Sitting of 11 May 1971

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

  NEW BROKEN HILL CONSOLIDATED LIMITED BILL [Lords]
  Amendment made,
  Bill read the Third time and passed, with an Amendment,

  STOCKPORT CORPORATION BILL
  As amended, considered,
  Bill to be read the Third time,

  KILLINGHOLME GENERATING STATION (ANCILLARY POWERS) BILL [Lords]
  Bill read a Second time and committed,

  CHICHESTER HARBOUR CONSERVANCY BILL (By Order)
  Order for consideration, as amended, read,
  Bill to be considered upon Monday next at Seven o'clock,

  ISLE OF WIGHT COUNTY COUNCIL BILL (By Order)
  Order for consideration, as amended, read,
  Bill to be considered upon Monday next at Seven o'clock,

  GREATER LONDON COUNCIL (MONEY) BILL (By Order)
  Order for Second Reading read,
  Bill to be read a Second time upon Tuesday next,

ORAL ANSWERS TO QUESTIONS
  AGRICULTURE, FISHERIES AND FOOD

    Decimalisation
    Mr. Eadieasked the Minister of Agriculture, Fisheries and Food if he will now make a definitive statement on the effect which decimalisation had on price changes.
    The Minister of Agriculture, Fisheries and Food (Mr. James Prior): The change-over to the new currency went very smoothly, and I would refer the hon. Member to the reply I gave on 2nd March to the hon. Members for Brent-ford and Chiswick (Mr. Barnes) and Portsmouth, West (Mr. Judd.)—[Vol. 812, c. 376,]
    Mr. Eadie: But how can the right hon. Gentleman know whether things went smoothly, particularly when last night he accepted a Motion moved by my hon. Friend the Member for Norwich, North (Mr. Wallace) calling upon the Government
    "…to set up an organisation for consumer protection with powers to scrutinise and check prices of essential goods and services."?
    When will that body be set up?
    Mr. Prior: That has nothing to do with the Question, which deals with decimalisation. As I have told the hon. Gentleman before in answer to a supplementary question, all the reports are that it has gone very smoothly.

    European Economic Community
    Mr. W. H. K. Bakerasked the Minister of Agriculture, Fisheries and Food how many officials of the Fisheries Department of his Department are permanently stationed in Brussels during the negotiations currently proceeding for Great Britain to attempt to join the European Economic Community.
    Mr. Prior: My Department is represented at Deputy Secretary level, with supporting staff, on the official negotiating delegation which divides its time between London and Brussels. Officials of my Fisheries Department are brought in whenever the need arises.
    Mr. Baker: Is not that a rather surprising answer? In view of the anxiety felt in the fishing industry, would not my right hon. Friend better be advised to have a permanent official there to see what effect the minimum price scheme, for example, is having on the fishing trade in the Common Market?
    Mr. Prior: No, Sir, I do not think so, because we can keep in much better touch with the industry here, which is the important thing, and Brussels is not very far away. But it is important that in our negotiations we should have at least one full-time member of the negotiating team who is a member of my Ministry, and that is what we have.
    Mr. James Johnson: As a Member for a fishing port, will the right hon. Gentleman say what is his sticking point in the negotiations? Is he prepared to tell the House that he believes that Article 2, with reservations about the size of vessel, the times of the year for fishing, size of gear and so on, is a sufficient safeguard for our inshore fishing fleet?
    Mr. Prior: The House would not expect me to disclose our negotiating position at this stage, but certainly conservation measures alone, which I think are adumbrated in Article 2, would not be sufficient.
    Sir F. Bennettasked the Minister of Agriculture, Fisheries and Food whether member States of the European Economic Community individually retain extensive powers to implement conservation measures as part of their individual fishery systems, and how these will apply to Great Britain if Great Britain joins the Community.
    Mr. Prior: Member States of the European Economic Community retain freedom to introduce conservation measures to protect fish stocks within their fisheries limits provided that they do not discriminate between members on grounds of nationality. So far as the United Kingdom is concerned, Her Majesty's Government has reserved its position on the common fisheries policy.
    Sir F. Bennett: Does my right hon. Friend agree that a great deal of the anxiety about the possible repercussions for the British fishing industry concerns over-fishing? Is he saying today, as I
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    hope he is, that control of this aspect of this difficult problem will be maintained fully in British hands?
    Mr. Prior: I am well aware of the problems, particularly in my hon. Friend's area. His local fishermen were able to put them to me at first hand when I went down to Torbay. What I said earlier in reply to the hon. Member for Kingston upon Hull, West (Mr. James Johnson) shows that I consider that Article 2 alone would not be sufficient protection for us.
    Mr. Milne: Does not the right hon. Gentleman consider it strange that the Community should delay application of a fisheries policy until the major fishing nations of Britain, Norway and Denmark have applied to join? Would not it have been much better for the negotiations if they had awaited the applications and discussed fisheries policy with those countries at the time?
    Mr. Prior: I think it is clear that what may or may not have been a suitable policy for six countries is not a suitable policy for 10. This number includes the countries the hon. Gentleman has named which are major fish-producing countries. Therefore, I think the answer is, yes.
    Sir R. Russell: What does my right hon. Friend mean by saying that the Government have reserved their position?
    Mr. Prior: I mean what is usually meant by that rather ambiguous expression.
    Mr. Edwin Wainwright: Does the Minister realise that many of us who are in favour of going into the Common Market, with certain reservations, are dissatisfied with the attitude which is being taken by the Minister and his right hon. Friend? May we be assured that there is some safeguard for our fishing industry if we go into the Common Market? Does he not realise that the answers which he has given, and indeed the answers given by the Government, give the impression that they are so keen to get in that they do not care a damn about the fishermen of this country?
    Mr. Prior: No. That is not a fair reflection of the view of the House. The House knows generally that the Government are well aware of the problems of the inshore fishing industry and some

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    of the other problems of the deep-sea fishing industry. We have made it plain on many occasions that the present common fisheries policy is not acceptable to us.
    Mr. Bryant Godman Irvineasked the Minister of Agriculture, Fisheries and Food who will have responsibility for fixing quality standards in Great Britain for milk and milk products if Great Britain joins the European Economic Community.
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Anthony Stodart): The Council of Ministers of the European Economic Community has power to prescribe minimum standards for milk and milk products. It has not yet done so generally, though draft legislation is under consideration. If the United Kingdom were a member of the European Economic Community we should have to comply with any standards so prescribed.
    Mr. Godman Irvine: In view of the interest shown in Europe in the excellent work done by the Milk Marketing Board in this country, will my hon. Friend take the opportunity to explain to the Europeans the advantages of this type of organisation?
    Mr. Stodart: Yes, Sir.
    Sir D. Walker-Smith: Could my hon. Friend say whether, if these measures are taken by the Council of Ministers, they would be by way of regulations under Article 189 of the Treaty of Rome and thereby be directly enforceable in this country without the intervention of Parliament?
    Mr. Stodart: My information is that there is no reason why we should not require higher standards for our own products in the United Kingdom if we want to do so.
    Sir D. Walker-Smith: That was not my question.
    Mr. William Price: No, but that was the answer!
    Mr. Leslie Huckfieldasked the Minister of Agriculture, Fisheries and Food what recent representations he has received from the National Farmers' Union about the progress of negotiations
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    for British entry into the European Economic Community.
    Mr. Martenasked the Minister of Agriculture, Fisheries and Food whether he will make a statement on his further discussions with the National Farmers' Union about the system of agricultural support in the Common Market in the event of Great Britain joining.
    Mr. Anthony Stodart: My right hon. Friend has kept in close touch with the President of the National Farmers' Union and there have been regular meetings between my Department's officials and representatives of the Union on a variety of matters arising out of the negotiations on British entry into the European Economic Community.
    Mr. Marten: Does my hon. Friend recall that during the last Price Review in March in the Common Market one farmer was shot in the back, one policeman was stabbed in the throat and 140 went to hospital? Could be explain why Price Reviews happen like that in the Common Market when here they are quite peaceful?
    Mr. Stodart: There was a time not so long ago in this country when one right hon. Gentleman had to leave by the back stairs.
    Mr. Strang: Are the Government determined to make sure that, if we enter the E.E.C., production grants will still be possible for hill farmers?
    Mr. Stodart: These are matters for negotiation, but there is nothing in the Treaty of Rome to preclude them.
    Mr. Cledwyn Hughes: Is the hon. Gentleman aware that the little local difficulty to which he referred, and in which I was involved, was caused by a small number of reactionary Tory farmers who were more concerned about the General Election than about the prosperity of agriculture?
    Mr. Stodart: My recollection was that there were rather more members of the Special Branch surrounding the right hon. Gentleman than there were angry Tory farmers.
    Sir A. Meyerasked the Minister of Agriculture, Fisheries and Food what benefits hill livestock farmers will gain,

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    if the United Kingdom joins the European Economic Community, from the higher prices paid for cattle and sheep in the Community.
    Mr. Prior: The amount of benefit would depend on the prices ruling at the time of entry and on the extent to which prices for fatstock are reflected back to prices for stores. But the Community's guide price for fat cattle in 1971–72 is about a quarter more than our guaranteed price, and producer prices for mutton and lamb are also higher in the Community. This is evidence that our hill farmers would benefit from a much stronger market for their stock.
    Sir A. Meyer: Can my right hon. Friend give an assurance that this favourable factor, together with such other assistance as he is able to obtain, will ensure that farmers do not suffer adversely as a result of our entry into the E.E.C.?
    Mr. Prior: The problems of hill farmers, particularly the problem relating to the hill cow and hill sheep subsidies, are still matters which we have to discuss in the negotiations at Brussels before the House can come to a decision. I am well aware of these problems, and we will do our best to help hill farmers.
    Mr. Mackie: If we do not get a satisfactory arrangement on direct subsidies, such as the hill cow subsidy and so on, will the Minister consider raising the end price sufficiently to give a hill cow subsidy of£22 to£23?
    Mr. Prior: There are many ways in which we can help hill farmers besides the direct subsidy on hill cows or hill sheep.
    Mr. Marten: Is my right hon. Friend aware that the National Federation of Young Farmers has rejected any proposition to enter the Common Market?
    Mr. Prior: No, I am not. I very much doubt whether it is representative of young farmers as a whole.

    Beer (Alcoholic Content and Gravity)
    Mr. Ashtonasked the Minister of Agriculture, Fisheries and Food whether
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    he will introduce legislation to control the alcoholic content and gravity of beer.
    Mr. Anthony Stodart: I see no need for legislation. There is no evidence that the alcoholic content, or gravity, of beer has changed significantly since 1951. Nor is it evident that consumers are incapable of selecting a beer which meets their taste from the many on offer.
    Mr. Ashton: Has not the hon. Gentleman seen the Sunday Mirror report, which is quite contrary to what he just said? If it is possible to have the proof written on the label of a whisky bottle and the octane rating on a petrol pump so that the consumer can have a proper choice, why cannot the same be done for beer? If the gravity is declared to the Excise authorities, as it must be, why cannot it be put on the beer pump or the beer bottle label?
    Mr. Stodart: The hon. Gentleman has asked several questions. I have read the Sunday Mirror, but a comparison of its article with the article in Which? in 1960 shows no marked trend. If the House wishes, I will circulate the complete comparisons in the OFFICIAL REPORT. The average specific gravity has varied by only 0·2 in 20 years; it has gone up very slightly since 1951. As to the comparison with whisky and petrol, with great respect to the hon. Gentleman, I think that they are different. The hon. Gentleman will give just as good a performance on light ale as on heavy.
    Mr. Farr: Is my hon. Friend aware that the specific gravity and the alcohol content of beer bear no relation to the quality of the drink, and that the quality of British beer brewed today is higher than it has been at any time since the war?
    Mr. Stodart: My hon. Friend is entirely correct. There are other things that interest beer drinkers. There is colour and there is flavour, and alcohol content is not one that particularly interests me.
    Mr. Michael Cocks: Does the Minister agree that it is regrettable that the House must rely for information on a survey in 1960 and a more recent report in the Sunday Mirror? Will the hon. Gentleman consider cutting through all the

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    objections raised on both sides by publishing the tax the drinker pays on a pint, so that the drinker can make his own comparisons?
    Mr. Stodart: That is not the Question that was asked. The House does not have to rely on the Sunday Mirror, The Customs returns show that in 1951 the average gravity of all beers was 1036·51 and in 1970 it was 1036·78. Therefore, they show that it is higher.

    Agriculture Act, 1957 (Section 3(1)(b))
    Mr. Deakinsasked the Minister of Agriculture, Fisheries and Food why it took his Department over 13 years to discover that it had wrongly interpreted Section 3(1)(b) of the Agriculture Act, 1957, when calculating changes in farm costs from one year to another.
    Mr. Prior: Although I have no responsibility for what was done under previous Administrations, my understanding is that the provisions of the Act have in the past been correctly applied for cost changes generally. Feed and transport cost changes were allocated to the "guaranteed" and "non-guaranteed" sectors on the basis of fixed proportions, an arrangement that did not properly reflect later changes in standard quantities. The new method of calculation was accordingly adopted.
    Mr. Deakins: Is not that a very serious state of affairs? Is not the right hon. Gentleman saying that he is right in his interpretation of the phrase
    "relevant costs of production"
    in Section 3(1)(b) of the 1957 Act, and that all previous Ministers of Agriculture from 1958 to 1970 were wrong in their interpretation? This is a very serious state of affairs for the House, because it affects taxpayers' money.
    Mr. Prior: I shall not speculate on the activities of previous Administrations in this respect. The hon. Gentleman should realise that feed and transport costs were originally allocated between guaranteed products on an arbitrary basis. This was never revised, so as time went on it became increasingly incorrect.
    Mr. Cledwyn Hughes: Is the right hon. Gentleman aware that there is a great
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    deal of disquiet about the way in which he presented his calculations in this year's Price Review, and that he did not make clear in his statement to the House or in his White Paper that costs were£24 million less than they would have been if the previous year's methods of computation had been followed? While there may be valid legal reasons, as the right hon. Gentleman has described today and as he described to me in a letter, for making the change, why did not he say so plainly and explain the matter openly to the House and the country? The right hon. Gentleman has given credence to the belief that this method was contrived to make the Review look better than it was—namely,£3 million under-recoupment instead of£27 million under-recoupment.
    Mr. Prior: I can understand some of the right hon. Gentleman's anguish that a Price Review introduced by me should have had a much better reception than one introduced by him. I did my utmost to save the right hon. Gentleman embarrassment although he had done his calculations wrongly.
    Mr. Deakins: On a point of order. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

    Processing and Packaging (Costs)
    Mr. Roger Whiteasked the Minister of Agriculture, Fisheries and Food what proportion of the household food bill in the United Kingdom is represented by the cost of processing and packaging.
    Mr. Prior: It is not possible to give a precise figure, but I would estimate that the proportion would be in the region of a fifth to a quarter.
    Mr. White: I think my right hon. Friend would agree that these are essentially labour costs. Could we not hope in future to see some reduction as a result of the cut in selective employment tax?
    Mr. Prior: Food packaging and processing, including labour costs, in so far as they form part of the manufacturing process, already mostly qualify for S.E.T. refund. But I agree that the reduction of this iniquitous tax by half will lead to some reduction in prices.

    Livestock Production (Licensing Regulations)
    Mr. Strangasked the Minister of Agriculture, Fisheries and Food what representations he has received from breeding companies on the extent to which the present licensing regulations hinder the development of more productive strains of livestock.
    Mr. Anthony Stodart: My right hon. Friend has had representations in this sense from the Association of Pig Breeding Companies and from some of its members.
    Mr. Strang: Is the hon. Gentleman aware that an announcement on this subject was expected last year? Will he explain the reasons for the delay?
    Mr. Stodart: A Question which is to be answered a little later has a more direct bearing on that subject.

    Thames Flood Barrier
    Mr. Trewasked the Minister of Agriculture, Fisheries and Food what further progress has been reported to him by the Essex and Kent River Authorities in their investigations into the downstream flood defences associated with or arising from the Thames Floor Barrier; and whether he is now in a position to give an estimate of the cost of these works in Essex and in Kent, respectively.
    Mr. Anthony Stodart: As I told my hon. Friend on 9th February, the problems involved are complex. Both the Essex and Kent River Authorities are proceeding with investigational work in conjunction with soil mechanic experts of the Building Research Station. It will be some time before these investigations and subsequent design work reach a stage where reliable estimates of cost can be made.—[Vol. 811, c. 261–2.]
    Mr. Trew: In view of the complexity and extent of these works, is my hon. Friend satisfied that they can be completed at the same time as the barrier? Will he assure the House, first of all, that there is no question of the barrier being put into operation before the downstream flood defences are completed? Secondly, since some of the river frontages are privately owned and outside the jurisdiction of the river authorities, is he
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    satisfied that the authorities have adequate powers to co-ordinate the work on the defences and that there will be no gaps?
    Mr. Stodart: I should like to be quite sure about the second point my hon. Friend made and I will write to him about it, but I believe that all is in order in that respect. In regard to his first point, one of the matters which is exercising us is the need to co-ordinate work with the design of the barrier.
    Mr. Brian Harrison: In view of the fact that it is thought that the subsoil in parts of the Essex coast is not strong enough to hold the necessary barriers, will my hon. Friend give an undertaking that no work will be carried out upstream which will inundate parts of my constituency or Essex generally?
    Mr. Stodart: Work upstream has already started with the raising of the walls, but I can undertake that we shall see to it that the work is so co-ordinated that what my hon. Friend has suggested will not happen.

    Food Prices
    Mr. Ashleyasked the Minister of Agriculture, Fisheries and Food if he will list the Acts which give him power to influence food prices.
    Mr. Prior: I would refer the hon. Member to the reply I gave the hon. Member for Ealing, North (Mr. Molloy) on 20th April. I prescribe milk prices under the Emergency Laws (Re-enactments and Repeals) Act 1964.—[Vol. 815, c. 364–5,]
    Mr. Ashley: Is the right hon. Gentleman aware that I appreciate his embarrasment and his failure to prevent food prices from rocketing? Therefore, does he feel that his party were wise to make such extravagant promises when they knew that they had no power to prevent such rises? Does the right hon. Gentleman intend to take power to prevent prices rising, or does he intend to continue with his chief alibi about housewives shopping around?
    Mr. Prior: As I explained to the House yesterday, I do not believe that prices can be controlled in the way the hon. Gentleman suggests, but the important point is to bring down the level of wage

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    increases which lie at the root of our problems.
    Mr. Cledwyn Hughes: In view of the fact that the Motion proposed yesterday by my hon. Friend the Member for Norwich, North (Mr. Wallace) was agreed to by the House, will the Minister say when he will set up the organisation for consumer protection of which this House has approved?
    Mr. Prior: Although the House did not divide on the Motion, I listened carefully to the points raised in what was, after all, a Private Member's Motion.
    Mr. Barnes: Is the Minister aware that there is still some confusion after yesterday's debate about the different reasons which he gives for the difficulty in bringing down food prices? Which of these is the most important: to bring down wages increases, to have more competition, or to have a stronger British agriculture? The Minister has given all these reasons at different times, and it is not clear on which he is relying most.
    Mr. Prior: They are three parts of a very good policy.
    Dr. Summerskill: What advice does the right hon. Gentleman give to the housewife who has children, or who works outside the home, or who is disabled or retired—what can she do about shopping around?
    Mr. Prior: She can use all her influence on her husband and on the rest of the community to see that wage increases are not granted for no more work.
    Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food what were the respective contributions to the rise in the cost of food for the year 1970–71 of recent transport legislation, the cost of selective employment tax, the cost of increased fuel taxation, and increased wages.
    Mr. Prior: It is not possible to give precise figures but it is clear that wages were the largest single cause of the rise in the cost of food in 1970–71 over the previous year. Higher costs arising from recent transport legislation and from the 1969 increase in selective employment tax also contributed to the rise. Fuel costs have also risen but the last change in fuel taxation was in April, 1969.
    Mr. Mills: Does this not clearly show that the Labour Party is utterly condemned over the past four years, on the legislation it brought in and the increase in the cost of living? Would my right hon. Friend look carefully at the legislation to see what can be pruned and stop all of this Socialist nonsense that is no good for farming?
    Mr. Prior: I agree that a lot of the legislation passed by the previous Government and much of the taxation introduced by them added to the increases which we are now experiencing. That is why the Government have made a start in reducing it.
    Mr. Barnes rose—
    Mr. Speaker: Order. I think there is a tendency to move on from peaches to speeches.
    Mr. John Morris: Can the right hon. Gentleman tell the House whether the Government intend to strengthen their powers over prices in the private sector?
    Mr. Prior: No, we believe that competition is the right way.
    Mr. Barnes: Would the right hon. Gentleman agree that the reduction in food prices that will be possible by halving S.E.T. is less than half a new penny in the£?
    Mr. Prior: Naturally it is a small reduction which can be made in this way, but I am confident that at least it will stop some prices from going up.

    Farmholdings (Size)
    Mr. Douglasasked the Minister of Agriculture, Fisheries and Food what are the latest estimates of the average size of British farm-holding, and the most recent comparison with farmer-holdings in the European Economic Community countries.
    Mr. Anthony Stodart: The average area of crops and grass on holdings of 2½ acres or more in the United Kingdom is estimated to have been 79 acres in 1967, which is the latest year when comparable figures are available for European Economic Community countries. The average area was about 47 acres in France, 27 acres in Netherlands and in Belgium/Luxembourg, 26 acres

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    in Germany and 18 acres in Italy. The average size for the European Economic Community as a whole was about 28 acres.
    Mr. Douglas: Does not the hon. Gentleman concede that, in view of the figures he has given, the Community will experience extreme difficulty in reaching the Mansholt target plan for the 1980s?
    Mr. Stodart: There are great difficulties lying ahead for the Community in that sphere. One thing to be thankful for is that we start with a good lead.
    Mr. Deakins: Do not these figures show that British farming under the postwar Agriculture Acts of 1947 and 1957 has been able to grow in prosperity and confidence, based on investment, because of the guarantees in the 1947 and 1957 Acts which are now being removed?
    Mr. Stodart: British agriculture has indeed done a magnificent job since the war. It is an example to the nation. It will continue to do so.

    Vegetables (Contamination)
    Mr. David Clarkasked the Minister of Agriculture, Fisheries and Food what investigations his Department has undertaken into the nature and extent of contamination of vegetables grown in the proximity of main roads.
    Mr. Anthony Stodart: Joint investigations by the Ministry and the Agricultural Research Council over the period 1963–69 showed little or no risk of contamination of vegetables unless these were grown very close to busy roads, and then only surface contamination was found.
    Mr. Clark: Is the Minister aware that a senior official of the Department of Health recently told the Royal Society of Health's conference at Eastbourne that there was the likelihood of contamination by lead of vegetables grown alongside main roads? Has the Minister any advice to give to housewives and market gardeners who might be using these vegetables?
    Mr. Stodart: The Macaulay Research Institute did some research on this subject between 1963 and 1969. Some outer leaves of vegetables were very slightly contaminated within 50 yards of busy main roads, but not to anything like the
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    extent which is considered dangerous under the Food and Drugs Acts.

    Peaches
    Mr. Skinnerasked the Minister of Agriculture, Fisheries and Food what is the current cost of an average-sized peach.
    Mr. Prior: Retail prices of peaches are not collected officially.
    Mr. Skinner: Is the right hon. Gentleman aware that on one famous occasion last year he thought he had a success story because peaches were falling in price? Now he cannot even claim credit for that. Will he go a little further and confirm speculations that the figure for the cost-of-living index in April will be the highest since figures were compiled? Perhaps he will urge his right hon. Friend the Secretary of State for Employment to get these figures out before the local elections are concluded.
    Mr. Prior: The second part of the hon. Gentleman's supplementary question has nothing to do with his original Question, to which I would only say that he is so blinded by his prejudices that he would not recognise a good peach if he saw one.
    Mr. Heffer: Would the right hon. Gentleman return to the point made by my right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) earlier about price increases? My right hon. Friend asked what the Government would do about the decision—
    Mr. Speaker: Order. I should point out that this Question relates to peaches.
    Mr. Heffer: I assume that the price of peaches can be dealt with by the body that would be set up if the right hon. Gentleman is prepared to carry out yesterday's decision of Parliament. Is he prepared to agree to the Motion and to put into operation the proposals passed by Parliament yesterday? If he is not prepared to do that, is it not obvious that it is this sort of situation that leads the people of this country to feel that Parliament is being brought into disrepute by the actions of the Government?
    Mr. Prior: The trouble with the hon. Gentleman is that he is nearly always as much out of order when he is on his feet as he is when he is sitting down.
    Mr. Charles Morrison: In view of the more auspicious climate for growing peaches inside the Common Market, is there not a likelihood that, once we are in, peaches will be cheaper?
    Mr. Prior: Under Conservative prosperity peaches will be eaten much more than before.

    Hypermarkets
    Mr. Kinseyasked the Minister of Agriculture, Fisheries and Food what is his policy with regard to Government assistance towards the provision of hypermarkets, in view of their contribution towards a lower cost of living.
    Mr. Prior: The provision of hypermarkets is largely a matter of commercial judgment for the firms concerned.
    Mr. Kinsey: While agreeing that that is so, may I ask my right hon. Friend whether he is aware that the promoters of the hypermarkets are of the opinion that they can save the housewife about 5 per cent. on food costs and 20 per cent. on non-durables? Would he not agree that that is a very high figure? Is he further aware that if he could persuade local authorities to support these promoters it would be a good thing for the housewife?
    Mr. Prior: I do not think that there is any unanimity on the point made by my hon. Friend. In so far as any development of increased competition will reduce prices, then it has my blessing.
    Mr. Buchan: Does the right hon. Gentleman remember that this was part of the problem we discussed yesterday when the House passed a Motion calling for an organisation to deal with prices? Is the right hon. Gentleman aware that by his answers today he is in grave danger of flouting the will of this House, not for the first time? Is he aware that he is putting himself in the position of Marie Antoinette and that I should not like to see him lose his head? Will he tell us when he will carry out the terms of the Motion and set up such an organisation?
    Mr. Prior: I cannot see the relevance of that supplementary question to the original Question.
    Mr. William Price: In view of the concern about meat prices and the Minister's advice to people yesterday to eat pork instead of beef, may I, as a vegetarian, sincerely ask him to suggest that the answer is to give up meat altogether and to rely on peaches?
    Mr. Prior: This is a Question about hypermarkets.

    Forestry Policy
    Mr. Farrasked the Minister of Agriculture, Fisheries and Food if he will make a statement of his policy towards private woodland owners.
    Mr. Charles Morrisonasked the Minister of Agriculture, Fisheries and Food when he expects to conclude his review of the work of the Forestry Commission.
    Mr. Anthony Stodart: As already announced, my right hon. Friend and his right hon. Friends the Secretary of State for Scotland and the Secretary of State for Wales are conducting a review of forestry policy. It is a wide-ranging one including cost-benefit studies, and I cannot yet say when it will be completed. Their conclusions, which will relate to both public and private sectors, will be announced in due course.
    Mr. Farr: While thanking my hon. Friend for that statement, may I ask whether he is aware that the costs for private woodland owners have been increasing very rapidly recently? Will he introduce an amended scheme for the owners of dedicated woodlands?
    Mr. Stodart: There has to be a mandatory review of such grants every three years and that is about to take place. I do not wish to anticipate the outcome of it.
    Mr. Charles Morrison: In view of the import-saving potential in forestry, can my hon. Friend say whether it is the Government's general intention to increase afforestation, by means of encouraging either the Forestry Commission or the private woodland owners?
    Mr. Stodart: That is one of the subjects that is being dealt with under the general review.

    Tractors
    Sir J. Langford-Holtasked the Minister of Agriculture, Fisheries and Food what progress he has now made in his consultations with all the interests concerned prior to his amendment of the Regulations on Tractor Safety Cabs; and when he proposes to lay the amended regulations.
    Mr. Anthony Stodart: My right hon. Friends cannot take the matter to completion until they have received and considered the views of the organisations consulted under the statutory procedure which I described to my hon. Friend on 20th April.—[Vol. 815, c. 364,]
    Sir J. Langford-Holt: Will my hon. Friend bear in mind that every week that these consultations go on, manufacturers are using the wording of the present regulations to hold the farming industry to ransom? Is he aware that this is causing a great deal of resentment and that the sooner it is brought to an end the better?
    Mr. Stodart: I cannot go beyond what I have said. A reasonable time for consultations must be given.

    Sows
    Mr. Burdenasked the Minister of Agriculture, Fisheries and Food if it is his intention that the Codes of Practice now awaiting ratification will permit the penning of sows in stalls in which they can neither walk nor turn around, and in which it will be legal for them to be incarcerated from the time of their first farrowing until their breeding life has ended.
    Mr. Anthony Stodart: I would refer my hon. Friend to the answers I gave on 25th November, 1970 and 9th February, 1971 to his Questions on this subject.—[Vol. 807, c. 165; Vol. 811, c. 266–7.]
    Mr. Burden: When will my hon. Friend stop stonewalling and give an undertaking to the House and to the country that he is not prepared to have animals incarcerated in diabolical conditions inside factory farms? If such conditions and practices obtained in zoos, the people responsible would be subjected to prosecution without delay.
    Mr. Stodart: I have clearly failed to convince my hon. Friend that neither he nor I are experts on whether these sow stalls are cruel. I told him before, and I repeat, that they eliminate certain other discomforts, such as cannibalism and fighting, and they have the support of the Welfare Committee and the State Veterinary Service—
    Mr. Burden: No.
    Mr. Stodart: —both of which bodies' recommendations were accepted by right hon. and hon. Gentlemen opposite, as they are by us.
    Mr. Rankin: Can the Minister assure us that these regulations have the undisputed majority support of the House of Commons? Have they ever faced that challenge?
    Mr. Stodart: These regulations are under discussion at the moment with various organisations, and they will be laid before the House of Commons for discussion in due course.
    Mr. Rankin: When?
    Mr. Peter Mills: Will my hon. Friend bear in mind that many animals are kept in far better conditions and provided with much better food and general climate than many elderly people?
    Mr. Burden: In view of the unsatisfactory nature of that reply, I beg leave to give notice that I intend to raise the matter on the Adjournment.

    Ponies (Quarantine)
    Mr. Brewisasked the Minister of Agriculture, Fisheries and Food how long ponies imported from abroad are kept in quarantine before being disposed of to private owners.
    Mr. Anthony Stodart: I would refer my hon. Friend to the reply which I gave to the right hon. Member for Orkney and Shetland (Mr. Grimond) on 4th May.—[Vol. 816, c. 313,]
    Mr. Brewis: Is my hon. Friend satisfied that this system of certification by foreign veterinary surgeons is working satisfactorily and that there is no fear of infectious diseases spreading among the equine population of this country?
    Mr. Stodart: No horses or ponies are allowed in from any country where African horse sickness exists, and a veterinary certificate is needed from an exporting country. Animals arriving without one are isolated and examined.

    International Waters (Dumping of Chemical and Industrial Waste)
    Mr. Milneasked the Minister of Agriculture, Fisheries and Food if he will arrange to have discussions with the North-East Atlantic Fisheries Convention on the proposals by the Scandinavian countries for the banning of the discharge and dumping of chemical and industrial waste in international waters.
    Mr. Prior: I should not consider these matters appropriate for the North-East Atlantic Fisheries Commission, but Her Majesty's Government is convening a meeting of North Sea states next month to discuss pollution and dumping in the North Sea. This will be followed by a wider inter-governmental meeting to discuss marine pollution generally.
    Mr. Milne: Is the right hon. Gentleman aware that while his answer gives some satisfaction, the fact that the Fisheries Commission will not be dealing with this matter gives cause for grave doubts about the seriousness of Her Majesty's Government in dealing with pollution in international waters?
    Mr. Prior: The hon. Gentleman need not be worried about this matter. We are very concerned about it. Marine pollution is already under consideration by other international bodies and we do not want to add to these. However, I have taken note of what the hon. Gentleman said.

  CEYLON PRIME MINISTER
  Mr. Dalyellasked the Prime Minister if he will invite the Ceylon Prime Minister to London for an official visit.
  The Prime Minister (Mr. Edward Heath): I had the pleasure of meeting Mrs. Bandaranaike in Singapore in January. She would be a welcome visitor in this country at any time.
  Mr. Dalyell: Does the Prime Minister accept that the troubles in Ceylon are
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  not just a matter of goodies versus baddies, but stem from real problems of sheer poverty and graduate unemployment? If that is accepted, may I ask what the Government's policy is towards the further supply of arms?
  The Prime Minister: There is undoubted poverty in Ceylon, and it has been the policy of successive Administrations to help Ceylon with the maximum aid possible. In this case, a democratically elected Government appealed to Her Majesty's Government for arms to support them in dealing with a small minority of extremists in revolt against that democratically elected Government. Her Majesty's Government came to the conclusion that it would be right to help the Government of Ceylon in these circumstances.
  Mr. Tapsell: Has any progress been made since January in the establishment of international arrangements, with which both Ceylon and the United States are associated, for the defence of the Indian Ocean?
  The Prime Minister: I know of no movement in international organisations to deal with that problem.

  SECURITY
  Mr. William Hamiltonasked the Prime Minister what steps he is taking to improve security within all Departments.
  The Prime Minister: Security arrangements within all Departments are kept under continuous review, and a special review of arrangements for safeguarding confidential commercial information within those Departments concerned has been put in hand.
  Mr. Hamilton: Does the Prime Minister agree that if the information and allegations contained in the article on the front page of The Guardian today have any truth in them, they reveal an extremely disquieting situation of the gross inadequacy of Government security concerning both private individuals and affairs of State? Will the right hon. Gentleman undertake that the inquiry which has been initiated will be independent and will go into all matters ranging from the V. & G. scandal to the matters indicated in The Guardian article this morning?
  The Prime Minister: The affairs of the Vehicle & General Insurance Co. are being dealt with by the tribunal set up under the Tribunal of Inquiries Act, 1921.
  The allegations in The Guardian today are obviously extremely serious, and we are treating them as such. They go wider than Government. They include banks, insurance companies, private industrial companies, and the gaining of information from all these sources. We have been in touch with The Guardian, and I am glad to say that it has agreed to help as far as it possibly can, in the investigations which we are making, in following up the cases mentioned in the article. I am sure that the first thing for us to do is to pursue this information as speedily as we can and then to decide what action should be taken to remedy it.
  Mr. Harold Wilson: Does the right hon. Gentleman agree that some of the allegations in that article, referring to non-governmental organisations in particular, appear to fall within the remit of the Committee of inquiry into the privacy of the individual? Will he make sure that it is given all the information required to investigate these allegations? As some of the more serious allegations appear to refer to Government Departments, when he has completed his own inquiries—they must be for him—will he undertake to make a statement to the House.
  The Prime Minister: On the first part of the right hon. Gentleman's question, I believe that it is the case that these matters can be dealt with by that Committee. I have no doubt that it will take note of these points.
  I will, of course, make a statement to the House as soon as possible. The right hon. Gentleman knows that it is not always in the interests of maintaining security to divulge the particular methods by which we shall do it. Departments already have very specific rules, which existed under the right hon. Gentleman's Administration, for dealing with confidential information, whether of a personal or of a commercial kind. If it is found that these rules have been broken, action can be taken. If it is found that the rules themselves are inadequate, we can make fresh rules to deal with some of the circumstances with which the allegations in The Guardian are concerned.
  Mr. Thorpe: While obviously the right hon. Gentleman must have time to consider these matters, would he not agree that one of the serious allegations in The Guardian was about the ease with which commercial organisations can obtain information by telephoning Government Departments? Is there not a case for saying either that no information should be given by telephone or that the inquirer should leave his number and be telephoned back?
  The Prime Minister: Yes; that is a perfectly valid point, with which we are dealing immediately.
  Sir F. Bennett: In regard to the question of political security, do the same rules about security background apply to Ministers as to civil servants?
  The Prime Minister: I think that exactly the same rules apply as applied under the previous Administration.
  Mr. Leslie Huckfield: This is still a very unsatisfactory state of affairs. Is the Prime Minister aware that Minister after Minister on that Front Bench has assured me, in answer to questions, that there is nothing to worry about on the question of confidentiality of information? Would he not admit that there is, therefore, a need for my Control of Personal Information Bill, and would he also extend the terms of reference of the Younger Committee so that it can also consider the public sector?
  The Prime Minister: What I told the hon. Gentleman in answer to a Question was that it was not just a matter of confidentiality of information stored on computers, but that exactly the same high standards should apply to all information in Government Departments, both personal and commercial. This is the aim of this Administration, and if, as a result of the statements in The Guardian today, we find means by which the rules are either being broken or being evaded, we can take immediate action, and The Guardian will have performed a valuable public service.
  Mr. Onslovv: On the particular question of national security, would my right hon. Friend agree that this might be partly reinforced if some way could be found of reducing the number of Communist intelligence officers operating in London under diplomatic cover?
  The Prime Minister: That is a separate problem, but it is well known that it is under consideration by the Foreign Secretary.
  Mr. Hamling: Would the Prime Minister particularly consider the allegation about information being supplied to foreign embassies, bearing in mind what the hon. Member for Woking (Mr. Onslow) said?
  The Prime Minister: Yes, Sir; this is, of course, a major point of importance which is being examined.
  Mr. Harold Wilson: Although the Prime Minister must be free and have adequate time to conduct these inquiries, would he pay particular attention to the allegations that ex-officers of certain Departments, with knowledge of telephone numbers and the necessary procedures and the kind of questions to ask, are telephoning from outside? Would he try to cut down any private, secret or confidential information being given on the telephone, and require it, even at some delay and some cost, to be put in writing?
  The Prime Minister: Yes, Sir. As I have said, The Guardian has undertaken to help us in this matter so far as possible and has also agreed that I should make that fact public.

  TRADE (MINISTERIAL RESPONSIBILITY)
  Mr. Ashtonasked the Prime Minister whether he will now assume personal responsibility for the duties of the Minister responsible for trade.
  The Prime Minister: Unless and until I make a statement to the contrary, the House should assume that I have not taken over, and do not propose to take over, any of my right hon. Friends' departmental responsibilities in this or any other field.
  Mr. Ashton: Is the right hon. Gentleman not aware that, only yesterday, we had to have a personal statement from the Minister concerned because he had misled the House, and admitted misleading the House, two weeks ago? Does the right hon. Gentleman not think that, since it was reported in every newspaper
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  that he himself had not been told about the V. & G. affair until it appeared on the tapes, and that he does not know what is happening in this Department, he should take over personal responsibility for it?
  The Prime Minister: It has long been a tradition of the House that, once personal statements have been made, they are not referred to by hon. Gentlemen. The Vehicle & General affair is already being dealt with by the tribunal.
  Mr. Harold Wilson: Is the right hon. Gentleman aware that we are delighted to hear him say that, once personal statements are made, they are accepted by the House? Does he recall that, when the then Secretary of State for Defence made a personal statement about some reference to General de Gaulle, the right hon. Gentleman, then Leader of the Opposition, followed the most unusual practice of putting down a Private Notice Question in order to hound him further? We are delighted that he is now converted to the rules of the House.
  The Prime Minister: If the right hon. Gentleman will refresh his memory, he will find that the purpose was not in the least to hound the then Secretary of State for Defence: it was in order to obtain a statement which the House should have.

  EUROPEAN ECONOMIC COMMUNITY
  Mr. Laneasked the Prime Minister whether he will make a Ministerial broadcast this month on the progress of the Common Market negotiations.
  The Prime Minister: I have at present no plans to do so.
  Mr. Lane: If, as most of us hope, there is progress in Brussels this week and Paris next week, and fair terms eventually emerge, would my right hon. Friend continue to keep the debate on the inspiring level of his recent Royal Academy speech, so that the public can see this issue not just as an argument about butter and sugar—important though they are—but as a new and historical opportunity for the British people?
  The Prime Minister: I very much agree with my right hon. Friend that one

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  should deal with long-term political and defence questions concerning Europe as well as the detailed points on the Treaty of Rome which are being discussed in the negotiations in Brussels.
  Mr. Pentland: In regard to the safeguards which are involved for Britain and the Commonwealth in the present negotiations, can the right hon. Gentleman now explain which must be fully accepted by the Six before the negotiations are finalised? If he would do so, it would relieve a great deal of anxiety in the country.
  The Prime Minister: My right hon. Friend the Chancellor of the Duchy of Lancaster reports to the House each time he returns from negotiations in Brussels, and he will be doing so after he returns from the present meeting. At the end of negotiations, if they are successful, it will be possible to put before the House the complete picture. It is on that that the House will make its judgment.
  Mr. Kenneth Baker: Did my right hon. Friend see that the Leader of the Opposition said on "Panorama" last night that, if the terms were appropriate, he would unequivocally support Britain's entry into Europe? Could he elicit from the Leader of the Opposition whether, if he is satisfied that the terms are appropriate, he will lead his party to back him into Europe?
  The Prime Minister: I am sure that, if the Leader of the Opposition did make an unequivocal statement on "Panorama" last night, he will certainly stand by it.
  Mr. Healey: Can the right hon. Gentleman assure us that he will make a full statement on his talks with President Pompidou as soon as possible after his return? In view of the fact that he has just assured us that he has no intention of pre-empting the functions of any of his right hon. Friends, and since the talks with President Pompidou are, according to the Press briefing, to concern primarily political questions on the future of Europe, will the Foreign Secretary join him on this mission?
  The Prime Minister: I will certainly make a statement when I return, if that is what the House desires. That can
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  easily be arranged through the usual channels. The Foreign Secretary will not be accompanying me to Paris.

  IMMIGRATION BILL
  Mr. Bidwellasked the Prime Minister how many letters he has received expressing opposition to the Immigration Bill.
  The Prime Minister: I have received a small number of letters about particular aspects of the Bill, but they cannot be classified as simply for or against it.
  Mr. Bidwell: When the right hon. Gentleman replies to these letters, does he point out the nonsense of patriality and non-patriality as it applies to Commonwealth citizens? Does he explain also how he will need to adjust or to make a new law regarding Britain's immigration situation in relation to the Rome Treaty?
  The Prime Minister: The first point has been discussed in great detail in Committee, and the Government are now considering the conclusion to which the Committee came and will be able to advise the House on the Bill at a later stage. The arrangements under the Treaty of Rome in regard to movement of labour, and the relationship of this to immigratidn from other countries, have long been well known.
  Mr. Thorpe: May we at least have an assurance from the right hon. Gentleman that when replying to these letters he ensures that, apart from the requirement for them to report changes of address and occupation to the police, no other emergency wartime regulations will be reintroduced to control new immigrants to this country?
  The Prime Minister: The letters I have received about the Bill have been seeking information of various kinds. A small number have been protesting against the Bill, while a considerable number have been asking that the Bill should be more rigid than it is. I have replied explaining the provisions of the Bill, and this has not been done in terms of wartime regulations. Nor is the Bill conceived by those who write to me in such terms. They recognise that there is a problem in those areas which have large

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  numbers of immigrants. We said at the election that we should act on this matter, and that is what we are doing.
  Mr. John D. Grant: Does the right hon. Gentleman accept that he is in office only by courtesy of the right hon. Member for Wolverhampton, South-West (Mr. Powell) and his obnoxious views on immigration?
  The Prime Minister: Sufficient has been written and said about the last election for me not to hold an inquest on it.
  Mr. Clinton Davis: What representations have been made to the right hon. Gentleman on this issue? Would he agree that a large number of community relations councils, the British Council of Churches and the Board of Deputies of British Jews are among many organisations which have represented their feeling that the Bill is racialist and is likely to be very damaging to race relations in Britain?
  The Prime Minister: As I said, a small number of the letters I have received have been critical of the Bill, but not the great majority.
  Mr. Roy Jenkins: Does the right hon. Gentleman consider, in view of what has already happened in Committee, that this was a well-drafted Bill?
  The Prime Minister: To deal with a very difficult problem, this was a good Bill. What is more, it will go on to the Statute Book.

  BASIC FOOD PRICES
  Mr. Harold Wilson: On a point of order. Your predecessor has accepted this as a point of order in similar circumstances, Mr. Speaker.
  May I ask the Prime Minister or the Leader of the House, if not now then at any rate in connection with this week's business, to make a statement following the decision of the House yesterday in relation to the prices of food and related subjects and the acceptance by the Government of the need to reconstitute some watchdog over rising prices? May we have an assurance that either of the right hon. Gentlemen will tell us, either today or tomorrow, when a statement will be
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  made giving the Government's intentions in order to carry out the Motion which hon. Gentlemen opposite yesterday accepted unanimously?
  Hon. Members: Answer.
  Mr. Speaker: Order. Whatever my predecessor may or may not have ruled, in my view that is not a point of order, though it is a point which can be made and which, no doubt, will have been noted.

  QUESTIONS TO MINISTERS
  Mr. Mackie: On a point of order. During Question Time the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food said in answer to a supplementary question from one of my hon. Friends that he would not answer the particular point that had been raised because he would be answering Question No. 27 later. In the event, Question No. 27 was not answered. Am I entitled to raise this as a point of order?
  Mr. Speaker: It is certainly not a point of order for me.

PAKISTAN
The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): Last Thursday, during business questions, the Leader of the House was asked by the Leader of the Opposition whether I could make a statement about the situation in Pakistan which might assist hon. Members in the debate which is to take place on Friday. With your permission, Mr. Speaker, and that of the House, I should now like to do so.
In previous statements to the House I have expressed Her Majesty's Government's concern about the situation in East Pakistan and our wish to assist in alleviating the suffering and stress.
Within East Pakistan communications have been disrupted as a consequence of the recent strife and there may well be food shortages later this year, particularly in areas already affected by last year's cyclone. I repeat that Her Majesty's Government stand ready to play a part in any international relief effort, and that it is our view that this can best be organised through the United Nations.

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After consultation with the American Secretary of State, I recently sent an agreed message to the Secretary-General of the United Nations in which we suggested that he should approach the Government of Pakistan to renew his offer of international humanitarian assistance. U Thant is in touch with the Pakistan Government on the problems of relief.
I hope that they will be ready to allow a team of experts to make an objective appraisal of what is needed and that they will be prepared to accept assistance, if that is judged to be needed, on an international basis. Clearly, any relief effort must be made with the agreement and co-operation of the Government of Pakistan. We are, of course, ourselves in close touch with President Yahya Khan about the situation.
There is the separate problem of aid and assistance to the Pakistan economy in general. Pakistan faces serious economic difficulties, including shortage of foreign exchange. Consultations about these problems are proceeding within the framework of the aid consortium under the chairmanship of the World Bank, and decisions about future action must await the result of these consultations.
There is, finally, the problem of the very considerable number of refugees who have crossed from East Pakistan into India. Already a consortium of British charities had decided to offer assistance. They asked for Government assistance to transport supplies necessary for health and shelter. I decided that Her Majesty's Government should make an immediate contribution, and this has been done. Supplementary provision for approximately£18,000 will be sought in due course and, if necessary, an advance will be made in the meantime from the Civil Contingency Fund.
The Indian Government have since approached the United Nations for assistance over the refugees, and a United Nations team is now in India to assess the need for international help. As with the other two problems which I have mentioned, I consider that this matter is best handled by international organisations.
Mr. Healey: I thank the Foreign Secretary for that statement, which will be useful in our debate on Friday. I am
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sure that hon. Members on both sides of the House agree with the advantage of involving the United Nations in this problem. Indeed, some of the dangers in prospect might well justify the United Nations concerning itself with some of the political aspects of the problem, no less than with the relief aspects.
Does the right hon. Gentleman agree that the bald terms of his statement conceal a human tragedy which has few precedents in recent history? Is it not a fact that there are already 1½million refugees in West Bengal who, according to Indian Government estimates, will require£25 million per month to feed? Is it not a fact that even more people require assistance in East Pakistan itself?
Is the right hon. Gentleman satisfied that aid is now getting through to those in need in East Pakistan? Is he aware that a Red Cross aeroplane loaded with medical supplies was refused permission to land and that there are well authenticated reports that a large volume of stores is already stocked in Chittagong, but that permission has not yet been given for these goods to be distributed to those in need?
Does he agree that little can be achieved to relieve the suffering in this area or, indeed, to aid the economy of Pakistan unless there is a rapid movement towards a political settlement of the problem, in conformity with the wishes of the people of East Pakistan, as recently expressed in democratic elections?
As he promised when I last questioned him on this matter that he would make a statement, would the right hon. Gentlemen tell us whether Sheikh Mujibur Rahman is in prison in West Pakistan awaiting trial? Does he agree that if Pakistan is left without democratic leadership, other forces may take over and that this could be a disaster not only for Pakistan, but for the whole of the sub-continent.
Sir Alec Douglas-Home: As the right hon. Gentleman says, this is, of course, a very real human tragedy. The scale of it, considering the number of refugees in India and the possible problem of the relief that may be necessary later in the year, is very great and, therefore, it justifies bringing in the United Nations, which

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is perhaps the only body that can handle it, and that, I hope, will be done.
The answer to the right hon. Gentleman's question about a political settlement is that this must be for the people of Pakistan. Nobody from outside can dictate it. As I have said, we have been in constant touch with the President of Pakistan about the need for a political settlement. That is the only way, in the end, to solve the problem. But this must be for the President and the people of Pakistan.
Mr. Healey: Would the Foreign Secretary answer the specific question that I asked? Has he any information about the refusal by the authorities in Fast Pakistan to allow distribution of medical supplies and other assistance already available?
Sir Alec Douglas-Home: One consignment from the Red Cross was refused entry by the Government of Pakistan. The difficulty, so we understand, of distributing the food which is at present there in sufficient quantities is one of communications, and the distribution, according to our information, has to be done at present by the Pakistan Army, and this in itself presents difficulties. That is why I urge that the team should go in as quickly as possible to assess the need and to see how food can be got to the people. The other problem does not arise at the moment.
Mr. Woodhouse: Is my right hon. Friend aware that the Charity Commissioners in this country have ruled that money in the Pakistan Flood Relief Fund may not be used for relief in the present calamity? If the objection to that is purely of a technical character, would my right hon. Friend indicate whether it may be possible to remove it?
Sir Alec Douglas-Home: We have looked at this matter. It would be very difficult to remove it after the conditions applied. One of the areas worst affected is, in fact, the cyclone area, and if we can get the food moving, certainly the money subscribed for that purpose can be used.
Mr. Thorpe: Is the Foreign Secretary aware that we welcome his recognition of the importance of the United Nations as the appropriate agency for relief?
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Further, is he aware that reports of appalling atrocities are still coming out from East Pakistan? Can he say whether Her Majesty's Government can take some further initiative, either through the Commonwealth Secretariat or through the United Nations, for a team of observers either to establish or to disprove these disquieting allegations?
Sir Alec Douglas-Home: At present, I do not think that it would be helpful to ask that observers should be admitted to Pakistan. We have no reason to believe that they would be accepted. As the right hon. Gentleman probably knows, six international journalists are being let in this week, so more information will come from the country.
Sir F. Bennett: All other considerations apart, would the Foreign Secretary agree that the precedents show, without any doubt, that however well-meaning an attempt to interfere politically in the affairs of another Government may be, the result is counter-productive for the people themselves?
Sir Alec Douglas-Home: Without generalising, in this particular case that I am dealing with private representations are certainly better than any public statements.
Mr. Shore: Can the Foreign Secretary clear up this matter and say whether relief and aid personnel have free movement in East Pakistan at present? What response has he had from the Pakistan Government to the representations which we hope he has made about a political settlement and respect for democratic decencies in Pakistan?
Sir Alec Douglas-Home: The response that we have had is the desire and wish, as expressed by the President, that there should be a political settlement and that talks should be resumed between representatives of East Pakistan and the President. We must hope that this will take place. As for the introduction of aid into East Pakistan now, the great trouble is the lack of communications, which have been almost totally disrupted in the last three months. When they are restored, aid will begin to flow.
Mr. Marten: Would my right hon. Friend agree that one of the long-term problems will be the 3 million refugees

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who fled from East Pakistan to India, and their resettlement back in East Pakistan? If the situation in East Pakistan deteriorates rather badly, the situation will become similar to that which has arisen in Ceylon, where North Korea has been operating pretty sharply.
Sir Alec Douglas-Home: If the situation were to deteriorate further in East Pakistan, the consequences would be as my hon. Friend describes. The hope must be that some kind of political stability is restored, in which case I am sure that those who are now in India would wish to return and to resume the work which they were doing.
Mr. Douglas-Mann: Is the Foreign Secretary aware that the view of the majority of people who are very familiar with the situation—I cannot claim to be so, but I have visited the area—is that East Pakistan is embarking on what is likely to be a very long war and that the situation creates grave dangers of war between India and Pakistan? Does the Foreign Secretary accept that this is not a situation analogous to a civil war in one country but it is a matter of aggressive war by West Pakistan against East Pakistan? Does the Foreign Secretary accept that this is a situation in which two countries have voluntarily joined and one half has demonstrated overwhelmingly that it wishes to separate itself? The matter should be treated as an aggressive war between two countries rather than as a civil war in one country.
Sir Alec Douglas-Home: We must not be led into statements as to whether the results of the elections in East Pakistan favoured secession. There are different interpretations. It is not for me to make them. Political settlements must he arrived at by the people of Pakistan. We profoundly hope that this will happen. There is little that we can do to influence that. That is why I have concentrated today on the humanitarian aspects, in which we have a part to play.
Mr. Biggs-Davison: Is my right hon. Friend aware that General Chaudhuri, of the Indian Army, writing in the Hindustan Times, has expressed exactly the opposite view to that of the hon. Member for Kensington, North (Mr. Douglas-Mann)? May I ask my right
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hon. Friend whether it is not the case, in times past, when there have been difficulties and scarcities, that there has been a movement of refugees across the frontier and a movement back when normal conditions have been restored? Is not there ground for hope that this will occur again?
Sir Alec Douglas-Home: There is a hope; but it has not happened yet. The attitude of the Indian Government has been strictly correct in the matter of their relations with their neighbouring country.
Mr. Foley: Would the Foreign Secretary direct his attention to the plight of East Pakistan refugees in India? Has he no means of assessing the dimensions of the problem? Is he informing the House that the sum of the contribution made by Her Majesty's Government to the relief of the distress of East Pakistani refugees in India is£18,000? Is this the total contribution?
Sir Alec Douglas-Home: That is what we were asked for by the organisations concerned, to fly in the supplies which they had waiting but could not transport. So for this purpose, quite appropriately, as the House will agree, we supplied the money and they were, therefore, able to do so. The Indian Government have now asked the United Nations to take over the management of the problem of refugees. We think that is right.
Mr. Dalyell: Would the Foreign Secretary turn to the specific question put to him by my right hon. Friend the Member for Leeds, East (Mr. Healey, namely, the issue of the medical supplies that are held up in Chittagong? While we can understand that there are transport problems elsewhere, it seems inconceivable that, if they wanted to, the Pakistan Government could not move those supplies out of Chittagong to other places.
Sir Alec Douglas-Home: We are making inquiries on this matter to see whether medical supplies can be moved. The hon. Gentleman should not underestimate the dislocation of communications that has occurred. For example, our Deputy High Commissioner was unable to go from Dacca to Chittagong until quite lately, in the last day or two. This is a real problem.
Mrs. Hart: May I ask the Foreign Secretary about the attitude taken by the British representaives on the Pakistan aid consortium? Looking to the future, I ask whether he is instructing our representatives to concentrate, in the light of extreme economic inequalities between East and West Pakistan which have been part of the reason for the present difficulties, upon project aid specifically directed to East Pakistan rather than to West Pakistan?
Sir Alec Douglas-Home: The right hon. Lady will not underestimate the problem of solving the existing problem of development, let alone looking for new ones. This will be a very expensive project. But development projects for the future of East Pakistan are immensely important in the context of the whole country.
Several Hon. Members rose—
Mr. Speaker: Order. I am afraid we must get on.

PROTECTION FROM EVICTION (COUNCIL TENANTS)
3.50 p.m.
Mr. David Stoddart: I beg to move,
That leave be given to bring in a Bill to extend to council tenants similar protection against eviction as is given to tenants of priunfurnished rented accommodation by the Rent Act, 1968.
Hon. Members will be aware that it is possible at present under the Small Tenements Recovery Act, 1838, for a local authority to obtain an eviction from a magistrates' court without offering any reason. The same is true of people in housing associations and trust housing. As the law stands, therefore, it is possible for a local authority to evict tenants for the most spurious of reasons, although it must be added in fairness that only a small minority of authorities would act in this way.
However, there have been cases where local authorities have acted in an unreasonable fashion. The most recent example in my experience is that of a local authority which passed a resolution saying that, if a tenant or any member of his family was convicted of vandalism, the family would be evicted. In this case the local authority was not only proposing to punish the culprit twice for the same offence. It was also seeking to punish all the other innocent members of his family by making them homeless. While it is only fair to add that the council concerned is having second thoughts, the fact is that not only did it pass such a resolution but it would have been able to enforce it in the courts.
In my view, the time is long overdue for council tenants to have rather more protection in law than they have at present. My Bill seeks to provide such protection by specifying the grounds on which a court may make an order for recovery of possession of any dwelling. Briefly, the grounds are as follows: (a) that the rent has not been duly paid; (b) that the tenancy agreement has been broken; (c) that the tenant has created a nuisance in the neighbourhood or has used the premises for illegal or immoral purposes; (d) that there has been unauthorised sub-letting; and (e) that the local authority needs the dwelling to

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comply with its statutory duties under various Acts.
From what I have said, I hope that it will be understood that I realise full well that local authorities must be equipped to carry out their duties under the Housing Acts. I do not feel that the proposals contained in the Bill conflict with that in any way.
The Government may very well welcome a Bill of this sort, bearing in mind their intended legislation—which I hasten to add that I detest—to put the rents of council tenants on the same basis as private tenants.
I commend the Bill and hope that I shall be given leave to bring it in.
Question put and agreed to,
Bill ordered to be brought in by Mr. David Stoddart, Mr. Frank Allaun, Mr. Norman Atkinson, Mr. Michael Cocks, Mr. Neil Kinnock, Mr. Dick Leonard, Mr. William Molloy, Mr. Stanley Orme, and Mr. James Wellbeloved.

PROTECTION FROM EVICTION (COUNCIL TENANTS)
  PROTECTION FROM EVICTION (COUNCIL TENANTS)
  Bill to extend to council tenants similar protection against eviction as is given to tenants of private unfurnished rented accommodation by the Rent Act 1968; presented accordingly, and read the First time; to be read a Second time upon Friday, 21st May and to be printed. [Bill 168.]
ORDERS OF THE DAY

  FINANCE BILL
  (Clauses 6, 7, 8, 10, 22, 30 and 49 and any new Clause relating to Purchase Tax)
  Considered in Committee,
  [Sir ROBERT GRANT FERRIS in the Chair]

  FINANCE BILL
    Clause 6

      CONTINUATION OF POWERS UNDER SECTION 9 OF FINANCE ACT 1961
      Mr. Dick Taverne: I beg to move Amendment No. 1, in page 7, line 26, leave out 'August' and insert 'February'.
      The Chairman: Order. I have a short announcement to make to the Committee. Following upon representations which have been made to me by right hon. and hon. Members on both sides of the Committee, I have decided to vary my provisional selection of Amendments for this first debate. I think that it will be for the convenience of the Committee if, with Amendment No. 1, we discuss Amendment No. 13, in page 7, line 27, at end add—
      ( ) Section 9(2) of the Finance Act 1961 shall be amended by leaving out the words 'by the addition or deduction as may be prescribed, of such percentage, not exceeding ten per cent.' and inserting the words 'by the addition as may be prescribed of such percentage, not exceeding 10 per cent., or the deduction as may be prescribed of such percentage not exceeding fifteen per cent.'.
      Mr. Taverne: This is a debate on the regulator, and in the past this has been the occasion for a major debate on the economy. Today, it is right that we should begin the Committee stage of the Finance Bill on the Floor of the House with another such debate.
      The Amendment is not just a token one. Taken with Amendment No. 13, it is designed to deal with the situation in which we find ourselves. We tabled an

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      Amendment, Amendment No. 3, in page 7, line 27, at end add—
      ( ) In section 9(2) of the Finance Act 1961 for the words 'ten per cent.' there shall be substituted the words 'fifteen per cent.',
      which for technical reasons could not be part of this debate. However, the situation is covered by Amendment No. 13.
      The joint effect of the Amendments is this. We accept that in normal circumstances the regulator should be limited to the power to decrease or increase taxation by 10 per cent. without new legislation. However, in present circumstances, we feel that the power should be amended to enable the Government to decrease indirect taxes by 15 per cent., but only for a six-month period.
      I put forward three propositions in support of the Amendment. First, it has now become clear that the analysis of the situation at the time of the Budget was too optimistic. Information which has become available subsequently shows that the position was worse than it seemed at the time. Secondly, except for the developments of the last week on the foreign exchange market, the situation has worsened since the Budget. Thirdly, the present situation urgently demands a far greater degree of expansion than the Budget measures contain.
      I make it clear at the start that it gives me no pleasure to offer a somewhat gloomy analysis. I do so in no partisan spirit, but only because the facts lend themselves to no other interpretation.
      I ask right hon. and hon. Gentlemen opposite to study the facts carefully and to see how far the Government are in a position to contradict my points. I suggest to them that, if my analysis is right, the remedies that we propose follow logically. Even if hon. Gentlemen opposite are not inclined to follow us into the Lobby, which is understandable, at least they may bring pressure to bear in support of a change of course by the Government.
      Let me first turn to the position as it was on Budget day. It is now clear from figures published by the Government that the Budget judgment was wrong, partly because it was based on a wrong analysis of the situation. The analysis may have been justified by the information then available, but it is now shown that it was too optimistic.
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      I draw the attention of the Committee to the contrast between the figures in the Financial Statement and those in the April issue of Economic Trends, My sources therefore, are the Government's own. Table 1 of the Financial Statement showed that the estimated increase from the second half of 1969 to the second half of 1970 was some 3·3 per cent. for consumer expenditure, 1·8 per cent. for public expenditure on goods and services for public consumption, 2·1 per cent. for private fixed investment,£150 million for stock building, and altogether an increase in the gross domestic product of 1·8 per cent.
      4.0 p.m.
      Let me now turn to the estimated outcome as shown in the April issue of Economic Trends, This shows that for the same period a slightly greater increase in consumer expenditure was balanced by a slightly lower increase for public authorities' consumption, that fixed capital formation was considerably down, from 2·1 per cent. to 0·9 per cent., that stockbuilding was lower, by about£50 million, that imports were lower, and that gross domestic product, according to the expenditure figures, grew at 1·2 per cent. instead of 1·8 per cent., or, if one averaged out all the separate indicators for the growth of g.n.p. they show an average increase of 1·5 per cent., instead of 1·8 per cent. In addition, we have had the figures for consumption in the first quarter of 1971, which show that consumption declined somewhat.
      From those comparisons it emerges incontrovertibly that the economy was more sluggish during the fourth quarter of 1970 than was thought at the time of the Budget. That in itself suggests that corrective measures should have been introduced to take effect some time before the Budget, and certainly that the Budget measures should have been more expansionary. The Budget started from the wrong point.
      I now come to my second proposition, to the developments since the Budget. What has happened since then to investment, prices, unemployment, consumption, and the prospects for exports?
      Let me take the last first, because it is the one area in which there is at least some cheer. As an official spokesman I am, perhaps, under some inhibitions and

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      cannot entirely freely discuss the question of exchange rates, but my feeling has been for some time that, with our present level of unemployment and unused capacity, the need for expansion is such that if our expansion led to a danger, as it might, of a balance of payments crisis then, rather than avoid the expansion, we should not treat the rate as sacrosanct. Indeed, we should take all measures to see that the expansion is export-led.
      As a result of the events of the last week we have had a windfall on the export front because of developments with the mark and the dollar. The floating upwards of the German mark and the Dutch guilder, as well as the additional slight help from the revaluation of the Austrian and Swiss currencies, clearly improve the competitivenes of our exports and their prospects, and the total benefit to the balance of payments was estimated by Mr. Brittan in the Financial Times as being at least£100 million. At the worst that gives us a somewhat greater breathing space before present trends would once again lead to a balance of payments crisis, and it therefore removes to some extent some of the inhibitions which the Government may have felt, on balance of payments grounds, against expansion. There is the somewhat awful spectre that next winter we may have the appalling combination of high unemployment, stagnation, high inflation, and a balance of payments crisis, but that prospect has receded somewhat in relation to a balance of payments crisis.
      Mr. J. Bruce-Gardyne: The hon. Gentleman implied that we should seek what he described as export-led growth, and be prepared to take a more flexible attitude towards the exchange rate with that end of view. Would he concede that a more flexible attitude towards the exchange rate would mean that the exchange rate would go up, and not down?
      Mr. Taverne: Not if it was coupled with a policy of all-out expansion.
      On the domestic front, the situation is about as depressing as I can remember it at any time. I start with the prospects for investment. During the Budget debate I challenged the Chancellor on the forecast contained in the Financial Statement which seemed to predict a fall in manufac-
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      turing investment. The Financial Statement foresaw no rise in investment between the second half of 1970 and the second half of 1971, and a rise of only ½per cent. between the first half of 1971 and the first half of 1972. But, as there was a projected increase in shipbuilding and housebuilding, this seemed to suggest a fall in manufacturing investment. The Chancellor's answer was that the figure in the Financial Statement was a cautious one, and he went on to say:
      "I would certainly hope that in the outcome we shall have a better figure for investment than that. I think that there is a good chance that the impact which the Budget as a whole has made will produce a better figure."—[OFFICIAL REPORT, 5th April, 1971; Vol. 815, c. 164.]
      The Chancellor then seized, perhaps somewhat rashly, on a survey which had appeared on the front page of the Financial Times that morning showing that in the euphoria which followed immediately after the Budget, when many business men were rejoicing at the tax cuts they had been given, there was an upturn in confidence.
      But, unfortunately, every time the Government leap for joy at the sight of a speak of blue in the sky, thunder clouds immediately gather again more ominously than ever, and the last Financial Times monthly survey, published on 3rd May, showed a depressingly downward trend in capital spending intentions, even since the Budget. In the four-month moving total, which is a more significant indicator than any particular survey at any particular time, there was a 7 per cent. drop among those who expected capital investment to increase, and a 5 per cent. increase from those expected capital expenditure to decrease.
      That shows a marked drop in expectations and, while the four-month moving average conceals the exact nature of what is happening, it looks almost certainly as though, after the boost of confidence in early April, the downward revision of intentions during April must have been very substantial. It now looks as though the figures for investment in the Financial Statement, which were depressing enough, must be revised even further downwards.
      I now come to the problem of prices. The Government have expressed the hope that wage settlements would first level off and then gradually decline. It looks as though wage settlements may have

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      levelled off at about the 12 per cent. mark. This is an average figure, and it hides the monstrous disparity between settlements in the public sector and those in the private sector, but the nature of the settlements in the private sector give no grounds whatsoever for expecting a downturn in the future, because several of the higher settlements are being signed for two-year periods, and this is a pattern which may be followed generally. It offers little prospect of a significant diminution in the growth of prices in the next few years. I shall deal later with factors apart from wages which increase prices and which the Government neglect.
      As for the unemployment prospects, one can only say that the figures speak for themselves, and what utterly depressing reading they make!
      If one turns to consumption and takes the tax cuts and the National Insurance benefits together, it must be somewhat doubtful whether the increase in consumption predicted by the Government will, in fact, materialise. The increased child allowances will, perhaps, give the greatest boost to consumption with the high proportion of the tax remitted that will be reflected in consumption. The other direct tax cuts, particularly the cuts in corporation tax and in S.E.T., will affect consumption by much less than half the total amount remitted. It is doubtful whether the total combined effect will increase gross domestic product by more than ½per cent. during the second half of 1971 or by more than 1 per cent. throughout 1972.
      What, then, are the prospects? An objective analysis of the information available, on which I would appreciate the Chancellor's comments when he winds up and from which, I regret to say, hon. Members opposite will find it difficult to escape, points to a downturn in investment, a steady increase in unemployment, a continued rapid increase in prices, and in all probability a somewhat lower increase in consumption than the Budget projects. The only cheer lies in some better prospects for exports.
      I turn now to my third proposition—the need for a rapid expansion, with which these Amendments are concerned. It follows logically from the analysis which I have placed before the Committee.
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      Hon. Members opposite still talk from time to time as if the Budget measures when they finally take effect will reverse the unemployment trend. There are frequent references to Budget measures to reduce unemployment. There was nothing in the Budget actually to reduce unemployment. The Chancellor himself made this clear. During the Budget debate I challenged the Chancellor on the issue of unemployment and I pointed out that a boost to make demand grow at 3 per cent., if it was realised, would merely slow down and not even level out the rise in unemployment. There is an increasing amount of evidence that productivity in manufacturing industry is now rising faster than 3 per cent.
      The Chancellor did not deny my statement. Instead, he returned to the answer which has frequently been given—that in fact he would not deal with unemployment until inflation had first been cured. I quote from the Chancellor's final remarks in the debate on the Budget Resolutions:
      "I cannot make any promise that unemployment will fall until we get a substantial reduction in the level of pay settlements…
      I could have brought about a reduction in the level of unemployment by giving a still larger boost to consumer demand than I have. But everything that I have said supports the view that it would have been irresponsible in the circumstances to do so."—[OFFICIAL REPORT, 5th April, 1971; Vol. 815, c. 166–7.]
      It is clear that the core of the Government's economic strategy is that unemployment must be allowed to rise, or cannot be dealt with until inflation is beaten. It is implicit in this strategy that the way to beat inflation is to allow unemployment to rise. This strategy is based on a fundamental fallacy. It is a costly fallacy which will cause an enormous amount of suffering. The whole thesis which seems to underlie the Government's strategy that there is a relationship between a given level of unemployment and the rise in prices, has been totally exploded. The so-called Phillips' curve, to use the technical jargon, has been discredited.
      At what point is it now argued that unemployment will begin to affect prices? Is it at 1 million unemployed, 1½million unemployed, or 2 million unemployed? No doubt there is a point at which massive unemployment will begin to have an effect, but when? The Americans

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      pursued precisely the same policy that the Government are now pursuing and they then abandoned it and at the time when they abandoned it unemployment had risen to nearly 7 per cent.
      Why is it a fallacy? It is partly because it is clear that a high level of unemployment will not necessarily affect the willingness of individual firms to grant high increases. Part of the unemployment is caused by changes in structure and techniques, but these changes often have to be bought, new bargaining situations arise and there are pressures on both sides, not just on the union side, to increase pay.
      Partly it is a fallacy because it is wrong to suggest that inflation need cause unemployment. A high settlement may cause individual firms to lay off staff, but an increase in national unemployment depends on aggregate demand. The Government have the means to increase this demand, to create expansion and the extra investment, but they have abdicated from this responsibility.
      4.15 p.m.
      Indeed if one looks at the nature of our present inflation, which is cost inflation, it is clear that stagnation increases costs. A fuller use of capacity would decrease costs. A 15 per cent. wage increase in the motor industry can be more easily absorbed when production goes flat out than when it is restrained in a stagnating economy.
      Again, it seems clear that at present inflation is to a large extent a psychological phenomenon. Part of the reason for high wage claims is fear, a perfectly rational fear that workers will be left behind in the general scramble for wages, a fear that the cost of living will outstrip their earnings. Leaving aside the whole question of an incomes policy, to which the Government will in due course be driven for the whole economy and not just the public sector, expansion of production, and in particular a boost to expansion by direct action on prices through the use of the regulator, will increase earnings and lessen fear.
      The Government are totally wrong to place all the blame for inflation on the unions and on wage claims. They totally fail to recognise that stagnation and the existence of unused capacity are in themselves contributory factors to inflation.
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      The Chancellor said in his Budget speech, and the Prime Minister has repeated this at Question Time, that he would not hesitate to use what means were available if the situation worsened beyond his expectations. It has worsened. As I have shown, the economy was more sluggish during the fourth quarter of 1970 than was thought at the time of the Budget. What evidence is available for 1971 shows a continuing downturn which is almost certainly deeper than the Financial Statement envisaged. It shows that the Budget judgment was wrong and should have been more expansionary. It certainly shows that action should be taken now to correct the mistakes of the past.
      The Chancellor could take action either by increasing public spending or by using the regulator. As the situation requires early results, clearly it is the regulator which he should use. The Amendments are designed to enable him to use the regulator to a greater extent than was possible before. In the next six months this power will be needed. I commend the Amendments to the House.
      The Minister of State, Treasury (Mr. Terence Higgins): The debate which has been initiated by the hon. and learned Member for Lincoln (Mr. Taverne) follows a tradition which is now well established of discussing the general economic situation on the Clause of the Finance Bill which renews the regulator. This gives the Chancellor power to alter the rate of purchase tax plus or minus 10 per cent. to cope with variations in economic activity between one annual budget and another. I hope later to say rather more about the Amendments than did the hon. and learned Gentleman.
      I suspect that the Committee will expect me to follow the hon. and learned Gentleman to some extent in the points he has made. Similar regulator debates have taken place each year since 1963, with the exception of 1969, when we found it more convenient to do it in the form of a debate on corporation tax, and last year, when Finance Bill affairs were very curtailed because of the impending election.
      In 1968 and 1969 the debates took place in Standing Committee; but, whether they have taken place in Standing Committee or on the Floor of the

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      House, they have been analytical rather than party political. The hon. and learned Gentleman adopted the same approach this afternoon. I hope to follow that same approach.
      I have been glad to have participated in all the previous debates of this kind and to have had some part in establishing the tradition. I am now hoist slightly on my own petard. Having studied the debates I find also that these are largely occasions when Government back benchers and the Opposition put forward their ideas rather than opportunities for the Government Front Bench to put forward new policies. The reason is clear. These debates are very largely an extension of Budget debates and it would be very unusual indeed if the situation had changed very significantly in the meantime. The point which the hon. and learned Gentleman has made put too great a reliance on the short-term figures. I regard it as premature to make any significant change in my right hon. Friend's Budget judgment.
      As my right hon. Friend made clear on 30th March, we face a uniquely difficult situation of cost-push inflation combined with rising unemployment. It is worth pointing out that this is one of the reasons why hon. Members tend to suggest wrong solutions. Most economic text books would suggest that cost inflation is not a situation which can persist over a significant period in the absence of excess demand. Yet our experience since the latter part of 1969 has disproved this. We have had rampant cost inflation at the same time as we do not appear to have had any excess demand in the economy as a whole. It follows, in our view, that demand management alone cannot provide the solution to the problems we face, although the regulator of course remains a very valuable weapon in our economic armoury, and this year —I go this far with the hon. and learned Gentleman—is of particular importance because the situation is clearly very complex. But it is limited to demand management and its potential use should, I believe, be looked at in the context of our broader economic policies.
      Our objective in the Budget was to take measures which, in the fashionable phrase, will raise the level of employment so that it will grow in line with productive potential. This represents a
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      significantly faster rate of growth in output than in the recent past. One has only to look at the Financial Statement to see that this is so. It is a rate of growth of output of about 3 per cent., which is much bigger than the rate has been recently, and is also significantly greater than it would otherwise have been if we had not done anything about the situation in the Budget.
      There are those inside this House and outside it who have argued that the Budget judgment was wrong and that we should take steps in the Bill—and the hon. and learned Gentleman seemed to concertina the argument on the regulator —or in the regulator to deflate the economy or, alternatively, to raise demand much faster. Subject to points which may be made later in the debate, I think that it is true to say that the disagreement has been over our objective rather than with the measures which we propose as likely to achieve it. I think that the hon. and learned Gentleman raised the same point.
      In this situation, it would be worth while setting out why it does not seem to us that either deflation or much greater reflation would be right at present and why we do not, therefore, feel that the additional powers the hon. and learned Gentleman is suggesting are necessary. It is difficult to find anyone who, in the present unemployment situation, is now arguing for deflation or that we should expand demand less than we propose to do—except, perhaps, those who seem to have misunderstood our monetary policy completely and who, denying that their use of monetary policy would create a situation of higher unemployment, talk as though by magic cost inflation can be cured by monetary means. No one really advocates massive deflation at present.
      I want to take up the point which the hon. and learned Gentleman made with regard to unemployment and his assertion—as assertion it is—that the Government's policy is to try to cure cost inflation by massive unemployment. That is most certainly not the policy of the Government. The Phillips curve, which I have referred to in earlier discussion on the regulator, shows clearly, I agree, that the relationship between unemployment and prices has changed shape and has moved very substantially. So it probably is the case that, if we

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      were to adopt massive deflationary policies or even the deflationary policies which have been used in the past to cure demand inflation, we would find that they were completely inappropriate, for such policies would involve a massive increase in unemployment, which would be quite unacceptable, and would involve a complete slump in investment, which would endanger our policy for future growth. I cannot see that to be an alternative to the Budget judgment.
      On the other hand, there are those who argue that the right answer is a massive programme of expansion. The hon. Member for Ashton-under-Lyne (Mr. Sheldon) has perhaps been the most consistent in advocating this sort of policy, both under the last Government and since we took office. In that context, it is also true that the T.U.C. and many hon. Members have expressed the same view. I do not believe that a programme of massive expansion is the right answer. One cannot cure cost inflation by adding demand inflation to it. One cannot achieve a higher level of employment and economic growth which can be sustained—and I stress, "sustained"—by massive expansion of demand, because no conceivable increase in real output, which is what is important, could cover the kind of wage claims we are still getting, and even a temporary speeding up of a cyclical improvement in productivity would not close the very large gap which still exists between growth of earnings and productivity.
      Mr. Taverne: Could the hon. Gentleman make his position clear? If he allows demand to expand simply in line with the growth of potential capacity, how does he deal with the point that this will still leave the enormous margin of unused capacity which exists at present and which will continue to exist? Is it not a fact that, in a situation where this massive amount of unused capacity exists, one can, without adding demand inflation, use up that unused capacity?
      Mr. Higgins: The position was clearly stated by my right hon. Friend and quoted by the hon. and learned Gentleman himself. I do not believe that, if we were to go in for the kind of expansionist policy advocated, we could do so without endangering the present position,
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      and if we tried to do so we would rapidly get back to the dreary "stop-go" cycle. If we are to find the right solution, it is important, as was implicit in the hon. and learned Gentleman's intervention, that we should not confuse growth in output, which is one side of the equation, with growth of productive potential, which is the other side. If we want a sustainable rate of economic growth, it is the growth of productive potential—which is essential and decisive—that we must raise, otherwise it will only be a short run solution. What we have to achieve is not a temporary solution. If we are to succeed in controlling inflation and achieving a sustainable level of high employment and economic growth, then we need the kind of solution we have suggested and not a short-run rate of expansion which would jeopardise all our long term plans.
      Mr. Robert Sheldon: Is the hon. Gentleman defining productive potential as unemployment which arises from greater use of our available resources?
      Mr. Higgins: I must confess that I do not understand that intervention, but if the hon. Gentleman would care to spell it out in his speech we will pursue the matter then.
      Mr. Sheldon: Hitherto, very largely the level of productive potential has been defined as the amount of unemployment created by a greater utilisation of resources. This is a circulatory argument. The hon. Gentleman says that the extra unemployment is due to extra productivity and this leads him to welcome the unemployment instead of decrying it.
      Mr. Higgins: I do not welcome unemployment. I must confess that I think that the hon. Gentleman is rather confused in his analysis. But I will listen with interest to what he has to say later.
      I want now to take up two other points made by the hon. and learned Gentleman the Member for Lincoln. First, I think that he underestimates the danger which the kind of policy he is advocating would have in balance of payments terms. Secondly, and very significantly, he totally disregards the effect that such a policy of even more rapid inflation is likely to have on those living on fixed incomes.

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      That was a remarkable omission from his speech. The attitude is one of expansion at any cost and not to bother if we have demand inflation on top of cost inflation.
      Mr. Taverne: I must correct that misrepresentation. I argued that a more rapid expansion would slow down the rate of inflation and not increase it, because it would make a better use of unused capacity and therefore bring down unit costs.
      4.30 p.m.
      Mr. Higgins: I appreciate that the hon. and learned Gentleman mentioned that, but I do not believe, for the reasons I have given, that that would be the outcome. There is considerable confusion here in the hon. and learned Gentleman's mind over the relationship between an individual firm's pricing policies and unused capacity and marginal and average costs. I do not wish to take the question up in detail now, because it would take a while to spell it out. But I do not believe that the policy the hon. and learned Gentleman is advocating would do other than endanger both the balance of payments and those on fixed incomes, and it would endanger our long-run plans.
      There are those who argue that all would be well if we combined a policy of expansion with a prices and incomes policy. In this context it is important to note that the expression "incomes policy" has become virtually meaningless. It must be defined if we are to have any meaningful discussion about it. Therefore, I do not entirely follow what the hon. and learned Gentleman advocated. We have made it clear that we reject the concept of a statutory prices and incomes policy. The Labour Government demonstrated very clearly that the control of wages and prices by legislation would not work. We were subjected to a declaration of intent, seven White Papers, three Acts of Parliament, numerous statutory orders and over 150 Reports of the Prices and Incomes Board, but we ended up with the worst inflation ever. The hon. Member for Liverpool, Walton (Mr. Heffer) will agree that the policy was grossly unfair, and I do not believe that it is one which we should adopt.
      Nevertheless, I do not believe that demand management in itself is enough. It is for that reason that the Government are pursuing the policy of a progressive
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      and substantial reduction in the level of pay settlements to achieve steadier prices. If Labour hon. Members want to call that a prices and incomes policy, they can do so, though I prefer to look at it as part of a much broader anti-inflation policy.
      It is important to relate the position we have taken on de-escalation of wage claims to the use of the regulator. It is clear that the present cost inflation stems from the devaluation in November, 1967, which increased import prices, and the subsequent increase in indirect taxation and so on in the Budget in April, 1968, and the further political events, of which we are all aware, leading up to the General Election. But we have no doubt that the cause of the present inflation is inflationary wage settlements. We have only to look at the figures of increasing costs and prices to see very clearly that this is so. We believe that we have had some success in our de-escalation policy, but clearly we have further to go. It is only if we pursue that policy that we can hope to overcome the paradoxical situation with which we are confronted. Therefore, we would hope to have had the support of Labour hon. Members in achieving that aim. It is remarkable that they have not supported us in this policy, even though I believe that it is the only one that is likely to achieve success. We must combine the policy of de-escalation with a responsible demand management policy.
      Mr. John Pardoe: The hon. Gentleman has said several times in the last few minutes that the Government are pursuing a policy of de-escalation of wage increases, and he has implied that it is succeeding. Will he spell out clearly why he thinks that it has been successful? What evidence has he that it has achieved any particle of success? How does he intend to increase its success in the future?
      Mr. Higgins: The answer is fairly apparent. The hon. Gentleman has only to follow the trend of a succession of Settlements, particularly in the public sector. The hon. and learned Member for Lincoln referred to the massive disparities between the two sectors. There have been cases which have hit the headlines where the increase in the private sector has been very large. I am not sure whether the hon. and learned Gentleman

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      thought that that was a good or bad thing, but I do not believe that that is generally the case. We have seen a considerable decrease, if we take the generality of cases rather than those which hit the headlines. But I do not dispute that we have further to go, and it is very important that we should persist with the policy we have adopted so far. I believe that it will be successful.
      Mr. Norman Pentland: The hon. Gentleman repeats that the level of wage increases is coming down. The Prime Minister, the Chancellor and other members of the Government have said in recent weeks that because of high wage demands causing wage-cost problems, unemployment has increased to its highest level for over 30 years. Why is unemployment not coming down now, instead of increasing?
      Mr. Higgins: There are a very large number of reasons which my right hon. Friend the Chancellor has given. The first is that naturally if we have inflationary wage settlements we become less competitive in export markets. That means that we do not sell as much, and employment in exporting industries therefore tends to decline. Second, conversely, to the extent that there are inflationary increases in industries competing with imports, those industries become less competitive and again employment in them tends to decline. Third, as I think the hon. and learned Member for Lincoln actually said, if we have big increases in wage costs relative to other costs, firms tend to economise. This tends to reduce employment opportunities and squeeze companies' cash flow, and in the longer term to reduce the level of investment, and thereby reduce long-run employment opportunities as well. Therefore, I see no difficulty in answering the hon. Gentleman's question. It is a shame that Labour hon. Members are not supporting the view I have just put forward, because if we really want to solve the problems we are facing it is in everyone's interest—certainly if we want a higher level of sustainable economic growth and a higher level of employment —to get the level of inflationary settlements down so that real wages can be raised for the benefit of the community as a whole.
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      The Amendments should be rejected, though the reason for rejecting the first is very different from the reason for rejecting the second. The first suggests that instead of being renewed for the normal length of time the regulator should be renewed only until February. The second is concerned with altering the rate by which the regulator can be operated. We should reject the first Amendment because it would severely curtail the powers the Chancellor has had ever since 1961 to alter the purchase tax rates and carry them through if necessary thereafter to the following Budget. If we accepted the Amendment, it would not only mean that we could not take action after February, but, as I understand the position, it would also mean that if we took action between now and then it would be reversed between February and the Budget. That would be a very strange situation. It might enable us to make the next Budget look more attractive on the surface, but it would be a very odd situation. Therefore, it is right that the House should follow the practice it has followed since 1961, and give the Chancellor the powers which successive Chancellors have had as to the timing of the regulator.
      The second Amendment leaves the power to increase the regulator at 10 per cent. but increases the amount by which it may be reduced from 10 per cent. to 15 per cent. The precise reasons for this were perhaps implicit rather than explicit in which the hon. and learned Gentleman said. There is already probably some bias in the regulator in the direction sought by the hon. Member for Ashton-under-Lyne (Mr. Sheldon), who has moved similar Amendments on a previous occasion. The bias is in that direction anyway because it is estimated that a 10 per cent. surcharge would yield about£325 million additional revenue in a full year, whereas a 10 per cent. rebate would reduce the revenue by about£375 million in a full year, because of the expected differences in the elasticity of demand. Therefore, there is already some asymetrical effect in the operation of the regulator.
      The power given to the Government by the Clause is already very substantial. As I have said, it is between£325 million and£375 million. That being so, this is a reasonable request for the Chancellor to make. We think that it

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      would be excessive to increase that power further. It is essentially a question of not limiting the Government's freedom too much and on the other hand making the Government fully responsible to Parliament. It is perhaps paradoxical that I should suggest that if the Amendment is pressed to a Division we should reject it. But I believe that in these circumstances the powers for which we are asking in the Clause are adequate. If by any chance they should prove not to be so, I believe that the Committee will agree that it would be right and proper that we should make whatever proposals are necessary for more dramatic changes. But our present view is that the regulator powers for which we are asking in the Clause are adequate. They have been granted to successive Chancellors. Therefore, I hope that the Committee will feel able to renew the powers and will reject both Amendments—the Amendment on timing because it would curtail the powers too far, and the Amendment on the rate because it would extend them too far in the other direction.
      Mr. John Nott: On a point of order, Sir Robert. I felt rather strongly on the lack of opportunity for backbenchers to express their views about part of the Bill being divided and remaining on the Floor of the House and part going to Committee upstairs. That is history now, and I do not wish to raise the matter again, but what will be the position if we have four Front Bench speeches on each Amendment? Is it normal for there to be four Front Bench speeches on Amendments taken on the Floor? There will not be much opportunity for back benchers to have a say on the Bill if we proceed as we are proceeding this afternoon.
      The Chancellor of the Exchequer (Mr. Anthony Barber): May I help my hon. Friend and the Committee? In this debate it seemed to me right that I should be available to deal with any points which were not necessarily covered by what has just been said by my hon. Friend the Minister of State. It was not my intention to depart from the normal practice on these occasions, which is for one Minister to deal with a matter comprehensively and for another to be available if necessary, or in some cases for the same Minister to speak again and deal with
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      any points that have arisen. I take the point, and I know the views of the hon. and learned Member for Lincoln (Mr. Taverne) on time. A great deal of time can be taken up by Front Bench speakers, and sometimes it is sheer duplication.
      4.45 p.m.
      The Chairman: None of these is a point of order for me, but I can assure the Committee, following what has been said by the Chancellor of the Exchequer, that there will be an abundance of opportunity for everybody to make their speeches as we go along.
      Mr. Bruce-Gardyne: Further to that point of order, Sir Robert. Could you also give us guidance as to your intentions? Is it your intention that, having debated the Amendments, we should then have a further debate on the Question, That the Clause stand part of the Bill?
      The Chairman: That is a matter about which the Chair is always reluctant to commit itself in the early stages of a debate. I reserve judgment on that point until the time comes. The hon. Gentleman, with his experience, will know what is the usual procedure adopted by the Chair.
      Mr. Sheldon: The position of the regulator debate is now firmly established and it would not be irrelevant to point out how recent a tradition this is. I remember in the debates on the 1965 Finance Bill having difficulty with the Chair, as reported throughout a column and a half of HANSARD, when all I was trying to do was to point to alternatives to the regulator, so narrowly was the matter then interpreted. We have seen that this has subsequently been expanded to a whole debate on the economic matters which are before us. I do not quarrel with that situation, but welcome it.
      I also welcome the fact that we have another new tradition, namely, that of a wide-ranging debate on Third Reading, a tradition, which I hope likewise will become firmly established. Certainly the economic matters which have been before us over past decades have not diminished and the opportunities for discussing them need to be extended. That these traditions have been created is a tribute to the way in which we run our affairs.
      My Amendment deals with the problem of the regulator and how it can be used.

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      In fact, the regulator downwards has been surprisingly rarely used. It has always been increased to take into account the worsening economic situation as it develops in the months following the Budget and my Amendment seeks at least to draw attention to the way in which it ought to be used, particularly at present.
      My hon. Friend the Member for Heywood and Royton (Mr. Barnett) and I have put down Amendments of this kind over past years. The point is that we want to make it easier for the Chancellor of the Exchequer to inject some money into the economy when he thinks fit. The pity is that Chancellors have rarely thought of injecting such money, but instead have decided to pursue rather more restrictionist policies than I would have wished to see.
      We now have for the first time a real and widespread acceptance of the need for a rather greater expansion of demand than has been the case in previous years. As a result I hope that the Chancellor, even though the power to reduce purchase tax and Customs and Excise duties by 15 per cent. might not be accepted by the Committee, will use the powers he has more than in the past.
      The reason is that for the first time since the war the present Government are making use of the one economic weapon which Governments have forborne to use over the past 30 years. The great thing that has happened in the past year in economic terms is the decision by the Government to make use of one economic regulator which has been spurned by all post-war Governments: namely, the regulation of the economy through the increase in unemployment. For various reasons, largely historical and also because some Conservative Ministers remembered too well the problems which were associated with tying the Conservative Party to the spectre of unemployment, this has been a weapon which has not been used by Governments up until this year. What we have now seen is the full-blooded, professional use of unemployment as a new economic regulator which is a matter of massive economic and social importance. Its social importance is obvious to all.
      The way in which this new regulator has come to be used must be seen in
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      its social implications. I believe that there are few pure economic laws as such, but there are a great many more social laws upon which many of these economic laws depend. One of the strongest of the social laws is the law of fear. What we are trying to do is to base an economic assessment of the situation on an economic law which rests on the fear of people for their jobs. The whole economic argument for unemployment is that there can be a de-escalation of wages. This is possible if as a result of fear people are prepared to settle for a wage claim less than that which they require because they are frightened of their jobs; because they know full well that if as a result of an excessive wage claim they were to lose their job, another job would be much harder to find.
      In my advice bureau in my constituency this weekend I have seen, as no doubt have many other hon. Members, many people who have come to tell me about fear for their jobs. They have not been made redundant, but they are frightened of redundancy because they know that it is in their area. My area is not one with a particular problem of this kind. It is near to the steel closures, but we are not affected as greatly as were many other areas. Certainly one-fifth of the people who come to see me in my surgery feared for their employment. I have never experienced this before, and it made me realise what my predecessors in the constituency had to face when they had difficult employment problems during the 1930s.
      We are seeing this prime economic weapon used for the first time in a sophisticated way. In the past, there was the pre-Keynesian idea that extra wage demands led to inflation, but I thought that that had been pretty well demolished. Therefore, I am surprised at the Minister of State using an argument which would not have been very respectable in the context of the 1930s, and is far less respectable today. The hon. Gentleman said that wage demands led to unemployment. He well knows the opportunities given by the use of demand management, but many other factors are concerned and it is an over-simplification to say, as might have been said in the 1920s or 1930s, or much more likely in the 19th century, that our problems

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      are caused because workers are asking for too much money.
      Any economic theory which is based on this assessment, which is so hopelessly out of date, is doomed to failure. Those who try to blame the workers for being bloody-minded because they do not obey economic theories postulated by right hon. Gentlemen opposite fail to appreciate what is going on. These so-called "bloody-minded workers" are rather different from the workers in the 1930s and before.
      These are people who will not acquiesce in the same way as did some of their predecessors. They will want tighter and tighter trade unions and will insist on getting whatever is available. One prominent trade unionist said that if there is to be a free-for-all, his union wanted to be part of "the all". Those in the Tory Party who worked hard in the 1950s, and all credit to them, to break down rigid attitudes will see their efforts bitterly disappointed because of the steps taken by the present Administration in an attempt to revert to what for so long have been abandoned policies.
      [Mr. GEORGE WALLACE in the Chair]
      Captain Walter Elliot: I am following the hon. Gentleman's argument with interest. If he holds this view, why did his right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) when Chancellor of the Exchequer say that the most the country could afford was a maximum of 4 per cent. increase in wages—between ½and 4 per cent.?
      Mr. Sheldon: We were then facing balance of payments difficulties and a reluctance, which I did not share, to make adjustments to the exchange rate. In fairness to his present Administration, one prominent Minister has made this point and it is the only respectable point that can be made about wage demands leading to inflation. That Minister is the Secretary of State for Employment who, in the winding up speech on the unemployment debate recently, said that inflation would cause balance of payments difficulties and if one accepts that the exchange rate is fixed then that, in turn, will cause unemployment. But it depends on rigid exchange rates which he did not
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      spell out, but which the House will accept as an essential part of his argument. It is a respectable argument if one accepts the conditions which the right hon. Gentleman laid down. It is interesting to note that not once in that speech did he refer to what I would call the intellectually dishonest argument of wage demands being the natural cause of inflation.
      We have had what has been called the numbers game. In the past few weeks various hon. Members, including myself, have tried to assess at what moment the Government will intervene to reduce unemployment. What are the numbers concerned? Many of us have had suspicions that the figure might be allowed to reach the 1 million mark. It would be the first time that that figure has been reached since the early days of the war. However, we have asked this question to no avail since we have had no answer as to the number. The Government must know, and at some stage their nerve will crack. The interesting thing is to know when it will crack and what they will do about it.
      Whatever right hon. Gentlemen opposite, and indeed the Prime Minister, may say about unemployment being nothing to do with the Government and that they will merely sit back and watch the trade unions fight it out with the employers, while the Government stand idly by, nobody really believes that to be the case and certainly the electorate will not believe it. When it comes to the next election it will he no good pretending that unemployment is nothing to do with the Government. The electorate will know that it is to do with the Government, and will vote accordingly.
      What will the Government do? If they are to be held responsible, they must acquire the power. This is one of the cardinal lessons that was learned in the election of 1959, namely, that if it is claimed that the country has never had it so good and that that is the result of Government action, then when the country has it bad, the country knows whom to blame. The country will not praise the Government one moment and forget about them the next. If they are held to be worthy of praise, they will also be held to be worthy of blame. This is a political fact which we have all absorbed thoroughly.

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      It is interesting to see what the Economist said about wage demands on 24th April:
      "It has thus become impossible to say with honesty that the Government's anti-inflation policy is succeeding. When Ministers go on pretending that it is succeeding, they are trying to fool the public—and may be succeeding in fooling themselves. Sooner or later, an incomes policy is going to have to be brought into being. Ministers prefer not to believe that yet."
      5.0 p.m.
      An interesting point was in a comment from the Minister of State who said that there was some doubt as to what we mean by an incomes policy. I do not know whether that was the first cuckoo of doubt, the harbinger of the creation of this grey area, and perhaps it is out of this that a policy will emerge. It is not what right hon. Gentlemen opposite, speaking on behalf of the Government, were saying before. This change in attitude that will come from the Front Bench opposite will be studied word by word by many right hon. Gentlemen on this side of the Committee. The change will come. The interesting questions are, when and in what form?
      What are the Government doing about the levels of growth meanwhile? The intervention I made in the speech of the Minister of State was not perhaps a suitable method of putting an argument across, and I should like to expand on that now. At present we know that the policy of the Government is that the economy should grow at the rate of its productive potential. What does that mean? It means that if we assume certain productivity increases in industry of such and such a per cent., we can say that that is the underlying growth of the economy and we will match demand in accordance with the underlying real growth. One is a genuine growth, the improvement in the weighing of our productive processes, and the other is the way in which Government manages the economy to go roughly hand in hand.
      How do they define this productive potential? It is done by saying, "If there were no extra goods produced what would be the increase in unemployment?" Presumably people would not want labour; they would then fire their people and the increase in unemployment would be a measure of the underlying in-
      240
      crease in productivity. That is a measure, and, to be academic, it is very good. It sounds perfectly logical, and there is some case for it. The difficulty is that although it is much more easily calculated than any other method, it takes a static situation into account—it says that there will be no effort by Government to improve productivity, the Government will not be involved in increasing production.
      It is only when we consider the alternatives that we see how inadequate such a policy is. We can turn from the vicious cycle on which the Government are engaged to the virtuous one of increasing demand, bringing pressure of demand upon our factories, bringing pressure of demand to lead to an increase in inventiveness, a reduction in unit costs and the increase in sales that comes from this. This is the path being followed by most of the expanding economies of the world today but it is the one that the Government reject. Instead, they prefer to sit back with this vicious cycle of unemployment leading to a lack of productive increase as measured by the productive potential. This ought to be changed. One of the things that many of us hoped for when Iain Macleod came on the scene was that there would be a change because he accepted some of these arguments of growth. One great disappointment that what we had was a reversion to some of the static policies of the past.
      We know that the situation has changed fundamentally in the last few days by the mark revaluation and the revaluation of other currencies. This has been estimated as putting somewhere between£100 million and£140 million on our balance of payments. Taking the respectable argument used by the Secretary of State for Employment, that means that we can expand by a number of times the balance of payments surplus that will arise directly out of these currency revaluations. That means that we can expand not only by£130 million or£140 million but several times that. That is the new factor. If we take Sam Brittan's argument that the increase in retail prices may be only 0·1 per cent. or 0·2 per cent., that is not a figure that should inhibit us with our inflationary rates of retail price increases of 8 per cent. to 9 per cent.

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      There is the strongest possible case for using the regulator. If we do not, we must not be surprised if we see bankruptcies rising even higher. One of the interesting figures was that in the last quarter of 1970 insolvencies were at their highest level for ten years. If there are certain economic disadvantages with which we are associated, there is one thing with which the Tory Party has always been associated, and that is insolvency. With Rolls-Royce and these other matters no one will stick his neck out and say when the end is in sight.
      My hon. and learned Friend the Member for Lincoln (Mr. Taverne), mentioned capital investments. One item of great significance, and even more depressing than other figures, is the figure given by the Machine Tools Trade Association showing that the level of new orders in the United Kingdom for machine tools in the last quarter of 1970 was 42 per cent. less than it was in the first quarter of 1969. To me, machine tools represent the very heart of industrial progress. This the best indicator of the kind of industrial Britain that I hope to see. Instead of progress, there is this massive decline in the figures.
      No one opposite can look forward with any confidence after the kind of Budget that we have had and the kind of Finance Bill that has succeeded that Budget, coupled with the kind of policy still being pursued by the Government. The only thing we can say to the Government is: "You have the regulator, we are giving you greater powers to make use of it in a more expansionary way, and any restrictionist attitude cannot be blamed upon this side. For God's sake use the measures we have given you."
      Mr. Nott: Before dealing with the main burden of my speech may I assure the Chancellor that, in spite of my earlier point of order, I am delighted that he and the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) will be winding up the debate. It has been particularly difficult to speak on economic debates in this Parliament. The Budget debate was heavily over-subscribed and I could not get in on the Second Reading of the Finance Bill. In addition we have not had an opportunity as back benchers to discuss the division of the Finance Bill. Altogether it has been rather a frustrating time.
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      Since we have been passing through a rather stirring economic period, I hope my right hon. Friend will understand the points of order that I have been raising over the last week or so, particularly as my speech will be of a slightly candid nature and I know there is nothing worse than a candid friend.
      The debate on the regulator, while it is a rather and topic, has always given the Committee the opportunity of a fairly wide-ranging debate on the health of the nation. By pure coincidence and somewhat ironically, it takes place today while our nation's economic destiny is being discussed—one might almost say auctioned—in the corridors of Brussels. At the heart of this debate must lie the outcome of the next 10 days of British history which in my view will be decided not on economic, but strictly on political grounds, and rightly so. Nevertheless, the consequences of a positive or negative outcome or even worse, no outcome of any sort at all is likely to have such far-reaching economic consequences for the nation and the future of demand management that I cannot leave them entirely out of the debate.
      As I want to say some critical things about the Common Market—I shall relate this wholly to the regulator—I should make it clear that I always used to be a supporter of our entry on political, not economic grounds—grounds admirably expounded by the right hon. Member for Stechford in The Times yesterday If, however, the economic obligations are so great in the transitional period as seriously to restrict our growth in the intermediate term and the currency rules so rigid as to prevent us operating to secure our national survival from accelerating world inflation, I shall have to look very carefully indeed at the terms since they could involve serious political consequences for this country during the next few years.
      Since the war British economic policy has set itself four prime objectives, all of which taken together are believed to increase the real wealth of the British nation. Those objectives I could list as a full employment target, a balance of payments target, an incomes policy or an incomes growth target, and an economic growth target.

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      I shall not, although I am tempted to do so, embark on the question of whether more rapid economic growth will enhance or detract from the quality of life. That is a subject on which the right hon. Member for Stechford talks fairly frequently. Suffice it to say that I find it interesting, when referring to economic growth, that more and more Americans, inhabitants of the richest country in the Western world, should want to come to live in this country which, according to certain statistics, is rapidly becoming the poorest. I also find it interesting that the British people, who apparently are aware that real wealth is increasing extremely faster than here in the Common Market countries apparently wish to stay outside. I should be foolish to seek the answer to this question, because it would require a judgment whether the British people were not rather more sophisticated than their politicians, and that might lead me into all kinds of trouble with the Committee of Privileges, my right hon. Friends, and others.
      Like Mr. Joe Rogaly of the Financial Times I sometimes wonder whether the economists are not a little misguided. Is the level of our growth, tuned here and there by the regulator, not increasingly becoming an exaggerated issue? Should we not be more interested, as was said the other day, in how many people are healthy, sane and active rather than how many hospitals we are building? Should we not be rather more interested in how many people are properly, not improperly, educated than in how many more schools we are constructing, and whether those who possess a home find it comfortable and nice to live in rather than whether we are building more homes?
      I cannot deal in this debate with economic growth and the growth target, but I have some scepticism on how we measure the real wealth of the nation. I recognise that steady economic growth is desirable for all the material benefits which it brings, but whether any so-called dynamic effects, assuming that we will achieve them if we enter the E.E.C., will materially improve the quality of life in Great Britain seems to me an open question and certainly it is not the issue which
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      should decide our entry into the Common Market.
      That was certainly in order, but perhaps not very closely related to the regulator. I come now perhaps more closely to the economics of the matter—namely, incomes policy, balance of payments and full employment, which are all very much related to the level of demand.
      I believe that the period of Labour Government, the so-called Socialist experiment of 1965 to 1969, was a total, abject failure because it relied, in order to reconcile the objectives which I have outlined, on internal demand management through fiscal methods, coupled with an incomes policy, which failed to work, and a fixed exchange rate which, by force of circumstances, the Socialist Government abandoned.
      Had we had a truly Socialist policy of demand management by fiscal means coupled with rigid import licences, or some variant of the same, and a fixed rate of exchange, all operating in a truly Socialist environment where there was a consensus on what constituted a fair system of pay differentials on a national scale, then the Socialist policy might have worked. As it is, I think that it showed up the total fallacy of an incomes policy, because even a Socialist Administration, financed by the trades unions and heavily represented in the House of Commons, was palpably unable to create a social consensus on what constituted a fair system of wage differentials on a national scale.
      5.15 p.m.
      I have noted the recent study by the Department of Employment. If one discounts its partiality and what I believe to be many erroneous facts, it is still admitted that the effects of an incomes policy can only be temporary and nothing more.
      If anyone wishes to read some really good arguments against an incomes policy he should pick up Professor Clegg's recent book and start at the end and work backwards. The last chapter is entitled, "Will the unions co-operate?" Professor Clegg lists a whole series of reasons why they will not. But then, by a great act of faith—he has great faith in incomes policy—he gives the answer: yes, they will. I thought that

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      the arguments led me to precisely the opposite conclusion.
      Looking back over the past 10 years, it is true that all Chancellors have given top priority to stimulating exports and private business investment. But since, in conditions of exceptionally buoyant world trade, our share of world exports, except for the odd hiccup or two immediately following devaluation, has consistently fallen, it is evident that every Chancellor has failed.
      Efforts have been made by every Government to restrain consumption and Government expenditure in order to release resources for private investment. But, despite all the efforts which have been made by Chancellors of every party, it is ironic that in every downturn of the trade cycle private investment has taken the biggest knock. At no time has it been more evident than now.
      I have complete confidence in the determination of the new Administration to tackle Great Britain's problems, and I think that they have started well. But nothing can remove the evidence—the hon. and learned Member for Lincoln (Mr. Taverne) listed many of the points—of very unsatisfactory export figures, buoyed up by the terms of trade, rising imports, static fixed investment, growing consumer spending and what looks to me like rising Government expenditure as well. I should be a liar, or anyhow a sycophant, if I were to say that I thought that the figures showed anything else.
      I should, in passing, mention Government expenditure. The Government were to be congratulated in the mini-Budget for financing many of their tax reductions by increasing charges. This was a welcome change which has increased the citizen's freedom of choice. I applaud the whole exercise. It was extremely well done. But if Government expenditure were to be defined in a meaningful way instead of by the so-called Treasury definition—namely, as that proportion of the national output which is devoted to collective rather than to private purchases —I believe that it must now be rising very fast. Indeed, in the last three months it has looked to me to be getting out of control in relation to the recently published White Paper.
      I must repeat that the items of Government expenditure which matter are
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      not transfer payments like family allowances, pensions and school milk and meals, which, however financed, are part of private purchases, but items like Rolls-Royce and Concorde and tribute to the Common Market's peasants. These are items which come out of the real resources of the British nation.
      Our predicament is clear. More than in any other European country, the level and growth of effective demand in Great Britain is decided by the share which exports take up out of our total productive capacity and the amount which imports represent of our total consumption. It seems clear that, in a capitalist economy, private investment—this is the problem which everyone mentions—is demand-induced, and it will remain so.
      The Secretary of State for Trade and Industry can pour money endlessly down the throats of private industry in tax allowances, grants and subsidies, but, in the last resort, private investment in industry is demand-induced, and allowances and grants and even interest rates are a marginal matter. They can be important, but they are not the critical determinant in private investment.
      Mr. Tam Dalyell: Is one right in understanding the hon. Gentleman to say that he would have left Rolls-Royce to stew in its own juice?
      Mr. Nott: I do not want to get drawn into a debate of the RB.211—
      Mr. Dalyell: That is exactly what the hon. Gentleman said.
      Mr. Nott: It is not what I said at all, but it is a different subject, which I am not debating now.
      The difficulty is—this is my critical point on the regulator and where I totally disagree with the Labour Amendments—that any release of consumer demand at present will create an immediate demand for imports, long before that demand works its way through, by higher investment, into greater capacity for our exports.
      Mr. Dick Douglas: The hon. Member is presenting, to me at least, a peculiar argument. He has argued that investment is demand induced. Now he is saying that, if we did something about the regulator, we should have a surge of imports. Is

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      he now saying that the demand induced in investment in the domestic economy should be going to exports, the potential for international markets, and that private industry in this country is deficient in that respect?
      Mr. Nott: That is what I am going to say, but I have not got there yet.
      Any release of consumer demand through the use of the regulator—the Labour Party are talking about moving it not upwards but downwards, because they are expansionists—will release an immediate demand in imports long before that demand creates higher investment in British industry to create additional capacity for exports. Here I confess my own failure. I arrived at the truth rather late and at the same wrong time as Professor Schiller. Until six months ago, I did not believe in floating rates of exchange. I came to advocate them as the only remedy to stop the appalling rate of domestic inflation in this country, which we will increasingly suffer from the dollar deficit.
      In my last speech on the economy, on 18th February, I concluded with a warnning which has come true in a way which I never anticipated—that, with the dollar deficit as it is, and the inflationary effects which would come upon our economy, we would run into serious difficulties. Now, as a result of the last weekend, the position is even worse for us, because the pressure now in terms of the dollar deficit is far more upon sterling than it was before the revaluation of the European currencies.
      I remember the smile on the face of the tiger—if I may refer to the Chancellor as a tiger—when I mentioned my conversation to him. It was hard to discern whether it was inspired by pity for the fact that a lamb had fallen prey to the ravishing intellect of my right hon. Friend the member for Wolverhampton, South West (Mr. Powell) or whether he really felt, paternalistically of course, that I did not know or realise how he was hemmed in by the negotiations for the Common Market.
      Of course I appreciate that no member of the Government or even of the Labour Party Front Bench can properly discuss exchange rate policy while the Common
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      Market negotiations are going on, but it is the prerogative of the backbenchers to discuss things which need to be discussed and leave it to the Front Benches to say, as the Chancellor does, that he will go "as far and as fast" on Werner as everybody else and give important assurances about the immutability of our parity in Copenhagen. I understand some of the facts of political life and I know that he cannot answer any of the points which I am making, but since he will not be able to resist the economic facts of life for ever on exchange rate policy, I must make these points just the same.
      If the regulator is used at present to lower taxes, it will lead to a rapid deterioration in the balance of payments, because the growth of imports will always tend to lead to growth of exports, and exports will follow the growth of productive capacity rather than lead it. This is our problem.
      I am convinced that Bretton Woods is wholly out of date. It may have made some sense and it has served us well for many years, but, with the growth of a truly international currency market—the Eurodollar market—it is palpably incapable of preventing huge currency flows, and the speculators—or, to be more accurate, the large multi-national companies which are conducting their business and increasing the real wealth of the Western world perfectly legitimately—can now bring national currencies down, and they will continue doing so. May we be preserved from Lord Balogh and all his ways, because he suggests that the only way to control this is by controls on the Eurodollar market, which would be disastrous.
      There are only two ways out of this predicament. The first is the "break or bust" school, of which the original mentor was my right hon. Friend the Member for Barnet (Mr. Maudling) who now has many followers on the Labour Party Front Bench; the hon. Member for Heywood and Royton (Mr. Barnett), the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) and the hon. and learned Member for Lincoln (Mr. Taverne) all now follow that philosophy although they also complain about the balance of payments deficit which they inherited in 1964. I should have thought that, with a fixed exchange rate and even a balance of payments surplus of£600

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      million—our balance of payments surplus is not that strong—we would fail again, because the time lag before our capacity for greater exports was built up would be too great.
      So the only second way out of the predicament, I believe, is to float the pound. The weekend's devaluation of the pound and the dollar against the European currencies will flood us with as many dollars as flooded Frankfurt. It may not happen immediately, but we will have the same problem. It will have very damaging results on internal price levels in this country.
      Cost inflation is a serious problem. However, even if the Chancellor's policy of de-escalation—I am not sure what its correct name is in the current jargon, something "minus one" is the term I believe—is wholly successful—and it is to be hoped that he gets wage settlements down to the same level as the growth in production—the problem of internal domestic inflation will still not be solved while the dollar deficit continues at its present level.
      5.30 p.m.
      If the Chancellor and his Treasury colleagues can produce the outstanding tax reforms in this Budget and, more important, if they have the dedication and perseverance to get them through the Inland Revenue and Civil Service—which hon. Gentlemen opposite never had, although they shared many of the objectives which my right hon. Friend achieved in his Budget—then they will be equally capable of radical thinking in demand management.
      A reduction of taxes by use of the regulator will not overcome or solve the problem. There is no radicalism in the regulator. It is an old-fashioned and out-of-date weapon which I hope will never be used again to release personal consumption. We do not want consumption-led growth in Britain, but export-led growth coupled with an ending of inflation.
      I am convinced that our Common Market priorities are paramount now. I understand the problems completely, but these negotiations must be out of the way, one way or the other, by the end of June. [Interruption,] I have not said whether I am for or against the Common Market in these remarks; Werner is an economic nightmare
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      although the right hon. Member for Stechford thinks it is a happy dream.
      The right hon. Member for Stechford has a great European ideal, but I must not be led into a discussion of the Common Market, except to say that the right hon. Gentleman foresees a Europe rather as it was in the Middle Ages, with Norwich, Dijon, Lyons and Winchester as great, prosperous cities paying their tribute not to the Mother Church in Rome but to the bureaucracy in Brussels. It is indeed a high ideal. I do not share it, but I understand it.
      I believe in a Common Market of nation States. As we have had a traumatic weekend, with the common agricultural policy having, I hope, been knocked on the head once and for all, and the idea of a monetary union having been put back for ever, things look happier.
      I appreciate that the Chancellor cannot answer many of my questions. I hope, nevertheless, that he has noted my remarks and that I have not been too critical of the Government.
      Mr. Eric S. Heffer: When we discuss industrial relations I frequently see hon. Gentlemen opposite wander into the Chamber, sit down for a few moments, look around in a perplexed way and then wander out again. I feel like doing the same in this debate, for this is a complicated matter and there has been some learned and witty discourse.
      Previous speakers have given their views on what should be done to solve the financial problems that face Britain and Europe. I will not follow that path. I have always believed that one should concentrate on those things about which one knows most. However, there are certain matters on which the Government should be challenged.
      The Minister of State repeated the statement that is frequently made in the House from the Treasury Bench, particularly during Questions to the Prime Minister and the Chancellor of the Exchequer that wage inflation is leading to high levels of unemployment and that, at all costs, we must de-escalate wages. The de-escalating of wages has become the latest demand. I cannot call it the latest panacea, because it is not a new idea. The mill owners were probably the first in the field at the time of the Industrial Revolution to claim that all the problems of the

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      economy would vanish if only the dreadful workers would not insist on higher wages. That same argument is being used today, but in a modern context—that if only the workers would be happy and content with what they are getting, or perhaps a little less, all our problems would be solved.
      The hon. Member for St. Ives (Mr. Nott) pointed out the fallacy of this argument and the fact that other factors must be taken into account if our problems are to be solved, and these factors have nothing to do with workers' wages. Of course, the Government are hoping that if they use the descaltion argument often enough, sufficient people will eventually believe it. It is, in other words, a red herring which the Government hope will divert attention from their failure to deal with rising unemployment, the lack of investment and all the other ills.
      It is time that this de-escalation of wages argument was pinned once and for all. After all, we have never been given evidence to show that rising wage levels result in economic difficulties and unemployment. Indeed, hon. Gentlemen opposite are even using the de-escalation argument in connection with the balance of payments. When the Labour Party were in power we heard a lot about the balance of payments. But now hon. Gentlemen opposite are fusing the two arguments and are hoping thereby to have a red herring which will draw attention away from their failure in many respects.
      I recall that at Question Time the other day the Minister of State for Employment used the classic argument—if I can dignify it with the word "classic" —about the need for a satisfactory balance of payments, but he used it in a totally different context. Today the Minister of State said that higher wage levels would suck in imports. I would not worry too much about the balance of payments just now. We have a surplus and we need not retain a gigantic one. Perhaps it would not be a bad idea to lose some of this enormous surplus.
      Mr. Peter Rost: What about the overseas debt?
      Mr. Heffer: The arguments that hon. Gentlemen opposite use in this context are incredible.
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      I agree with the removal of purchase tax on some items. I also agree that we should increase the general demand to reflate the economy. I am not even about to give a list of purchase taxes which could be removed. But some should be removed. This is a serious proposition which ought to be examined.
      No one has satisfactorily answered the whole question of a wages policy. I have also been looking at Professor Clegg's book, but I have not yet finished reading it. It is regrettable that I did not start at the end and work through to the beginning.
      There are three ways in which the question of incomes can be tackled. First, there is a way which we have never tried but which the Labour Party, before 1964, actually advocated. That was known as the "planned growth in incomes". What began as a planned growth in incomes ended as a sort of freeze of incomes, and holding incomes down. But with a planned growth in incomes one also has to have a greater measure of control of the economy as a whole. I am glad to see that I am taking the hon. Member for Oswestry (Mr. Biffen) with me on this. He may totally disagree with it, but he sees the logic of my argument. We have to get back to the concept of a planned growth in incomes and to the logic of that, but at the same time we must have an extension of economic controls throughout the whole of our economy. If that is done, we can really begin to deal with the problem of incomes in this sense.
      Another way of dealing with incomes is the statutory incomes policy, which the Labour Government had, based upon the concept of the "norm". I can remember saying in the House that this was an absolutely fantastic argument. If a man earns£150 a week and receives an increase of 2½per cent., that is not bad. But for a man earning£8 10s. a week who has an increase of 2½per cent., that is terrible. We cannot have an incomes policy based upon this type of norm. It is not fair and it does not deal with the lower-paid worker. I have heard the argument that we should say to draughtsmen, for instance, who are amongst the higher-paid sections of engineering workers, "This year, do not ask for an increase because we intend to

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      give an increase to farm workers." That would be very laudable if it worked in practice. But the draughtsmen know that if they do not ask for an increase, that does not mean that there is less profit in engineering, or that the profits are being put into the farming industry to help raise the level of farm workers' wages. Under our system it does not work out. They do not gain anything by not asking for higher wages because the sums of money involved are not there. It is not done like that. I am not saying that it could not be done. It could be done with the planned growth in incomes of which I have spoken. It means also the extension of planning and controls in other directions.
      We did not do that in six years of Labour Government. Unfortunately, we did two things: we partially had an incomes policy based on the norm; and —I disagree with my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), although I do not think that he would disagree with me—we partially used unemployment also. There is no question about that. I remember very well the arguments in the House. I remember pointing out that I did not accept the theory that the development areas should have their unemployment lowered and that other areas, such as Birmingham, should allow unemployment to increase until we had a sort of overall acceptable limit of 500,000 unemployed. I did not believe it then and I do not believe it now. I know that my hon. Friend the Member for Ashton-under-Lyne did not believe that, and he was being kind to the Front Bench. I am not being kind to anybody. I want a policy and I want us to learn some lessons from that period.
      The Labour Party have to return to a policy which they always pursued, from 1945 onwards, when our first demand, always, was for full employment. We always argued for that. That was written large, in huge letters, in all our manifestoes, except the last one. It will be in the next one as far as I am concerned. We on this side of the House should be absolutely dedicated to full employment.
      5.45 p.m.
      Hon. Gentlemen opposite have taken a somewhat different view about full employment. The third way of dealing
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      with the problem—and trying to keep wages down—is to allow unemployment to rise. That is what they are doing at present. They are using unemployment as an economic regulator. They are trying to pretend that this is not so, but they know that it is so. If they are not using it as an economic regulator—and the hon. Gentleman shakes his head—what are they doing about the problem? If they do not believe in it as a regulator, let them do something positive. That is possible in modern society. Keynes existed. He was an economist whom all of us, at one stage in our lives, have read. The regulators can be used in a different way, and not for unemployment. The hon. Gentleman really cannot get away with it.
      In this situation we have to do two essential things. First, there must be a general upturn in the economy, as proposed by the trade union congress. There must be a reduction in the levels of purchase tax to help in that direction. There must be greater investment. I was terribly scared at one stage during the speech of the hon. Member for St. Ives when it seemed that he would have allowed Rolls-Royce to go. He did not want Government expenditure of any kind in that direction. I should like to tell him—I reiterate what I said recently—that Cammell Laird's shipyard would not exist now had the Labour Government not intervened; now it is beginning to make a profit once again. In modern society we have to have Government intervention in a positive direction.
      We cannot believe that we can go back 200 years. We can do that only with utterly disastrous results. So the first thing is to see a general upturn in the economy by the measures which I have proposed.
      Second, the House must state again and again its complete conviction that, whatever we do, we shall bring in measures which will reduce unemployment. We must recognise that this is not just a wastful use of people but that its long-term effect on our economy can be tremendously harmful.
      Ever since the end of the war, Liverpool has had a pool of unemployment, and it is the residue of the pre-1940 days. The men who make up that pool have never been trained. They have never

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      had jobs. They represent resources which have never been used, and it is a crime in our society that this should be so. For that reason, whatever else we may do in this House and whatever party is in power, we must be dedicated to the idea of removing unemployment, which is one of the biggest curses ever.
      Mr. John Biffen: Like other speakers in this debate, the hon. Member for Liverpool, Walton (Mr. Heffer) used the occasion for a kind of economic tour d'horizon, In saying that, I hope that I am not anticipating any constitutional changes which may imply that French will have parity with English at some future date. As the hon. Member for Ashton-under-Lyne (Mr. Sheldon) said, it has become characteristic of this debate for the Committee to discuss the economy in general. I hope that I shall not cramp the style if I revert to what I intended to say originally by relating my argument to the use of the regulator.
      Before doing so, however, perhaps I might comment on one or two of the points made by the hon. Member for Walton. In respect of an incomes policy, I say only this before we become caught up in another kind of vortex of debate on the subject. The hon. Gentleman spoke a lot of good sense and gave the Committee his sound analysis that, for the control of incomes to have any meaning, it will have to be pervasive and statutory. I hope that he will communicate his views to his right hon. Friend the Leader of the Opposition, who looks as though he will go for the illusory and easy option that, somehow or other, given a few nods and winks, it can be worked out on a voluntary basis with the C.B.I. and the T.U.C.
      Then I wish to comment on the hon. Gentleman's reference to unemployment. I do not wish to engage in a debate on unemployment. But I do not think that the hon. Gentleman is right in asserting that it was a deliberate policy of the Labour Government to increase unemployment, any more than I accept the assertion of the hon. Member for Ashton-under-Lyne that my right hon. and hon. Friends are
      "…engaged in the professional use of unemployment."
      The rise in unemployment that we are witnessing is probably much more pro-
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      found and much less capable of that kind of analysis. I suspect that the task of understanding the phenomenon and then producing the best remedies is hindered rather than encouraged by the way in which we conduct some of this debate—
      Mr. R. B. Cant Mr. R. B. Cant (Stoke-on-Trent, Central) indicated assent,
      Mr. Biffen: I am glad to see that I have the support of the hon. Member for Stoke-on-Trent, Central (Mr. Cant).
      I shall not dwell on this point, because I want to talk about the regulator. However, in view of the remarks of the hon. Member for Walton, I felt that it was a fair observation to make.
      I come, then, to the speech of my hon. Friend the Member for St. Ives (Mr. Nott). I fear that he is showing signs of political infection. The virus of Powell-ism is spreading. He sounded Gaullist in his views of Europe as well as championing monetary controls and a floating exchange rate. My hon. Friend is treading in dangerous territory. It is most encouraging. There was a totality and credibility about his arguments which made very convincing listening, and he has put forward a case of substance which ultimately will have to be met and answered.
      The hon. Member for Ashton-under-Lyne has a claim on some of our affections for this debate. As he rightly said, he became involved in an "up and downer" with the Chair some years back, trying to widen the terms in which we could discuss the regulator. I was greatly struck by the hon. Gentleman's remarks two years ago in a debate on the same topic, when he said:
      "We must remember that although the regulator in theory provides for regulation down as well as up, the downward movement has never been used."—[OFFICIAL REPORT, Standing Committee F, 11th June, 1969; c. 27.]
      I take that as an oblique compliment to my right hon. and hon. Friends that we are discussing the regulator and taxation in circumstances in which it is thought that there can be reductions in taxation. I suppose that we should be charitable, enough to welcome it.
      Even so, I was pleased to hear my hon. Friend the Minister of State indicate that he would resist these Amendments. I put his mind at rest by saying at once

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      that I shall be an enthusiastic supporter of his in the Lobby. The reason is that I believe that our economic management is delicately balanced and that that balance would be moved in an unfortunate way if the regulator were used in a downward direction.
      I believe that it is still not sufficiently appreciated that, during the course of last year, what was expected to be a public sector surplus of£244 million turned out at a deficit, setting aside the distorting effect of the Post Office strike, of£357 million. That was a turn-round of something like£600 million and, incidentally, almost double what would be the full effect of the use of the regulator. In other words, the impact of the regulator would be peripheral compared with many features in the management of the economy unknown or unplanned by the Government.
      In that situation, my right hon. Friend the Chancellor of the Exchequer has proposed in his Budget a deficit on public sector spending, again discounting the slight distortion created by the postal strike, of£1,469 million. That is an increase in the public sector deficit of over£1,100 million.
      Those who are concerned with the monetary rôle in Government policy must be slightly concerned about how that increase in the deficit is to be financed. I accept the indication being given by my right hon. Friend that it need not have an effect upon Government monetary policy. But we should have to be charitable almost to the point of fault if there were not just a suspicion at the back of our minds that such an enormous increase in the deficit might lead to more relaxed monetary controls than might otherwise be the case.
      I say that because, if inflation continues, as it shows every sign of doing, that deficit will be a good deal larger than the planned figure of£1,469 million. My reason for arguing that is that the public sector is a very substantial employer of labour. In those circumstances, rising wage costs normally increase public sector expenditure more greatly than they increase the buoyancy of the revenue. That being so, I am particularly anxious that the gap between Government revenue and Government expenditure is not further widened by the downward use of the regulator.
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      [Miss HARVIE ANDERSON in the Chair]
      6.0 p.m.
      I conclude by giving three other reasons why I hope the Government will resist these blandishments. The argument is that we need a boost to general activity in the economy. This was the point made by the hon. and learned Member for Lincoln (Mr. Taverne), and it echoed the powerful speech of my hon. Friend the Member for Leek (Mr. Knox) on the last day of the Budget debate.
      We have the opportunity of a fortuitous boost to activity in this country, derived from the floating of the mark and the guilder, and the revaluation of the Swiss franc and the Austrian Schilling. These are valuable export markets in which, presumably, we shall be able to trade that much more competitively. We should accept this as the occasion from which we can derive an impetus to further industrial activity and, above all, an export-led increase in activity, rather than a consumer expenditure-led increase.
      Second, there is a temptation, which I want my right hon. and hon. Friends to resist, to lower Excise duties as some preliminary to the implementation of a value added tax. I am not now going to rehearse my objections to such a tax. There are powerful advocates for it. I have in mind my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) who has indicated his expectation, and his hope, that a value-added tax will include those commodities now covered by Excise duties, and naturally enough there will then be the argument, "Let us narrow the differential while we can, let us try to do it through a partial use of the regulator". Indeed, my hon. Friend the Member for Worcestershire, South has put down Amendments and new Clauses which demonstrate that that is what he has in mind.
      I find it distasteful, on my sense of social priorities, that we should be thinking of redistributing our taxes so that they will fall less heavily upon wines, spirits and tobacco, and possibly be extended to cover such commodities as children's clothing and shoes. If the regulator were used in some way to reduce the impact of Excise duties, I should regard that as a foretaste of socially unacceptable changes in the pattern of our indirect taxation.

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      Third, I ask my right hon. and hon. Friends to resist the temptation to lower purchase tax on motor cars as a way of offering some additional boost to the motor trade. My hon. Friend the Member for Bedfordshire, South (Mr. Madel) made an extremely eloquent constituency speech—that is meant as a tribute, and not otherwise; we all have constituents—on the virtues of the use of the regulator to boost motor car production, and he talked about the substantial potential in increased output in the motor trade given the existing capacity.
      I accept my hon. Friend's argument, but I ask my right hon. and hon. Friends to reject his proposal, and rather to take advantage of the other weapon that is available. We have the Crowther Commission's Report on credit control, and it seems to me that we have here an excellent piece of advice. I hesitate to offer my own refined piece of fine tuning as to what ought to be the next move in hire-purchase relaxation, but if the Government, wishing to pursue prudent fiscal policies, nonetheless feel that they have a credible monetary policy which lies at the centre of their economic strategy, no Report could have been more welcome than that of Lord Crowther.
      It seems to me that the Crowther Report, although we may argue about the impact that it might have on the velocity of money supply, is an excellent document for the monetary school in economic management. By a happy coincidence it provides exactly the sort of boost that is sought for by my hon. Friend the Member for Bedfordshire, South, and would be sought for by my hon. Friend the Member for Worcestershire, South, another eloquent advocate of the motor trade, and I suspect that a revival in the motor trade, more than any other single aspect in the industrial field, would communicate itself to engineering generally, and the level of investment in engineering, reaching possibly even the machine tool trade, which was mentioned by the hon. Member for Ashton-under-Lyne.
      My right hon. and hon. Friends have the chance of taking a step towards the dismantling of selective controls which hitherto have been exercised through the hire purchase regulations, and relying upon broad monetary disciplines. That is a policy which would commend itself
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      to many on these benches, because we believe that to adopt such a policy would be to tread the paths of economic liberalism, and to avoid the inflationary financing by capricious tax changes. It would ensure that the gains of the last few months of imaginative tax reform would not be lost, at the prospect of continuing inflation.
      Mr. Pardoe: The hon. and learned Member for Lincoln (Mr. Taverne), in opening the debate for the Opposition, gave the impression that the Government had the power to determine both the level of demand and the level of investment. I think that that is a false premise, because I doubt very much whether the Government have anything like the power to control the level of investment which they have assumed, and which all Governments up to this time have assumed. I suggest that investment, if it follows anything, is more likely to follow demand, and business men's expectation of future demand for their products, than any incentives by way of tax, grants, or otherwise.
      I accept, in the light of experience of development policy, that it is possible by means of investment grants to change the pattern of investment. It is possible to persuade a business man to invest in Cornwall, rather than in Birmingham—I wish that business men would do so more frequently—but I do not believe that it is possible for the Government, through various stimuli, to encourage investment as a whole. I refer the hon. and learned Gentleman to the latest issue of the Moorgate and Wall Street Review in which the point is proved conclusively.
      The Opposition appear to believe that demand can be significantly managed by the regulator. I doubt whether it can be done in the way the Opposition expect. I think that the regulator is a useful tool of demand management. I am not convinced that it would be a useful tool today, anyway in the form in which it is in the 1961 Finance Act because, if there is no close connection between demand, as measured by the level of unemployment and cost inflation, the regulating demand is pretty useless if we wish to reduce unemployment.
      The Government—I took the Minister of State up on this point in the middle of his speech—seem to believe that the

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      solution to our present economic problems is the de-escalation of wage claims. Even if it were true—I think it extremely dubious; this is the third economic fallacy I have attempted to destroy—I do not believe that the attempt is succeeding. The Government are not de-escalating wage claims. It is not sufficient for the Minister of State to tell us that there are one or two highly publicised excessive wage claims going through. He obviously implied Ford and, I suppose, Vauxhall and others like that.
      It is not only on the front pages of the pop Press that one gathers information about the level of wage claims and wage increases. It is in extremely detailed documents such as those produced by the incomes research bodies and by the various Government Departments. The pages of such publications, which document wage claims day by day, week by week and month by month, show only too clearly that there is no de-escalation. In any case, even if we accepted that there had been some moderate de-escalation, are we to say that the economy can allow increases of 12 per cent.? Perhaps that is a de-escalation from 14 per cent. which was the figure one might have taken six months ago.
      So I do not think that that policy is working. I know very few people outside the ivory tower of Government who believe that it is working. Most independent commentators today—the Economist, the Financial Times—are stating clearly that the Government are in dire danger of falling into that most dangerous of all political traps—that of believing their own propaganda.
      I am sorry that I missed the earlier remarks of the hon. Member for St. Ives (Mr. Nott). The hon. Gentleman spoke in favour of a floating exchange rate. He implied that he had been somewhat converted to this view by the right hon. Member for Wolverhampton, South-West (Mr. Powell). I do not think that the right hon. Gentleman has converted many people to this view. I can assure the House that I was converted to the concept of a floating£some time ago and before the right hon. Gentleman called it a national totem pole. I personally have believed that the£was over-valued at least since 1962 and, indeed, am able to produce public records to show that I said so.
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      I thought that the contribution of the hon. Member for St. Ives was at any rate a more honest one than that made by the hon. and learned Member for Lincoln. When the hon. and learned Gentleman was confronted with the problem of the Opposition's desire for greater expansion—we all want greater expansion—he implied that at the end of the day they would be prepared to sacrifice the£to get that expansion. What I want to know from the Opposition is whether this is the line they are peddling. I am prepared to sacrifice the£for expansion. The hon. Member for St. Ives possibly would be prepared to do so. Are the Opposition saying categorically that they would either be prepared to float the£—completely or within limits—or that they would be prepared to devalue? The last time the Labour Party was faced with this choice it opted for squeeze; it opted for unemployment, as the hon. Member for Liverpool, Walton (Mr. Heffer) reminded us.
      I have great doubts whether the Opposition, if they were in power again, would opt for devaluation or for a floating exchange rate. I hope that they would. However, the enormous weight of orthodoxy which bears down on the shoulders of any Government—the great mass burden of the Treasury and of orthodox banking opinion—would ensure that they probably did not go along with what they may now be prepared to talk about.
      I do not believe that we can have expansion without being prepared to float. I should like to see some sort of stabilisation in the floating, because one never quite knows where floating will end, although, on the basis of the evidence of this weekend and, indeed, on previous evidence such as the Canadian experience, one tends to believe that if one floats it will not be very far from the base from which one started. In other words, all the pessimists—all the Jeremiahs—said that the Canadian floating would be disastrous and that there would be a terrible turmoil. In fact, there was no such turmoil.
      I believe that if we were to introduce the crawling peg whereby we had a sliding limit, this would introduce an element of stabilisation. If it is not necessary—I do not think that either I or the hon. Member for St. Ives thinks that it

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      is necessary—nevertheless it would go a long way to overcome the doubts and fears of orthodox financial opinion.
      Mr. Nott: I should not like the hon. Gentleman to think that I am in favour of letting the£float without supporting it. If the£were to be floated I should still want the Exchange Equalisation Account to be in the market.
      6.15 p.m.
      Mr. Pardoe: One can manage the float in various ways. So probably it is true that we are all in favour of management.
      I move now briefly to the essential point about the regulator which I wanted to make in the Amendment I have tabled but which has not been selected. The regulator is an essential tool of demand management and is, therefore, very orthodoxly Keynesian and, for that reason, was perhaps to be welcomed when it was introduced. It was introduced in the Finance Act, 1961. It is as well to remind ourselves of the purpose for which the regulator was introduced. Section 9(1) of the Finance Act, 1961 says:
      "If it appears to the Treasury that it is expedient, with a view to regulating the balance between demand and resources in the United Kingdom…"
      Does that apply today? Is that a sufficient reason for the regulator? Are, for instance, the connections between the total level of demand and unemployment accepted today as they were in 1961 when the regulator was introduced? The first thing to say about it, I suppose, is that it is undoubtedly a form a substantial intervention by Government in a free economy. For that reason, I doubt whether the Government would introduce this provision if it had not been introduced back in 1961. The Government of today are, so they say, against intervention of this detailed sort.
      However, I should like to widen it. The regulator seems to apply to too narrow a range of taxes. Indeed, the purposes spelled out in the first part of the Section seem to me to be far too narrow. I do not think that it is just a question of
      "regulating the balance between demand and resources"
      because we are no longer at all sure that that is the best method of ensuring full employment or indeed of stabilising prices.
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      Therefore, I should like to widen it to try to cover an incomes policy. I accept that in an incomes policy the Government's rôle is limited. The hon. Member for Walton suggested that when the Labour Party was last in Opposition it was in favour of a planned growth of incomes. I always thought that this was nonsense, because, as the hon. Gentleman admitted, it requires a degree of control over details of the economy which seems to be to be quite impossible and unacceptable. So I do not believe that Government can control incomes by means of a detailed day-to-day or week-by-week or month-by-month intervention.
      However, the Government ought to be able to erect bastions against outrageous increases, because it is after all the outrageous increases which, if any increased incomes are causing inflation, are undoubtedly doing so. I therefore suggest to the Government that they might widen the regulator so as to act specifically on outrageous increases.
      Mr. Heffer: Will the hon. Gentleman define what he means by "outrageous increases"?
      Mr. Pardoe: I accept that the hon. Gentleman believes that no level of wage increase causes inflation. I believe that this is an untenable position.
      Mr. Heffer: The hon. Gentleman must not say that he accepts that I think that there is no outrageous increase. I just want to know what he thinks is an outrageous increase. It is not what I think or do not think about it. What does the hon. Gentleman say is an outrageous increase?
      Mr. Pardoe: I do not think that there can be any argument but that any wage increase which is over and above the increase in the level of production within the industry concerned must be inflationary. This would mean that, as the national output will perhaps rise by 3 per cent., if we believe the Treasury, or by 2 per cent., if we believe the National Institute, any wage increase over 2 per cent. or 3 per cent. is bound to be inflationary. Obviously, I am not suggesting—although the Labour Government suggested it and tried to operate it—that we would be successful in keeping increases down to that level. It might even be that we should try to keep them down to the level of overall inflation,

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      which is partly what the T.U.C. has suggested in its proposal to divide wage claims into their two component parts—first, productivity and a genuine increase in the standard of living and, secondly, that part which is required to compensate for rising prices.
      I would have thought that there is a level which most reasonable people would accept as being highly inflationary within a particular industry. Again, I am not asking that the Government should intervene in particular industries, because that brings them too far into the day-to-day running of the economy. But I suggest that we should state from year to year a level of, say, 7 or 8 per cent. or whatever it may be, and say that those who gather an increase in incomes per head, or those industries which pay an increase in incomes per head, over and above that level must pay for the damage they do to the rest of us by inflation. I see no reason against that. It does not seem to me to be monstrously interventionist; nor does it totally distort the balance of the economy, which is the argument against most forms of incomes policy which have been put forward.
      There are various ways in which one can act on the willingness of employers to grant outragous increases—or inflationary increases, if the hon. Member for Walton prefers that term—and on the willingness of organised employees to use their giant's strength to win them. One can do it in various ways—for example, by increasing the level of unemployment. But no one knows how far one has to increase unemployment to stop inflation. The Phillips curve is dead. The Minister of State said that it had shifted. I did not know that it had done that, and if he knows where it has shifted to, then he is a better man than I am. I do not think that anyone knows. One could use control of credit to ensure that the number of bankruptcies rose so that employers could not pay higher increases because they would go bankrupt if they did. That is all part of a similar policy.
      Again, one might use selective cuts in import duties so as to force employers who granted large increases to think again and toughen up their bargaining attitude. One could come to the policy enunciated by the T.U.C.—the division
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      of pay claims between the part needed to compensate for increased prices and the part needed to increase the real standard of living. I think that that is a very good short-term policy. I support it wholeheartedly in the short term. I think that it could be outrageously inflationary in the long term, but as an emergency measure it is an excellent idea. It would be a guarantee to the employer that he was not going to be overrun by inflation.
      But I believe that with all these things a tax on inflation is essential. Various methods have been proposed. There was the suggestion by Michael Fogarty, Director of the Social and Economic Research Institute in Ireland, in a lecture to Irish trade unionists in March last year. There was the suggestion by Professor Sydney Weintraub in the Lloyd's Bank Review for perhaps a tax on companies which would try to ensure that companies had a built-in resistance, bolstered by Government taxation, to stop granting excessive wage increases.
      A much more specific suggestion is that put forward by the Economist for using a kind of regulator on National Insurance contributions. It would be possible—and it would be even more possible if we did what I have often advocated, which is to have a percentage payroll tax instead of a lump-sum flat-rate National Insurance contribution—to ensure, by means of a regulator of National Insurance contributions, that, if an employee obtained an increase which was more than society reckoned to be cognisant with stemming inflation, the excessive increase would be paid back to the Government in increased taxation. That seems to me a perfectly legitimate means of Government intervention.
      All I am suggesting is that, if we are to go on enforcing the regulator, we need to widen its purpose from the terms set out in 1961 in order to ensure that we can use it to act directly upon inflation and the inflation of pay as a whole—and I use "pay" in its widest possible sense, applying it to all sorts of pay. It should be possible to use it not just under the 1961 Act, on Customs duties and purchase tax, but on the National Insurance contributions as well and on other direct taxes which apply to the individual. This could bolster the Government's defences against unnecessary cost inflation.
      Mr. Kenneth Baker (St. Marylebone): The Liberal Party has not been in control of our national economic affairs since 1914. If what we have just heard from the hon. Member for Cornwall, North (Mr. Pardoe) is an updating of Liberal economic thinking, it is as well that the Liberals have not had the opportunity since 1914 to get their hands on the levers of power. We have heard from him a definitive statement of Liberal economic policy which is confused and naïve. He wanted an incomes policy against outrageous increases without defining what outrageous increases were. He seemed to believe that, by floating the£, expansion would somehow follow. The argument for floating or not has little to do with expansion or contraction. The whole point about floating the£is that one lets the market determine the level of value of the currency.
      It is said that this would avoid situations in which, for example, politicians like Mr. Nixon would sit in the White House, as he did last week, refusing to devalue, while politicians like Herr Brandt would sit in Bonn, as he did last week, refusing to revalue. If the£had floated last week, the likely effect would have been that it would have floated upwards, which would have meant not expansion of the British economy but, if anything, a marginal contraction.
      The currency crisis, which is the background to the debate, adds a certain piquancy and a certain drama and excitement to the debate. Because it is inextricably involved with our negotiations with the Common Market, it means that we have not only an economic drama but also a high political drama. This will be a very exciting summer politically for us all. I cannot but recall the character in "The Importance of being Ernest" who said, "The suspense is terrible—I hope it will last".
      We should be grateful that, in the recent currency crisis, sterling was not playing a central rôle. I cannot help feeling that, if the right hon. Member for Huyton (Mr. Harold Wilson) had still been in No. 10 Downing Street last week, he would have felt deeply resentful of the fact that sterling was not playing its customary starring rôle in a currency crisis. The centre of the stage was an irresistible magnet to him. He could not resist the chance of being the bride at
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      every wedding and the corpse at every funeral.
      But I hope that no one in the House will think that what happened last week—the floating of the deutschemark and the guilder and the Swiss and Austrian revaluations—is a solution. It is merely a temporary stop-gap to the problems which beset the Western world. If President Nixon believes that he has got some measure of relief for the dollar, it is the sort of relief that a sick man gets when he turns over in bed. There is still no cure. He has eased the cramp. He has eased his comfortless position. But the same inherent troubles are there.
      I hope that the Government and the Bank of England will use the opportunity of not being involved in a major currency crisis to try to work out what they think is a long-term solution to the abiding currency problems of the Western world. No situation is static. Already a currency flow has begun and it will change course in the next few days and weeks across the frontiers. It may well be that within the next year or so the£will come under pressure from one source or another, and then we cannot sit aside and not make a decision.
      6.30 p.m.
      The Government last week resisted the temptation to float, in my opinion correctly. It must have been very tempting last Thursday or Friday to float the£with some of the other currencies. I hope that the Government, having resisted that temptation, will make clear to British industry the enormous opportunity the Government have given it by retaining the present parity with the dollar. The Government should lose no chance of stressing what an opportunity it is to increase our exports.
      I calculate from what the hon. and learned Member for Lincoln (Mr. Taverne) said that the net effect on consumer demand of Amendment No. 13, which I believe is to decrease the regulator by 15 per cent. for six months, is about£125 million to£150 million in injection—[An HON. MEMBER: "It is£500 million."]—In that case it would be a substantial boost to demand. But if the Opposition are arguing for a boost to consumer demand, a much more effective means would be to consider the recommendations of the

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      Crowther Committee, particularly on the effect of hire-purchase controls, which are a blunderbuss of an economic weapon, especially in relation to the car industry. I hope that if the Government are thinking of reflating later this year or early next year they may be considering doing it through substantially reducing or modifying, or perhaps eliminating, hire-purchase controls, rather than acting through purchase tax and the regulator.
      What is the Opposition's economic policy in the present state of the British economy? We have heard various suggestions, but no authoritative statement from the Opposition Front Bench. Some hon. Members opposite said in the Budget debate that they wanted a prices and incomes policy. There were others who said, "Never a price and incomes policy." Others said that there should be immediate and substantial reflation, with the implied risk on the balance of payments and upon sterling. The hon. and learned Member for Lincoln was courageous to say that the risk of devaluation of sterling was one that he personally was prepared to take—and, I imagine, the Opposition Front Bench. The former Chancellor, the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) said in the Budget debate that his main criticism of the Government's economic policy was that the reflation in the Budget should have been earlier. When the right hon. Gentleman complains that a Chancellor has acted too slowly, we should pay great attention to his words, because he has had great personal experience of acting too slowly. After the devaluation in November, 1967 four precious months were wasted while he did nothing. He threw away the first valuable advantages of devaluation. Whoever winds up this debate for the Oppositions should tell us clearly tonight exactly what is their economic policy.
      The Government's economic policy, as stated in the two Budgets, is crystal-clear. The two taken together are the most reflationary measures in this country since 1945, with tax cuts in the current financial year of about£950 million—and of that only about£30 million to the very rich, the surtax payers. I accept the argument that not all that£950 million is going straight into consumer demand, but about£300 million to£400 million is. One could argue that that figure would be
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      higher if one included some of the other taxes as going into consumer demand.
      This is coupled with a monetary policy, which some critics on this side think is far too loose, which amounts to allowing industry and private borrowers to have virtually as much money as they want. We are not having a credit squeeze or credit freeze. If businesses want to raise money, they are finding it quite easy to do so.
      The Government are to be congratulated on their measures of reflation. They have my support, though not the support of all my hon. Friends. There is scant regard for the Government's reflationary measures. I refute completely the argument used three times by Opposition hon. Members this afternoon that the Government are using unemployment as an instrument of economic policy. I could not support a Government that were deliberately doing that, and I do not believe that the Government are. The level of unemployment, which I find very regrettable, is explained very largely—not entirely—by substantial structural changes in the pattern and level of employment in our economy. Therefore, I do not accept the criticisms made by hon. Members opposite that we are using unemployment in a callous and indifferent way. That has never been the object of the Conservative Party. It is certainly not the object of this Government. If it were, I would cease to support them.
      Mr. Cant: I agree with those who argue that in our discussions of our present economic problems we place too little emphasis on the fact that the terrible phenomenon of the inter-war years—structural unemployment—is re-emerging, and that it is a consequence of serious technological change.
      In these circumstances, to some extent all our talk about macro-economic policies methods of demand management, is not irrelevant—quite—but is certainly of only a limited value.
      I support the Amendments, but not because I belong to the school of "expansion or bust". I do not. I hesitate to say this, but I have a certain amount of sympathy on this score with the hon. Member for Oswestry (Mr. Biffen). It is a source of embarrassment to me politically that we think alike on so many occasions. Some expansion is called for. I think that this should be undertaken

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      in the whole area of reducing indirect taxation because the fundamental flaw in the Government's policies was that on the one hand they were denouncing cost inflation as the problem in the economy and on the other doing everything possible to raise the cost of living through their tax policies. This will be proved to be a fundamental error. The hon. Member for St. Marylebone (Mr. Kenneth Baker) argued that the German revaluation should persuade us not to go in for any reflation of the economy. I would argue the reverse. This helps us considerably in moving the terms of trade in a limited area in our favour.
      I believe that, because it does this, it gives us that little extra room for manoeuvre which we on this side of the House feel is required and which could lead us to the argument for rather more demand in the economy. I agree that if we expand demand seriously we shall run into all the problems so eloquently described by Conservative hon. Members. But the argument that if we increase demand we increase the import bill, suffers from the wrong kind of emphasis. Analysis of what happens to the import bill under additional aggregate demand reveals that it is not a question of people in this country importing more foreign cars, taking more foreign holidays or increasing consumer demand for imported goods. The horrible fact about our import bill in the upward cycle of business activity is the increasing component of imported capital equipment. We would do well to remind ourselves that a lot of what we are saying about the consequences, in balance of payments terms, of an increase in demand, is a terrible criticism of British manufacturing industry.
      I shall not pursue that, because I do not want to embarrass any hon. Member opposite any further. We are always pointing an accusing finger at the trade unions, at the workers and their restrictive practices, their inordinate demand for wage increases. But the main accusing finger could be pointed at management in British industry. It is the relative inefficiency of British industry that should bring forth our major indictment.
      A lot has been said about cost inflation. I am sure that reasonable people,
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      like the Liberal spokesman on economic affairs, the hon. Member for Cornwall, North (Mr. Pardoe), are right when they say that we cannot live with 18 or 24 per cent. increases in wages on the one hand and an increase of only 3 per cent. in output on the other. That is perfectly true, but the situation is far more complicated than that.
      I admire the Prime Minister because he has an incredible capacity to stand at the Dispatch Box week after week enunciating what he believes is the supreme truth about our economic situation, using tedious repetition time and again. He has come to believe his own propaganda. People ask how long he will carry on with this policy, which is the Phillips curve removed endlessly to the right, and I would answer that he will carry on with it indefinitely. He is determined to break the will of the trade union leaders and he believes he can do it.
      Mr. Heffer: He is on a hiding to nothing.
      Mr. Cant: He believes he will win, but I would much rather lean on the experience of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). I am glad I have raised these points because my hon. Friend has reassured me.
      The Prime Minister, who is the nerveless wonder of British politics, dashes off the suggestion that he is using unemployment as a measure of policy with which he is going to win the battle with the working class. He has to allow unemployment to rise until the point is reached—and he may win this battle—when the spectre of unemployment will be severe enough to make trade union leaders think more than once about the sort of wage claim they will put in. But what a price we are paying. I wonder whether at night he ever turns over on his lonely couch and thinks about the problem of the people who are unemployed. If he ever does think of them, I have no doubt he can dismiss this spectre by saying to himself, "They are responsible because they have brought this on to themselves through wage-cost inflation."
      When one looks at these rather large wage claims and then thinks of the inflation with which trade unionists have

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      had to live over the past year—and with which they probably will have to live in the coming year—running at 8 per cent. per annum, all they are doing is seeking to maintain their very existence if they achieve around 16 per cent. increase.
      The Government are speaking with two voices. They are saying that the workers are responsible for the increase in cost inflation, when at the same time the Chancellor admits that he has not only financed inflation in the past year but is prepared to do so again in the current year. Where are the Government getting this money? How does money supply manage to increase by 12½per cent. per annum? Where has Friedman gone? He must be hiding somewhere underneath these benches.
      This is a serious issue and the answer is that the inflation which exists at the moment is not a consequence of greedy and grasping trade unionists but a consequence of the increase in money supply financed through the Euro-dollar market. How can we tolerate a situation when everything we seek to do to get our unemployment under control is undermined because the United States, in dealing with its balance of payments deficit, adopts an attitude of what is now technically called benign neglect? If we are prepared in one way or other to allow our money supply to be increased by the balance of payments deficit of the United States, and if we are prepared to allow our situation in this country to be responsive to the calls of international corporations, then let us not blame the trade unions. We must find some other solution to the problem.
      I have not seen any evidence in what has been said by the Chancellor of the Exchequer or by any of his right hon. Friends to give me very much hope for the future. If believe that there are other ways of tackling the problem. At this moment of time it would be appropriate to have a gentle measure of reflation. If we do not grasp some other alternative, then the Prime Minister, who is responsible for the total policy of this Government, will produce a society in which the bitterness and social divisions that is caused between the classes when we reach one million unemployed will not be easily erased in the next generation.
      Mr. Peter Hordern: I generally agree with the remarks of the hon. Member for Stoke-on-Trent, Central (Mr. Cant) in our economic debates. He is, as I recall, a staunch supporter of the Chicago school. He is not a member of the Freiburg school, nor is he a member of the boom-and-bust brigade to which many of his hon. Friends belong.
      It may seem odd that we should be discussing whether the Chancellor should have the power to alter the rate of purchase tax as a method of fine-tuning the economy, when we are in the middle of an economic blizzard blowing outside. This is certainly no weather for fine-tuning. Nevertheless, it is an important power to have. The question is whether the Chancellor should have the power and whether he should use it. In my opinion he should not use it. The reason is that there is a considerable degree of reflation proceeding at the moment, which is not readily obvious, but which will become obvious as the months go on.
      It is interesting to observe the Opposition's attitude which seems to form itself into three different schools of thought. There is the school of thought presented by the hon. Member for Liverpool, Walton (Mr. Heffer), who is an out-and-out expansionist, and many of his hon. Friends agree with him. There is the school of thought represented by the hon. and learned Member for Lincoln (Mr. Taverne) who told us today that he was in favour of expansion, which he coupled with a personal view that he was in favour of a floating exchange rate. When one of my hon. Friends suggested that the rate would probably float upwards, the hon. and learned Gentleman answered a little too quickly, "But not if the economy were to react in the way that it would by using the regulator." That was an admission that he would agree that the use of the regulator in a downward direction was a direct addition to our costs because the cost of imports would rise appreciably and at once.
      The third school of thought is represented by many right hon. and hon. Gentlemen opposite, mostly by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) and by the right hon. Gentleman the Leader of the Opposition. It is refreshing these days to find those

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      two right hon. Gentlemen agreeing about anything, so we should not complain if they agree on at least one item of policy, namely, that of having a voluntary incomes policy in combination with an increase in reflation.
      This leads one to ask why the right hon. Member for Stechford and the Leader of the Opposition are now so keen on exerting a voluntary incomes policy when just a year ago they were concerned to drop it. What conditions now obtain which are so different from the situation a year ago? Certainly prices were rising every bit as fast then as they are now and nobody could say that the rate of unemployment was at all satisfactory in the first six months of 1970. It does not seem to me that the intransigence of Mr. Jones and Mr. Scanlon have altered very much. Although this is an entirely hypothetical question, one of the most regrettable parts of the Opposition's incomes policy is this specious idea that a voluntary incomes policy can be combined with deliberate reflation, as if the voluntary incomes policy would ever be sustainable by the Labour Party or by the trade unionists themselves.
      The fact is that there is no chance of operating any form of voluntary incomes policy after the experience of the last few years. At least it could be said that the Leader of the Opposition and the right hon. Gentleman recognise that it would be wrong to allow purchase tax to be cut as a measure just by itself. Even with the present level of unemployment, they think it would be wrong simply to stimulate demand. That surely is right. Nothing could be worse than to stimulate consumer demand when industry has not the capacity to meet it. Imports would rise rapidly and our balance of payments would quickly suffer. Even more to the point is the fact that, contrary to general belief, there is no discernible credit squeeze in operation at the moment. Indeed, the situation is very much the reverse. The clearing banks have plenty of money to lend and are actively seeking ways of lending it. The difficulty they have is to find creditworthy customers.
      There is a serious shortage of liquidity in companies, but the reason for this is very clear. It is that the return on industrial assets has fallen from an aver-
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      age of 15 per cent. in 1964 to 10 per cent. last year. This return is quite inadequate to cover the cost of new investment and that is why there is so little of it today. It is not that there is so little confidence in the outlook but simply that, after years of increasing corporation tax and the Labour Party's antipathy towards profits, there is no reserve for companies to use for investment.
      What my right hon. Friend has done about the situation is to reduce the cost of borrowing and to reduce sharply the rate of corporation tax. As a result the return on investment should allow a clear margin of profit, and it is this more than anything else that ultimately will increase the level of investment.
      If purchase tax were reduced, all that would happen would be that a fillip would be given to consumption at the time when the money supply was increasing as fast as wage increases themselves. I know that the 3 per cent. rate mentioned by my right hon. Friend in the Budget applied only to this particular quarter. But what concerns me is how much the Chancellor will be able to reduce the growth in money supply to any significant extent. In his Budget my right hon. Friend said that he does not intend that the growth of money supply should accommodate the going rate of inflation. But events have moved a very long way since the Budget.
      7.0 p.m.
      The mark has been floated, as has the guilder. The Swiss franc and the Austrian schilling have been revalued. Sterling at its fixed rate is definitely more attractive than it was. Meanwhile the flow of dollars, the prime cause of all this unrest, will continue. In this stage of uncertainty that alone is the most certain element. As long as the mark floats, there is nothing in it for those who hold dollars. The Swiss franc is not as attractive as it was. It is beginning, at last, to look like Cinderella's turn. It is a comparatively new experience for sterling to be in such demand that maybe we should not complain about it too much. It is no use pretending that the maintenance of a fixed rate of sterling in a period when sterling is in demand from overseas will not create considerable difficulties in controlling the money supply.
      No one can forecast with any precision how fast it will grow. It seems likely

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      that with a large borrowing requirement to which my hon. Friend the Member for Oswestry (Mr. Biffen) referred, as well as a considerable funding operation in the gilt-edged market, to be done this year, the Government will find it very difficult to keep growth in money supply to anything like the growth in output or productive potential. There is in process a considerable degree of reflation and it will not be long before this is noticed. It would have been much better had this process been carried out deliberately as a matter of policy by my right hon. Friends but I do not believe that this is the position. It is more that the power to control our economy is vitiated by the production of United States dollars. The solution is, of course, to float the£. The argument has so far been confined to economists and central bankers on a somewhat academic plane.
      Mr. Bruce-Gardyne: My hon. Friend said that the solution was to float the£. That was the solution to the problem created by the American Government's attitude towards the dollar. In a sense the more logical solution would be to achieve a change in the American Government's attitude towards the dollar.
      Mr. Hordern: It is better to change something over which we have control rather than attempt to change things over which we have no control. It would be surprising if this pressing matter did not become a matter for political decision, and sooner rather than later. We have to recognise that the production of dollars, and in particular the production of Euro-dollars, poses problems on a quite different scale from anything contemplated at the time of Bretton Woods. Only 11 years ago the Euro-dollar market was about 1,000 million dollars. Last year the size of it was 50,000 million dollars. Can exchange rates, narrowly drawn, provide a tolerable defence to this sort of expansion? I do not think they can.
      The stand that the Government have taken, over wage increases and price increases in the public sector should not be allowed to be undone because of Mr. Nixon's need to get himself re-elected. Therefore, we should float. I recognise the difficulties in which my right hon. Friend is placed. For one thing he said that he would not float some months ago.
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      For another thing it would not endear us to the French particularly during the negotiations over the Common Market. I do not want to press my right hon. Friend. I do not believe that there is a particular urgency to float at the moment, but when and if the issue of the Common Market is resolved—and I believe that it will have to be resolved one way or the ether in the coming months—the issue of floating the£will become an important issue for the Government.
      I hope that when the time comes the Government will take the right course which is—given all the technical factors and the ability of the American authorities to increase the supply of dollars and therefore vitiate the control of the economies of Western Europe, and of our economy—to float the£. In that context increasing or decreasing purchase tax may be a very small consideration. While advancing this power to my right hon. Friend, as I am sure the House will, I hope that he will consider very carefully the number of points that have been raised on the subject of floating the£.
      Mr. John Horam: I had not thought of making any remarks on this Clause because, as a graduate of June, 1970, I have not appreciated this traditional elephantias, whereby we look at the whole sweep of economic policy on two small Amendments which do not worry me too much either way. I hope that that does not put me out of order. The point I want to make is simple. The Government's Budget judgment was that they would expect to increase the gross domestic product by roughly 3½per cent, between the first part of this year and the first part of next. This was predicted on a growth of consumption of about 5½per cent.
      The Government will not get this growth. It is not happening at the moment and it will not happen in future, first, quite simply, because savings will prevent it. The rate of savings is already high and will increase. Inevitably, for psychological reasons—because people do not want to spend their money when they realise that the unemployment situation is worse and that they might be individually threatened by it—that will happen. Unemployment is at the root of this and it is caused by the Government's lack of an alternative policy to unemployment for coping with the problem of inflation.

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      We thus have a central dichotomy at the heart of the Government's policy. On the one hand they are trying to expand the economy, telling shareholders and bankers that their liquidity is good, asking why they do not invest, while on the other hand they are taking a tougher line with the unions, telling them that they do not want to hear too much from them, that they want to cure the problem of inflation and that the unions will have to do it for them. The contrast is quite clear. It is like trying to run when standing on one's tie, or for this Government the analogy might be better put by saying standing on one's beard, since this puts some kind of date on the economic policies which they are pursuing.
      Nothing very much will happen as a result of these policies. The situation may improve to a minor extent in one or two ways, but it will get worse in others. I do not think that the unemployment situation will improve. We shall get worse and will lose more growth. We shall fall further behind in the economic growth table. Equally, price inflation will not improve markedly.
      As my hon. and learned Friend the Member for Lincoln (Mr. Taverne) said, in the first place we have a two-year built-in effect, as a result of some of the wage agreements concluded this year. Secondly, the Government have placed great store on their hopes of an improvement in the wage situation as a result of the demands negotiated and agreed for the next time round. We are already beginning to see these new demands and they will not be at a lower level that those of the past 12 months.
      Thirdly, since price inflation is going up a rate of roughly 8¾per cent. per year, there is a circular effect. The existing high prices will affect wage demands, which will continue, maybe slightly moderating but still at a high level. Finally, even if some success is achieved by these means, it is bound to be slow. What is the good of a policy which comes down from 14 per cent. in one year to 12 per cent. the next, to 10 per cent. the year after and 8 per cent. the year after that? By that time we have lost the ball game.
      What is needed is something more decisive on two fronts. First, we need
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      an incomes policy. We have had my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) talking about his version of an incomes policy; we have had the hon. Member for Oswestry (Mr. Biffen) talking about his non-version of an incomes policy; and we have had the hon. Member for Cornwall, North (Mr. Pardoe) talking about his version. I hope that I have squared my political pitch by mentioning all three parties. Obviously one can argue about it indefinitely, but the central solution is there.
      The Government argue mainly that an incomes policy cannot work because it flies in the face of their feelings about freedom. That argument is totally nonsensical. To an ordinary worker the market forces are just as anti-freedom as is any kind of planning.
      Secondly, the Government argue that the last prices and incomes policy was a manifest failure, because it became unpopular and therefore could not be sustained. It became unpopular because we had to make a net transfer of resources into the balance of payments as we had a large balance of payments problem. That is why the prices and incomes policy pursued by the last Government became unpopular. It did not fail or become unpopular because of the principle; it was because of the situation then facing the Government.
      The last Government had to keep down the standard of living to a small percentage increase for two consecutive years. Therefore, that policy became unpopular and, because of the feelings which that process engendered, one result was wage inflation. There were other factors, but that was one element. Therefore, the whole thing, if properly understood, is related to the balance of payments problem which the Government finally surmounted; not to the principle of a prices and incomes policy. I think, therefore, that the Government will inexorably return to this policy.
      By treating cost inflation as cost inflation and getting to the root of the problem and not, as in this peculiar argument of the Government, about not wanting to add demand inflation to cost inflation, ignoring that this leaves open how one deals with cost inflation, and in addition having a prices and incomes policy, we shall be able to go ahead at

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      a higher rate than we have so far achieved.
      Because there is such a large amount of unemployment, and because of the Government's policies towards inflation, any injection which they make into the economy will be less effective than it might otherwise be, because people will be less free in their spending and therefor the consumption and multiplier effect will be mitigated. If we cope with inflation by means of a prices and incomes policy it will not be totally successful, but the extent to which it succeeds leaves us that much freer to go ahead faster for growth.
      This whole notion of incomes policy is as important to the second half of the twentieth century as the Keynesian revolution was to the first half of the twentieth century. It is important to get this right with all the planning involved. The hon. Member for Oswestry looks at me in a rather forbidding manner. I accept that this is as important as pump priming and all the rest in the first half of the twentieth century, and I think that inexorably we shall proceed towards this solution to our problems. I think that this is as modern thinking as laissez faire economists and Marxists on both sides are out of date.
      [Mr. JOHN BREWIS in the Chair]
      Mr. Bruce-Gardyne: One thing which I always enjoy about the so-called regulator debate is that it seems to provoke a certain amount of mild anarchy on either side of the Committee. As a mild anarchist, I find this attractive.
      We all recall the formidable speeches by the hon. Member for Birmingham, All Saints (Mr. Brian Walden) in the regulator debate of 1968. This afternoon we have heard a number of speeches which have, shall I say, incorporated an element of mild dubiety towards our respective Front Benches. I shall try not to add too much to the totality of mild dubiety in my brief comments as I want to be rather eccentric and concentrate primarily on the Clause.
      First, I want to pick up one remark by the Minister of State in his opening speech when he said that no one on either side advocated massive deflation. He is absolutely right.
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      7.15 p.m.
      The question is where we place the balance of priorities at the margin between the dangers involved in the evils of unemployment and the dangers involved in the evils of inflation. I do not think that any hon. Member on either side believes that Governments of either party have conducted or are conducting a policy designed to achieve, and based upon the achievement of, higher levels of unemployment.
      What worries some of us still is where precisely the Government's priorities lie between the achievement of their growth objectives for the economy and the observance of their monetary balance. If the achievement of the growth objectives has priority, then some of us would have some anxiety about the inflationary implications of this priority.
      I want to concentrate on whether we should renew the regulator power. I was delighted that the hon. Member for Cornwall, North (Mr. Pardoe), on behalf of the Liberal Party, joined me in putting down an Amendment to question this very point. However, in his speech I discovered that I had harboured a cuckoo in the nest. His demand was not that we should not have the regulator, but that we should have something bigger, more impressive and all-pervasive.
      I think that in these debates we should indulge in a modest degree of self-criticism to the extent of occasionally rereading the speeches which we have made. It is always good for us to do this.
      Mr. Timothy Raison: Not aloud!
      Mr. Bruce-Gardyne: I said "reread", not "repeat".
      I notice that in the last regulator debate in which I participated I prophesied a good deal of doom and destruction. I am happy to say that my prophecies were somewhat exaggerated. This form of self-criticism is particularly desirable in terms of the regulator debate because it shows that our judgments can often be wrong.
      I understand that the regulator is designed as an instrument of instant economic management. My right hon. Friend the present Chancellor of the Exchequer put this quite clearly in the

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      debate when the regulator was first introduced on 1st June, 1961, when he said that it was designed
      "to provide a means of stimulating or discouraging consumption according to the general state of the economy."—[OFFICIAL REPORT, 1st June, 1961; Vol. 641, c. 520.]
      If we accept that this is what I should be inclined to describe as the fine tuner's tuning fork and if the short-term judgments on both sides can be somewhat fallible, I cannot help wondering whether this instrument can on occasion be dangerous. If we regard the history of the use of the regulator, this anxiety may be somewhat reinforced.
      The hon. Member for Cornwall, North pointed out that so far the regulator has been used on three occasions, and on each occasion in an upward direction. It has never been used in a downward direction and it has never been used alone. On each occasion, it has been used as part of a crisis package. What emerges is that it is hard to argue that, in any of those packages, the regulator was indispensable, and on at least one of those occasions—in 1966—and possibly more than one, it was one of several substitutes for an act of devaluation without which the other measures were most unlikely to be successful.
      We should also consider at least two occasions when the regulator was not used and when many people, with the advantages of hindsight, would feel that it should have been used. One was the occasion when, before the present Speaker left office as Chancellor in 1962—we have it on the authority of Mr. Samuel Brittan and it has never been challenged—he intended to use the regulator in a downward direction. It was never used, but I cannot help wondering whether, if it had been used at that time, it might have been a more sensible operation than some of the fairly massive reflationary steps taken over the following 12 months.
      Then there was the occasion when the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) took office, when, again, many commentators would feel that he would have been well advised to use the regulator in the immediate aftermath of devaluation, rather than waiting for his Budget at the end of March. All that one can say about this history is that neither the use nor the
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      failure to use the regulator has shown that it is at all times a particularly wisely-used instrument of short-term economic management.
      Clearly, everyone has agreed that, if the regulator is to be used during the coming 12 months, it is most likely to be used in a downward direction. In other words, in the words of the Chancellor in 1961, it will be to stimulate consumption. We have to remember that that is at a time when, according to the Treasury's own forecasts, the growth of consumption is already expected to be the largest element of expansion in total demand—even if one accepts, as I might be inclined to do, some of the reservations of the hon. Member for Gateshead, West (Mr. Horam) on the likelihood of fulfilment of the Treasury's forecasts in this respect.
      So the use of the regulator in a downward direction in the coming 12 months could be expected to add a further stimulus to consumption, at a time when the Treasury has already forecast that consumption is likely to be rising pretty substantially. Of course, I can see the case for the use of the regulator as an anti-inflationary device, because of its effect on prices, but I wonder whether that is how it is likely to be used.
      We should carefully consider the comments of Sir Douglas Allen to the Wilberforce Committee in this connection. The key phrase in his evidence was this:
      "Whatever I can say about demand management policy—and I cannot say a great amount—in 1971, I can assure the Court that, if the situation produced a tendency for unemployment to rise, there are plenty of means the Government could take to prevent it."
      No one would dispute that foremost among these different means would be the use of the regulator.
      What I dispute is whether the use of the regulator would have any of that sort of dramatic effect which seems to be expected of it on levels of unemployment. I have said before that I sometimes think that managing the British economy is like driving an armoured car backwards, where one's field of vision is very limited, one's access to controls is remote and sluggish and consequently there is an inevitable tendency to over-compensate.
      Much of the present level of unemployment reflects the monetary policies pursued by the right hon. Member for Stechford in his last year of office. I do

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      not complain about those policies, because it is a fallacy to imagine that one could hope to cure the sort of inflationary stampede which we were beginning to experience at that time and have experienced since without accepting some diminutions in levels of employment and investment.
      But if it is true that present levels of unemployment are closely related to those monetary policies 18 months ago, surely it must be pure wishful thinking to imagine that the use of the regulator later this summer or autumn could have any significant effect—indeed any effect at all—on levels of unemployment this winter or next spring.
      The kernel of my anxiety about the renewal of this power is that if we seek to use the regulator in the way that Sir Douglas Allen seems to have implied, we shall be placing exaggerated expectations upon it, and as those exaggerated expectations of its immediate effect on levels of unemployment turn out to be disappointed, there will be an endless impulsion, an inclination, to repeat the dose and repeat it, and thereby to add to the substantial demand pressures which we shall probably be adding to the economy at a later stage in 1972.
      I sometimes wish that those on the Labour Front Bench who have had fairly recent experience of Government and who must know from their own experiences that unemployment is not an economic factor which responds rapidly to sudden changes of direction would desist from clamouring for forms of instant action which, if taken by any Government, could lead only to disappointment with the lack of results which they would achieve.
      Mr. Dalyell: I do not think that the hon. Member for South Angus (Mr. Bruce-Gardyne) should be under any illusions about us. We have been reluctantly driven to the conclusion that the Government are using unemployment as an instrument of economic policy, if only in a negative sense, in the sense that they have not put full employment anything like at the top of their priorities. We genuinely believe this.
      I should like to endorse the speech of my hon. Friend the Member for Gateshead, West (Mr. Horam), particularly what he said about there being all the difference in the world between having
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      a prices and incomes policy from the springboard of a strong balance of payments and trying to do it from the basis of a weak balance of payments.
      My point is an abbreviated question to the Chancellor. Is the Treasury doing any serious work on the whole question of the use of the regulator as it affects the multi-national company? A great deal could be said about it, but, in shorthand, there is an enormous difference between using the regulator, really applying it to the traditional economy which we have known until the last 10 years, and doing it on the basis of an economy where the multi-national company, with its multi-national decision making, is providing more and more of the worthwhile jobs.
      What work is the Treasury doing on the use of the regulator and how that use can be altered by the existence of the increasing growth of the multinational company?
      7.30 p.m.
      Mr. Barber: The whole Committee will agree that this has been a useful and wide-ranging debate. Hon. Members on both sides will also accept, whether or not they agreed with the views he expressed, that my hon. Friend the Minister of State dealt comprehensively with the speech of the hon. and learned Member for Lincoln (Mr. Taverne).
      In the past six weeks we have had a succession of economic debates, and rightly so in present circumstances. My hon. Friend the Member for St. Ives (Mr. Nott) said that the Budget debate was over-subscribed and that he had not had an opportunity of getting in. I managed to get into the Budget debate twice. [Interruption,] I was also able to get into the Second Reading debate, which was followed by a debate on broad economic policy, principally on unemployment, on the day following the Second Reading debate. My hon. Friend the Member for Oswestry (Mr. Biffen) will, therefore, understand why on this occasion I can give him an assurance that I do not intend to indulge in a tour d'horizon,
      Mr. Biffen: I welcome my right hon. Friend's comment in this respect. He will appreciate, however, that hon. Members in all quarters of the Committee are anxious to have, at an early date, an

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      indication from the Government of their reaction to the recent changes in monetary arrangements in Western Europe. Would my right hon. Friend care to use this opportunity to confirm that the House will be given a chance to hear the Government's view on this subject quite soon?
      Mr. Barber: I recognise that a few hon. Members have suggested that, now or later, we might allow the rate of sterling to float. I have always respected those who take this view, and it is useful in a wide-ranging debate of this kind that it should be expressed. However, I made my views clear on the arguments against floating rates as a general system in the speech I made to the I.M.F. meeting in Copenhagen last September.
      Mr. Biffen rose—
      Mr. Barber: I will answer my hon. Friend's question.
      I believe that the considerations which I then outlined remain valid. Those views about a general system of floating rates were, I believe, fully shared by the other Governments, but it was agreed that there should be further study of some improvements in the exchange rate system, and this included the possibility of temporary floating in particularly difficult circumstances.
      Inevitably, as was anticipated last September, these studies are bound to take some time, but the important point about what has happened this week in relation to what has been said in today's debate is that both the Governments who, for the time being, have ceased to maintain the normal margins, have explicitly stated their intention that this is to be temporary.
      A number of matters of great significance have been raised today, and as I indicated at the outset, after the remarks made by my hon. Friend the Minister of State I do not wish to detain the House for too long. As for the Official Opposition Amendment, I hope that, on reflection, after the explanation which was given by the Minister of State, it will not be pressed because it has become clear that it would not achieve the objective which the hon. and learned Member for Lincoln had in mind.
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      The hon. and learned Gentleman seemed to suggest in his opening remarks that the Government should now take steps to reduce the level of unemployment without regard to the pace of cost inflation and particularly without regard to the level of pay settlements. I believe that that is a most dangerous contention and that such a policy is a prescription for a return to the worst sequence of events which we experienced at times in the past, because the inevitable consequence would be a situation of excessive demand, and this would inevitably lead in due course, as we experienced in the past, to a slamming on of all the brakes.
      As some of my hon. Friends have rightly pointed out, it is entirely untrue to say that the Government are deliberately using unemployment as a means to combat inflation. The hon. and learned Member for Lincoln put forward what seemed the rather extraordinary idea that the answer to inflation was to put one's foot hard down on the accelerator and expand as fast as possible. This, he said, would lead to a fast rise in productivity and, therefore, as I understood his argument, to a slower rise in unit costs. I guess that if he and his colleagues were in government now they would not be putting forward such wild notions.
      I recognise, as has been said, that the relationship between the level of unemployment and the rate of wage inflation is not what it was sometimes thought to be. It is, I would have thought, incontrovertible to say that it is reasonable to expect that any significant increase in the pressure of demand would tend to add to cost inflation.
      The April unemployment figure was certainly higher than any of us in this Committee would have liked to have seen. I must say, in frankness to hon. Members, that it is possible that even though the absolute level of unemployment may fall, the seasonally adjusted underlying trend may go on rising for another month or two.
      Mr. Sheldon rose—
      Mr. Barber: I will give way in a moment.
      In my Budget speech I explained that, in the absence of any Budget changes, the prospect was for a rather slow increase in output during the present

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      financial year. This was why—I will not go into the details again—I proposed a number of tax changes designed to lift the rate of increase in output over the next year, but broadly in line with the increase in our productive capacity.
      In spite of assertions to the contrary during this debate, there is really very little reliable new evidence on which to base a revision of the Budget forecast of output. A few more economic indicators have become available, some of which have been mentioned today, but most of them deal with the first quarter, or the period before the Budget, and many of them are difficult to interpret. As I have said at Question Time, because of the postal strike some of them, like the Index of Industrial Production, relate to the period well before the Budget.
      Mr. Sheldon: The right hon. Gentleman has given some useful information about unemployment, particularly when he said that, seasonally adjusted, the figures would be rising in June and July. Can he say what is likely to happen in August, when a large number of school leavers come on to the labour market?
      Mr. Barber: I said, having chosen my words carefully, that the April unemployment figure was higher than any of us would have liked to have seen. I then said that it was possible that, even though the absolute level of unemployment might fall, the seasonally adjusted underlying trend might go on rising for another month or two. I thought that, as the question of the unemployment level had loomed large in this debate, it was right for me to tell the Committee frankly of this possibility.
      I wish to repeat a warning which I have given before about cost increases. If we are to see a rise in exports and a slowing down in the rate of imports, with a renewed willingness among businessmen to invest, we must remain competitive with other countries. It has been pointed out that many other countries have also had large increases in their labour costs in the last year. However, the fact is that they are making very determined efforts to redress the situation in their countries, and it would be very foolish and imprudent on our part if we were to assume that they will not succeed. This is why we, too, must succeed with our policy of de-escalation
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      of pay settlements. If we do, the prospect of rising output and demand is good. If we do not, a further boost to home demand would lead to trouble in the balance of payments and would also aggravate the difficulty of dealing with our major problem of cost inflation.
      My hon. Friend the Member for Oswestry referred to the extent to which the events of the last few days in the foreign exchange markets would be liable to affect our economic performance over the next year. At this stage, any judgment should be a somewhat cautious one. A great deal depends on the level at which the deutschemark floats and for how long it floats. But obviously, as I think my hon. Friend was implying, in so far as the exchange cross rate with sterling appreciates, our exporters will find the German market a more attractive one. Moreover, the appreciation of the Austrian schilling and the Swiss franc, the currencies of our two E.F.T.A. trading partners, is bound to be beneficial to our sales in those countries and should strengthen our position in other markets. While I repeat that a fairly cautious view is called for at this stage, my hon. Friend was absolutely right in saying that these developments create a new opportunity for British exporters. I hope that they will not be slow to seize it.
      In my Budget speech I explained why I came to the conclusion that some addition to demand was called for, and then I made a reference to the regulator, which we are now discussing, and I said:
      "If after the Measures I am about to announce have been allowed a reasonable time to have their effect, a further stimulus is needed, the usual instruments are always available."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1370.]
      One of the instruments to which I was referring was the regulator. Therefore, the question we have to ask ourselves is whether, in the intervening period between the Budget speech and today, a reasonable time has elapsed. That period is, to the day, precisely six weeks. It would be wholly unrealistic and, indeed, ludicrous to pretend that a reasonable time has been allowed for the measures to have their effect.
      One of the major mistakes that any Chancellor of the Exchequer can make is to chop and change from month to month, with the inevitable consequence that those who have to take decisions

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      in business have not the remotest idea of the course that the Government have set themselves. Obviously, we may and we do differ about individual proposals in the Budget. But I think that we are all agreed that one of the good points about the Budget as a whole is that it lays down a strategy not just for the immediate future, but for a considerable period ahead. Of course, if the situation changes, the regulator is there to be used. If I did not take that view, there would be no point in including Clause 6 in the Bill, the Clause which provides the power that we are discussing.
      I return to the question: has a reasonable time elapsed for the measures which I announced to have their effect? I ask the Committee to bear in mind—
      Mr. J. T. Price: I have been listening to the arguments for some two hours now. Does the Chancellor realise that whilst he may take this extremely cautious view of the future—naturally we do not condemn him for caution, because he has a great responsibility—the Stock Exchange has been far shrewder in assessing what is likely to happen? The Stock Exchange boom, which is not an artificial one, against an economic blizzard outside, is anticipating what will happen when the Government are forced in the autumn to take this reflationary measure. Every shrewd investor who operates on the Exchange, and is very often using the new money available for that purpose, has taken this view. It is not my view, but that of responsible opinion in the City.
      7.45 p.m.
      Mr. Barber: I believe that the interpretation which the hon. Gentleman has put upon what has been happening on the Stock Exchange is completely false. When one is considering whether a reasonable time has elapsed and whether the regulator is or is not likely to be used in the autumn, it is worth bearing in mind that a number of the tax changes which I proposed have not yet come into operation. For example, the cut in S.E.T. does not become operative until 5th July, and from then on, considering the cut in S.E.T. alone, for the following nine months there will be a cut in taxation of no less than£290 million. That will certainly have its effect, not only on non-
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      manufacturing industries, which ultimately bear the burden of S.E.T., but on the manufacturing sector, because it will mean a reduction in the forced loan to industry of about£100 million.
      Mr. J. T. Price: And on real property values, which have increased by 12½ per cent., since last—
      The Temporary Chairman: Order.
      Mr. Barber: There is another decrease in taxation which is bound to have a significant effect and that is the improvement in the child allowances, which I announced, because these are still to be reflected in the pay packets. Inevitably it was bound to take some time for the necessary recoding to take place, but it is expected that the improved child allowances will be reflected in the pay packets by July at the latest. This will involve a further cut in taxation this year, as from the time when they are reflected in the pay packets, of£163 million. In addition, there is the second cut in corporation tax of 2½per cent. This reduction is in respect of payments of corporation tax which become due, in general, on 1st January, 1972. I hope very much that that reduction will be—or, perhaps, even has been—to some extent anticipated. But, nevertheless, here again the cost in the financial year 1971–72 is£55 million.
      I do not say this in any party spirit, but so often, over the years, it seems that we have over-stimulated demand and acted precipitately, with the result that later on we have had to slam on the brakes, with all the consequences which we know only too well. As one of my hon. Friends has rightly said, this year taxation will be some£1,000 million less than it was when the right hon. Gentleman left office. Of course, when in Opposition, he wants us to make further cuts.
      When I wound up the Budget debate, I explained why I believed that it would have been irresponsible to boost consumer demand more than I am doing. The whole House wants the level of unemployment to fall. But as I said in that debate:
      "I cannot make any promise that unemployment will fall until we get a substantial reduction in the level of pay settlements."—[OFFICIAL REPORT, 5th April, 1971; Vol. 815, c. 166.]

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      The Budget was designed, after a time, to slow down the rise in unemployment and then to halt it. But its success in achieving this will depend, above all, on the progress of de-escalation of pay settlements.
      The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), during the Budget debate, said that
      "…a Chancellor should be judged much more by how he manages the whole economy…than by the tax changes…"—[OFFICIAL REPORT, 31st March, 1971; Vol. 814, c. 1529.]
      If it has to be one or the other, the Committee will fully sympathise with the right hon. Gentleman for wanting to draw a veil over his own tax changes. After all,£1,293 million in higher taxes over three years is a record which even a less sensitive historian than the right hon. Gentleman would probably want to forget.
      In this financial year, we have put forward proposals, many of which are embodied in the Bill, for reductions in tax rates to the extent of about£1,000 million. I have never under-rated the problems that we face, especially the cruel and difficult problem of inflation. I respect those whose views differ and those who put forward alternative policies. Throughout the period of this Government, we have been consistent in our approach. Under the leadership of my right hon. Friend the Prime Minister, we are resolute in our determination to deal with our short-term problems in such a way as not to be deflected from carrying through the long-term measures necessary to reform the structure of our economy. We intend to carry these policies through to their full fruition for the benefit of the whole nation.
      Our immediate aim is the de-escalation of pay settlements. As we succeed in that aim, the way will be clear to get unemployment down to a tolerable level and to slow down the rise in prices.
      Despite these two great problems which we face at present, there are other encouraging signs. Sterling is strong. Most of our overseas debt has been repaid. Personal savings are rising. The nation, if not the Opposition, welcomes both the Industrial Relations Bill and the Budget as evidence that at last we have a Government who are determined to carry through fundamental reforms in the interests of the nation as a whole.
      Mr. Roy Jenkins: I can agree with the Chancellor of the Exchequer at least in saying that we have had a wide-ranging and interesting debate. Even the hon. Member for St. Ives (Mr. Nott) will agree now that we had almost an adequate ration of backbench speeches and perhaps, after four hours, the hon. Gentleman will forgive two further brief interventions from the Front Benches.
      I enjoyed many of the contributions, especially some of those from the benches opposite. The hon. Member for Oswestry (Mr. Biffen) spoke with a certain air of messianic condescension to his own party, as one who has a unique grasp of revealed truth and who, from statements that we have had recently, has participated, although vicariously, in making the Prime Minister, Prime Minister and presumably in making the Chancellor of the Exchequer, Chancellor of the Exchequer.
      Then we had the hon. Member for South Angus (Mr. Bruce-Gardyne) and the hon. Member for St. Ives, to whom I have referred already. The hon. Member for South Angus began by saying that he "wanted to be eccentric". I thought that eccentricity was an act of spontaneity. Therefore, it did not altogether surprise me that his speech was a good deal less eccentric, certainly less engagingly so, than that of the hon. Member for St. Ives. The only eccentric feature in his speech was his description of his technique of Army driving. But that sounded more dangerous than eccentric.
      The hon. Member for St. Ives raised a number of interesting issues. He spoke with what he described as the freedom of the back benches about floating rates, future parity of sterling, and our attitude in a position where at least temporarily some people are floating. I make only two comments. I think that the Chancellor of the Exchequer, to deal with a little temporary difficulty, nailed his colours to a couple of masts too firmly in Copenhagen. We shall see what happens. On the other hand, while I have no dogmatic objection to floating, I thought that the hon. Member for St. Ives looked for two rather contradictory benefits. In a couple of sentences, he talked first of the value of our floating, presumably upwards, to repulse an inflow

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      of dollars which would be damaging to us from an inflationary point of view. Then he talked about the value of floating, presumably downwards, to give a stimulus to our exports. I think that he will agree that it is difficult for both to happen at the same time.
      It was also interesting, within a few minutes of the hon. Gentleman talking about the embarrassing inflow of dollars and its deleterious effects, to hear in the course of the speech of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), the parrot cry from the benches opposite, "What about our debts?" I hope that we can begin to bury that now. We cannot have it both ways. We cannot at the same time be deeply embarrassed by the present inflow of dollars. There is no doubt that the balance of payments surplus that the Government inherited, combined with the sustained strength of sterling, means not that the medium-term debts have all disappeared—though they are fairly limited in extent at present—but at least that the idea that there is a tremendous albatross hanging round the necks of the Government is nonsense. I hope that we shall hear no more about it, even from such a superficially partisan speaker as the Financial Secretary.
      The hon. Member for Horsham (Mr. Hordern) spoke about the Government's monetary policy, which to some extent impacted upon what the hon. Member for St. Ives said about the inflow of dollars and the possible effects of it. I do not suppose that the hon. Member for Horsham will wish to go on record as agreeing with me, but I am not sure that he disagrees with me basically too strongly.
      I am mystified about the Government's present monetary policy. I have no idea—I hope that the Chancellor has—whether it is neutral or passive or, if it is between the two, exactly at what point it is. I think that the Chancellor of the Exchequer said that it will be passive for the next three months and that after that he does not know. Presumably, we are half way through the three months, as it is six weeks since the Budget. In other words, it is not containing inflation, but he hopes, after three months, that if inflation needs to be further contained, he will use a monetary policy which might contain inflation rather later than it was necessary to use it to contain inflation. That is the
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      position which has been put forward on the monetary policy.
      The Minister of State was less lucid than usual. When he spoke in opposition, I remember thinking that he spoke responsibly and that he would be happier in government. I was not sure today that he would not have been happier speaking in opposition. Several times he said that he could not follow my hon. and learned Friend the Member for Lincoln (Mr. Taverne) and my hon. Friend the Member for Walton. I could not follow the hon. Gentleman a lot of the time. He is a lucid thinker and speaker. I believe that the reason why I could not follow him was that he was speaking to a very unhappy brief.
      There is a fundamental gap in the centre of the Government's logical thinking about the relationship of the expansion of the economy to the present level of wage settlements. We all agree that there is a severe cost inflation problem at present. The Government have often a little over-simplified the reasons to which they attribute it. It is there, and no one will dispute it. At the same time, it is clear that the economy is being worked well below capacity. If anything, as time goes on and as productivity increases, the gap between capacity and the level at which the economy is worked is increasing. That cannot be disputed. One result is the present totally unacceptable level of unemployment.
      I was not sure what the Chancellor of the Exchequer was saying today. He appeared to be telling us that the figures, seasonally adjusted, would get worse for a month or two. Was he telling us that they would not get worse for more than two months? If so, that is encouraging news. However, I notice that he does not confirm it. He would be rash to do so on the basis of the present policy.
      I fear that the seasonally adjusted figures are likely to continue to get worse for quite a bit longer. We have the economy operating well below capacity. Furthermore, what is clearly the case, six weeks after the Budget it is difficult to say that we have firm evidence about what has happened to the economy since the Budget. What we have increasing evidence about is that the base level on which the Budget was planned was falsely seen before the Budget. The level of

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      activity was believed to he higher when the right hon. Gentleman was drawing up his plans than apparently is now the case. Therefore, this is an important factor to be taken into account.
      8.0 p.m.
      What undoubtedly is the case is that there is substantial slack in the economy. I should not for a moment advocate piling demand inflation on top of cost inflation, but there is a good deal of room to expand the economy without getting near to doing that. How can it be otherwise, with unemployment at 800,000-plus, and still rising, and with that unemployment not now confined, though worst, to the weaker regions but growing rapidly in the hitherto prosperous areas of the country, such as the Midlands? How can it be pretended that there is not a considerable degree of slack?
      It is a false argument—and no doubt this is one reason why the Minister of State was unhappy—to say that additional expansion of the economy would pile demand inflation on top of cost inflation. If the Chancellor's argument—and this is the central, logical fallacy—is that it is not possible to give any stimulus to growth until cost inflation—which he attributes wholly to wage increases—has been brought under control, why did he make any concessions at all in his Budget? That is the logical gap in the Chancellor's argument. Why is it right to take measures which will prevent unemployment from rising still further at some time in the future, but not right, with this gap of unused capacity, to take measures which will bring it down?
      Our other objection to the Chancellor's measures is to some considerable extent based on the timing of them. I think that the right hon. Gentleman should have acted earlier. Every Chancellor should not tinker too much, and it certainly is the case that measures take a little time to work through in their effect on the employment situation, but there would have been a substantial case for acting last autumn, which I envisaged in my last Budget Statement, and there would have been a great case, given the present unemployment position, for acting in the Budget by means of
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      measures which would have bitten more quickly than those which the right hon. Gentleman chose to take.
      The Chancellor said that some of the measures would not come into effect for some time. It will be a long time before the effect of the cut in S.E.T. builds up, and the other changes will take some time to come into effect. We can debate this further on the new Clause dealing with purchase tax. The Chancellor could, and should, have acted more quickly, but he deliberately chose not to do so, and there is no question but that the prospect confronting the economy now is in almost all respects—except the external prospect, which is for the moment very good—dismal. It is one of rising unemployment. It is one of a dismal in vestment forecast. The level of projected increases put forward in the Financial Statement were themselves pretty derisory, and it is far from sure that those will be achieved.
      The indications are that the performance will be worse than even those dismal projections. The prices prospect is bad. Most of the internal factors are bad. Therefore, in this traditionally rather general debate on the regulator I think that we are justified in saying that we cannot feel confidence in the Government's handling of the situation. Because the Government have chosen the wrong inflationary measures because they have timed them wrongly, and because of the logical fallacy in believing that additional expansion would pile demand inflation on top of cost inflation, we believe that the adoption of our proposal—although we have no confidence that the Government would use it properly—would give them a little leeway to deal with the situation. Therefore, although we shall not press Amendment No. 1, because there are valid reasons for the Government's view, we propose to press Amendment No. 13 to a Division, and I ask my right hon. and hon. Friends to join me in the Lobby in due course.
      Amendment negatived,
      Amendment proposed: No. 13, in page 7, line 27, at end add:
      ( ) Section 9(2) of the Finance Act, 1961 shall be amended by leaving out the words 'by the addition or deduction as may be prescribed, of such percentage, not exceeding ten

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      per cent.' and inserting the words 'by the addition as may be prescribed of such percentage, not exceeding ten per cent., or the deduction as may be prescribed of such percentage not exceeding fifteen per cent.'—[Mr. Sheldon,]
      Question put, That the Amendment be made:—
      The Committee divided: Ayes 165, Noes 195.

      Division No. 360.]

      AYES

      [8.5 p.m.

      Allaun, Frank (Salford, E.)

      Hamilton, James (Bothwell)

      Pannell, Rt. Hn. Charles

      Archer, Peter (Rowley Regis)

      Hamilton, William (Fife, W.)

      Pardoe, John

      Ashton, Joe

      Hamling, Willam

      Pavitt, Laurie

      Bagier, Gordon A. T.

      Hannan, William (G'gow, Maryhill)

      Pendry, Tom

      Barnett, Joel

      Hardy, Peter

      Pentland, Norman

      Beaney, Alan

      Harrison, Walter (Wakefield)

      Perry, Ernest G.

      Bidwell, Sydney

      Hart, Rt. Hn. Judith

      Prentice, Rt. Hn. Reg.

      Bishop, E. S.

      Hattersley, Roy

      Price, J. T. (Westhoughton)

      Blenkinsop, Arthur

      Healey, Rt. Hn. Denis

      Price, William (Rugby)

      Boardman, H. (Leigh)

      Heffer, Eric S.

      Rankin, John

      Bottomley, Rt. Hn. Arthur

      Hooson, Emlyn

      Reed, D. (Sedgefield)

      Bradley, Tom

      Horam, John

      Rees, Merlyn (Leeds, S.)

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

      Houghton, Rt. Hn. Douglas

      Roberts, Albert (Normanton)

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

      Hughes, Rt. Hn. Cledwyn (Anglesey)

      Roderick, Caerwyn E.(Br'c'n&R'dnor)

      Campbell, I. (Dunbartonshire, W.)

      Hughes, Mark (Durham)

      Roper, John

      Carmichael, Neil

      Hughes, Robert (Aberdeen, N.)

      Ross, Rt. Hn. William (Kilmarnock)

      Carter-Jones, Lewis (Eccles)

      Hughes, Roy (Newport)

      Sheldon, Robert (Ashton-under-Lyne)

      Castle, Rt. Hn. Barbara

      Irvine (Rt. Hn. Sir Arthur(Edge Hill)

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

      Clark, David (Colne Valley)

      Jenkins, Hugh (Putney)

      Silkin, Hn, S. C. (Dulwich)

      Cocks, Michael (Bristol, S.)

      Jenkins, Rt. Hn. Roy (Stechford)

      Sillars, James

      Cohen, Stanley

      Johnson, Carol (Lewisham, S.)

      Skinner, Dennis

      Concannon, J. D.

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

      Small, William

      Conlan, Bernard

      Johnson Walter (Derby, S.)

      Smith, John (Lanarkshire, N.)

      Crawshaw, Richard

      Jones, Dan (Burnley)

      Spearing, Nigel

      Crosland, Rt. Hn. Anthony

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

      Spriggs, Leslie

      Cunningham, G. (Islington, S.W.)

      Kaufman, Gerald

      Stoddart, David (Swindon)

      Dalyell, Tam

      Kerr, Russell

      Stonehouse, Rt. Hn. John

      Davies, Denzil (Lianelly)

      Kinnock, Neil

      Strang, Gavin

      Davies, Ifor (Gower)

      Lambie, David

      Summerskill, Hn. Dr. Shirley

      Deakins, Eric

      Lamond, James

      Swain, Thomas

      Delargy, H. J.

      Lawson, George

      Taverne, Dick

      Dell, Rt. Hn. Edmund

      Leadbitter, Ted

      Thomas, Rt. Hn. George (Cardiff, W.)

      Dempsey, James

      Lee, Rt. Hn. Frederick

      Thomas, Jeffrey (Abertillery)

      Douglas, Dick (Stirlingshire, E.)

      Leonard, Dick

      Thomson, Rt. Hn. G. (Dundee, E.)

      Douglas-Mann, Bruce

      Lestor, Miss Joan

      Tinn, James

      Duffy, A. E. P.

      Lewis, Ron (Carlisle)

      Torney, Tom

      Eadie, Alex

      Lipton, Marcus

      Urwin, T. W.

      Edwards, Robert (Bilston)

      Lomas, Kenneth

      Varley, Eric G.

      Edwards, William (Merioneth)

      Lyon, Alexander W. (York)

      Wainwright, Edwin

      Ellis, Tom

      Lyons, Edward (Bradford, E.)

      Walker, Harold (Doncaster)

      English Michael

      McBride, Neil

      Watkins, David

      Evans, Fred

      McGuire, Michael

      Weitzman, David

      Fisher, Mrs. Doris (B'ham, Ladywood)

      Mackenzie, Gregor

      Wellbeloved, James

      Fitch, Alan (Wigan)

      Mackintosh, John P.

      Wells, William (Walsall, N.)

      Fletcher, Raymond (Ilkeston)

      MacPherson, Malcolm

      Whitehead, Phillip

      Fletcher, Ted (Darlington)

      Marsden, F.

      Willey, Rt. Hn. Frederick

      Ford, Ben

      Mendelson, John

      Williams, Alan (Swansea, W.)

      Forrester, John

      Millan, Bruce

      Williams, Mrs. Shirley (Hitchin)

      Fraser, John (Norwood)

      Morris, Alfred (Wythenshawe)

      Williams, W. T. (Warrington)

      Galpern, Sir Myer

      Morris, Charles R. (Openshaw)

      Wilson, Alexander (Hamilton)

      Gilbert, Dr. John

      Morris, Rt. Hn. John (Aberavon)

      Wilson, Rt. Hn. Harold (Huyton)

      Ginsburg, David

      Murray, Ronald King

      Wilson, William (Coventry, S.)

      Golding, John

      O'Halloran, Michael

      Gourlay, Harry

      O'Malley, Brian

      TELLERS FOR THE AYES:

      Grant, George (Morpeth)

      Orbach, Maurice

      Mr. Joseph Harper and

      Grant, John D. (Islington, E.)

      Oswald, Thomas

      Mr. Ernest Armstrong.

      Griffiths, Eddie (Brightside)

      NOES

      Adley, Robert

      Blaker, Peter

      Carlisle, Mark

      Alison, Michael (Barkston Ash)

      Boardman, Tom (Leicester, S.W.)

      Chapman, Sydney

      Astor, John

      Boscawen, Robert

      Churchill, W. S.

      Atkins, Humphrey

      Bowden, Andrew

      Clarke, Kenneth (Rushcliffe)

      Baker, Kenneth (St. Marylebone)

      Bray, Ronald

      Cockeram, Eric

      Baker, W. H. K. (Banff)

      Brinton, Sir Tatton

      Cooke, Robert

      Barber, Rt. Hn. Anthony

      Brocklebank-Fowler, Christopher

      Coombs, Derek

      Batsford, Brian

      Bruce-Gardyne, J.

      Cooper, A. E.

      Bell, Ronald

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

      Cormack, Patrick

      Bennett, Dr. Reginald (Gosport)

      Buck, Antony

      Critchley, Julian

      Benyon, W.

      Bullus, Sir Eric

      Crouch, David

      Biffen, John

      Butler, Adam (Bosworth)

      Crowder, F. P.

      Biggs-Davison, John

      Campbell, Rt. Hn. G. (Moray & Nairn)

      Curran, Charles

      d'Avigdor-Goldsmid, Sir Henry

      King, Evelyn (Dorset, S.)

      Rees, Peter (Dover)

      d'Avigdor-Goldsmid, Maj.-Gen. James

      King, Tom (Bridgwater)

      Rees-Davies, W. R.

      Dean, Paul

      Kinsey, J. R.

      Renton, Rt. Hn. Sir David

      Deedes, Rt. Hn. w. F.

      Knox, David

      Ridsdale, Julian

      Dixon, Piers

      Legge-Bourke, Sir Harry

      Roberts, Michael (Cardiff, N.)

      du Cann, Rt. Hn. Edward

      Le Marchant, Spencer

      Roberts, Wyn (Conway)

      Edwards, Nicholas (Pembroke)

      Lewis, Kenneth (Rutland)

      Rossi, Hugh (Hornsey)

      Elliot, Capt. Walter (Carlshalton)

      Longden, Gilbert

      Rost, Peter

      Eyre Reginald

      Luce, R. N.

      Russell, Sir Ronald

      Fenner, Mrs. Peggy

      McAdden, Sir Stephen

      Sharples, Richard

      Fookes, Miss Janet

      MacArthur, Ian

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

      Foster, Sir John

      McLaren, Martin

      Skeet, T. H. H.

      Fowler, Norman

      Maclean, Sir Fitzroy

      Soref, Harold

      Fox, Marcus

      McMaster, Stanley

      Speed, Keith

      Fry, Peter

      Macmillan, Maurice (Farnham)

      Spence, John

      Gardner, Edward

      McNair-Wilson Michael

      Sproat, Iain

      Gibson-Watt, David

      Made), David

      Stainton, Keith

      Gilmour, Sir John (Fife, E.)

      Mather, Carol

      Stanbrook, Ivor

      Clyn, Dr. Alan

      Mawby, Ray

      Stewart-Smith, D. G. (Belper)

      Goodhew, Victor

      Maxwell-Hyslop, R. J.

      Stodart, Anthony (Edinburgh, W.)

      Gorst, John

      Meyer, Sir Anthony

      Stoddart-Scott, Col. Sir M.

      Gower, Raymond

      Mills, Peter (Torrington)

      Stokes, John

      Grant, Anthony (Harrow, C.)

      Mills, Stratton (Belfast, N.)

      Stuttaford, Dr. Tom

      Gray, Hamish

      Miscampbell, Norman

      Sutcliffe, John

      Green, Alan

      Mitchell, Lt.-Col. C.(Aberdeenshire, W)

      Tapsell, Peter

      Gummer, Selwyn

      Mitchell, David (Basingstoke)

      Taylor, Sir Charles (Eastbourne)

      Gurden, Harold

      Moate, Roger

      Taylor, Frank (Moss Side)

      Hall, John (Wycombe)

      Molyneaux, James

      Taylor, Robert (Croydon, N.W.)

      Hall-Davis, A. G. F.

      Money, Ernie

      Tebbit, Norman

      Hamilton, Michael (Salisbury)

      Monks, Mrs. Connie

      Thatcher, Rt. Hn. Mrs. Margaret

      Hannam, John (Exeter)

      Monro, Hector

      Thompson, Sir Richard (Croydon, S.)

      Harrison, Brian (Maldon)

      Montgomery, Fergus

      Trew, Peter

      Harrison, Col. Sir Harwood (Eye)

      More, Jasper

      Tugendhat, Christopher

      Haselhurst, Alan

      Morrison, Charles (Devizes)

      Vaughan, Dr. Gerard

      Hay, John

      Mudd, David

      Waddington, David

      Heseltine, Michael

      Murton, Oscar

      Walder, David (Clitheroe)

      Hicks, Robert

      Neave, Airey

      Walker-Smith, Rt. Hn. Sir Derek

      Higgins, Terence L.

      Nicholls, Sir Harmar

      Ward, Dame Irene

      Hiley, Joseph

      Noble, Rt. Hn. Michael

      Warren, Kenneth

      Hill, James (Southampton, Test)

      Nott, John

      Weatherill, Bernard

      Holland Philip

      Onslow, Cranley

      Wells, John (Maidstone)

      Holt, Miss Mary

      Oppenheim, Mrs. Sally

      White, Roger (Gravesend)

      Hordern, Peter

      Owen, Idris (Stockport, N.)

      Whitelaw, Rt. Hn. William

      Hornsby-Smith, Rt. Hn. Dame Patricia

      Parkinson, Cecil (Enfield, W.)

      Wiggin, Jerry

      Howe, Hn. Sir Geoffrey (Reigate)

      Pike, Miss Mervyn

      Wolrige-Gordon, Patrick

      Hunt, John

      Pounder, Rafton

      Wood, Rt. Hn. Richard

      Iremonger, T. L.

      Powell, Rt. Hn. J. Enoch

      Woodhouse, Hn. Christopher

      James, David

      Price, David (Eastleigh)

      Woodnutt, Mark

      Jenkin, Patrick (Woodford)

      Proudfoot, Wilfred

      Wylie, Rt. Hn. N. R.

      Jennings, J. C. (Burton)

      Pym, Rt. Hn. Francis

      Jopling, Michael

      Raison, Timothy

      TELLERS FOR THE NOES:

      Kershaw, Anthony

      Redmond, Robert

      Mr. Paul Hawkins and

      Kilfedder, James

      Reed, Laurance (Bolton, E.)

      Mr. Tim Fortescue.

      Kimball, Marcus

      Clause 6 ordered to stand part of the Bill,

    Clause 7

      SURTAX RATES FOR 1970–71
      Question proposed, That the Clause stand part of the Bill.—[Mr. Maurice Macmillan,]
      8.15 p.m.
      The Chief Secretary to the Treasury (Mr. Maurice Macmillan): Partly at least owing to the nature of surtax, this is in some respects a standstill Clause repeating in its provisions the same scale of rates as the previous Administration suggested for the previous year, because it refers to earnings which were taxed at
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      those rates under the provisions of previous Finance Acts for income tax. Surtax is more or less a deferred instalment of income tax, payable in the year following the year of assessment for which it is chargeable. It is an extra instalment of the income tax for that year. The surtax which becomes payable on 1st January, 1972, although the rates are authorised in the Finance Act, 1971—that is, this Bill when enacted—relates to the income tax chargeable in the tax year 1970–71 which is subject to the income tax levels imposed by the Finance Act, 1970.
      We shall therefore have to consider the Clause in relation to the then standard rate of tax and to the provisions which were then obtaining rather than to the 1971 rates.

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      The provisions of the Clause cannot in any logical way be related to changes in income tax proposed for 1971–72, although surtax payers will benefit this year to the extent that they share in improvements either in current income relief or in the general benefit from the reduction in the standard rate. The provisions cannot be related to the proposals for 1971–72 and still less are they affected by Chapter III in Part II—Clauses 22 to 29—relating to changes in the method of charging income tax starting in 1973–74.
      The Clause simply imposes for 1970–71 the same scale of surtax rates on the same successive slices of surtaxable income above£2,000 as that imposed for 1969–70 by the Finance Act, 1970. In other words, surtaxable incomes not exceeding£2,500 will continue to be exempt, but where the surtaxable income exceeds£2,500 surtax is charged on the excess over£2,000. To avoid anomalies where the surtaxable income is only slightly above£2,500, the Clause provides a "marginal" relief.
      Section 11(1) of the Finance Act, 1970 provides as follows:
      "Income tax for the year 1970–71 shall be charged at the standard rate of 41.25 per cent. and, in the case of an individual whose total income exceeds£2,500, at such higher rates in respect of the excess over£2,000 as Parliament may hereafter determine."
      Parliament is in the process of hereafter determining.
      The proposed scale for 1970–71, on top of the standard rate of 41·25 per cent., goes from 10 per cent., making the combined income tax and surtax rate 51·25 per cent., for incomes between£2,000 and£2,500 through 37·5 per cent., making the combined income tax and surtax rate 78·75 per cent., for incomes between£8,000 and£10,000, up to the top level of 50 per cent., making the combined income tax and surtax rate 91·25 per cent., for incomes over£15,000 a year. For the sake of clarity, I should explain that this refers to surtaxable income which is derived from gross income by an abstruse calculation with which no doubt we are all familiar in detail.
      The details of the Clause are simple and familiar and there is no difference from last year's provision. I do not think that I need weary the Committee by going over them again. I hope that both sides
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      will find themselves able to support the Clause. No Amendments to it have been put down. Hon. Members on both sides can express a general view on surtax at this or any other rate, and I have no doubt that views will vary from those who think that it is too much of a bad thing to those who think that it is too little of a good thing. I have no doubt that hon. Members opposite will support the Clause because it contains the same rates and scale on the same standard rate of tax as they laid down. I hope that my hon. Friends will equally be able to support the Clause despite its, to them, perhaps slightly dubious origin in detail.
      Mr. David Marquand: Perhaps I can at once relieve any anxiety which the hon. Gentleman may feel about whether the Opposition are able to support the Clause by saying that of course he is right. It merely carries on for another year the provisions included in the 1970 Act, and we have no objection to it. But we do think it right that it should be debated on the Floor of the House. As the hon. Gentleman has said, surtax as such is to disappear and we do not mourn its passing. But the very fact that it is to disappear means, we feel, that the principle on which it is based, and which is embodied in this Clause and in equivalent Sections of previous Finance Acts, must be re-emphasised.
      A debate on the general principle of surtax gives us such opportunity. We feel it all the more necessary to have the debate because a good deal of the criticism which surtax has attracted, particularly from the Conservative Party, appears to have been directed not just at the nature of the tax but at the principle behind it. Therefore, we cannot help feeling a little worried in case the Government, in abandoning the tax in future years, will also surrender the principle.
      The principle embodied in the Clause is basically simple—that those with high incomes should make a larger than average contribution to community services. I do not think that anyone now explicitly challenges that principle, although it would be nice to have from the Minister a rather more firm affirmation that he accepts that principle than any member of the Government has yet

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      given. The real argument between the two parties comes over the question of what level of contribution those with high earnings should make.
      We believe that the level of contribution from those with high earnings should not in principle be reduced. This does not mean that the way in which the contribution is raised must necessarily remain inviolate. On the contrary, it is true that many of us on this side, as well as hon. Members opposite, feel that there is a considerable case for changing the way in which the wealthier members of the community make their contribution to community services.
      There is a powerful argument for believing that, at the moment, the way in which high incomes are taxed encourages avoidance and is in many cases ineffective. But although we are not saying that the existing method must remain inviolate, we are saying that a change in the method must not be used as a camouflage for lowering the level. In particular, we say that, if the burden of direct taxation on high incomes is to be reduced, that reduction must be compensated for by an increase in the burden of taxation of capital wealth. In our view, the Government have given far too little sign that they recognise this, and it is because of this that we are suspicious, to put it mildly, of their attitude.
      I have said that much of the criticism which surtax has attracted from the Conservative Party appears to be directed against the fundamental principle of progressive taxation. This is particularly true of what is sometimes called the "incentive argument" for reducing taxation on high incomes. As deployed by hon. Members opposite, the incentive argument is nothing more than gross hypocrisy. The argument itself can be advanced in three ways. One can listen to what rich people tell one and can take what they say at face value. Arguments of that sort are by far the most common for saying that high rates of taxation have a detrimental effect on incentives. But such arguments are clearly worthless because obviously rich people, like everyone else, would like to pay lower rates of taxation and they are good at finding arguments for proving why they should. Only the exceptionally naïve or credulous will accept at face value what the high
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      income earners themselves say about the disincentive effects of high taxation.
      The second way in which the incentive argument is frequently advanced is on the basis of a kind of a priori deductive reasoning from what is alleged to be, I suppose, human nature—that people are bound to suffer a disincentive if they have to pay high rates of taxation because that is what people are like. But if one examines the situation purely on an a priori ground, there is at least as good a case for thinking that high rates of taxation will act as an incentive as for thinking that they will act as a disincentive.
      Mr. Raymond Gower: But does not the hon. Gentleman agree that, in certain circumstances, he has probably found evidence of disincentive not only at surtax level but at factory level? Has he not heard from constituents—I have—who are earning perhaps above average factory wages and complaining bitterly about the disincentive effect of taxation at the level of, say,£40 or£45 a week?
      Mr. Marquand Mr. Marquand: Undoubtedly the incentive argument applies lower down the scale and not only to high income earners. But the nature of the argument, which is the point I am on, is as dubious for the£45-a-week man as for the£45,000-a-year man. It is just as unreasonable to believe what a person says, with no other evidence to go on, in the one case as it is in the other, because the person putting the argument has an obvious vested interest.
      [Miss HARVIE ANDERSON in the Chair]
      8.30 p.m.
      On the a priori argument for believing that high taxation acts as a disincentive, surely the only common-sense thing to say is that it is highly probable that high taxation will affect different people in different ways? Some people will respond to the income effect and will want to make up their income to what it would have been, in which case high taxation will have an incentive effect. Other people may engage—though it is a little unlikely—in all sorts of complicated economic and mathematical calculations and come to the conclusion that because the marginal rate is high it does not pay them to undertake extra effort. On

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      a priori grounds one cannot believe that the disincentive argument is compelling. The only way to find out is to see what happens and how people's behaviour is changed by differing levels of taxation.
      Some studies of this kind have been carried out. The conclusions are, as is so often the case with studies of this sort, extremely confusing and, on the whole, negative. No one has yet been able to demonstrate that high rates of taxation have a significant disincentive effect. The evidence was reviewed very well by Professor Brown in a P.E.P. broadsheet published in 1969. After reviewing all the studies carried out, he asked:
      "Can the studies reviewed above provide a clear-cut answer to the question, do direct taxes have a disincentive effect? The only intellectually honest answer is No."
      That seems to me to be absolutely right.
      I now come to the point of the hon. Member for Barry (Mr. Gower) about disincentive effects lower down the scale, though a little further lower down than he was thinking about. If it were true that high levels of taxation, and particularly high marginal rates, had a disincentive effect on those with high incomes, surely it would be equally true that high marginal rates of tax on those with low incomes would have at least as great a disincentive effect? If Conservative hon. Members were honest in saying that they wish to reduce taxation on high incomes because of its effect on incentives, they would be at least as keen to reduce the marginal rates on those with low incomes. But it is now established beyond doubt that effective marginal rate of tax, if we include not only tax but benefit forgone, is often a great deal higher for poor families than for the wealthiest surtax payer in the country.
      This week's New Society contains an excellent article by Mr. Tony Lynes summarising the results of a study of low-income families in Birmingham. He shows that if a family with two children on£13-£14 a week increases its income by an extra£1 a week, it loses 72p of that extra£1 in higher insurance contributions and lost benefits—in other words, there is a poverty surtax of 72 per cent. marginal rate. For a two-child family earning£18-£19 a week, the marginal poverty surtax rate was over 100
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      per cent. If such a family increases its income by£1 a week it would be 21p a week worse off as a result of the changes in contribution and benefit.
      Mr. Nott: If I understand the hon. Gentleman's argument correctly, that would be no disincentive to that family to earn more. Is that what he is saying?
      Mr. Marquand: What I am saying is that if hon. Members opposite are to convince us that their reason for wishing to reduce the taxation of high income earnings is not to be nice to their friends, but because they are concerned about incentives, the same argument applies equally to those on very low incomes, whose marginal rate of tax and benefit together is a good deal higher in many cases than the highest marginal rate suffered by the wealthiest surtax payer.
      The point the hon. Gentleman has not yet taken aboard is that the whole drift of the Government's social policy is to make the whole problem worse than it was before. To drift towards the means-test State is bound to accentuate the marginal rate problem for those with low incomes. The Government's attitude on social policy proves that their professed concern with incentives for the wealthy is humbug. Even if the incentive argument applied to high income earners it could not apply to those who inherit high incomes. That is why we on this side of the House think it is fundamental that if there are to be reductions of taxation on high incomes, they are only justifiable if accompanied by a new and more effective attack on the inequality of capital wealth. The distribution of capital wealth in this country is scandalously unequal at the moment. In 1968, the richest 1 per cent. of the adult population owned 32 per cent. of the personal wealth. The richest 5 per cent. owned 59 per cent. and the richest 10 per cent. owned approximately 75 per cent. This is a far more unequal distribution than is the case with income. It is also clear that the distribution of personal wealth is not sufficiently more egalitarian in this country today than it was 60 years ago.
      There is a profound article by Professor Atkinson in the Political Quarterly which goes into the matter in detail. He shows that although the share of the richest 1 per cent. is smaller now than it was in 1911, the share of the next richest

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      9 per cent. has actually gone up. What has taken place is not a redistribution of wealth from the rich to the poor, but a redistribution within wealthy families from father to children and from grandfathers to grandchildren. It is also clearly demonstrated by Professor Atkinson that the rôle of inheritance is as great today as it was in the 1920s, when the whole question was examined by Josiah Wedgwood.
      It is also clear that the concentration of personal capital wealth is far more unequal in this country than in the United States and probably it is more unequal than in any other Western country. Whatever may be true about the effect of taxation of incomes on incentives, clearly there can be no incentive argument for maintaining this incredible inegalitarian state of affairs in regard to personal capital wealth. The only possible justification for maintaining this is the argument that property rights are sacred. We on this side of the House reject that argument since we believe, both on grounds of social justice and of economic management, that that view is quite wrong.
      There has been a good deal of talk in this debate about the need for an incomes policy. In the face of this distribution of personal capital wealth, how can one possibly go down to a coal miner in my constituency, who is working hard for£25 to£30 a week, risking his life in the process, and ask him to hold back his selfish demands for more? If we are to have an effective, acceptable and workable incomes policy it can only be in the context of a radical assault on this inequality of wealth. It is because the Conservative Party give no sign of recognising the need for this that I believe that, when they talk about incentives, they really mean inequality for its own sake.
      Mr. A. E. P. Duffy: Some of the most common beliefs about British taxation are myths. One is the belief that the United Kingdom is one of the most heavily taxed nations in the world, whereas international comparisons in O.E.C.D. data show that we come about halfway down the list. Another belief is that as individuals we are taxed more greatly than in fact is the case. This is now put down to
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      peculiarities of the standard rate and earned income relief.
      A third myth is that the United Kingdom tax tystem is highly progressive. This would be true for incomes above the£4,000 range, but for the bulk of incomes below this range the tax system is proportional rather than progressive. National Insurance contributions, rates and tobacco duties are regressive, that is to say, they take up a larger proportion of small incomes than of high incomes. Purchase tax and drink duty are roughly proportional. Thus, income tax in Britain is not the progressive tax that most people usually think it is. Britain's tax structure was once reasonably progressive, but inflation has now altered its incidence out of all recognition. In trying to ease the position of selected groups I suggest that the Chancellor is merely distorting the situation still further.
      The replacement of the archaic income and surtax system with a simple, single, graduated, personal tax has been welcomed on both sides of the House, but the logic of that tax is that it should be progressive throughout the whole of the tax system, and not just at certain levels. It is the opportunity for moving in this direction afforded by the change foreshadowed in Clause 7 which I now wish to explore. For example, a married man with two children will pay no tax at all on roughly his first£950 of income. Between about£1,000 and£4,000 a year, his marginal tax rate is constant. For every extra£ he earns he will pay 30·14 per cent. in tax, but in countries like Sweden and the United States and Germany the marginal tax rate continues to rise between£2,000 and£4,000 a year. This would make for a much more progressive income tax structure as well as for a more equitable distribution of the income tax load, if it were adopted in Britain.
      Under the present British system the progressive element in the income and surtax ranges hits hardest not only at the surtax payers as we all know, but as my hon. Friend the Member for Ashfield (Mr. Marquand) has now demonstrated, it also hits at anybody on the threshold of income tax.
      8.45 p.m.
      A married man with two children will, next year, pay no tax at all on£900 a

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      year. At£1,000 a year his effective or average rate of tax is 1·7 per cent. As his income rises to£1,500 his average rate of tax rises sharply to 11·2 per cent. At£2,000 a year it is up to nearly 16 per cent. I am sorry that the hon. Member for Barry (Mr. Gower) has had to leave the Chamber because he thought that only a worker earning£45 a week had reason to grumble. If he were here he would see that workers well below that level have reason to grumble. It may be that they have much more ample grounds for doing so.
      Between£2,000 a year and£4,000 a year the effective tax rate increases from 16 per cent. to 23 per cent. In other words, for the broad band of Britain's middle-class, between£2,000 and£4,000 a year the tax rate is the same, whereas the working man moving into and up through£1,000 a year to£2,000 a year finds his average rate of tax increasing rapidly as he goes. The same is true of the man moving out of the middle and into the upper executive income level. We all know that that is why, in a sense, we are having this discussion. This is what the Clause is about. This is one of the features of the Chancellor's Budget—relief for this type of man.
      We hear less about the families of the working man on the threshold of income tax and those who are paying income tax in the£1,000 to£2,000-a-year bracket. That is why in place of the present income tax and surtax I would prefer to see a smoother progression. This would make it easier for people to understand how much tax they pay and would also reduce the disincentive effect present, not merely at the upper end of the existing progression, but also at the lower end. It would undoubtedly allow a change in the maximum cut-off rate, but this is not something I would find very objectionable.
      I share the concern of my hon. Friend the Member for Ashfield over the present inequalities. I am especially concerned about those inequalities of wealth rather than of income tax rates. Presumably the higher the cut-off point the greater the store that would be set by inherited capital, tax evasion and tax avoidance. Would it not be better therefore to accept a lower cut-off point, together with the wealth tax as has been suggested?
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      After all, inequality in the ownership of wealth is much more glaring than it is in income. I want to add some further authorities to those cited by my hon. Friend in support of his contention. Michael Lipton in his work "Assessing Economic Performance" shows that the top 1 per cent. of the population owned 42 per cent. of the personal capital in 1960 and collected 60 per cent. of the property income. The very top 10 per cent. owned 83 per cent. and collected 99 per cent. These figures contrast with their mere 8 and 28 per cent. respectively of total post-tax incomes from all sources. The inequality is even greater and, of course, cumulative since the top 1 or 10 per cent. can and do save much larger proportions of their incomes and hence much larger amounts than those with smaller incomes and capital and can thereby add still further to their capital.
      Perhaps the most blatant abuses come not from those who own wealth but from those who control it—our top directors, managers and executives. As Eric White shows in "Survey of Executive Salaries and Fringe Benefits in the United Kingdom", there is an almost infinite variety of means of improving the lot of the employee outside the tax system; that is, by increasing real incomes and avoiding tax. The value of fringe benefits has thus assumed major importance.
      Fully to appreciate their variety and possibilities one needs to consult Margot Naylor's "How to Reduce Your Tax Bill". One example is that of a company operating a pension scheme for its chosen top executives—92 per cent. of the White companies for all their executives and another 7 per cent. for some—to provide a pension based on one half or more, in 55 per cent. of the cases, of the gross salary. Where the scheme provides a capital sum on retirement, this represents three year's salary or£10,000 tax free. In some cases the sum on retirement goes much higher. The company's contribution, being a legitimate business expense, was tax free.
      On retirement the executive could take the capital sum and purchase an annuity. This gives him a larger net income than if he took all his retirement benefit in the form of a pension, because about two-thirds of the annuity is regarded as tax-free capital. Or he could borrow against the capital sum and get tax relief on the

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      interest on the loan set against his remaining tax liability. If the company had some discretion, however nominal, as to the dependant or relative who was to receive the lump-sum payment on the employee's death, there was not even any liability to estate duty. Clearly it is in this direction that the tax gatherers ought to focus their gaze with a view to imposing levies on some of the capital accumulations to which it is giving rise.
      Mr. Nott: I had not intended to speak in the debate, but as none of my hon. Friends rose a moment ago I thought that I should comment on the opening remarks of the hon. Member for Ashfield (Mr. Marquand). He called in aid more professors than I have yet heard listed in any debate from either Front Bench for some time.
      Mr. Marquand: Two only.
      Mr. Nott: In calling in aid his professors, the hon. Gentleman joined them with a remark, in answer to an intervention by my hon. Friend the Member for Barry (Mr. Gower), which I found rather distressing. The hon. Gentleman was asked whether he had met people in his constituency, chaps earning an ordinary wage in a factory—
      Mr. Gower: A high wage.
      Mr. Nott: The hon. Gentleman was asked whether he had met people earning a high wage who had said, "My P.A.Y.E. deductions are such that it is not worth working overtime". Surely the hon. Gentleman must have met people in his constituency who complained that it was not worth working overtime because of the P.A.Y.E. deductions which are made.
      Mr. Marquand: I have met a large number of people who think that the rate of tax which they pay is a good deal higher than it is. One thing which I welcome about the changes is that this misconception will be removed. I am sure that we are all glad about that. What I said was that it does not seem to me that, because a man on£45 a week or any other level says that he will not work any more for fear of paying a high rate of taxation, one should necessarily believe him, unless one can actually find out that he does not work any more. What counts is behaviour, not what people say.
      Mr. Nott: But who will know best—the man who says that he will not go to work tomorrow because of the large deduction which will be made from his pay packet or the professor who publishes a pamphlet saying that the man is wrong? The argument is carried to extremes by the theorists in the Labour Party. The hon. Member for Ashfield says that the man may say that he is not going to work overtime but he does work overtime. I do not believe that that is always so. Men in my constituency genuinely do not work overtime because they think that their tax deductions are too great.
      The hon. Member said that they misunderstand the tax system, that the standard rate on earned income is not 7s. 9d. but 6s., because of earned income relief. But whether the man understands it or not does not destroy the argument that taxation is a disincentive. If a man believes that he is paying surtax at 90 per cent. of his income, it does not matter whether he is right or wrong: if he does not change his job because of it, it is a disincentive. It seems commonsense to me, whatever the professors may say.
      The hon. Member for Sheffield, Attercliffe (Mr. Duffy) talked of a pamphlet written by another professor about all the dodges by which people lowered their tax rate, one of which, he said, was borrowing money and offsetting it against taxable income. The pamphlet is out of date. The hon. Gentleman's own party, when in power, cancelled that concession two Budgets ago. He must get the latest edition of the pamphlet published by another professor, because the one which he read was out of date.
      The hon. Gentleman then went on to say—I think rightly—that there is no theoretical evidence as to how incentives work either way, and he quoted Professor Brown. But if it is not a different man, Professor Brown was the co-author of a P.E.P. pamphlet on negative income tax. I do not know whether the hon. Member's quotation was from that pamphlet. The whole of the pamphlet set out the arguments, which the hon. Gentleman used about the low income earners, saying that some of the highest marginal rates of tax in the United Kingdom are paid by those on very low incomes.

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      If one takes National Insurance contributions into account and adds them to the tax system, we know that the jump in marginal rates is probably equally as high for a low income earner, a man on£14 to£15 a week, as it is for the man earning£8,000 a year. But Professor Brown advocates a negative income tax to remove this anomaly, so he cannot have it both ways. He cannot say that there is a lack of incentive to the man on a low income to get himself out of the£15 bracket because of the high marginal rates of income tax and National Insurance and also that there is not a lack of incentive for the man on surtax.
      The hon. Member said that the level of surtax should not be reduced. It is his view and that of a large proportion of hon. Members who share his political faith, but it is not the view, I understand, of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) who was the Chancellor in the last Socialist Administration. In his Budget Statement he said quite clearly that he thought that the levels of tax on high income earners were too high. If the right hon. Member for Stechford were still the Chancellor, he might have done something about it because he said that he thought it should be tackled. Nor is it the view which is shared by the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) because when he spoke on this subject from the Opposition Front Bench only a week ago he said that he believed that the levels should be reduced on high income earners.
      9.0 p.m.
      This brings me to the next argument adduced by the hon. Member for Ash-field, namely, that perhaps, in the last resort, he might accept that the tax levels should be reduced on high incomes, but only if one clobbered the chap with wealth. I have fortuitously obtained from the Library a copy of the official Labour Party document "Into the 'Seventies" which stated, on the subject of a capital tax:
      "and since any new capital taxes such as a wealth tax might be paid out of capital or at the expense of current savings, the extra revenue could clearly not be directly traded off for general cuts in income or purchase tax because of the effects on consumption."
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      That statement, from an official Labour Party document, seems to make the case against a wealth tax.
      I have no partisan or ideological feelings against a wealth tax. However, the simple fact is that it is not a very good tax. It damages the savings ratio, which in turn damages the economy of the country generally. Why, if the hon. Member for Ashfield thinks that wealth should be dealt with in this way, were his right hon. Friends not prepared to do it in the 25 or however many Budgets it was that we had in five or six years of Socialism? The answer is that they did not do it not for ideological reasons—because their ideology would support a wealth tax—but because it would have been damaging to savings.
      It is right to reduce the levels of taxation on high incomes because it so happens that people with very high incomes save a greater proportion of their money than do those with small incomes. This is not surprising. If one reduces taxation or pays extra benefits to a person earning, say,£14 a week, he is, of necessity, likely to spend it all. If, on the other hand, one reduces taxation—and it does not cost much to do this in terms of actual cash—on somebody earning£50,000 a year, a very large proportion, if not the whole, of the reduction goes in increased savings.
      One of the values of a distribution of wealth that is not equal—I do not necessarily hold to this, but all the professors the hon. Member for Ashfield cares to consult will assure him that this is the result of the maldistribution of wealth—is that the rich save more than the poor.
      I am, of course, talking in macroeconomic as opposed to micro-economic terms. I dealt with the matter in micro-economic terms by saying that I did not know in theory which way incentives really operate—whether they work for the poor in one respect or for the rich in another.
      In macro-economic terms, it pays hand over fist to reduce taxes on the man earning£20,000 because he helps to swell the savings ratio, which helps one generate the sort of economic development which enables one eventually to reduce taxes right through the scale.
      I conclude by saying that I have heard the argument so many times that what

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      was so disgraceful about 6d. of income tax was that it benefitted the rich more than the poor. Of course it did, because the rich happen to pay more tax. Presumably hon. Gentlemen opposite want to keep a progressive tax system. This was the burden of the speech of the hon. Member for Ashfield. He did not want the progressive taxation system to be tampered with. I appreciate that hon. Gentlement opposite never lower taxes, but the present Government lower taxes; they have knocked off half the tax, in two Budgets, which the Labour Party put on in their 25 Budgets in five years. Under a progressive tax system, if we knock 6d. off tax, the chap who is rich will benefit rather more than the chap who is poor. It is a statement of the obvious.
      On this issue, although I have heard the hon. Gentleman's speech many times before, as he has heard mine before, his speech was unsatisfactory, and I hope that he will not call in aid too many professors on the subject of incentives and that he will rather more tend to listen to and believe the man in the street who says, "I shall not work overtime tomorrow; it is not worth it because taxation knocks too much off my pay slip."
      Mr. John Roper: I have not heard a speech of the hon. Member for St. Ives (Mr. Nott) before, so the one he has just made came to me as a first hearing. I found it very stimulating and I should like to respond to one or two of the points he made.
      The final point that he was discussing was the question of reductions in taxation. On this side of the Committee none of us complains about the fact that taxes have been reduced, but we are concerned about the way they have been reduced and the people who have benefited from that reduction, and, in particular, the way that it has benefited those who pay a good deal of surtax. The hon. Gentleman referred earlier to a possible inconsistency in various of the writings of Professor Brown. I suspect that he was referring to a different Professor Brown in the case of the negative income tax pamphlet from the Professor Brown in the study of incentive effects, referred to by my hon. Friend the Member for Ashfield (Mr. Marquand). Even if it was the same professor—we will not quarrel about that—if Professor Brown is inconsistent and
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      says that incentive effects do not work at high levels but work at low levels, then the Government are inconsistent when they are concerned about incentive effects at high levels, but are not prepared to show the same concern when it comes to incentive effects at the level of the poverty line.
      The hon. Gentleman also referred to the question of a wealth tax. He pointed out, as the Labour Party had shown in the document "Into the Seventies", that there are considerable macro-economic problems about substituting a wealth tax for other forms of taxation which have a direct effect upon consumption. That is true. That is one of the macro-effects about such a tax. But the hon. Gentleman referred to the grounds on which one judges whether a tax is good or had. Its macro-economic effect upon the savings ratio is not the only ground on which to judge it. It is one of the grounds on which one would wish to judge a tax, but others are its revenue-raising effect and its equity effect. I very much note what my hon. Friend said about the place of taxation within the context of the introduction of an incomes policy. Here a wealth tax could play a most useful part. It would not only have equity advantages, but would, in the long run, have macroeconomic advantages far greater than anything that has been done in the Budget.
      As for the Clause, I know very little at first hand about surtax, and none of my constituents has yet consulted me about whether they should work a little harder to pay more surtax or work a little less hard to pay less surtax. Perhaps the constituents of the hon. Member for St. Ives consult him about it, but my constituents never come to see me about it. They are more likely to want to talk to me about the effects of the poverty surtax, the family income supplement and the other ways in which the Government are affecting those at the bottom of the scale.
      Reading the Clause, one gets the impression that there are no changes in surtax this year. It says:
      "…in the case of an individual whose total income exceeded£2,500, at the same higher rates in respect of the excess of that income over£2,000 as were charged for the year 1969–70."

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      However, the Budget has had substantial effects in benefiting the surtax payer. Let us take the case referred to earlier of the man with two children who earns£10,000 a year. First, he will get increased child relief, perhaps£80. He will pay a lower rate of income tax. He will get additional earned income relief. Then he will be able to contribute to a personal pension scheme a further£750 a year, raising his total contribution from£750 to£1,500—[Interruption,] If he is not involved in a superannuation scheme, he can contribute up to£1,500 to a personal pension scheme and get tax relief on that, perhaps another£300.
      It is sometimes said that the surtax reductions in the Budget are designed to encourage incentive among the employed and that the surtax concessions have been given to the employed. However, that is not the whole story. Again taking our man earning£10,000 a year, if he has a further£5,000 of investment income, he will benefit from the Budget in terms of the tax that he pays on that£5,000 of investment income in addition to the benefits that he obtains on the£10,000 of earned income. The floor at which he will begin to pay surtax on the investment income will have been lowered because of the increased earned income allowance. Therefore, he will not merely benefit on his earned income. He will pay tax at a lower rate on the top slice, and so on his unearned income he will benefit as well. In such a case, there is not only a reduction in the surtax that he pays on the earned income. There is also a considerable reduction in the tax that he pays on the unearned income.
      If his wife is also earning, he will get considerable advantages next year. If his wife is earning in the surtax bracket and he has all the investment income attributed to him, which I understand is the practice at present, the benefit will be even more staggering. No doubt that my hon. Friend the Member for Heywood and Royton (Mr. Barnett) will tell me whether I am right about that.
      The new tax system will be very favourable to the upper middle classes. We have here a very interesting opportunity in which to carry out the sort of scientific experiment that people have been discussing. Shall we see these people working harder? I have been
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      looking at people whom I see on the Tube as I travel to Westminster. Is the rush hour from the affluent suburbs half an hour earlier? Do people leave work half an hour later in the evenings? Have they a new jauntiness in their step? Are entrepreneurs that much more enterprising in their appearance? I have not noticed it on the trains on which I travel. Perhaps hon. Gentlemen opposite travel on different lines and notice different results—
      Mr. Kenneth Lewis: They do not travel on the Tube. They ride in Rolls-Royces.
      Mr. Roper: I have not noticed Rolls-Royces passing my front door half an hour earlier in the morning.
      We have a very interesting opportunity, effectively, surtax is being reduced. It would be a good idea if the Chief Secretary would tell us that he intends to commission at least half the professors to whom my hon. Friend the Member for Ashfield referred to undertake a study into the incentive effects that this substantial reduction in surtax is having on surtax payers. We should then be able to settle once and for all the argument which has continued for some time between the hon. Member for St. Ives and my hon. Friend the Member for Ashfield. It would be of great interest to the Committee and to the country if the Government would commission a study into the great stimulus to incentive which this reduction in surtax has given. One eminent authority that I have consulted is extremely sceptical about the results. I have noticed no significant results yet.
      I wish it were the fact that the economic reality was the same as the words in the Clause and that there were no effective change in surtax rates. The reality is that there will on this occasion be a very substantial reduction in surtax.
      9.15 p.m.
      Mr. Cecil Parkinson: Until I heard the speech of the hon. Member for Ashfield (Mr. Marquand) I had not intended to speak, because most of the things that I had wanted to say were said very ably by my hon. Friend the Member for St. Ives (Mr. Nott) in his very interesting speech.

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      The hon. Member for Ashfield said that we must not listen to those who pay tax and we must not discuss with surtax payers and taxpayers the question whether they find high rates of tax an incentive or a disincentive. The hon. Gentleman said that those people would be the last to know; in any case, they are biased; after all, they are the people paying the tax. The argument is that we should talk to people who have talked to those people and on the basis of having talked to such people we should arrive at the conclusion that taxpayers and surtax payers are not put off.
      I do not know from where one gets information about incentives or disincentives except from talking to those who are paying the tax. Presumably the professor who came to the conclusion that people were not put off came to that conclusion from talking to them.
      I am a practising accountant. I spend many hours of many days talking to surtax payers and discussing their problems with them. I know from personal experience that many people capable of generating a great deal more wealth for the nation and a great deal more income for themselves spend too much time talking to people like me about how to retain what they have been earning, instead of getting on with the job of earning more. Over the years an increasing number of people have come to me and have said, "The tax level is too high. I am no longer interested in building up my business, in working any harder, in earning any more money. All I want to work on is how to pay less tax on what I am getting and how to have a comfortable life, because there is no point in my generating any more income". But I am only a practising accountant and I admit that not many professors come to me with their surtax problems. However, many business people have come to me with their surtax problems over the years.
      The hon. Member for Heywood and Royton (Mr. Barnett), when he speaks in his own inimitably honest manner, will be forced to admit that what I am saying accords with his experience over the years as a practising accountant. I found it an extraordinary statement that marginal rates of tax are a big disincentive for the poor but that the rich, about whom hon. Members opposite when it suits them think nothing but the worst, are apparently
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      supposed to rise above themselves on these occasions and not take any notice: they are supposed to find no disincentive in the fact that they will be paying a rate of 87½per cent. whereas the poor man is supposed to be put off by a high marginal rate. We all know that such a rate is a disincentive for the poor—
      Mr. Joel Barnett: I am sure that the hon. Member will have had the experience which I have had, of clients saying that the rates of tax are terrible and that they would work much harder if they were lower, but he will know from his own experience that the very people who tell us that literally could not work any harder than they are already working.
      Mr. Parkinson: I have had that experience, but I have also found that these people are spending an inordinate amount of time with their tax advisers, which is probably why we get to know them so well. They are certainly working very hard, but part of the time they are working, totally unproductively, on how to retain more of what they are earning. Of course, the hon. Gentleman and I are grateful to them for having acquired that interest.
      I thought that I had heard the last of it at a candidate's course years ago, but I note that we are still getting that hoary old statistic about 1 per cent. of the population owning 90 per cent. of the wealth, which, we are told, are the same proportions as in 1911. The hon. Gentleman and I know that, although the percentage may have stayed the same, the people within it are a constantly shifting group. I could introduce him to half a dozen people who started life with nothing and are now millionaires. I could introduce him to members of families which were once wealthy and no longer are. The same proportion of wealth might be held by the same proportion of people but the consistent mistake of the Opposition is to assume that, because the proportions do not change, the people within them do not change. It is simply not true.
      If anything has been proved by the growth in the number of takeovers and in the number of new millionaires in the City, along with the gradual moving into or taking over of the establishment by new millionaires, it is the fact that

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      entrenched wealth is, in many cases, and certainly to the extent that they think it is, a figment of the imagination of hon. Members opposite. Time and again we have seen companies removed from the control of families which have held it for centuries. Because the new generation has not been capable of coping, along comes a new entrepreneur, picks up the business cheaply and builds it up. If, in turn, his son is not capable of keeping it up, it will become a cheap buy for someone else. Hon. Members opposite should stop assuming that because the percentages of wealth have not changed the people within them have not changed and do not change. No one knows better than the hon. Member for Heywood and Royton and I about the fall of families—the old "clogs to clogs" routine taking place over several generations. I hope that we need hear no more of these phoney statistics about the proportions of wealth in 1911 or 1901 being the same as today and held by the same people. The proportions may be about the same but the people holding the wealth have constantly been changing.
      Mr. Emlyn Hooson: I agree with the hon. Member for Enfield, West (Mr. Parkinson) that far too great a proportion of the ingenuity of this country goes on tax avoidance. Some of the best brains in my profession are employed in advising on taxation matters, and a complicated system of taxation always lends itself to that. Any step proposed in the Clause for simplification of the tax system and the establishment of a single graduated tax in place of our rather antiquated system is to be desired.
      Although I sympathise a great deal with the sentiments expressed by the hon. Member for Ashfield (Mr. Marquand), I could not follow his tortuous logic. He was right to attack the Government for their social policy. He pinpointed an area which must cause considerable doubt in the community as a whole.
      Mr. Maurice Macmillan: I am sure that the hon. and learned Gentleman does not intend to mislead the House, so I should point out to him that the Clause bears no relation to any future arrangement for surtax or income tax or the merging of the two but refers to the imposing of surtax for 1970–71.
      Mr. Hooson: I understand the point that this is a bridging Clause. It bridges over for the coming year, and I think that it is part of the scheme of rearrangement.
      Before the hon. Gentleman interrupted, I was referring to the argument of the hon. Member for Ashfield. He is right to say that there are serious disincentives to the low income earner to improve his lot, and that failure to remove them is a glaring omission from the Government's policy. It was to a certain degree, though not the same degree, a glaring omission from his own Government's policy. The serious disincentive caused by the incidence of national insurance and so on has existed for a considerable time. But I could not follow the hon. Gentleman's leap from that argument to the argument which he seemed to advance that there was no evidence that it was a disincentive for the higher wage and salary earners to be paying taxation at a high rate.
      Mr. Marquand: What I said was that the arguments about disincentives to high earners were inconclusive, and that there was no solid evidence to show that there were disincentives. I added that if hon. Members opposite were to convince us that their reason for wanting to reduce taxation on high earners was the disincentive effect, then in logic they should also do something about the disincentive effect of the poverty surtax, about which they have done nothing. This suggests that their attitude on disincentives for high earners is hypocritical.
      Mr. Hooson: I follow the hon. Gentleman's point, but the fact that the Government have failed to take the proper steps to provide incentives for the lower income group is no reason why they should not give proper incentives to the high income group. It would have been preferable if they had done both, but that they have not done the one is not a reason why they should not do the other.
      I have no doubt that we shall never find evidence from the academic sphere to prove the incentive or lack of incentive from the incidence of taxation. It is a matter of judgment and common sense. I happened recently in the United States to meet a man who is becoming the European director of an international concern. He was deciding where to live

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      and where his headquarters should be, and he had had the taxation systems and incidence of taxation of each country very carefully investigated. His decision on where to set up his headuarters and live was governed by which country's incidence of taxation was most favourable to to him. I have no doubt from my experience that at a certain level of taxation those who pay taxes at that level find it a serious disincentive, particularly if they have the option of working harder or of free-wheeling. I know from chatting with colleagues in different professions and in business that this occurs.
      I have considerable sympathy with the hon. Gentleman's argument that wealth is still very inequitably distributed in this country. This is because the various measures over the years have not been effective. The test of any tax is whether it is to be effective, whether it is to achieve certain economic and social ends, and whether it can be collected to bring in the revenue it is designed to bring in.
      Let us take, for example, the death duties which have been the main instrument for trying to achieve a more equitable distribution of wealth. The truth is that people with fairly small estates pay the death duty and those with the large estates generally do not because they have taken proper advice. The£30,000 estate almost always attracts the tax in full, whereas the owner of the£3 million estate has taken advice long before death intervenes. To that extent it is a voluntary tax. It has failed because no steps have been taken in the House to make it effective. All the talk about a wealth tax would have been unnecessary if the Labour Government or any other Government had ensured that the death duty and estate duty were effective taxes.
      9.30 p.m.
      That is one of the reasons why we have constant complaints. I share the feeling of hon. Members on this side of the matter, but they have always fallen into the trap of being unable to make up their minds whether they want to see capital more equitably distributed or to abolish private capital altogether. The result is that they have never introduced a taxation scheme which enables people to make capital out of income. Very often the
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      person who has not inherited wealth and who relies on his own abilities to earn income is taxed to the hilt and is unable to make capital out of his earnings. If there is anything that gives a man incentive, it is the ability to make capital out of his earnings. I should have thought that the Labour Opposition would be as concerned as the Conservative Government to enable people to make capital out of earnings.
      If we made up our minds that we wanted to see a more equitable distribution of capital, our whole taxation system would be re-arranged. The hon. Member for Ashfield must persuade his own party that what is to be aimed at is a taxation system which enables capital to be shared more fairly. He cited the example of the United States, where capital is more equitably distributed than it is here. It may not be equitably distributed, but the proportion is greater than it is here. That is partly because of the tax system there. The young executive in an American firm can be partially paid in shares, and he does not have to pay tax on them until they are realised, generally when he leaves the firm or retires. That is a system which enables people to make capital. There is a continuous turnover in the companies not only of executives but of capital. Capital is distributed much more often than it is in this country, where once capital is in bulk it tends to stay in bulk.
      Mr. Kenneth Lewis: Having heard the speech of the hon. and learned Member for Montgomery (Mr. Hooson), I feel that, not for the first time, the Liberal Party wishes to have it both ways. In the first part of his speech I thought he was saying that he did not feel there was justification for giving incentive at surtax level because the Government had provided inadequate incentive at the lower level.
      Mr. Hooson: The hon. Gentleman has misunderstood me. I was criticising the hon. Member for Ashfield (Mr. Marquand) since I said that the fact that the Government had not done enough for people at the lower level was no reason why they should not have done something for people earning at the higher rate.
      Mr. Lewis: I accept that the hon. and learned Member made that clear at the end of his speech, but I thought that at the beginning he was complaining that

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      the Government had not done that. For many years Governments have been told by Labour Party members, "You cannot give anything to the surtax payer because you have not given anything lower down the scale." This kind of situation under successive Governments led to the situation in which no Government could ever give anything at the top level. We have been in the situation year after year as Finance Bills have come forward that no Government, until the present one, have ever had the courage to give some incentive to those who are earning at the very top.
      Some of the very high salaries paid in industry today, which are as much as£50,000,£60,000 or even£70,000 a year, sound very high. If the Daily Mirror prints the news that that is the sort of salary being paid, it is very good propaganda for the left winger who asks, "Why should such-and-such a managing director receive such a large sum of money?" But these salaries have developed through increases over the years because those executives would have been left with only 6d. in the pound. If they had been left with more income at the top end of the scale, those salaries would not have needed to be so high and the criticism would not have arisen.
      One managing director once told me that his salary of£70,000 rose completely by accident. He was paid on an incentive basis on a certain proportion of the profits of the business, As the business went up and up in profitability, so his income rose higher and higher. He could not reduce his income because he had to pay surtax on last year's income. To get enough money to pay last year's surtax he had to pay himself about the same sum. He was an individual who had no great capital when he started his business. Obviously he had accumulated some capital through the growth of the company in the shareholdings he had acquired over the years.
      We have heard speeches by hon. Members opposite on the lines that we cannot give incentives by simply reducing surtax among people who already have got too much, and it has been asked how those people can be made to work harder. One of my hon. Friends said that they could not work harder because they work very hard already, but the fact is that
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      they take greater risks because they feel that it is worth while. It is the risk-taker who provides the development of industry which provides the jobs and gets the exports for the country and provides us with our prosperity.
      I am sure that if young people can look ahead and see that if they become high earners they will be able to keep more of their money, they will have the incentive to take the risks which are in their own interest as well as in the interests of the nation. I do not see how hon. Members opposite can argue against this being an advantage to industry since we have not tried it over the last 10 years. This is the first time that there has been a cut to enable those high flyers to earn more. Perhaps we ought to try it and see what happens. I estimate that in two or three years time we shall be in a better position to tell whether this policy has worked.
      Hon. Members opposite seem to be giving a considerable amount of notice in advance that, if there is another Labour Government, there will be a wealth tax. I suppose they feel that this will win them a lot of votes. There is, however, a danger that much of the wealth they will seek to secure through this tax will fly out of the country. Surely it is apparent that the country needs investment. Most of the savings come from people who are high earners. If we need such investment, whatever Government are in power, it can come only from people who are given encouragement. There is no encouragement given, and no investment to be gained, by imposing a wealth tax. What the Labour Party should be considering is some form of incentive tax. If they can improve on our incentive tax then good luck to them, but they have not shown any intention in doing this up to now.
      Mr. Dalyell: If I attempted to follow the remarks of the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis), on what he said about risk, I should be out of order. I should like to address myself for a moment to the Minister of State who in an earlier debate taunted us on this side of the Committee and said it was a pity that we did not go out and try to do something to persuade those who support us to restrain their wage demands. He implied that we either did not have the courage, the will or the

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      patriotism to do it. I played some part, I do not claim an overwhelming part, in what I think is recognised as being almost a model agreement in the most difficult of all industries, the motor industry. There was an agreement at Bath-gate, together with an agreement at Cowley along rather different lines, which was regarded as being almost a model of restraint.
      To get such a longish-term agreement and persuade shop stewards to go along with it, it is necessary to be able to say that the Government are pursuing a fair economic policy in the crudest terms. My hon. Friend the Member for Ashfield (Mr. Marquand) talked about facing miners earning£30 a week and persuading them to restrain their claims. In the motor industry this problem is acute. When we discuss this kind of claim it must be against the background of the general economic situation. If it is desired that there should be wage restraint then we cannot do the kind of things, arising out of the Clause. The offhand dismissal of a tax on wealth is very unwise, whatever form the tax takes.
      In all of these discussions we have to come down to the realities of the situation and to recognise that part of what the hon. and learned Member for Montgomery (Mr. Hooson) said was only too true. Estate duty and other forms of taxation are often uncollected and the haggling goes on for a long time. This brings us to the basic issue and that is the state of the Inland Revenue. We can go on and on discussing pure economic arguments and desirable forms of taxation, but we have to face the fact that the Revenue at this level is in a creaky condition.
      It is hardly surprising, because being an income tax adviser to wealthy people is a far more lucrative job than being Her Majesty's Inspector of Taxes. Time and again I have given the figures for the Scottish Estates Duty Office. Over a ten-year period 32 graduates were trained, 13 of whom went off to private insurance and law firms, seven to banking, four were considered unsuitable for one reason or another, four went to get married and four remained. The problems of the Scottish Estates Duty Office are perhaps especially difficult, for reasons known to the Treasury.
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      Similarly, on several occasions I have raised this subject and been told "We are looking into the problem; we will come up with some kind of answer." This has not been done and as far as I know there is still no clear view about what should be done to deal with the shortage of key members of the Inland Revenue. Without them, without proper pay, any kind of meaningful operation of the taxes listed by the hon. and learned Member for Montgomery is impossible. The Minister of State is chatting away quite amiably. Perhaps he would like to interrupt me and tell we what he plans to do about this.
      Mr. Higgins: I hesitate to do that. Actually I was contemplating that perhaps the reason for the shortage is that the hon. Gentleman, myself and the hon. Member for St. Ives (Mr. Nott) were all at Cambridge together and all ended up here.
      Mr. Dalyell: Whatever kind of group we may or may not have been in, or whatever our merits or demerits, that is not a complete answer to the problem. The Minister's charm is all very fine, but it will not do, because the problem still exists.
      The Treasury says, "We shall do something about it. We shall publish the result of this, that, or the other study." It has not done so yet. Until these loopholes are properly tackled and until there is a feeling that the wealthy are paying what they ought to pay even under the present system, it will be very difficult to get the restraint for which the Minister was asking today.
      [Sir ROBERT GRANT-FERRIS in the Chair]
      9.45 p.m.
      Mr. Maurice Macmillan: The debate has shown one or two misconceptions about the nature of the Clause and the provisions in the Bill regarding surtax payers. I should make it clear at the outset that there are no new benefits for surtax payers other than those contained in the provisions about earned income. There a re no extra provisions for surtax payers concerning unearned income either for the year to which the Clause relates, 1970–71, or for this tax year 1971–72. This shows how right hon. Members on both sides

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      were to welcome the new methods, which have nothing to do with the Clause, for making a more comprehensible and sensible arrangement for collecting what would in the past have been surtax.
      One point which has been made in this connection is that our tax structure, income and surtax combined, is no longer progressive. This does not stand up to examination. It is still a very steep tax which the Clause puts into force for 1970–71 and, indeed, for future taxation as reflected by other provisions in the Bill.
      It is reasonable, although I should be out of order in expanding the argument too far, in examining the part of the Bill dealing with the future, to say that the provisions for the changes to operate after 1973 do not show any signs of not being a method of taxing earned and unearned income, but meet the point raised by the hon. Member for Ashfield (Mr. Marquand), with which many on both sides would agree, that on the whole those who have the largest income should pay higher rates of tax and contributions towards communal expenditure. That proposition in general terms has not been dissented from—not even by the more extreme laissez faire wing of the Liberal Party in the past. That is a very fair point which we can make. Apart from the misconception of what the Clause was doing, there has been a slight misconception of some of the motives which underlay our arguments.
      This debate ranged rather wide, from the nature of direct allowances through the possibilities of wealth and questions of capital and income accumulation, down to incentives. For a relatively limited Clause, it was a fairly wide-ranging debate.
      The hon. and learned Member for Montgomery (Mr. Hooson) wished to see more provision to enable people, including high earners, to create capital out of their income for savings and investment encouragement. I hope to be able to discuss these matters at a later stage; I have devoted some thought and argument to these matters myself in the past. But in this, he appeared to disagree almost completely with the hon. Member for Sheffield, Attercliffe (Mr. Duffy), who, in referring to the blatant abuses which managers and directors get up to, rather
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      than earners, referred to their capacity to accumulate capital. I understood the hon. and learned Member to wish managers and directors, rather than earners, to be able to do this, so there was a slight discrepancy there.
      The hon. Member for Sheffield, Attercliffe put a slightly different emphasis to that of his hon. Friend the Member for Ashfield on the whole question of the distribution of personal capital wealth. The hon. Member for Attercliffe appeared to mind about new people acquiring wealth more than about anything else, while the hon. Member for Ashfield clearly minded more about old people hanging on to wealth than new people acquiring. The dichotomy was exposed by my hon. Friend the Member for Enfield, West (Mr. Parkinson), in his admirable contribution on what he called entrenched wealth, pointing out that the percentage of the owners of capital who may hold the larger amounts does not necessarily imply that the people making up that percentage have stayed the same over the years.
      The hon. Members for Farnworth (Mr. Roper) and West Lothian (Mr. Dalyell) regarded the taxation of wealth more directly than through income tax and surtax as politically desirable rather than economically effective. My hon. Friend the Member for St. Ives (Mr. Nott) made it clear that, even from the most doctrinaire point of view, one would be misleading the Committee and the country if one were to suggest that even the most radical change in the taxation of wealth is likely to produce large sums in proportion to the total tax yield and that, therefore, the main arguments in its favour are those of social justice and political reason.
      One has to take considerable pains in what is after all, even in the minds of the Labour Party, still to be a mixed economy, with a large proportion of the national effort in the private sector, to avoid killing the goose which lays the golden eggs.
      Mr. Barnett: Would the hon. Gentleman develop the argument as to how he would achieve the target of social justice on his concept of a tax policy, bearing in mind that he has already accepted that a prices and incomes policy cannot achieve social justice either?
      Mr. Macmillan: Not on this Clause. The debate has already ranged rather wide.
      I hope that the hon. Member for West Lothian will forgive me if I do not even attempt to reply to his answer to my hon. Friend's contribution to another debate earlier today which I did not hear. His account of the difficulties of the Scottish Estate Duty Office was enough to wring the heart of any Treasury Minister.
      It will be appreciated that the difficulties of the Inland Revenue, which are considerable, have been sufficiently great in the past that taxation has been collected through other means. The Department has acted with great fortitude, courage and considerable effort and I am conscious that the changes proposed in the Budget will not exactly decrease its burden of work. However, we hope that the simplification and clarification of the tax structure will ultimately do so.
      Another large part of the argument turned on the question of incentives, and here, for once, I had to agree with the hon. and learned Member for Montgomery when he said that it was extremely doubtful whether one could have any degree of certainty about anything in this sphere, including taxation, in considering what was or was not an incentive.
      I agree that it is difficult to make any sort of assessment of motivation in the sphere of human endeavour. It is difficult for professors, tax consultants and anybody by observation, common sense or anything else to assess what makes human beings do various things. This is made even more complicated by the capacity for self-deception and what one might call the post hoc propter hoc syndrome which tends to arise on these occasions.
      The idea that high taxation, and particularly high marginal taxation, is a disincentive seems to have been a delusion from which Chancellors of both major political parties have suffered, though frequently they have taken a different view once in opposition.
      It has been pointed out that the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) made it perfectly clear, both in 1968 and 1969—I will not go into this in detail; his words are in HANSARD for all to read—that he re-
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      garded high marginal rates of taxation as a disincentive.
      He also made it plain that, in his view, some of our more successful competitors abroad were holding their positions because, at least in part, compared with them our rates of direct taxation on earned income were comparatively high. The right hon. Gentleman also made it clear that he would have liked to have done more to lower the rates of taxation on high earned incomes, and he went as far in 1969 as to say that he regarded an increase in one of the earned income allowances as a high priority for a later Budget.
      Some of the contributions to what one might call the incentive argument failed to appreciate that whether or not, at a given moment, people will work more or less hard if their marginal rates of taxation are reduced is only part of the question. The important part is the general climate of opinion that is created by different rates of marginal taxation, both for those who are paying them and for those who hope one day to pay them because, by so doing, their incomes will be increased.
      When one considers both the rates of taxation on earned income and the natural desire, which the hon. and learned Member for Montgomery mentioned, of high earners to create their income through savings and investment in the country, one must realise that it is the general incentive to success that is part of the capacity of any economy to keep going in difficult circumstances. Some of the speeches from hon. Gentlemen opposite, but not all, seemed to disparage the effort, and, by disparaging, the reward that that effort may regard itself as having earned. Perhaps that was particularly true where there was a lack of recognition that in many cases such abuses by high earners as may be detected are due to the fact that their marginal rate of taxation is, in their eyes, too high. The same applies whether the extra effort is being made inside or outside the surtax bracket.
      10.0 p.m.
      Mr. J. T. Price: Perhaps the right hon. Gentleman would round off his argument more convincingly if he referred to the fact that some of the higher incomes to

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      which my hon. Friends were referring were not earned incomes but unearned incomes. How does the question of incentive apply to those people in the very high income brackets, who are merely dealing with inherited property and what flows from it in the way of very high incomes? Surely this is germane to the argument.
      Mr. Macmillan: I am afraid that the hon. Gentleman must have misheard me when I was pointing out that this particular Clause and this Finance Bill do not contain any relief for unearned incomes, other than that which would naturally be enjoyed by the relief in the standard rate of taxation.
      Mr. J. T. Price: I do not accept that.
      Mr. Macmillan: The hon. Gentleman may not accept it, but it is true. First, we are talking about a Clause which applies to 1970–71. Second, we are talking about the surtax which will be paid in 1972, due on 1st January. Therefore, the taxation of unearned and earned income in the year 1971–72 may be held to be relevant. Other than the natural consequence of lowering the standard rate of tax, there is no particular relief for unearned income. Indeed, some of my hon. and right hon. Friends on this side of the Committee have been rather critical of my right hon. Friend the Chancellor for this omission. This must be taken into account. Therefore, this is not a suitable time for me to develop the arguments suggested.
      Both sides of the Committee have made the point about the disincentive effect at the low level of the very low threshold of income tax. This is one of the consequences. It is a difficulty which we all have to face. It grew primarily during the years of Labour Government, due partly to inflation, partly to the extent to which the right hon. Member for Stechford lowered the tax threshold, and partly to the fact that income tax under the arrangements made by the right hon. Gentleman starts being paid at the standard rate at so low a level. This is a function, to some extent, of the selective nature of social security benefits, in that the more one tries to help those whose need is the greatest, the more one produces, as does a system of negative income tax to some extent, the
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      disincentive problem of the margin. It is a problem of which we are very conscious.
      We have ranged wide in a general debate on the taxation of high earners and, to some extent, earners. I think that the Committee will agree that it has been a slightly disorganised debate, no doubt due to the fact that the Clause which we are discussing relates so narrowly to one aspect of the problem and deals only with the tax to be charged as surtax at the rate decided by the Labour Party for 1970–71, and is the surtax due on 1st January, 1972, calculated on the earnings in that year and set in the Finance Bill of this year.
      Question put and agreed to,
      Clause 7 ordered to stand part of the Bill,
      To report Progress and ask leave to sit again.—[Mr. Maurice Macmillan,]
      Committee report Progress; to sit again Tomorrow,

      SURTAX RATES FOR 1970–71

        MERCHANT SHIPPING (OIL POLLUTION) BILL [Lords]
        Order for Second Reading read,
        Motion made, and Question put forthwith pursuant to Standing Order No. 66, That the Bill be now read a Second time.
        Question agreed to,
        Bill accordingly read a Second time,
        Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

        RECOGNITION OF DIVORCES AND LEGAL SEPARATIONS BILL [Lords]
        Order for Second Reading read,
        Motion made, and Question put forthwith pursuant to Standing Order No. 66, That the Bill be now read a Second time.
        Question agreed to,
        Bill accordingly read a Second time,
        Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

      TRANSPORT (LONDON AND SOUTH-EAST REGION)
      Motion made and Question proposed, That this House do now adjourn.—[Mr. Speed,]
      10.7 p.m.
      Mr. Julian Ridsdale: I welcome this opportunity to discuss transport services in London and the South-East region, in view especially of the severe increases in fares which so many people have had to face recently on both buses and the railways. I am only sorry that we cannot have a longer debate, because I know that a great number of my colleagues, like my hon. Friend the Member for Essex, South-East (Mr. Braine), my hon. Friend the Member for Gillingham (Mr. Burden), my right hon. Friend the Member for Ashford (Mr. Deedes), my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton), my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden), and my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), feel very strongly about the burden that the commuter has to bear in increased fares.
      The most recent rail fare increases of up to 25 per cent. came into force in London and the South-East on 25th March. We have been told that the increases were necessary to offset the Government's partial withdrawal of grant aid to rail services in London and the South-East Region.
      The increases were foreshadowed in a statement in the House by my right hon. Friend the Chancellor of the Exchequer on 27th October, 1970, when he reiterated the intention of the Labour Government's 1968 Transport Act that rail services in London and the South-East area should be made progressively less dependent on grant aid and that, by 1973, these services must be made to stand on their own feet and pay their way. Thus, as a first-stage reduction of the grant for 1971, fares have been increased substantially in London and the South-East Region.
      I cannot understand why the Government have a different policy for the withdrawal of subsidies in the London area compared with the rest of the country. I was disappointed, when my right hon. Friend withdrew the partial subsidy from London and the South-East Region, that
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      he did not have a consistent policy and see fit to withdraw the subsidy from the rest of the country. I asked that this should be done in November, at least partly to prevent the heavy burden that commuters in the London area had to face, only to be told that the Government were considering the matter.
      I hope that we shall get a clear statement today of the reasons why this withdrawal of subsidy applies only to the London and the South-East Region. The latest figures that I have show that the running costs of grant-aided passenger services in 1969 amounted to£163 million, of which£60 million consisted of Exchequer grants, made up of£15 million from the London commuter area.
      So far a total of only£10 million of grant aid has been withdrawn for 1971–72, yet we have been told that, because of this withdrawal, fares have been increased by 25 per cent. Can the Minister give us some later figures for grant aid, because, due to the inflation which has occurred since 1969, surely grant aid is running at a higher figure than£60 million for the country as a whole and higher than£15 million for the London area commuter network?
      What concerns me, though, is the burden commuters are having to face. If the withdrawal of£10 million of grant aid has led to a 25 per cent. increase in fares, will the Minister give his estimate of the amount by which fares will have increased by 1973 as a result of the total withdrawal of grant aid for London and the South-East Region; and will this estimate allow for the present unparalleled inflation which is facing the country? Further, how much are fares likely to increase as a result of the recent 9½ per cent. wage increase on the railways, which equals a 20 per cent. wage increase since May of last year?
      In addition to these increased wage costs, railway costs have risen due to the general unprecedented rise in prices that we have all had to face over the last few years. Therefore, unless productivity on the railways can be considerably increased, which seems most unlikely, especially if they are starved of capital, over the next three years commuters are likely to face fare increases which since 1969–70 will be almost equal to a doubling of fares. For commuters in North-East Essex this would mean an almost

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      £200 increase net, which is an even greater burden when we consider how much must be earned to make this net figure from gross income.
      Is it any wonder that I have had to send to the Minister a petition from 1,865 commuters protesting about what is happening? Of course they are in despair. If increases of this nature are to be made, it will mean that many will have to leave the North-East Essex coast and move nearer to London.
      Therefore, I ask the Government to make a comprehensive statement as soon as possible about future transport policy. I do not want a policy of subsidy, which disguises costs. In a recent debate on commuter services my hon. Friend the Under-Secretary of State for the Environment said this:
      "…we are taking a wide look at the whole problem of how to match investment in various forms of transport in the cities with one demand competing against another. It is a highly complicated situation…we are interested in seeing what can be done in the totality of the problem, and studies and consultations are going on to see whether any adjustment may be made in national policies."—[OFFICIAL REPORT, 10th March, 1971; Vol. 813, C. 553–4.]
      I hope that these studies are now complete and that we shall hear from my hon. Friend tonight that there have been some adjustments in national policies. I assure the Government that many people are in despair about the continuing rise, not only in rail fares but also in bus fares. I hope that an early indication will be given of policy changes to meet the situation so that many people who are being hit so hard can plan for the future which at present holds so many uncertainties for them.
      I hope that these studies and consultations will underline the necessity for more investment in rail as an effective and economical means of transport. Certainly more investment is needed in the railways, as travellers know only too well, because of overcrowded trains and deteriorating service due to lack of investment and cutting back of staff.
      Undoubtedly the railways still have an important part to play in transporting commuters daily. The railways make the least demand of any form of transport on the environment, avoiding air pollution and the increasing land use
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      associated with road transport. If commuters are to be forced on to the roads because of fares which they cannot afford, the road system will quickly become congested and we shall be faced with increasing financial problems against which the present railway request for more investment will seem most economical.
      I estimate that, over the next 10 years, the railways as a whole will need about£300 million capital, of which£220 million will be needed in London and the South-East Region. I do not believe that it is realistic to keep on fanning the flames of inflation by trying to get this capital by always increasing fares or prices in nationalised industries. Of course passengers and consumers must pay realistic fares and prices, but is it realistic to take away£60 million of grant aid, push up fares and fan the flames of inflation when we know that, in London and the South-East Region, the railways need that£220 million of capital over the next 10 years?
      If we are to be realistic in transport policy, why do not we make a charge on motorways, as the French and Italians do? Should we not do more to encourage traffic and passengers on to our railways? I know that the railways are big users of capital but surely at this time we cannot starve them of capital, despite what has happened in the past. If we are to prevent congestion from so many cars coming into city centres, we must encourage more use of the railways.
      All this, I know, is set against the background of wage demands which the railways will find it difficult to contain by increased productivity. There has been a 20 per cent. increase in wages since last year, but I hope that those negotiating for further increases will realise the vital need for further investment and that the Government will come forward with a plan. I hope that the trade union leaders will be able to moderate future demands knowing how vital investment over the next 10 years is for the railways.
      Not only rail fares but bus fares are causing concern to transport users. Cannot the Government do something to break the bus monopoly which is working so badly, especially in rural areas? Why cannot licences be given to mini-bus operators, who, I am sure, could fill in a lot of the services which the railways

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      are finding it more and more difficult to run economically and which the big bus companies are also finding it difficult to fulfil?
      I assure the Government that the travelling public are in despair at the ever-increasing demands they are having to face. I hope that the Government will very soon find a solution to these difficult problems.
      10.19 p.m.
      Mr. Andrew Bowden: There is a sense of grievance among commuters in the South-East because the system is clearly unfair. My hon. Friend the Member for Harwich (Mr. Ridsdale) has mentioned that, in some parts of the country, the system is not operated in the same way as it is to operate in the South-East. I want to take the point a stage further.
      Some lines in the South-East are obviously wholly economic and it is unreasonable that commuters living at the end of those lines—my constituency is an example—should be forced to subsidise other travellers in the region. This gives rise to one of the senses of grievance, judging from my post bag. I hope that the Government will think seriously about this problem.
      10.20 p.m.
      The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): My hon. Friend the Member for Harwich (Mr. Ridsdale) who opened the debate has, as always, touched on a wide range of important matters to his constituents and indeed to the House and the country as a whole. He spoke of what he described, possibly somewhat extravagantly, as the despair of his constituents. He touched on the wide-ranging questions of pay policy. He dealt with rural buses. He spoke eloquently about the environmental advantages of the railways, and he carried me with him a great deal of the way in that respect.
      However, I am sure he will appreciate that in a short Adjournment debate of this kind it is not possible for me to touch on all the matters which he raised. He made a number of interesting points, and I assure him that I will be glad to follow up all that he has mentioned and to discuss them with him at some future time.
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      Before I deal with some of the specific railway points which he made, perhaps I could make two general points and then spend a few minutes setting out the background to the problems of the London commuter area. My first general point is that the withdrawal of operating subsidies for the London commuter network must be seen against the background of the Government's overall economic strategy. Control over public expenditure—and railway grants are a part of public expenditure—is central to the strategy of my right hon. Friend the Chancellor. His recent Budget proposals, which I know my hon. Friend welcomed as much as I did, were made possible only because of the Government's willingness to tackle difficult problems of public expenditure such as the one which have been raised this evening.
      My second general point concerns the onus of proof. This is not an esoteric point but a practical one. It is simply that the payment of subsidies, and not their withdraw, has to be justified. The general principle is that people normally should pay the cost of the services they use and there need to be compelling social reasons to depart from that principle. I can find no such compelling social reason that is peculiar to the London commuter. I have myself been a London commuter but, in the general context of the national economy, it is difficult to find a compelling social reason for the London commuter to be singled out to receive a measure of subsidy that is not available to many others.
      As a group, the London commuters have no conspicuous claim on the taxpayers' money. Many people in much less prosperous areas meet the full cost of their journey to work. I can give one precise example in the area which my hon. Friend knows as well as I do, namely those London commuters north of the river who travel by London Transport. They pay the full economic cost.
      Mr. Nigel Spearing: Does the hon. Gentleman realise that the whole Government strategy for London Transport and the commuters is one of mystification, because they have not announced any support for the Fleet Line; they have not committed themselves to a 75 per cent. comparable capital contribution as they have done for roads; and the Minister is not prepared to issue a Green Paper,

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      yet the Government have given a 75 per cent. grant to the Liverpool tube line.
      Mr. Griffiths: The hon. Gentleman must raise that matter on another occasion. We are here dealing with a subject raised by my hon. Friend and I want to answer it. I stress that there is no change of policy in the matter of grant aid. Treating the British Railways London commuter network as a single entity and aiming to make it viable as soon as possible was just as much the policy of the previous Administration as it is of the present one. The previous Administration in their White Paper "Transport in London", published in July, 1968, says clearly
      "The London commuter services will be treated as a network … the first overall objective will be to achieve viability for the network by the end of 1972."
      The previous Government went on to say:
      "Subject to their financial objectives, British Rail will themselves determine fares on the network."
      That means that not only was viability the aim of the previous Government, but this was to be achieved by a marketing approach to fares policy. I do not generally agree with our predecessors in this matter, but since they for once decided on economic viability and then on a marketing approach to fares as their policy, I hope that my hon. Friend will not object to the present Government, who are committed to those very principles, also applying them in practice.
      Mr. Ridsdale: Are we to apply them to the rest of the country, too?
      Mr. Griffiths: I hope to come to that, but I must put this general point.
      The logic of a marketing approach to fares is that the Board must base its charges not simply on the cost of providing an individual service but on what the market will bear. Suggestions that the Board has been unfair in increasing its charges on routes which pay, as well as on routes that do not, are misconceived. Services which fail even to cover their direct costs are prima facie candidates for examination by the statutory closure machinery. But, as with any large multi-product commercial organisation, provided loss-makers cover their direct costs and make some con-
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      tribution to overheads—even though that contribution is less than their proper allocation of overhead costs—the organisation may well be better off with them than without.
      The same applies to the individual traveller on the profitable service. If fares on loss-makers were increased beyond what the market will bear, then traffic and revenue would fall. But the costs of providing the service would not fall; and would therefore need to be recouped on the profitable services—which would mean even higher fares. So the idea that some passengers within the network are cross-subsidising others, or that some have been treated more harshly than others, is far too simple, and is broadly inaccurate.
      Even if it were desirable to relate fares to the cost of providing an individual service, on much of the network —perhaps particularly on Southern Region—it is not possible to calculate it on that basis. Many different services run over the same tracks and use the same stations, depots, rolling stock, signalling equipment and so on. Allocation of these fixed costs between the different services is therefore complicated and ends up being fairly arbitrary. So there is no alternative but to treat the whole commuter network as a single entity.
      Fares increases would have been needed even without the decision of my right hon. Friend the Chancellor to withdraw the operating subsidy. In 1970 the costs of the London commuter network were, in round figures,£100 million and receipts were£85 million. The unremunerative service grant, therefore, was£15 million. Costs are rising, particularly wage costs. Labour accounts for more than 60 per cent. of the Board's total costs on this network. On the railways, as anywhere else, if wages rise faster than productivity or cost savings, the inevitable result is higher charges. For every I per cent. that wage increases in the railways exceed increased productivity, the Board has to find£750,000 more revenue. The only alternative to higher fares to meet those higher costs is ever-increasing subsidies, which would in practice mean inflation financed by the Government. That is unacceptable to the present Administration.

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      I turn to the particular services in which my hon. Friend is interested. The Felixstow-Ipswich line is one of them. The costs of this line are£120,000 per year. Earnings are£16,000 per year and the grant, therefore, is£104,000 a year. It is very difficult, against a background of seeking to contain public expenditure, that that amount of money should be paid.
      I come to the Manningtree-Harwich service. The costs are£102,000, the earnings£26,000 a year, and the necessary grant to make up the difference£76,000 a year. My hon. Friend will recognise, for he is a considerable economist, that those figures cannot be continued unless there is an increase in subsidy as costs increase or there is an increase in fares. That is the kind of harsh choice confronting the Government.
      No doubt there are individual cases of hardship, particularly among those less-well-off inner London residents or those comparatively less-well-off families who have contracted out of the city to travel to places where there are comparatively fewer jobs. This is not the choice of the railways and it is certainly not the choice of the Government. It is the choice of the people themselves who, throughout the South-East, have elected to commute long distances to live in pleasant country or by the sea.
      I cannot deny that there will be some effect on road congestion, but I am advised that it is likely to be relatively small and that significant switching to car commuting is unlikely if only because of the difficulties in parking and the existing congestion on the roads. I remind my hon. Friend that motoring is not cheap. Season ticket fares on the railways, in spite of the increases, are still generally less than the cost of the petrol alone.
      On the more positive side, there can be little doubt that the end of the operating subsidy will have a beneficial effect on British Rail staff morale and management. The morale of the staff and management improves as they find that they are not the pensioners of the State.
      The Government will continue to provide infrastructure grants for certain types of capital expenditure and improvements to the commuter system. The initiative for
      346
      putting forward investment proposals lies with the Board, but I know that the Board is conscious, as are the Government, of the need to improve the quality of its London commuter services.
      My hon. Friend raised a number of specific questions which I should like to answer. He asked me—will grants be abolished elsewhere? I cannot give him a complete and comprehensive answer. I would say that we have to examine the arrangements within the other conurbations, particularly in the passenger transport authorities in the four great conurbations in the North.
      He asks by how much fares will be increased by 1973. I cannot answer that question. That must depend upon cost inflation, in particular on wage increases. It must depend, too, on the application of the Chancellor's policy of reductions of grants. He asks what will be the result of the latest 9 per cent. wage increase on the railways. I can only say that it will be substantial. I cannot, and will not, dissemble by suggesting to him that this rise in fares is the last. I wish that it were. It would be untrue for me to say that it is the last. He said that the railways are starved of capital and that more investment is justified, not only on transport grounds but on general planning, environmental and other grounds. I agree with that. He must however face the question: where is the investment to come from? The investment can either come directly from the taxpayer, which means increased Government expenditure, increased taxation, to provide it, or from higher revenues from the railways system; but the higher revenue can only be derived from those who use it, and the end of that line is higher fares.
      Therefore, I fear that my hon. Friend and the country, including our constituents, must face the fact that the railways, except for Government grants, are by no means able to cover their costs from their incomes, and the grants made available by the Government are paid for by all of us as taxpayers.
      Mr. Spearing: Like the roads.
      Mr. Griffiths: The Government are anxious to reduce the burden of tax in accordance with their election manifesto. I am sure that my hon. Friend

      347
      will agree that the Chancellor has made a useful start in his Budget by cutting taxation by close to£1,000 million a year. The Government intend to go on cutting taxes just as soon as the state of the economy will allow it, but this can only be done if the growth of public expenditure, including that in unremunerative railways grants, is contained. That means, as my hon. Friend knows perfectly well, that subsidies paid to a whole range of public activities, including
      348
      the railways, have to be contained in order that our policy shall succeed. Unless the rise in public expenditure is halted or contained, taxes cannot be cut.
      The Question having been proposed after Ten 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 twenty-three minutes to Eleven o'clock,

AGRICULTURE, FISHERIES AND FOOD
  European Economic Community
  European Economic Community
  Food Prices
  Food Prices
  Sugar
  Sugar
  Meat and Cereals (Marketing)
  Meat and Cereals (Marketing)
  Research
  Research
  Agricultural Organisations (Restrictive Practices Court)
  Agricultural Organisations (Restrictive Practices Court)
  Bull and Boar Licensing
  Bull and Boar Licensing
  Prisons (Commercial Glasshouse Acreage)
  Prisons (Commercial Glasshouse Acreage)
  Tree Planting
  Tree Planting
  River Great Ouse (Pollution)
  River Great Ouse (Pollution)
  Milk and Eggs (Payments to Farmers)
  Milk and Eggs (Payments to Farmers)
  Farm Production
  Farm Production
  Consumer Expenditure (Household Food Bills)
  Consumer Expenditure (Household Food Bills)
  Fowl Pest
  Fowl Pest
  Unicar Cow Pens
  Unicar Cow Pens
  Home-Grown Timber
  Home-Grown Timber
  Milk Bottle Caps
  Milk Bottle Caps
  Dartford and Darenth Valley (Flood Prevention)
  Dartford and Darenth Valley (Flood Prevention)
  Butter
  Butter
  Republic of Ireland (Dead-Meat Plants)
  Republic of Ireland (Dead-Meat Plants)
  Beer Prices
  Beer Prices
  Cereals (Import Levy Scheme)
  Cereals (Import Levy Scheme)
  Minister of Agriculture, Fisheries and Food (Official Engagements)
  Minister of Agriculture, Fisheries and Food (Official Engagements)
NATIONAL FINANCE
  Health and Welfare Charges
  Health and Welfare Charges
  Tax Inspectors (Telephone Calls)
  Tax Inspectors (Telephone Calls)
  Telephone Kiosks (2p Coins)
  Telephone Kiosks (2p Coins)
  European Economic Community
  European Economic Community
  Incomes (Gini Coefficients)
  Incomes (Gini Coefficients)
  Members (Correspondence)
  Members (Correspondence)
  Road Fund Licences (Evasion)
  Road Fund Licences (Evasion)
  £Sterling (Value)
  £Sterling (Value)
SOCIAL SERVICES
  Take-up Campaign
  Take-up Campaign
  Prescription Charges (Season Tickets)
  Prescription Charges (Season Tickets)
  Commonwealth Nurses (Huddersfield)
  Commonwealth Nurses (Huddersfield)
  Powered Limbs
  Powered Limbs
  Hospital Doctors (Hours of Work)
  Hospital Doctors (Hours of Work)
  Retirement Pensions
  Retirement Pensions
  Disabled Persons (Financial Provision)
  Disabled Persons (Financial Provision)
  Disability Income (Loss of Earnings)
  Disability Income (Loss of Earnings)
  Cancer Organisation
  Cancer Organisation
  European Economic Community
  European Economic Community
  Pensions (Reciprocity Agreements)
  Pensions (Reciprocity Agreements)
  Member's Correspondence (Delay)
  Member's Correspondence (Delay)
  Ford Workers (Alleged Frauds)
  Ford Workers (Alleged Frauds)
  DEPARTMENTS OF TRADE AND INDUSTRY AND EMPLOYMENT
  DEPARTMENTS OF TRADE AND INDUSTRY AND EMPLOYMENT
  HOME DEFENCE REVIEW
  HOME DEFENCE REVIEW
  PRIME MINISTER (SPEECH)
  PRIME MINISTER (SPEECH)
  PRIME MINISTER OF FRANCE (MEETING)
  PRIME MINISTER OF FRANCE (MEETING)
  CHANCELLOR OF THE EXCHEQUER (SPEECH)
  CHANCELLOR OF THE EXCHEQUER (SPEECH)
  SECRETARY OF STATE FOR EMPLOYMENT (SPEECH)
  SECRETARY OF STATE FOR EMPLOYMENT (SPEECH)
  PRIME MINISTER OF CANADA
  PRIME MINISTER OF CANADA
  UNITED STATES OF AMERICA (OFFICIAL VISIT)
  UNITED STATES OF AMERICA (OFFICIAL VISIT)
  TEESSIDE (MINISTERS' VISITS)
  TEESSIDE (MINISTERS' VISITS)
  JURY SERVICE
  JURY SERVICE
CIVIL SERVICE
  Prices and Charges
  Prices and Charges
EDUCATION AND SCIENCE
  Nursery, Primary and Secondary School Places (Cost)
  Nursery, Primary and Secondary School Places (Cost)
  Pupil-Teacher Ratio
  Pupil-Teacher Ratio
  Youth Service Age Range (Local Authority Expenditure)
  Youth Service Age Range (Local Authority Expenditure)
  University Maintenance Allowances
  University Maintenance Allowances
  Colleges of Education (B.Ed. Courses)
  Colleges of Education (B.Ed. Courses)
  Powered Limbs (Hendon Arm)
  Powered Limbs (Hendon Arm)
  Cancer Research
  Cancer Research
  Railway and Transport Museum
  Railway and Transport Museum
EMPLOYMENT
  Factory Inspectorate
  Factory Inspectorate
  Plymouth and Gunnislake (Unemployment and Government Training Centres)
  Plymouth and Gunnislake (Unemployment and Government Training Centres)
  Food Price Index
  Food Price Index
  Huddersfield
  Huddersfield
  Papermaking and Boardmaking
  Papermaking and Boardmaking
  New Year's Day (Holiday)
  New Year's Day (Holiday)
  Salary Increases
  Salary Increases
  European Economic Community
  European Economic Community
ENVIRONMENT
  M1 (Watford—Hemel Hempstead)
  M1 (Watford—Hemel Hempstead)
  Road Safety
  Road Safety
  Unlicensed Vehicles
  Unlicensed Vehicles
  Goods Vehicles (Regulations)
  Goods Vehicles (Regulations)
  Huddersfield (Rate Rebates)
  Huddersfield (Rate Rebates)
  Somerset House
  Somerset House
  Housing and Roads, Northern Region (Expenditure)
  Housing and Roads, Northern Region (Expenditure)
  Slums, Greater London
  Slums, Greater London
  Treasury Building and House of Commons (Cleaning)
  Treasury Building and House of Commons (Cleaning)
  Hackney (Housing and Municipal Development)
  Hackney (Housing and Municipal Development)
  Central Heating Installers (Register)
  Central Heating Installers (Register)
  Portsdown Hill Housing Scheme (Communications from Members)
  Portsdown Hill Housing Scheme (Communications from Members)
  Prefabricated Bungalows Demolition (South Ayrshire)
  Prefabricated Bungalows Demolition (South Ayrshire)
  Huddersfield (Home Improvement Grants)
  Huddersfield (Home Improvement Grants)
HOME DEPARTMENT
  Liverpool Prison (Prisoners Under Escort)
  Liverpool Prison (Prisoners Under Escort)
  Member's Letters
  Member's Letters
  Probation Service
  Probation Service
  Bingo (Prize Money and Stakes)
  Bingo (Prize Money and Stakes)
  Italian Nationals (Entry into United Kingdom)
  Italian Nationals (Entry into United Kingdom)
TRADE AND INDUSTRY
  Textile Industry (Yorkshire)
  Textile Industry (Yorkshire)
  Warsaw Pact Countries
  Warsaw Pact Countries
  Spadeadam, Cumberland
  Spadeadam, Cumberland
  Exports (Promotion)
  Exports (Promotion)
WALES
  School Meals
  School Meals
  Motorways
  Motorways
SCOTLAND
  Hospital Building Programme
  Hospital Building Programme
  North and South Uist
  North and South Uist

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

LOCAL AUTHORITY FINANCE AND NATIONAL TAXES
LORD JACQUES: 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 will bear in mind the advisability of local authorities being paid, as a right, a proportion of the proposed value added tax raised in their areas, with a view to reducing the excessive burden of taxation on domestic accommodation and widening the incentives to local authorities to increase their revenues.]
THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE): My Lords, the Government have announced their intention to publish in due course a Green Paper on the reform of local government finance, to serve as a basis for public discussion of the best means of financing local authorities' expenditure. I would ask the noble Lord to await its publication.
LORD JACQUES: My Lords, I thank the Minister for that reply. May I ask the Government to bear in mind that local rates form a very high percentage of rents, particularly in the case of small houses, which means that housing is regarded as a luxury instead of as a necessity and many people who pay their national taxes in sorrow, pay their local rates in anger? May I also ask the Government to bear in mind that while there are practical difficulties in the proposal embodied in the Question, they are by no means insuperable?
LORD ABERDARE: Yes, my Lords, most certainly this Green Paper will consider all aspects of local authority finance. So far as the proposal of the noble Lord is concerned, I understand that the Federal Republic of Germany has a system of this sort at the moment.
LORD HEYCOCK: My Lords, is the Minister able at the moment to tell us at what stage this Green Paper is going to be brought into being? For a long time we in local government have been concerned as to the financial implications of the organisation. We are very concerned to see the Green Paper at the earliest possible moment.
LORD ABERDARE: My Lords, the Green Paper will be produced before the Summer Recess, whenever that may be.

SCHOOL MEALS CHARGES IN WALES
2.40 p.m.
LORD MAELOR: 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 that there has been a considerable reduction in the number of Welsh children taking school meals as the direct result of increased charges, and that the children's physical wellbeing is being jeopardised.]
LORD ABERDARE: My Lords, it was estimated that overall there would be a fall of about 12 per cent. in the number of children taking meals. The special return, which will be made during the week beginning May 17, will enable the Government to assess how much of the drop is due to the higher charge and how much may be due to the normal seasonal decline at this time of the year. It will also show the effect of the new arrangements for remitting the charge on grounds of hardship. There is no evidence that the physical wellbeing of children is being jeopardised as a result of the higher charge.
LORD MAELOR: My Lords, I have no wish to make a Party issue of this question, but is the Minister aware that we can boast nowadays of having the healthiest, strongest children in the whole

849
of Europe, due to the fact that every child is guaranteed at least one square meal a day? I wonder whether the Government can have another look at this particular subject.
LORD ABERDARE: My Lords, I do not want to make a political answer to the noble Lord, but the noble Lord's Government did put up the price of school meals twice.
LORD HEYCOCK: My Lords, in view of the seriousness of the situation, I wonder whether it is too early to estimate the physical effect on the children of the increase in the price of the meals? I wonder whether it would be appropriate at some early stage to have consultations, first in Wales with the Welsh Joint Education Committee and then in England with the Association of Education Committees and the Association of Municipal Corporations, so that we can see the extent of the problem and the serious effect that this increase is going to have generally on the children in our schools.
LORD ABERDARE: My Lords, I do not accept that this is going to have a serious effect, but certainly we shall be ready to consider with the bodies the noble Lord has mentioned what effects there may be. I should also mention that the Committee on Medical Aspects of Food Policy is watching this matter very closely and has set up a specialist panel.
LORD BYERS: My Lords, would the noble Lord take note that this problem is not confined to Wales? There is a considerable number of children who live some distance from school and who are now living on sandwiches, and I cannot believe that this is right.
LORD ABERDARE: My Lords, I am well aware that this applies to the whole country and the matter will be kept under review.
LORD SAINSBURY: My Lords, may I ask whether some estimate could be made of the increased overheads in serving school meals, because of the reduced number of children taking them?
LORD ABERDARE: My Lords,I cannot answer that question off the cuff, but I will certainly see whether I can get an answer for the noble Lord.
THL EARL OF BALFOUR: My Lords, may I ask whether a notice of the scale of wages of those who are eligible to claim against school meals could be published in local post offices? I feel that this right to claim in certain cases, is not well enough known by the general public.
LORD ABERDARE: My Lords, my noble friend may be aware that we have just started a publicity campaign to make sure that the public are aware of all the welfare benefits that are available to them, and this includes those who may be eligible for free school meals. And of course, we have increased the number of children who are eligible for school meals.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, would it not be better to spend the money on the meals rather than on the publicity?
LORD ABERDARE: My Lords, we are spending the money on those who most need it.

UNIVERSITIES EXPANSION AND STUDENT ACCOMMODATION
THE LORD BISHOP OF NORWICH: 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 view of the expected increase in the number of university students over the next few years, they are aware of the serious problems facing universities in providing suitable student accommodation especially in those universities, such as the University of East Angla, which are situated in small cities, where the number of lodgings available is limited.]
THE PARLIAMENTARY UNDER-SECRETARY OF STATE, DEPARTMENT OF EDUCATION AND SCIENCE (LORD BELSTEAD): My Lords, both my right honourable friend and the University Grants Committee are aware that the question where students are to live as universities expand in the 1970s is of great importance and public interest. The Committee, which is responsible for determining grants to individual institutions, advises my right honourable friend on

851
the universities' needs for residence before she settles the total allocations for university building of all kinds. Projects starting in the 5 years from 1968–69 to 1972–73 will provide over 23,000 residential places and by 1974–75 universities are expected to have accommodation for about 106,000 students, compared with 82,000 in 1969–70. The Committee has recently completed an inquiry into future requirements for residence and into the prospects of an increase in the number of students living in lodgings or at home. Several universities have already succeeded in financing residence by means of private loans supplemented by grants from public funds. The problems of raising loans on a sufficiently large scale to meet future requirements are now being considered by the Committee and by the Committee of Vice-Chancellors and Principals.
My Lords, I apologise for the length of that Answer, but I hope that it may have given some indication to the right reverend Prelate of the present position and the future intentions of the Government for consultation.
THE LORD BISHOP OF NORWICH: My Lords, I should like to thank the Minister for a most encouraging Answer to the Question. There are two supplementary questions that I should like to ask, to which his Answer has itself provided some reference. First, can more money be made available to the University Grants Committee for the purpose of providing student accommodaton; and if that cannot be provided to the extent that is needed, could the universities have the same facilities for obtaining loans, and at comparable rates as are available to local authorities? Secondly, would not the Minister agree that serious social consequences are likely to result from the failure to provide students with reasonable accommodation? Can he therefore give the House an assurance—I was not sure whether such an assurance was given in his Answer—that the future expansion of universities will be limted to the number of students who can be provided with adequate accommodation, so far as one can estimate?
LORD BELSTEAD: My Lords, my answer to the right reverend Prelate's first and last questions is that I am sure
852
he will acquit me of any discourtesy when I say that I cannot forecast a future budget which is, after all, administered by the University Grants Committee, ahead of the allocations by that independent Committee, which is one of the cornerstones of the way in which our universities work. On the middle part of the right reverend Prelate's question about loans to local authorities, I assure him that my right honourable friend is in close touch with the University Grants Committee on the question of residence. But she has of course to consider it in the context of the development of higher education as a whole in the 'seventies, to take into account the most important needs of the polytechnics and colleges of education, and also to face quite squarely the strange question at the moment of the decline in the number of home-based students, a decline which has continued ever since before the war. Although I know that that last point is not relevant to the University in East Anglia, set in the most beautiful part of East Anglia, nevertheless the right reverend Prelate's university is well known for its extremely energetic and forward-looking ways of raising loan finance.
LORD WELLS-PESTELL: My Lords, may I ask the noble Lord whether it is not a much more serious problem that an increasing number of university graduates are finding it more and more difficult to get jobs commensurate with their qualifications at the end of their university careers?
LORD BELSTEAD: My Lords, I entirely agree; but I think we are a little off the Question.
LORD NUGENT OF GUILDFORD: My Lords, is my noble friend aware that the present system of university grants operation for the financing of student residences bears very hardly on the new universities, who have to find the whole of the cost of building student residences out of voluntarily raised funds? As one who has had some part in raising funds for the new University of Surrey, is my noble friend aware that this system places a great strain on these universities?
LORD BELSTEAD: Yes, my Lords. I thank my noble friend for drawing the attention of the House to that matter, and I will draw the attention of my right

853
honourable friend to the question that my noble friend has raised. This, I think, forms part of the consultations to which I referred in my original Answer.
BARONESS STOCKS: My Lords, can this whole question be considered in relation to the terrific waste of student accommodation and university equipment occasioned by the spread of an Arts degree course over three years, each year consisting of three ten-week terms?
LORD BELSTEAD: Yes, my Lords. Again, I thank the noble Baroness for bringing up that point. This is taken into account by the University Grants Committee when it gives the 25 per cent. grants, which at the moment is the common form of its grants, and not the 100 per cent. grants to which the right reverend Prelate was really referring in his original supplementary question.
LORD SLATER: My Lords, in view of the importance of the statement the Minister has made in reply to the Question, would it be asking too much that it should be circulated in the OFFICIAL REPORT? And has he any information from his Ministry as to what is to happen in regard to the application for the Tees-side University?
LORD BELSTEAD: Yes, my Lords, the reply will of course appear in Hansard tomorrow.
THE EARL OF DUNDEE: My Lords, may I ask my noble friend whether he is aware that when East China was occupied by Japan 50,000 Chinese students emigrated for a thousand miles on foot, carrying their school books and accompanied by their teachers, to the South Western town of Cheng-Tu where they carried on until the Japanese were expelled, living and sleeping in Nissen huts, feeding on a bowl of rice a day, clad in coarse Chinese gowns, entirely devoted to their studies, reinforced as time went on by thousands of recruits? They were visited by a British Parliamentary delegation in 1942, which included my noble friend Lord Ailwyn and myself. Does not my noble friend think that we might learn a little from the behaviour of these Chinese students, who so clearly considered that learning is of far greater importance than comfort?
LORD BELSTEAD: Yes, my Lords; but the point at issue is how far people
854
in this country are prepared to travel to do this. The Chinese proverb that I should like to give back to the noble Earl is this: If 10,000 students were to live at home and attend a local university instead of going to a distant one, over £10 million could be saved on capital costs alone.

THE RAILWAY AND TRANSPORT MUSEUMS
LORD NUGENT OF GUILDFORD: 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 a decision has been taken on the proposals for the Railway and Transport Museums.]
THE PAYMASTER GENERAL (VISCOUNT ECCLES): My Lords, the Government have considered proposals to rehouse the railway collection now at Clapham either at York, or at other places outside London; alternatively to rehouse the railway and road transport collections from Clapham in London. Detailed plans have been worked out only at York and at the Crystal Palace low-level station. The additional cost and the extra time required for building works are, however, decisive factors against the London alternative. The Standing Commission on Museums and Galleries advised me in the same sense. Accordingly the Government have decided:

1. to establish a National Railway Museum at York to be run by the Science Museum;

2. to arrange for the historical records of the railways to be kept in London, eventually at the new Public Record Office at Kew;

3. to consult with the G.L.C. and the Science Museum about the arrangements for the storage in London of the road transport collection, until such time as it can be properly shown to the public.

LORD NUGENT OF GUILDFORD: My Lords, may I thank my noble friend for his Answer to my Question? Is he aware that although all aspects of his Answer will not please everybody, at

855
least everyone will be pleased to have the decision taken? Would my noble friend tell us what weight he gave to the considerations of regional location as compared with the importance of getting a national institution in the right place?
VISCOUNT ECCLES: My Lords, the decision to go to York was taken on its merits as a site for a national railway museum. We had to be sure that there was no better site in London, and it was this inquiry which the previous Government failed to pursue. Now, taking into account the cost and the time for moving out of Clapham, we are agreed that York is a better site. That being so, I can record our satisfaction that an institution of this national importance is to be established in the North of England.
LORD POPPLEWELL: My Lords, is the Minister aware how very well his reply will be received by a large number of railway enthusiasts, particularly in the northern part of the country, where they feel that some part of the national museum should be regionalised? This will be especially well received where the railways first begun, in the Stockton and Darlington area. It will give great pleasure to many to know that the decision has been taken to establish this museum at York where land and everything is readily available.
VISCOUNT ECCLES: I am glad that that is so, my Lords. But the noble Lord must realise that we are left with quite a difficult problem as to what is to happen to the London road transport collection.
LORD BURNTWOOD: My Lords, is the noble Lord aware that his Answer will not be received with unalloyed pleasure by everybody?—but that, of course, is the nature of the problem. Can he give some indication of the time scale of the various moves, and has he ever estimated how many noble Lords have visited Clapham, for it is a quite exceptional exhibition?
VISCOUNT ECCLES: My Lords, I agree that Clapham is a very agreeable museum and is visited by a great many children. It has lately put up its charges, with no ill effects upon the entrance figures. Of course it is a good thing that we should distribute these collections
856
around the country, but only on their merits. As a man interested in museums, I am convinced that we must be sure that the site chosen will afford all that is necessary for a national collection. Fortunately York does this.
LORD WYNNE-JONES: My Lords, would the noble Lord agree that York is traditionally the heart of the railway system in this country and is therefore a most appropriate place for a museum of transport? At the, present time there is already a railway museum there which is very much visited by small children.
VISCOUNT ECCLES: My Lords, the railway interests, in particular the Transport Trust, have let me know that Great Britain has several hearts in connection with the railway system. I think York is well placed, but there were other places outside London which had quite a good claim.
LORD WYNNE-JONES: My Lords, this was not a heart transplant.

PEERS' DIVISIONS PROCEDURE
EARL ST. ALDWYN: My Lords, may I remind your Lordships who were kind enough to take part in the dummy run for the new form of Division before the House sat to-day that this new form cannot come into operation until the House has approved the Report of the Procedure Committee on the Motion which will be moved in due course by the Leader of the House.
GREATER LONDON COUNCIL (GENERAL POWERS) (No. 2) BILL
Read 3a, with the Amendments, and passed, and returned to the Commons

ATTACHMENT OF EARNINGS BILL [H.L.]
2.58 p.m.
THE LORD CHANCELLOR (LORD HAILSHAM OF ST. MARYLEBONE): My Lords, I beg to move that the Commons Amendments be now considered. May I, in three sentences, say all that I have to say about this matter. The Bill was moved to this place on the Order Paper because it was thought that we might get

857
by without a debate, and this is probably right. It is, as your Lordships will remember, a Consolidation Bill, and both the Amendments that I shall be moving, if this Motion is carried, are so technical and so obviously right that I do not think they require very much discussion. I beg to move.
Moved, That the Commons Amendments be now considered.—(The Lord Chancellor.)
On Question, Motion agreed to.

COMMONS AMENDMENT
>[References are to Bill 104 as printed for the Commons]
[No. 1.]
Clause 21, page 16, line 18, after "earnings" insert "order".
THE LORD CHANCELLOR: My Lords, this Amendment deals with the omission of the word "order", which was missed apparently because the sentence was intelligible without it. In the interests of consolidation, however, it is necessary to put it in. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 2.]
Schedule, 6. page 28, leave out lines 2 to 4.
THE LORD CHANCELLOR: My Lords, I beg to move that this House doth agree to the second Amendment. It deals with a slip by the draftsman, who took out more than he ought to have done in order to effect a consolidation.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
On Question, Motion agreed to.

INDUSTRIAL RELATIONS BILL
3.0 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.
Moved, That the House do again resolve itself into Committee.—(Lord Drumalbyn.)
On Question, Motion agreed to.
House again in Committee.
[The EARL OF LISTOWEL in the Chair.]
Clause 13 [Application for ballot on continuance of agency shop agreement]:
LORD DIAMOND LORD DIAMOND moved Amendment No. 100:
Page 11, line 22, after ("of") insert ("a voluntary agreement or").
The noble Lord said: This Amendment is a probing Amendment, and I would not wish to make more than a very few comments in order to enable the Government to explain the meaning of this clause, and particularly to tell me whether I have understood it correctly. So far as I understand this part of the Bill, there are in fact two kinds of agency shop agreement as referred to in Clause 10. Clause 10(1) refers to an "agency shop agreement", which I might describe as a voluntary agreement. We have to have two words for "agreement" because the old, simple meaning of agreement—namely, something two people have agreed together—no longer applies because an enforced agreement where two people have been compelled to undertake, at the instance of somebody else, certain action is now called, according to this Bill, or according to the Minister in charge of the Bill, an "agreement". So, in order to make my position clear, perhaps we may call this first one "a voluntary agreement". The second case, under Clause 10(2), is where there is an agency shop agreement as a result of an application to the Industrial Court
Under Clause 13 there is this reference, at line 22, which is under subsection (3):
"In the case of an agency shop agreement made in pursuance of a ballot…".
That is one kind of agency shop agreement. What I am seeking to do is to ascertain the position with regard to the other kind of agreement; namely, a voluntary agreement. In the case of the agency shop agreement the clause makes it perfectly clear that there cannot be—that is to say, the Industrial Court cannot entertain—an application before the end of the period of two years for a cessation of an existing agency shop agreement, where that arose out of a ballot. Am I correct in understanding that this subsection has no relevance to what I would call a voluntary agency agreement under Clause 10(1); and that if, for example, the voluntary agreement specified a period of six years, eight years or ten years—namely, periods which are well in excess of two years—then this subsection would have no application and a voluntary agreement would persist so long as the period was unexpired; and that there would be, therefore, no possibility of a reference to the Industrial Court to bring that agency shop agreement to an end after two years—or, rather, under this procedure, in two years' time; under a period of not less than two years?
That is the purpose of the Amendment —to clarify the position. I should be grateful if the Government would be good enough to confirm or deny whether I have understood it correctly; and then we can deal with the situation further in the light of the Government's reply. So for these purposes, I beg to move.
LORD BELSTEAD: The noble Lord, Lord Diamond, has made clear the intention of his Amendment; namely, to probe the position of a voluntary agreement. In the case of a voluntary agreement there will have been no ballot and therefore the challenge could still be made under the provisions of this subsection. If the effect of the Amendment would prevent the voluntary agency shop agreement from being challenged within two years of its commencement, we believe that this could lead in fact to industrial strife, because the voluntary agreement, of course, will not have been subject to the ballot in the first place. No challenge would be made
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if those who were covered by the voluntary agreement—those working—were content with the agreement. The only purpose, therefore, surely, of this Amendment would be to frustrate the desire of the majority of workers who might want to bring about an end to an agreement in an orderly way. Not being able to secure a ballot to express their views, they might have to turn to methods which would be damaging to bring about changes which they desired and which would not help to improve industrial relations.
The agency shop provisions, we believe, have been carefully designed to ensure that no agreement is made without affording the workers directly concerned an opportunity to express their approval or disapproval of the agreement. Where the workers have expressed their views the provisions allow what we believe is a reasonable period of stability—the two—year pause—before a further challenge can be made. At the same time, there is reasonable opportunity to bring about orderly changes in the arrangements.
An agency shop imposes important obligations on the workers covered by it, and we believe therefore that those working should have the opportunity to express their views on it and to challenge any arrangement which is made against the wishes of the majority. I hope that that explanation clarifies the relevance of the voluntary agreement which the noble Lord is trying to insert into the text of the Bill, and the agency shop agreement.
3.8 p.m.
LORD BLYTON: I rise to support the Amendment because of the fact that it is not as easy as the Minister attempts to make it. There will be a great number of difficulties arising over the balloting procedures involved in setting up an agency shop or challenging it once it is in existence. A ballot will be required in two sets of circumstances: first, by 20 per cent. of the employees asking for a ballot; and, secondly, by the employer asking for a ballot. To obtain or maintain the agency shop, a union will have to gain a majority of those eligible to vote—not a majority of those voting. In this way, to abstain is to vote against.
Under this rule, if a union fails it would be forbidden to apply for a ballot

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for two years. The propositions for an agency shop are really impracticable in the maritime transport industry, and the most difficult will be in the ballot requirements. There are serious arguments against the proposals in this clause, and one is the practical difficulty involved in balloting seamen at any given time, given the mobile nature of their work. The assumption that each shipping company has its own permanent staff is erroneous. Only one in five registered seamen have company contracts. Therefore, 80 per cent. of our seamen have the liberty, which is often exercised, to be employed by any number of companies for varying periods throughout their careers as seamen.
Balloting within a company could give seamen the opportunity to participate in more than one ballot on the agency shop question, and even if these ballots were held simultaneously the vote would still be unreal, for the reason that the issue would be company orientated while the seamen are industry orientated. In other words, the matter of union representation within an undertaking would be determined by the seamen who have not, and need not have, any special interest in the individual company or its affairs. Again these ballots will effectively disenfranchise a large number of seamen who at any one time are ashore on leave or awaiting further employment, and I ask the Minister: how well their interests be catered for within the ambit of this clause?
In these circumstances, the agency shop and its procedures is open to criticism, especially in an industry like seafaring, and this is in no way a substitute for the comparatively efficient and equitable system that we have known for years of the closed shop in the seafaring industry. As I stated on Clause 5, the shipping industry has a high turnover rate and means that seafarers serve for short periods only. Thus many will be in the position to enter and leave seafaring employment without being obliged to conform to an agency shop agreement. Clearly the law will not be capable of enforcement in many such cases. How can this law be made enforceable when the sailors are in the Indian Ocean? The proper conduct of industrial relations with seamen rests primarily on organisation, and I am sure that if this were put in
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the Bill they would get a voluntary agreement with the shipowners.
The effect of doing away with the closed shop will be to destroy this most essential element in their union. How can we expect, in an industry scattered over the seven seas, to take a ballot as described in this clause, with all the qualifications that follow? It is really necessary—and I plead this case on behalf of the seamen—that this Amendment should be accepted so that they can make a voluntary agreement in this industry. I am certain that if this clause were left in the Bill it would bring about industrial chaos. We shall not get the industrial peace that the Government say this Bill sets out to achieve. Therefore, I support my noble friend on the Front Bench.
LORD POPPLEWELL: I also should like some further clarification. My noble friend seeks to embrace the words "voluntary agreement". That type of wording includes the present closed shop. When this Bill becomes an Act, will the closed shop be accepted as a voluntary agreement or will it necessitate the full implementation of the Act in establishing votes for an agency shop? This is exceedingly important, because it could probably be argued—as I rather gather the Minister was arguing—that what we seek as a voluntary agreement is something, according to the Minister, that has not been voted upon by the people with in any given industry. By and large this is not quite correct, because the unions that have been able to establish these closed shop agreements have done it with the full consent of all their members—probably not by having a ballot, but by various decisions that have been taken by their respective ruling assemblies. Therefore, they express the voluntary spirit of our trade union movement that has brought about and operated these closed shops.
With the introduction of this Bill I think it is important that we should make perfectly clear, once the Bill becomes an Act, the precise position with regard to voting. How will the code of practice that will be given to the N.I.R.C. operate, in so far as they will agree to make an application ultimately to the Commission to carry out this ballot? Will the code of conduct that will be given to the N.I.R.C. be such as to instruct them

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that a ballot must take place? This is very important. I hope that I am wrong in my assumption, but if I am right it further indicates how illogical this Bill really is because it is not calculated to establish good industrial relations. If what I fear in fact comes to pass, it will put one little bit more bitterness into the question of negotiations between both sides that neither side really wants. I hope the Minister will be able to give me a full answer when he replies.
THE LORD CHANCELLOR: The noble Lord who moved this Amendment described it as a probing Amendment and asked a question, to which my noble friend Lord Belstead gave an answer. My noble friend Lord Belstead pointed out that subsection (3) deals with the period of time which must elapse between an agency shop agreement made in pursuance of a ballot taken under Clause 11 and a new application to the Industrial Court for a fresh ballot—and it refers to nothing else at all.
My noble friend pointed out that a ballot under Clause 11, as prescribed in line 22, could only take place in the circumstances set out in Clause 11, which is that the employer did not originally want the agreement. Both noble Lords who have spoken since appear to be under a misapprehension as to that, because both of them have gone back to the original discussion about the purposes and scope of an agency shop agreement. The voluntary agreement of an agency shop between the employer and a union or unions we dealt with at considerable length yesterday, and it takes place under Clause 10. It does not give rise to the two-year period, for the reason which my noble friend has explained. So far as the seamen are concerned, if and in so far as there is anything in the case presented by the noble Lord, Lord Blyton, we have sought to cover the case in Schedule 1 and, I think, in Clause 16. That I think also deals with the point which was troubling the noble Lord, Lord Popplewell. There is no lack of logic in this clause. It simply says that if a compulsory ballot takes place under Clause 11 and results in an agency shop, the challenge which is provided for in Clause 13 cannot take place for a period of two years because
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the men will have already voted for it in the course of a ballot.
LORD SHINWELLAlthough I support the principle behind the Amendment, namely, in regard to special circumstances, as, for example, in the case of the seafaring community, which is an exception, it seems to me that if the Amendment were accepted by the Government the subsection would require to be revised. Therefore the assurance that has just been given by the noble and learned Lord, the Lord Chancellor, which is embodied in Schedule 1 and provides for an exception of the kind mentioned by my noble friend Lord Blyton, would, in my judgment, be satisfactory.
My noble friend Lord Blyton was on a very important point when he referred to the seafaring community. A ballot is very difficult to operate, even to initiate. Although it could be initiated it might fail to be implemented among the seafaring community because, as noble Lords are aware, seamen sign articles and can be away from the United Kingdom for 12 months or sometimes even for two years according to the articles signed. That is quite customary in certain shipping lines. In those circumstances the seamen would be quite unable to take part in a ballot. I wonder whether the point mentioned by the noble and learned Lord, the Lord Chancellor, could be supplemented by an assurance that the seafaring community, along with the shipowners, the Shipping Federation, or a number of associations connected with the shipping industry, could form, by arrangement, a voluntary agreement. I cannot imagine that the Government would take exception to that. It would not conflict with a ballot, which would be required for the ordinary case in industry.
The noble Lord, Lord Belstead, in suggesting the rejection of the Amendment, argued that the voluntary agreement might be challenged. Challenged by whom, and for what purpose? The only possibility of a challenge would not come from shipowners, because if the shipowners and the National Union of Seamen or the navigation officers' organisation came to an agreement which provided for a closed shop in the seafaring community, the only possible challenge could come, for example, from a seaman who had a

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conscientious or other kind of objection to joining the union.
THE LORD CHANCELLOR: I think the noble Lord is under a misapprehension. My noble friend was referring to the rights of challenge conferred on a 20 per cent. minority by Clause 13, which applies to a voluntary agreement.
LORD SHINWELL: I am anxious to follow the noble and learned Lord, the Lord Chancellor, but I still think I am on a point. His argument now, which differs from the argument adduced by the noble Lord, Lord Belstead, is rather difficult to understand. He speaks of a 20 per cent. minority. Minority of whom? It could not be the Shipping Federation, because they speak for the general body of shipowners.
THE LORD CHANCELLOR: If the noble Lord would look at subsection (2) of the cause we are discussing he will see what minority precisely is referred to.
LORD SHINWELL: I do not want to pursue this matter unnecessarily. I am only concerned, having some knowledge of the situation affecting seamen and knowing the difficulties that confront them in taking a ballot, that it is very difficult for the National Union of Seamen or the navigation officers' organisation to undertake a ballot. But if I am assured that the seamen are in some way protected and regarded as an exceptional case, I shall be quite satisfied.
3.27 p.m.
LORD DIAMOND: Clause 13 refers to "any time when an agency shop agreement is in force" and it was natural, therefore, that my noble friends, Lord Blyton and Lord Popplewell, should take this opportunity of discussing matters which are very much on their minds and relate them to this particular Amendment. In fact, as the noble and learned Lord has said, this Amendment deals with a rather narrower point; it deals in particular with subsection (3). Therefore, although I am most grateful to the noble Lord, Lord Belstead, for having given me a clear answer on subsection (2), I wonder whether I might redirect his attention to subsection (3). He asked whether the position had been made clear. I am bound to say it has, up to a point, so far as I am concerned. Perhaps
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he will be patient while I explain that part that is not absolutely clear. We are on common ground, I know, from what he and the noble and learned Lord said, that although subsections (1) and (2) deal with all kinds of agency shop agreements, subsection (3) deals only with that particular kind of agency shop agreement which has originated out of a disagreement between employer and union and which has been settled by the ballot procedure referred to under Clause 10(2) and Clause 11.
I am asking what is the effect of Clause 13(3), or indeed of any part of Clause 13, on the circumstance where there has been a voluntary agreement entered into for a period of more than two years. In short, is it the case that after two years the voluntary agreement could be challenged under this procedure? I assume not. Is it the case then that a voluntary agreement which is in other respects satisfactory and is for a period of more than two years could not be upset by anything in this clause, and in particular in this subsection? If so, I should not wish to trouble your Lordships further with this particular Amendment. The assurance which my noble friend, Lord Shinwell, seeks could come more conveniently on Schedule 1, and the questions which my noble friends have asked in regard to the closed shop I am sure will recur when we come to the closed-shop clause. But it is at this point that I must get it absolutely clear that a voluntary agreement under Clause 10(1), made for, if you like, a period of two years, but it could be any period, will not be upset by anything in this clause.
THE LORD CHANCELLOR: I hope the noble Lord will forgive me. It is a little difficult to be quite certain that one has got the point he has in mind. I think he has been mistaken. A voluntary agreement under Clause 10(1) is subject to what we have called the challenge under subsection (1) of Clause 13. The period of time for which it is made is immaterial, so long as the condition provided by subsection (2) of Clause 13 is fulfilled. If, however, the challenge is unsuccessful, then, running from that day, there is a period of two years' embargo on any further challenge; but that depends upon the lack of success of the challenge under subsections (1) and (2). and not upon the period of time for which the agreement

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was originally arrived at. I hope I have made myself clear.
LORD DIAMOND: I am most grateful to the noble and learned Lord. He has made himself terribly clear (and I use the word "terribly" in all its senses) because he has made it clear that where a voluntary agreement is entered into by parties in real agreement—there is no dispute under Clause 10(1); the employer and the union are satisfied that there should be an agency shop agreement and enter into it—nevertheless, the agreement can at any time, one week later, one year later or at any time, be challenged, provided the conditions of Clause 13(1) and (2) are satisfied; namely, that you get the one-fifth concurrence in writing. This will mean that where you have an agreement which has been entered into voluntarily—and this took a long time to wheedle out of the Government and out of the clause— bona fide to the satisfaction—
THE LORD CHANCELLOR: Excuse me for a moment. The noble Lord is not being fair to my noble friend. He did say this in his original answer, but it evidently failed to register; and it was for that reason that I repeated it when I noticed that the noble Lord wanted clarification.
LORD DIAMOND: If he did, then it is perfectly clear that it did not penetrate my mind and so it was necessary for it to come out again. I am not sure whether every member of the Committee, immediately the noble Lord, Lord Belstead spoke, understood that what this clause provides—and we have now got it clear—is that where union and employer have voluntarily entered into an agreement of this kind, which is satisfactory to both sides, which both the employer and the union or unions want, then that can be challenged by any single dissatisfied person or employee, who proceeds to go round the works with a list of papers saying, "Please sign this, mate". And it is, of course, very easy to get signatures. If your Lordships doubt how easy it is to get signatures, may I invite your Lordships to look at the recent signatures on two documents appearing in the other place: one is a document prepared by the Anti-Common Marketeers, against
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the Common Market; another is a document prepared by the Common Marketeers, in favour of the Common Market.
Your Lordships will see that distinguished Members of the other place have put their names, some to each document, some to both documents. That expresses a breadth of mind, a tolerance which we admire; but I think it makes the point which every single Member of the other place understands only too well: the pressure of a friend to get you to sign a document which is pleasantly worded, but in the kernel of which is an appeal against the agency shop agreement. How easy it is in such circumstances to get 20 per cent. willing to oblige a friend, a mate, who will sign the document.
In those circumstances the Government, for reasons which are totally unexplained, want to come along and upset the agreement, in pursuit of good industrial relations. It will not surprise your Lordships when I say that having reached that conclusion nothing could be further from my mind than to withdraw this Amendment, because this Amendment might mean—I doubt whether it is perfectly worded—that where you have an agreement voluntarily entered into between the two sides, they should be allowed to carry out the agreement they have entered into; they are both satisfied and happy about it, the works is continuing happily and everybody is content. In those circumstances, I am bound to ask, what is the philosophy, the justification of the Government, for upsetting an agreement which both sides have entered into voluntarily in the pursuit of good industrial relations?
THE LORD CHANCELLOR: The noble Lord is entitled to ask the question and I am entitled to reply. The answer is this: the basic philosophy I explained at considerable length the other night when we were talking about the closed shop. Our belief is that human beings are entitled to be in voluntary association. The whole basis of the agency shop, which is a substitute for the closed shop, is, in our view, an abridgement of the rights of the minority and the rights of the individual. In order to ensure that it is only a minority whose rights are

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abridged we provide for a ballot. If the union and the employer get into cahoots with one another—I use the word in no pejorative sense—and they have an agreement that there should be an agency shop, we wish to be sure that should at least one-fifth challenge it the agreement should continue only if it represents the majority of the workers. What Clause 13, and this particular subsection of Clause 13, is about is the provision that there should be a majority of the workers in favour before the agreement continues. If you want to divide about that, divide about it.
LORD DIAMOND: I should have thought there is nothing which the noble and learned Lord and I have more in common than that this is something which one should and must divide about; namely, the right of employers and employees, through their unions, to enter into arrangements and to abide by them.
3.38 p.m.
On Question, Whether the said Amendment (No. 100) shall be agreed to?
Their Lordships divided: Contents, 56; Not-Contents, 123.

CONTENTS

Addison, V.

Hilton of Upton, L. [Teller.]

Sainsbury, L.

Archibald, L.

Hoy, L

St. Davids, V.

Balogh, L.

Jacques, L.

Samuel, V.

Bernstein, L.

Janner, L.

Serota, Bs.

Blyton, L.

Lee of Asheridge, Bs.

Shackleton, L.

Brockway, L.

Lindgren, L.

Shinwell, L.

Buckinghamshire, E.

Llewelyn-Davies of Hastoe, Bs.

Slater, L.

Burntwood, L.

McLeavy, L.

Soper, L.

Burton of Coventry, Bs.

Maelor, L.

Stocks, Bs.

Champion, L.

Morris of Grasmere, L.

Stow Hill, L.

Crook, L.

Moyle, L.

Taylor of Mansfield, L.

Davies of Leek, L.

Noel-Buxton, L.

Wells-Pestell, L.

Delacourt-Smith, L.

Nunburnholme, L.

White, Bs.

Diamond, L.

Pargiter, L.

Williamson, L.

Fiske, L.

Peddie, L.

Wise, L.

Gaitskell, Bs.

Phillips, Bs. [Teller.]

Wootton of Abinger, Bs.

Gardiner, L.

Popplewell, L.

Wright of Ashton under Lyne, L.

Garnsworthy, L.

Ritchie-Calder, L.

Geddes of Epsom, L.

Rusholme, L.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Cork and Orrery, E.

Henley, L.

Aberdeen and Temair, M.

Courtown, E.

Hives, L.

Abinger, L.

Cowley, E.

Hood, V.

Ailwyn, L.

Craigavon, V.

Howard of Glossop, L.

Airedale, L.

Crathorne, L.

Hylton-Foster, Bs.

Albemarle, E.

Cromartie, E.

Ilford, L.

Alexander of Tunis, E.

Daventry, V.

Inglewood, L.

Allerton, L.

Denham, L. [Teller.]

Jellicoe, E. (L. Privy Seal.)

Amherst, E.

Derwent, L.

Kemsley, V.

Amory, V.

Digby, L.

Lauderdale, E.

Arran, E.

Drumalbyn, L.

Long, V.

Ashbourne, L.

Dudley, E.

Lonsdale, E.

Atholl, D.

Dufferin and Ava, M.

Loudoun, C.

Balfour, E.

Dundee, E.

Lucas of Chilworth, L.

Balfour of Inchrye, L.

Elliot of Harwood, Bs.

Luke, L.

Barnby, L.

Exeter, M.

Lyell, L.

Bathurst, E.

Ferrers, E.

MacAndrew, L.

Beauchamp, E.

Ferrier, L.

McCorquodale of Newton, L.

Beaumont of Whitley, L.

Fortescue, E.

McFadzean, L.

Belstead, L.

Gisborough, L.

Mancroft, L.

Berkeley, Bs.

Goschen, V. [Teller.]

Mansfield, E.

Bledisloe, V.

Grenfell, L.

Massereene and Ferrard, V.

Boothby, L.

Gridley, L.

Merrivale, L.

Boston, L.

Grimston of Westbury, L.

Molson, L.

Brooke of Cumnor, L.

Hacking, L.

Mowbray and Stourton, L.

Brooke of Ystradfellte, Bs.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Moyne, L.

Byers, L.

Northchurch, Bs.

Caithness, E.

Hankey, L.

Nugent of Guildford, L.

Clifford of Chudleigh, L.

Hanworth, V.

Oakshott, L.

Clwyd, L.

Hatherton, L.

Ogmore, L.

Conesford, L.

Hawke, L.

Orr-Ewing, L.

Ponsonby of Shulbrede, L.

Salisbury, M.

Swaythling, L.

Radnor, E.

Sandys, L.

Swinton, E.

Rankeillour, L.

Sempill, Ly.

Teynham, L.

Reay, L.

Sherfield, L.

Thorneycroft, L.

Robbins, L.

Sinclair of Cleeve, L.

Thurso, V.

Roberthall, L.

Stamp, L.

Tweedsmuir of Belhelvie, Bs.

Robertson of Oakridge, L.

Strang, L.

Vivian, L.

Rockley, L.

Strange, L.

Ward of Witley, V.

St. Aldwyn, E.

Strathclyde, L.

Windlesham, L.

St. Helens, L.

Stratheden and Campbell, L.

Wolverton, L.

St. Just, L.

Resolved in the negative, and Amendment disagreed to accordingly.

3.48 p.m.
On Question, Whether Clause 13 shall stand part of the Bill?
LORD DIAMOND: This is a most important clause. Because of the way in which the Amendments have been taken we have had an opportunity of discussing one aspect only of the clause. So your Lordships will bear with me while I explain a number of aspects of the clause to which we are wholly opposed. In essence, the clause is a prescription for unrest. That is the essence of our complaint. It is disruptive of good relations in industry and of good relations within trade unions as between members. As I indicated a little earlier on subsection (1), it gives to one person, any single individual, the right to make an application. I think it would be difficult in any community or society or in almost any large household to find not one single individual who is feeling a little unhappy about life on any particular day. One individual who feels disgruntled, to use an expressive, albeit not highly literal, term, can set the whole of this disruptive process going.
When I say "disruptive process", it is a process to disrupt an agreement which has been entered into either voluntarily as between employer and unions, or after a ballot when a reluctant employer is compelled by the force of the ballot, by the force of public opinion, of his employees to enter into this arrangement. It disrupts that arrangement, and the peaceful relations which are existing as a result of that arrangement. It disrupts them because it provides, first, that any single disgruntled individual can set the process going, and, more particularly, can threaten, and properly threaten, to set the whole process going. So immediately a new power, a new force, a new strength is being given to the disgruntled individual
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or individuals, inside a particular place of work where there is an agency shop agreement in force.
Next, as I indicated a little earlier, all that the Industrial Court has to be satisfied about, before it entertains the application from that one individual, is that not less than one-fifth of the relevant workers —that is to say, the workers to whom the agency shop agreement applies—have signified, in writing, their concurrence in the application. I suggest that this again is such a small and easily accomplished figure that the disruptive process is not in any sense deterred. It would have to be a far larger figure before you could really be sure that there was serious, and permanent, dissatisfaction with the agency shop agreement. Nothing could be easier, on the basis, of, say, 10 per cent. disgruntlement (which is not a very large figure), and 10 per cent. friendship (which is also not a very large figure), than to get 20 per cent. of signatures in order to enable this application to be entertained by the Industrial Court.
The disruptive process therefore carries on, except, I agree, to the extent that, where the agency shop agreement has resulted from a ballot (namely, as a result of the employer disagreeing in the first place, or being unwilling or reluctant in the first place) you have a period of two years of reasonable calm, free from this disruptive process. But, as we quite recently elicited, where you have an agreement which has been entered into with open arms by both sides of industry, the employer and the employee, then it can be disrupted within seven days. Employers and employees are perfectly content, and have entered into a shop agreement of this kind, and it can be disrupted, in the process I have described, within the first week, or after any period, although broadly it is going very satisfactorily, and as well as these things go if one pictures the average factory or shop

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floor, where inevitably there are incidents which cause anxieties, pressures and frustration, which make any self-respecting man feel that he would like to do something at that particular moment. Even such a restrained indivdual as the noble and learned Lord the Lord Chancellor could not restrain himself from finishing his last speech by throwing off a threat in his very last sentence. Did he mean it? Of course he did not. What he meant was that a certain amount of pressure had built up and he wanted it to be released. This is a normal psychological release, with which we are all familiar.
THE LORD CHANCELLOR: I made no threat. I only remarked that the noble Lord had said he wanted to divide on the Amendment. I described the issue. I said that I thought we were right, and I said "If you want to, divide". What could be less of a threat than that?
LORD DIAMOND: There is no need for me to repeat what the noble and learned Lord said, or the relevant accents, or temperature, or octaves. It was within the hearing and recollection of all noble Lords. All I am saying is that I am using that as a most recent example of the fact that in a much more difficult set of circumstances, of grinding machinery, noise, delays, awkward foremen, unto-operative mates and so on, it is inevitable that there should be pressures which result in a man feeling that he must do something to get them released. He will start an application and go around with a sheet of paper saying. "Here, we cannot stand this any more, can we? So-and-so said I had taken too much time off for tea, so sign this". Then the mate signs. I am saying that 20 per cent. could arise from a much smaller figure of real disgruntlement, that that disgruntlement might well be temporary and not permanent, and that that is far too small a percentage on which to base a disruptive process of this kind, where apparently you have a reasonably satisfactory atmosphere based on a reasonably satisfactory agency shop agreement.
One final argument I wish to draw to your Lordships' attention, and which perhaps would appeal more to those on this side than on the other side of the Committee.
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It is of course the case that, within an organisation as large as the average union or section of a union, as within any other group in society, there will be differences of opinion. It is even known in your Lordships' House, and even within one side of your Lordships' House, that there may be differences of opinion. There will certainly be differences of opinion within most trade unions, as between one man and another, about a variety of matters. It is healthy, appropriate, and traditional that these opinions should be aired, that discussions should take place and, so far as possible, agreement reached. But where should the opinions be aired? Differences between trade unionists should be aired within trade union circles and trade union spheres, as between one trade unionist and another. This clause misdirects that proper discussion; it directs the discussion of that difference towards an outside body instead of getting it settled within a union. It will therefore undoubtedly tend to weaken instead of strengthen the union, because strength comes from difficulties met and overcome in good faith. This clause will misdirect all that energy and we shall get agitation, which should take place within the union, directed outside, thus weakening the whole approach.
This one clause contains all those mistakes, yet it is a central clause of a Bill the main justification for which, to the ordinary member of the public, is that there have been industrial disputes, that they ate due, in the ordinary man's view, mainly to a man's word not being his bond, that agreements should be kept; therefore, we must have an Industrial Relations Bill, so that agreements should be kept. I suggest that that is the normal approach of the average person outside Parliament, who is not particularly technical in the field of industrial relations. This is what the Bill is about: to ensure that a man's word is his bond. This clause is to ensure that a man's word is not his bond. It is to ensure that, when agreements have been entered into voluntarily as between employer and employee, they can be broken; they can be challenged; they can be threatened by one disgruntled person starting off the process I have indicated. I think this clause is wholly bad.
4.0 p.m.
LORD SHINWELL: What I am about to say to your Lordships, particularly to noble Lords on the opposite Benches, though not so much to those on the Government Front Bench, is said more in sorrow than in anger. I was always under the impression that employers of labour—and there are many in your Lordships' House, particularly on the Government side—would naturally prefer a voluntary agreement based on co—operation, conciliation and good will. Frequently we hear that there is far too much legislation. The Press join in the chorus against excessive legislation; in the other place, there are frequent abrasive remarks about too much legislation; and I am satisfied that there are many in your Lordships 'House who would prefer fewer legislative enactments than appear from time to time and are subsequently implemented.
In the preceding debate the noble and learned Lord the Lord Chancellor said to my noble friend Lord Diamond that he was seeking to probe. That was correct. But as a result of the probing of my noble friend Lord Diamond, we made a discovery which to me is astonishing. When I indulged in a few observations when we were debating the Amendment, I failed to do so with the skill of my noble friend Lord Diamond and I missed the point. I was concerned only about what I regarded as an exceptional aspect of our industrial life which relates to the seafaring community. I have always been interested in the wellbeing of that community and, indeed, of the whole shipping industry.
I observed (this is a personal matter and I mean no offence in what I am about to say; I merely state a fact) that one of the noble Lords who presented himself—he was not in the House during the debate on the previous Amendment but he came in, no doubt in response to the call for a Division—was the noble Lord, Lord Mancroft, who is one of the principal directors of the Cunard Line. I should not be surprised to learn that there are here other shipowners and people connected with the shipping industry. But I am convinced that if there is a body of industrialists in the United Kingdom who want a voluntary agreement with their employees, it is those who are associated with that industry. Therefore I challenge noble Lords on the
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opposite Benches. What is it that they want? Do they want more disruption, more disputation, more industrial strife, more discontent among workpeople, and disappointment and disillusionment about employers? Or do they want a measure of good will and conciliation and understanding, in order to avoid industrial discontent and strife?
At the end of the debate, the noble and learned Lord the Lord Chancellor remarked in a very strident voice, "Divide. Divide, if you want to divide." And that we did: not because he demanded it of us. but because that was our intention. We should have divided even if he had failed to display what seemed to me, not arrogance—I should not care to use that term—but annoyance. I beg the noble and learned Lord not to be annoyed with us.
THE LORD CHANCELLOR: I was not in the least annoyed. I was only quite confident that we were right and that we were going to win; and I was right about both items.
LORD SHINWELL: The noble and learned Lord is entitled to believe that he was right. On the other hand, we are entitled to believe that we were right. There is disputation among us, but the noble and learned Lord the Lord Chancellor not only believed he was right but thrust it down our throats, and I must confess that I do not care for that sort of conduct. I suggest that the noble and learned Lord should understand that we are the Opposition. There was a time when he was a member of an Opposition, and indeed for much longer than he cared. But I do not want to go into personal matters. He and I understand each other. We have had frequent conversations and I am certain that we do not bear any malice, one to the other. But the noble and learned Lord must understand that we are here for the purpose of presenting our case as we understand it. Sometimes we fail to present a logical argument, but occasionally we succeed, and I am bound to say that if ever I admired a speech from the Front Benches I was full of admiration for the skill with which my noble friend Lord Diamond projected his point of view. He clarified the position for all of us.
My noble friend said that noble Lords opposite who took part had no doubt

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heard what the noble and learned Lord the Lord Chancellor said at the end of our preceding debate. But they did not. They failed to hear it. I wish they had heard it, I should not be at all displeased if the noble and learned Lord the Lord Chancellor indulged in the same remark if the whole 123 of your Lordships were present. Then noble Lords opposite would understand a little more, and perhaps would be displeased at the gesture of annoyance and disturbance that caused the noble and learned Lord to indulge in that quite unnecessary observation.
Anyhow, now we know where we are. We now have it on the authority, and indeed at the urgent request, of the noble and learned Lord the Lord Chancellor: "Divide; divide"; and that is what we are going to do. If I had my way, I should divide on every Amendment. Is that what the Government want? Do they want to hold this up, to filibuster, to continue for many weeks and months? Do they want to go all through the night? I beg of them not to try, not to tempt us in that direction. It would be a mistake. It would not be for the good of the Government or of the Opposition, and it would not be good for industrial relations.
That is really all I want to say, except this. It would be to the advantage of our debates occasionally—and I admit that I myself am sometimes absent—and it might be to the advantage of the whole country and to the prospects of better industrial relations, if noble Lords on the other side themselves listened to the debates and did not rely on the Whips ordering them into the Division Lobby. That applies in particular to those noble Lords who are themselves engaged in industry. I ask this question of noble Lords: what is to be the future of this country? We are beset with more problems that we have ever known. Those problems must be resolved in the interests of all of us, and if they are to be resolved we have to start on a better understanding and a better relationship between the employers, on the one hand, and the employees, on the other, which will in the long run be conducive to the good of the United Kingdom.
Finally, I want to ask this question again. and I wish that somebody on the other side would answer it. Would not
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noble Lords prefer voluntary agreements to the compulsory arrangements which are embodied in this legislation? What is their choice? Is it voluntary agreements, voluntarily arranged with good will on either side, which can last for a considerable period of years—perhaps for all time? Or do they want legislation which is capable of disruption, interference, and unnecessary intervention? What do they want? I wish that somebody would tell us. It would help us in our future debates.
BARONESS GAITSKELL: I am against the whole of this clause, because it seems to me to be an example of what is wrong with the whole of the Bill. This is a very complicated Bill, but it is superficial. One can expect of a document which is so complicated that it would be profound, and that it should go to the fundamentals of industrial relations. But this clause certainly does not do that. It does not do it with its 20 per cent. ballot and its two—year pause—both of these things are completely unnecessary. If this Bill were good at all it would be better without both of these things. All the very glib sentences about personal freedom uttered by the noble and learned Lord the Lord Chancellor are simply sops to the Conservative voters, who do not understand or know about the complexity and the sensitive nature of industrial relations, and that there are no glib answers. This clause contains only glib and superficial answers which will not work at all. I should like to draw to the attention of noble Lords opposite the question posed by my noble friend Lord Shinwell at the end of his intervention.
LORD PARGITER: There is a question involved in this particular clause, and in other clauses to which I cannot see the answer, either because I am too dense or because the Bill is too complicated and perhaps it is a little of both. As I read it, it seems that no existing closed shop will be legally able to exist on the appointed day. On and from the appointed day, the rules with regard to agency shops will have to be complied with, and in order to do that all the procedure embodied in these clauses must be followed. That is my understanding of the matter. Do the Government know what they are letting themselves in for? Do they know what is going to happen if this is the case? All the existing

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closed shop agreements will have to comply with, and be seen to comply with, these provisions on the day that the Act comes into force. First, an application is presumably to be made, then provision for ballot, then provision for exemptions, and the necessity to have the correct percentage asking for a ballot. The classes of workers to whom the specific agreement will apply have to be defined, for in a particular establishment one section could be closed and another open. It will apply to certain classes of labour within the establishment, but not necessarily to all. All these factors are at present well covered by voluntary agreement. But so far as I can understand it, voluntary agreements are to go out of the window and this is to be put in their place. It seems to me that the Government have no idea of what they are taking on.
THE EARL OF MANSFIELD: If anyone in your Lordships' House, or outside it, has hitherto suffered from the delusion that the Labour Party is in favour of industrial democracy I think that their attitude on this clause—particularly as shown by the speech of the noble Lord, Lord Diamond—ought to have dispelled any such illusion. The noble Lord, Lord Diamond, started by complaining that one person could start a disruptive movement. Throughout the world it is nearly always one person who starts any kind of movement. He then complained that a mere 20 per cent. of disgruntled people could force a poll. Surely, if a trade union after two years of an agency shop has 20 per cent. of its members sufficiently disgruntled to be willing to sign a requisition for a ballot, that union cannot be a very happy one.
Many of your Lordships must belong to a considerable number of societies of one kind or another, political, literary, or scientific. In almost all the societies of which I am a member, and I believe it is the case in most others, there is usually a provision that a special general meeting can be called on the request of a certain number of signatories. I know of no case in which the number of signatories required is anything approaching 20 per cent.; it is usually something like 5 per cent.—perhaps 12 to 25, or occasionally 50, of the members of a body which usually consists of some hundreds.
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If 20 per cent. of the membership of a union after two years are sufficiently disgruntled with an agency shop to wish to hold a ballot, that union has something very wrong with it. Why then should they not be able to have a ballot? Twenty per cent. is a considerable number. It means that, if that number of people sign a requisition in favour of a secret ballot, there are probably as many again who are secretly in sympathy. We have witnessed the ridiculous scenes, usually on television, when militant shop stewards call upon a meeting of several thousand workers to put their hands up to show that they wish to start or continue a strike. Practically every hand goes up. It would be a bold man who would not put his hand up, and a braver one still who would show his hand against. They know what the consequences would be.
Here we have a perfectly simple case of whether or not 20 per cent. of a union sufficiently disgruntled may demand a ballot; yet noble Lords opposite and their Party are so sufficiently undemocratic that they wish to refuse them that secret ballot. This attitude is one of those things which has made the bringing forward of this Bill absolutely necessary. The trade unions have brought it on themselves.
The noble Lord, Lord Shinwell, asked what we on these Benches want. I can answer that simply. We want the trade unions to have self-determination. We want their fate to lie in the hands of the general body of the members of the trade union, and not in the hands of a small caucus of shop stewards who, all too often, are either Communists or Communist—dominated. If noble Lords opposite' would only realise that the unions have brought this on themselves, and that what we are trying to do is to save them from themselves, they would realise that this Bill was very necessary and that this clause is one of the most necessary in it.
LORD POPPLEWELL: One would have thought from the noble Earl's observations, and how he tries to put his case, that he is a friend of the trade union movement, merely asking the unions to put their own house in order. But he made a number of fallacious observations in support of his case. First, he referred to the 20 per cent. of the trade union involved. That is not in the Bill. This

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Bill refers to 20 per cent. of those people engaged within the industry—
THE EARL OF MANSFIELD: That is what I said.
LORD POPPLEWELL: The Bill makes provision for people not to become members of trade unions. They may have a conscientious objection to joining; there may be other reasons. He overlooks completely the democracy that there is in the trade union movement. This indicates his total lack of knowledge of the building up of the trade union movement. In all the rules of the movement approved by the Registrar, provision is made for the ordinary rank and file member of the trade union eventually to be the dominating factor. The executives, whoever they may be, can only go with the ultimate decisions to the rank and file member through the various steps of the trade union rules. I would have thought that the noble Earl might have made himself aware of this fact before making these particular observations.
THE EARL OF MANSFIELD: I was talking about the Bill and the clause, which the noble Lord opposite is not.
LORD POPPLEWELL: The noble Lord was totally wrong in saying he was dealing with the clause, because he was continually referring to 20 per cent. of the trade union movement.
THE EARL OF MANSFIELD: No.
LORD POPPLEWELL: Well, this is within the knowledge of the Committee. I will leave it there. That is my argument so far as that matter is concerned. Quite frankly, I had no intention of intervening on this particular part of the clause until I responded to the observations of the noble Earl. The clause indicates one more act of repression, as it were, by the Government against the trade union movement. It has often been argued that the trade union movement has privileges. Of course it has not, and never has had, any privileges, regarding the criminal and civil law. A whole series of enactments, from 1871 onwards, were needed to restore to the trade union movement some of the civil liberties they had before. This particular Bill is another instance of the imposition of entirely unjustifiable penalties. I am absolutely astonished that the Government should
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insist on this clause because it has been approved in another place. We are not elected representatives and it could be argued that we have no right to speak here.
LORD DIAMOND: I hope my noble friend will forgive me for interrupting him, but he has again said, together with other noble Lords, that this clause has been agreed in another place. I am sure my noble friend appreciates that this clause, and all the clauses up to Clause 31 that we are going on to consider, were all subjected to the guillotine procedure and not one word was said on them.
LORD POPPLEWELL: I thank my noble friend for reminding me about that position. To be perfectly frank, that fact had slipped my mind during this discussion. We are part of Parliament and as such are surely entitled to debate these subjects. If we can influence the Government to be more realistic and to enter into the voluntary spirit that has served industry so well throughout the ages, the position would be much better. The difficulties which trouble industry today do not need a cumbersome Bill of this description. We ardent trade unionists know the difficulties better than most people. A short, sharp Bill dealing with the question of unofficial action and things of that kind would have been more beneficial to the nation as a whole than imposing a law of this kind which will be a lawyer's paradise and will bedevil industry for a long time.
4.25 p.m.
LORD SLATER: I had not intended to make any contribution to the debate on this particular clause, but having listened to the noble Earl who preceded my noble friend Lord Popplewell, saying that the trade unions had brought this upon themselves, it is obvious to me that the noble Earl knows very little about trade unions, how they have been built up and how they operate within this country. He says that he is a member of various organisations. Certain regulations and certain principles operate within those organisations with which he is associated. Some of us who have negotiated with people such as those sitting on the other side of the Committee have found them to be good employers of labour, and we have been able to enter into conciliation

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machinery whereby we have arrived at voluntary agreements which have been most lasting and have proved beneficial to both sides of industry.
I was surprised, indeed amazed, at some of the speeches made in another place with regard to voluntary arrangements and agreements. When one can reach a form of conciliation between two sides, and forms of settlement within a short period of time on particular issues which are main issues within a particular industry, this is to the advantage not only of the people inside the industry—whether employer or employee—but of the nation and the economic position of the nation. We are concerned about this, just as much as the employer, and the noble Earl who preceded me, who had so much to say against the trade unions. It is unfortunate that his observations will be taken particular notice of by people on the shop floor. Many of us will no doubt be asked questions about observations of this nature and about the reluctance of the Government to keep the existing type of conciliation machinery. We have appealed to them time and time again for the continuance of the system which is in operation in certain industries in this country. I agree with Lord Shinwell that it would have been much better if we could have reached the position of working out problems on a voluntary basis, as we have endeavoured to do ever since the trade unions came into existence in this country.
LORD COOPER OF STOCKTON HEATH: I think it was the Sidney Webb group which many years ago, described the trade union movement as a continuous association of workpeople. For the first time in trade union history we now have this proposition which threatens the continuous association of workpeople at the workplace every two years. I know a little about the American method. I do not think we should be quite so foolish in this country as they were in America, where it led to the contract system and wages being fixed for periods of two or three years. At the end of the contract there was an internecine struggle between unions as to who should represent the workpeople involved, and all kinds of endeavours were made to persuade people to move from one
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union to another. This clause in a way opens the door to that sort of thing. Obviously, I do not think this kind of method is necessary. The Registrar, as was indicated yesterday, is going to watch the union rule book very carefully to make sure that it provides adequate measures to discipline the workpeople, and so on. This is the intention. On top of this we are having this ballot.
I have tried to speak from experience when I have taken part in these discussions—and I find it extremely interesting, because it is bread and butter to a practitioner in the trade union movement—and I am now again going to speak from experience about the Pilkington dispute to illustrate the difficulties which can be created by the Government for a union trying to exercise a fair measure of social responsibility. The Pilkington dispute started because of the situation in this country, where there is a great deal of pattern bargaining and a great deal of local bargaining. Pilkington's was primarily a Liverpool problem, but there were many internal faults which I accept and which were brought out by the Government inquiry. The Pilkington dispute started over a mistake by a wage clerk in not putting into effect an agreement covering a certain number of men. It was promised that the mistake would be put right within a week, but this was not done. As a result, the employees got so irritated that between 24 and 30 of them walked out; and before we, as a union, could do anything about it, the action snowballed and workers at five factories came out at St. Helens, where the bulk of the employees were working —7,000 to 8,000 work people. There were also sympathetic strikes at other Pilkington factories up and down the country.
After they came out, they formulated a demand for a wage claim of £5 a week. That figure escalated, as they got more and more sympathy and success, to a demand for £10 a week increase—I think that even £15 was mentioned. It was a very tricky situation. Great attention should be paid to this because it illustrates one of our modern problems. All the workers were dealt with—and when the noble Lord speaks about individual freedom he should think about how to deal with it. If there are 5,000 people on a football field and they are asked to

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decide whether they want £3 or £5, there is only one thing they will vote for; and up will go the hands. This is an impossible way to try to handle men and their aspirations. I would say that the only possible way is through the machinery of a trade union. If you permit sectionalism, and allow groups to break away because they do not like the policy of the union at a particular moment, you will encourage the breaking up of trade unions and the development of breakaway unions.
In the middle of this strike at Pilkington's the unofficial leaders formed a trade union which was registered. They were helped by solicitors. This created quite a problem for our union. In spite of those difficulties, we made a settlement, which in all the circumstances I thought reasonable, involving an increase of £3 a week. For doing that our name became mud with this demagogic crowd, which was being led unofficially. At Pilkington's we had a check-off system. May I say, in parenthesis, that only twelve months earlier (this point will be appreciated by noble Lords who are familiar with the Whitley system) I had been asked, as the General Secretary, to attend a dinner of all the Pilkington shop stewards to pay tribute to fifty years of industrial peace. This was the fiftieth anniversary of the Pilkington Whitley Council. I will again use the phrase that I have used so often: this whole thing absolutely blew up in our faces.
As I was saying, we recommended a settlement of £3. We then had two ballots. The first was abortive because—and this is a lesson about balloting—in the middle of the ballot we had changed circumstances; other offers were being thought about, including the one of £3 on which we settled. Knowing the religious position in St. Helens, we allowed the clergy to supervise the second ballot: it seemed the fairest way. We had a simple majority decision, but the unofficial element, despite the fact that it had been agreed that they should act as returning officers, said that it was a "twist". They would not accept the decision, and they kept those lads out for about eight weeks before, finally, they went back to work on the offer we had made. That was an almost uncontrollable situation, and it often happens. You
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often find that if work people are unsuccessful in their endeavours against their employers, and they are advised by their union to be a little more reasonable and accept certain offers, they turn on the union in a bitter sort of way because they have lost the battle; and they make the union as it were the stalking-horse.
At Pilkington's we had the check-off system, the closed shop, and the union contributions were deducted at source. This unofficial crowd, which started operations on the football field, had sample forms for the work people to sign call on the firm to terminate the agreement to make the check-off direct. They secured 3,500 signatures. I am pleased to say that we got over it; but what a problem it has been for the union! Is not that an example of what we may be letting ourselves in for if this legislation is passed? It is easy for a dissident group at a particular moment to create a great deal of trouble; and in my view, the only way such a situation can be dealt with is to have—as we have in the union—proper machinery, proper organs of government, properly elected, and people who can make decisions. Sometimes it is very important to be able to make decisions, which may be unpopular in certain quarters, if you are to maintain proper agreements properly entered into. In fact, at Pilkington's we had made a recent financial agreement of which only the first instalment had been received; the second was still due. In spite of that, the agreement was violated and the workers went on strike. I would say that if, within a few weeks of that strike, there had been a ballot about which should be their official union, we should have had a very rough time and experienced great difficulty in maintaining our position.
4.35 p.m.
LORD TAYLOR OF MANSFIELD: I wish to make a few observations about the mechanics of this clause. We have established two kinds of agency shops. The first is arrived at by voluntary agreement between employer and trade union. The other kind will result from a ballot on the instructions of the National Industrial Relations Council. Both kinds, according to this clause, may be terminated. This is where the mechanics of the matter come in. In the event of

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a one-fifth written concurrence with a proposal to get rid of either type of closed shop, the matter is reported to the N.I.R.C. which reports to the Commission on Industrial Relations, and the Commission will be empowered to order a ballot. I do not think the Government appreciate the size of the difficulties which will result from this suggested procedure.
My noble friend Lord Blyton referred to the almost impossibility of taking a ballot among seafaring people. Let us consider some industries which are not in the same position as the seafarers. The C.I.R. will be responsible for supervising and conducting the ballot, and if we take the mining industry, about which I know most, it would be easy to conduct a ballot because permission would be given by the management and the owners of the property, and a large number of men would be in one place. In the mining industry ballots are not uncommon, and they are always taken at the pithead. But until 1947, before a ballot could be taken permission had to be granted by the management, representing the colliery owners, and even since 1947 permission has had to be obtained from the N.C.B.
We will assume for a moment that in the mining industry an agency shop has been established, and there have been murmurings of dissatisfaction, which have grown into noises, and the time has arrived when the necessary one-fifth have decided to ask for the abolition of the agreement, and the procedure as outlined in this clause is initiated. Now suppose the C.I.R., who are responsible for the supervision and the conduct of the ballot, go to the management of the colliery and say: "We are charged by the N.I.R.C. with the task of taking a ballot about the agency shop agreement". Suppose the management, on behalf of the owners, the N.C.B., say: "We are sorry, we are quite satisfied with the agreement, and so as a matter of fact is the union. It is just this minority of not less than 20 per cent. and rather than upsetting and disturbing things we would prefer them to stay as they are, and we do not propose to give you permission to take the ballot at the pithead". That is quite easy and simple. Will the noble Lord tell me whether, in such a situation, the manager of the
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colliery will be permitted in law to refuse permission for the C.I.R. to take the ballot, which Clause 13 says they are legally charged to supervise and conduct?
Let us take a more extreme case. Let us take the agricultural workers: two men on a farm here, another man on a farm perhaps two miles away. Let us assume that the Agricultural Workers' Union and the National Farmers' Union feel an agency shop to be desirable. How is the C.I.R., or anybody else, going to take an effective ballot in the circumstances in agriculture such as I have just described? Many more cases could be given, and my question to the noble Lord is whether he will answer those propositions. My concluding words are these: this clause, in the view of one noble Lord on the opposite Benches, is going to create the utmost difficulties, and in my opinion they will be insurmountable.
4.43 p.m.
LORD DRUMALBYN: We have had a full debate on the Question, That this clause stand part. It has to some extent anticipated a debate on the next clause stand part, and I hope the debate on that clause will be appropriately reduced in length, though one cannot forecast these things. At any rate, I hope the same things that have been said on this clause will not be repeated.
We are on an important clause here, without any doubt at all, and I would like to take the key-note for the start of my reply from the words used by the noble Lord, Lord Popplewell, on the last Amendment, when he said: "Unions have established closed shop agreements with the full consent of their members"; then he went on to say that it was probably not with the ballot. Then the noble Lord, Lord Pargiter, who always asks very pertinent questions, asked what was going to happen about closed shops on the appointed day. I think we ought perhaps to deal with this question first, so that we can then see the position later. Noble Lords will remember that, while the Bill will no doubt come into operation on an appointed day, it will come into operation when the first Part of the Bill to be brought into operation comes into operation.
But noble Lords, I think, would be misleading themselves if they thought that it would be possible at that first

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stage to bring this Part of the Bill into operation. I should imagine—and I think I can speak with some authority on this: when I say that I should imagine, even if I were not informed on this, it would appear quite obvious—that the first Parts to be brought into operation must be those setting up what might be called the infrastructure of the Bill, the registration, the provision for setting up the courts and so forth; for indeed without this you could not have an application to the courts. It will therefore follow that this kind of arrangement will come into effect some time after—I cannot say how long—the first date on which the Bill comes into operation. This of course will also have to go for Clauses 5 and 6. That being so, there is quite a good margin of time for closed shop agreements to be turned into agency shop agreements if the parties so desire. Indeed, as a said yesterday, this is already happening, now, before the Bill comes into operation, although of course the statutory rights do not accompany the arrangements until the Bill does come into operation. I do not know what the noble Lord, Lord Shackleton, finds amusing in all this. I hope I am explaining the matter with tolerable clarity to him, but I am happy that he is happy—
LORD SHACKLETON: I was really rather hesitating about whether we should ask the noble Lord to explain it all over again, because although he said he was speaking with some authority—we always hope that Ministers on that side speak with authority—it was rather a difficult argument to follow, and the word "operation" had a sort of repetitive quality. I had not wanted to interrupt the noble Lord, but I am not sure that all the noble Lords behind me on this side quite understood. If the noble Lord, without necessarily explaining the reason why he is speaking with authority, could just say again what the consequence is, it would help.
LORD DRUMALBYN: I am sorry indeed if I diverted the noble Lord from concentrating on the substance of what I was saying. The point is simply this: there will be different dates for different parts of the Bill to come into operation. These parts which we are talking about just now will not be the first parts to
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come into operation. The first parts will obviously have to be the infrastructure, the registration clauses, the clauses setting up the courts, and so on. There will therefore be an interval of time after the Act, if you like, comes into operation, before this particular Part of it comes into Operation. I hope that is clear. Within that period it will be possible for closed shop agreements to be turned into agency shop agreements, because when this part comes into operation then of course Clause 6 will operate right away and any agreement regarding a pre-entry closed shop will be automatically void.
LORD PARGITER: I am grateful to the noble Lord for his explanation, but I am still not quite clear. It seems to me that this part of the Bill will come into operation not on the first appointed day but on some subsequent day, and in the meantime a lot of machinery will have been set up and the agency shops will be able to go on. But suppose that the employees do not want them to go on. Then the Government can come and say on the subsequent appointed day that they trust comply with the rules set out here. I see no particular reason why I should help the Government on this matter, but surely the simple way would be for any existing closed shop agreements to be registered, after which they can be challenged and the matter would then go through the machinery. That appears to me a simple thing to do, but it would be recognising that there are existing agreements, arrived at voluntarily between unions and employers. Surely it would be a simple thing to write into the Bill that these agreements remain valid until the parties concerned end them.
LORD DRUMALBYN: We have already dealt at great length with the reasons why the right to belong or not to belong to a union should be maintained in the Bill. There are consequences that follow from that. What the noble Lord is asking is that that right should not apply in cases where there is an agreement to continue the closed shop and that agreement is registered. That is what I understood him to say, but that is not the way the Bill proposes to go about things. We are not debating this just now. I had to say this to give the

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pattern because of the noble Lord's question. We should not follow this down the road too far.
LORD PARGITER: Nothing we would do in the continuation of an existing voluntary agreement would prevent those workers who may be dissatisfied, because they were forced to be in the union, from using the procedure already in the Bill in order to get the closed shop out of the way. But here is a firm basis from which to start.
LORD DRUMALBYN: I am trying to explain to the noble Lord that a closed shop can be transformed into an agency shop without the approval of anybody at all. If he had only been a little patient, and had waited for me to develop my argument, I should have got to that point by now. This is one case: that an agency shop can result from a closed shop. Secondly, there can be an agency shop set up by voluntary agreement between employers, workers and unions after the Bill comes into operation. In both cases —certainly in the first case—the union will have established, as the noble Lord, Lord Popplewell, said, the agreement with the full consent of its members, but this would apply with equal force to an agency shop agreement which took over from the closed shop with the modifications which the Bill requires. In the second case, one would equally expect that if there were a voluntary agreement between employers and union, the union would have made sure that they had full support for it. Indeed, I understand that in some cases where closed shop agreements are negotiated, the employers insist on a high proportion of consent to the agreements—and I see the noble Lord, Lord Cooper of Stockton Heath, nodding his head. But that is not necessarily the position; the agreements may not last for ever. People can lose the confidence of their supporters. An agreement may not operate as it was expected to go. Circumstances may arise in which the majority of workers will wish the agreement to be revised. This clause is the first clause which starts the machinery for getting revision in that case. The rubric is:
"Application for ballot on continuance of agency shop agreement."
The noble Lord, Lord Diamond, expressed astonishment that any worker
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to whom the agreement applies should be allowed to make an application. But somebody has to make the application. I find it difficult to see why there should be any restriction on the person who makes the application. It may well be that the person in question has some office in another union, but he must be a person to whom the agreement applies. For good measure, the noble Lord added the word "disgruntled" and said that this power is being given to disgruntled individuals. But that is entirely to ignore the fact that there is a collection of the written support of one-fifth of the workers. During the time when that written support is being collected, what are the shop stewards doing? Is this going to be allowed to pass without explanation, so that people will be misled into giving their signatures? I do not think that the noble Lord is being entirely realistic.
LORD DIAMOND: As the noble Lord has said that he did not think I was being entirely realistic, I am bound to ask: did he listen carefully to the precise chapter and verse of everything being described by my noble friend Lord Cooper of Stockton Heath in the specific case that he gave.
LORD DRUMALBYN: I did. I listened with the greatest interest to a most illuminating account of the circumstances of the Pilkington dispute and I am sure that it fascinated the whole Committee. But is it not significant that the story was in fact ended by an officially sponsored ballot, which was conducted mainly under the auspices of local independent clergy, showing that such a ballot can have at least the support of the silent but responsible majority as against the small band of disgruntled extremists. The important point, surely, is that if there is a constitutional or even a statutory means of testing effectively the views of the workers concerned, this may prevent or bring to an end the kind of unconstitutional anti—union strike that we had at Pilkingtons.
I hope that I have drawn a fair comparison in this case. I hope that, on mature consideration, noble Lords will not feel that this is something they need oppose, but in case they feel inclined to oppose it, I would say this. As the noble Lord, Lord Shinwell, says, both

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sides are entitled to believe that they are right, but in fact only one side can be right; and of course both sides can be wrong. But I have explained my point of view on this clause. The object here is to build up a system of industrial relations based on the individuals whom the unions are there to serve. The opinions and votes of the individual should be made to count. This is our point of view and I think that here the procedure logically follows from it.
I need not reply in detail to the other points that have been made, except to say to the noble Lord, Lord Taylor of Mansfield, who mentioned one or two points of interest, that of course under certain circumstances there will be difficulties in the taking of the ballot. This is inevitable. But it is up to the C.I.R. to arrange the ballot in such a way as to be a properly conducted ballot. I do not think it would be possible to lay down in detail in a Bill of this kind how this should be done. The noble Lord asked about the taking of a ballot at a pithead. Last night we introduced into the Bill an Amendment which would enable the C.I.R. to invite the employer to provide facilities. This Amendment was moved by my noble friend Lord Thorneyoroft. The employer could refuse, and it would be up to the C.I.R. to find proper facilities elsewhere. To answer the other question that the noble
Lord asked, the employer would not be able to refuse the C.I.R. permission to take the ballot.
LORD SLATER: We have had plenty of experience of ballot-taking. These cost money. Who is going to be responsible for accepting the cost of these ballots? The noble Lord may think that I have a suspicious mind; that may be so in regard to this particular measure. Attached to the Conservative Party are what are known as Conservative trade unionists. It would be nothing for them, through their local associations, to take certain forms of action which would involve a ballot. Who will pay the expenses incurred? Where is the money to come from?
LORD DRUMALBYN: Clause 156 deals with the financial provisions, and the noble Lord will find that this matter is covered in the financial provisions. I hope that I have expressed our point of view on this matter. There is clearly a difference of principle between the two sides here and we can only settle it by expressing our opinion in the Lobby.
5.3 p.m.
On Question, Whether Clause 13 shall stand part of the Bill?
Their Lordships divided: Contents, 142; Not-Contents, 62.

CONTENTS

Aberdare, L.

Chesham, L.

Ferrier, L.

Ailwyn, L.

Clifford of Chudleigh, L.

Fortescue, E.

Airedale, L.

Clinton, L.

Gage, V.

Albemarle, E.

Clwyd, L.

Garner, L.

Allerton, L.

Colgrain, L.

Gisborough, L.

Alport, L.

Conesford, L.

Goschen, V. [Teller.]

Amherst, E.

Cork and Orrery, E.

Grenfell, L.

Amory, V.

Courtown, E.

Gridley, L.

Ashbourne, L.

Cowley, E.

Grimston of Westbury, L.

Atholl, D.

Craigavon, V.

Hacking, L.

Balfour, E.

Cranbrook, E.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Balfour of Inchrye, L.

Crathorne, L.

Barnby, L.

Crawshaw, L.

Hankey, L.

Barrington, V.

Cromartie, E.

Hanworth, V.

Bathurst, E.

Daventry, V.

Hastings, L.

Beauchamp, E.

Denham, L. [Teller.]

Hatherton, L.

Beaumont of Whitley, L.

Derwent, L.

Hawke, L.

Belhaven and Stenton, L.

Digby, L.

Henley, L.

Belstead, L.

Drumalbyn, L.

Hives, L.

Berkeley, Bs.

Dudley, E.

Hood, V.

Blackford, L.

Dundee, E.

Howard of Glossop, L.

Bledisloe, V.

Ebbisham, L.

Hylton-Foster, Bs.

Boston, L.

Effingham, E.

Ilford, L.

Brooke of Cumnor, L.

Elliot of Harwood, Bs.

Inglewood, L.

Brooke of Ystradfellte, Bs.

Emmet of Amberley, Bs.

Ironside, L.

Byers, L.

Exeter, M.

Jellicoe, L. (L. Privy Seal.)

Carrington, L.

Ferrers, E.

Kemsley, V.

Kilmany, L.

Moyne, L.

Sandford, L.

Kilmarnock, L.

Northchurch, Bs.

Sandys, L.

Lansdowne, M.

Nugent of Guildford, L.

Sinclair of Cleeve, L.

Lauderdale, E.

Oakshott, L.

Strang, L.

Long, V.

Perth, E.

Strange, L.

Lothian, M.

Ponsonby of Shulbrede, L.

Strathclyde, L.

Loudoun, C.

Portsmouth, L. Bp.

Stratheden and Campbell, L.

Lyell, L.

Radnor, E.

Swaythling, L.

MacAndrew, L.

Rankeillour, L.

Swinton, E.

McFadzean, L.

Rathcavan, L.

Terrington, L.

Malmesbury, E.

Reay, L.

Teviot, L.

Mancroft, L.

Rhyl, L.

Teynham, L.

Mansfield, E.

Roberthall, L.

Thorneycroft, L.

Massereene and Ferrard, V.

Rockley, L.

Tweedsmuir, L.

Merrivale, L.

Rothermere, V.

Tweedsmuir of Belhelvie, Bs.

Meston, L.

Ruthven of Freeland, Ly.

Vivian, L.

Milverton, L.

St. Aldwyn, E.

Ward of Witley, V.

Molson, L. St.

Helens, L.

Willingdon, M.

Monck, V.

St. Just, L.

Windlesham, L.

Monk Bretton, L.

Salisbury, M.

Wolverton, L.

Mowbray and Stourton, L.

NOT-CONTENTS

Addison, V.

Geddes of Epsom, L.

Rusholme, L.

Archibald, L.

Greenwood of Rossendale, L.

Sainsbury, L.

Balogh, L.

Hall, V.

St. Davids, V.

Bernstein, L.

Hilton of Upton, L.

Samuel, V.

Birk, Bs.

Hoy, L.

Segal, L.

Blyton, L.

Hughes, L.

Serota, Bs.

Brockway, L.

Jacques, L.

Shackleton, L.

Brown, L.

Janner, L.

Shinwell, L.

Buckinghamshire, E.

Kennet, L.

Slater, L.

Burntwood, L.

Lee of Asheridge, Bs.

Sorensen, L.

Champion, L.

Lindgren, L.

Stocks, Bs.

Chorley, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Stow Hill, L.

Cooper of Stockton Heath, L.

Summerskill, Bs.

Davies of Leek, L.

McIeavy, L.

Taylor of Mansfield, L.

Delacourt-Smith, L.

Maelor, L.

Wells-Pestell, L.

Diamond, L.

Moyle, L.

White, Bs.

Donaldson of Kingsbridge, L.

Pargiter, L.

Williamson, L.

Fiske, L.

Peddie, L.

Wootton of Abinger, Bs.

Fletcher, L.

Phillips, Bs. [Teller.]

Wright of Ashton under Lyne, L.

Gaitskell, Bs.

Popplewell, L.

Gardiner, L.

Raglan, L.

Wynne-Jones, L.

Garnsworthy, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Clause 13 agreed to accordingly.
Clause 14 [Ballot on application under section 13]:
5.13 p.m.
On Question, Whether Clause 14 shall stand part of the Bill?
LORD HOY: I have been asked to say a few words about Clause 14. The noble Lord, Lord Drumalbyn, said that apparently a great deal of what was contained in this clause had been anticipated during discussion on Clause 13; but that is simply because of the way in which the Bill has been drawn up. There are so many cross-references. Indeed, when one reaches Clause 14, the one we are now on, before one has finished reading the second line of the clause one encounters
896
a reference to Clause 13. So if there is some duplication in debate, obviously it is not because noble Lords wish to duplicate their argument but simply because of the way in which the Bill is drafted.
Clause 14, as I understand it, deals with the mechanism of the ballot. If an absolute majority votes for continuation of the agency shop under subsection (4), it continues; and then there cannot be another ballot for two years. But if there is not an absolute majority the Court must, under subsection (3), rescind the agency shop agreement and make an order as laid down in this subsection. This seems very strange language to me. I am not competent to give a legal interpretation of it, but in my fairly long experience in the Houses of Parliament I cannot remember legislation in which

897
courts have been dictated to in this fashion. But I shall certainly be grateful to have the opinions of those who are much more versed in the matter.
We also have—and it is contained in this clause, in subsection (3), at line 10—words which we debated in the early hours of this morning on the question of the majority of workers eligible to vote. As I understand it, when this matter was discussed in the early hours of the morning the Government gave an assurance that this point would be looked at. However, perhaps I may say a word or two on this part of the clause because it is of vital importance, since the Bill is saying there must be an absolute majority by a simple mandate of those who trouble to vote. Indeed, what is being said is that the non-voters, treated in an ordinary Parliamentary Election or local election as abstainers, are to he treated as dissentients under this Bill. What the Government are saying in the Bill as at present d rafted is that even if one refrains from voting, one is voting against. That seems to me to be an extraordinary proposition.
Indeed, we could never have Government in this country at all on that basis, because what a clause such as this would be laying down would be that no Government could ever have the right to govern in this country unless it had a mandate from the majority of the electors of the country, whether they voted or not. Obviously this seems a little preposterous. I raise the matter again to-day only because I understand the Government said in an earlier stage in the Bill (I cannot remember if it was before or after midnight) that they would look at this point. Perhaps we on this side of the Committee should be content if the noble Lord who has to reply were to give an assurance on this point to-day.
We should also like to know how the ballot is to be carried out. If noble Lords will look at the beginning of Clause 14 they will see that it says:
"For the purpose of complying with a request made by the Industrial Court under section 13 of this Act with respect to an agency shop agreement, the Commission shall determine whether the ballot is to be taken by the Commission or is to be taken under the supervision of the Commission by some other body…".
The clause then goes on to explain what would follow from that. I consider that
898
your Lordships are entitled to be told what the intention of the Government is in this respect. Ballots are difficult things, I admit. Indeed, if your Lordships want any convincing of the difficulties that arise in taking votes you may be assured that those of us who were present in your Lordships' House in our "trial run" this afternoon well understand how difficulties could be created. So it is important to know what you want to do when you are taking a vote. Either the Commission is going to do it or the Commission is not. If the Commission is not going to do it itself, then who do the Government think is going to carry out this ballot?—because the Bill refers to some body other than the Commission and uses the phrase "some other body". This is a nebulous way in which to frame legislation. I do not know; I may be misinterpreting the Government's intention in this matter, but it would appear to me that this clause is exceptionally loosely worded. We are entitled to know exactly what the intentions of the Government are.
My noble friend Lord Slater, on Clause 13, raised the question of costs, which I think comes under Clause 14; but, as I say, the cross-references are so numerous that one can well understand that happening. I do not know who in fact is going to pay. It is all right for the noble Lord, Lord Drumalbyn, to say, "If you just look across at Clause 156, that clause will explain to you how certain expenditure in certain circumstances will be met by certain sections of the Government." Indeed, he interprets Clause 156 with such great optimism that he even makes provision for any profits to be paid into the Consolidated Fund, so he is obviously going to take no chances as far as money is concerned. If we are going to put responsibility on people other than the Commission—on outsiders—I should have thought that who in fact is going to make the payment ought to be spelled out in the Bill. We heard at an earlier stage that the Government had accepted an Amendment and were even prepared to allow the employers to carry out these ballots. With due respect, I should have thought that a ballot carried out by employers—and this is not an indictment of their honesty—might not be altogether

899
a guarantee of secrecy so far as the workers are concerned. Indeed, we had a later suggestion, just before we finished our debate on Clause 13, that ministers of the Church had been asked to carry out this task. So altogether Clause 14 is in many ways loosely and badly drafted, and certainly contains an objectionable part in subsection (3).
So on these points we shall be grateful if the Government can confirm that they hold to what was said last night, and will tell us who they propose shall carry out these ballots under this Part of the Bill.
5.22 p.m.
LORD GARDINER: May I raise a further point? The intention of the Government in this clause, as I understand it, is that where there is a newly negotiated agreement between employers and employees on an agency shop a ballot may be ordered and the Industrial Court may make an order rescinding the agreement unless more than 50 per cent. of those eligible to vote in fact vote in favour of the continuance of the agency shop agreement. I express no opinion on the policy of that, but as I understand it that is the object of the Government. The question I respectfully raise is whether this clause really carries this out. It is a question which I raised at about half-past two this morning. I do not think many of your Lordships were here then, and naturally I did not expect a full answer at that hour of the night. The position is that first of all the Industrial Court is not fulfilling the ordinary functions of a court, which is to decide some dispute and which, by applying the law, the court decides. Here the Industrial Court has no alternative if the conditions are satisfied but to make an order. It is a rubber stamp process and they might as well do it by post because there will not be anything to ask them about.
The point I wish to emphasise is that the Court is not to make that order if a majority of the workers eligible to vote in fact vote in favour of keeping the agency shop agreement. It is to make that order if the Commission reports the result of the ballot. If I may repeat that: the court is not to make the order if that is the result of the ballot; they are to make the order if that is what the Commission
900
says is the result of the ballot. We are used to ballots and elections, and the able and distinguished people who act as returning officers—usually town clerks, clerks of the peace and so on—sometimes make mistakes, and that is why we have an election court. They make mistakes either because votes are counted which ought not to have been, or vice-versa. I suppose there has never been a ballot or an election without some spoiled papers. Somebody has to decide that, and they may decide it wrongly, or sometimes there may be a simple error in adding up a column of figures. That is why we have an appeal. The law knows that even judges make mistakes; that is why it is almost part of the rule of law that there must be at least one right of appeal, and sometimes of course, two, in case the Appellate Courts are mistaken.
What I want to know is what happens in this case if the Commission is wrong? Once it has reported, the court is bound to order the agreement to be rescinded. Nothing can stop that once the Commission has reported. But supposing the Commission has reported to that effect and at the time the court is required to make the order it knows from evidence which has been put before it that the Commission was wrong and that a quarter of the people never got their ballot papers, or that the Commission qua returning officer has wrongly accepted from the other body to whom it has handed over the arrangements, what the result of the ballot is. This is quite unprovided for and, as I understand it, this is part of the Bill that was never really discussed in the other place.
It might perhaps make sense to provide that if there is a dispute as to whether the Commission's report on the result of the ballot is accurate or not, there might be an appeal on that to the Industrial Court. Then the Industrial Court would have something to do, instead of just being a rubber stamp to carry out the decisions of the Government. But, surely, some provisison ought to be made, and I should like to know whether I am right in thinking that this must be the only type of ballot or election held in this country in which no provision of any kind is made for the returning officer making a mistake.
LORD BELSTEAD: As I understand it, the checks on the Commission would

901
be the Industrial Court and also, of course, the terms of the Bill, which are that the Commission shall carry out the ballot in a certain way, and presumably if it is not carried out in the way that is specified, and properly conducted in secret, then the ballot will have to be taken again. I am replying to the noble and learned Lord without advice on that, and I will certainly rectify it if I have that point wrong. We feel, as I have tried to make clear from Clause 5 onwards in the Bill, that agency shop agreements arc a matter of balance, and frankly on this side of the Committee we hope we have got it right—the balance between individual rights and the rights of trade unions for the good of negotiations in industrial relations. We also hope that we have persuaded your Lordships that the C.I.R. will be able to undertake that the ballots are fairly conducted.
The noble Lord, Lord Hoy, asked what other bodies might undertake electorally. This was debated last night. I do not know whether the noble Lord was here.
LORD HOY: Until half-past two this morning, unfortunately.
LORD BELSTEAD: Well, the Electoral Reform Society will have passed before the noble Lord's gaze in the debate. We have heard to-day of other arrangements which were made. These matters were certainly brought up, but I was not aware that they caused great dissension between the two sides of the Committee. On the expenses point, I am afraid that I have nothing to add, except to refer the noble Lord to the clause to which he referred; namely, Clause 156. But on the general aspect of the reasonableness of undertaking the ballot, the noble Lord is quite right. If he was here yesterday evening he will have heard my noble and learned friend give the undertaking that if a ballot is to he conducted in a reasonable way it may well be that it will have to involve, for instance, postal votes. My noble and learned friend said that that was the effect which could well be had by the wording of the Bill, and the duty that that will lay upon the C.I.R.
The noble Lord, Lord Hoy, then went into the part of Clause 14 that concerns a majority of those eligible to vote. I would draw your Lordships' attention to the fact that noble Lords in the Liberal
902
Party had withdrawn quite a string of Amendments just before we came to debate the Question, That Clause 14 stand part, and I would not wish to say anything which might provoke remarks from those noble Lords who have withdrawn Amendments—
BARONESS WHITE: With great respect, the noble Lord will appreciate—
LORD BELSTEAD: May I just finish my point?—by reopening in great detail a matter on which (the noble Lord, Lord Hoy, is right on this point) the Government gave certain undertakings yesterday afternoon. I am not evading the point, I am just trying not to take us over the same ground again. Noble Lords are quite welcome to pick these points up if they wish. We on this side of the Committee realise, and it was made clear to the Committee in a large number of able speeches yesterday, that there are criticisms of this balloting situation, and the noble and learned Lord just now made the point very effectively that we do not simply require a simple majority vote. The point has also been made that apathy, under these terms in the Bill, could have a decisive effect on the result of a ballot. I hope I am not being provocative when I say that I think we on this side of the Committee feel that our reason for this is that the terms and conditions of employment are affected significantly by agency shop agreements; that there is some loss of freedom, as well as the very real advantages which will accrue to both sides of industry, from the making of agency shop agreements. That is the reason—we may well be wrong on this—why we have, we admit, required a higher rate of majority in these ballots than we do later on in the Bill when there are ballots on the recognition issues.
Having said that, may I remind the House that my noble friend conceded yesterday that a strong case had been made, a case which needed close consideration, and that it may be that rather a different emphasis will need to be put on this. At any rate, we are quite ready to Took at it again. Those were the terms of the undertaking given by my noble friend—and not least because of the sort of speech which the noble Lord. Lord Blyton made earlier in the day, when he pointed out, with considerable force,

903
the difficulties of highly mobile labour forces. It would be wrong for me to add to what my noble friend said yesterday; I am seeking merely to repeat it; I am not seeking to stop any noble Lords from picking up the points I have made.
Lastly, there is the two years' pause point to which the noble Lord, Lord Hoy. referred. May I quickly say that we; again concede that the two years' period written into Clause 14 is an arbitrary one, but the case which the Government put in favour of it is that it provides a reasonable interval of time in which a trade union can seek further support. Some restriction on frequency of application is undoubtedly necessary, as agency shop provisions allow for agency shop agreements to be made voluntarily between employer and union. We feel that there must be some restriction on the ability of the parties to apply when it is shown that such an agreement would not enjoy the support of workers. Here is an effort to find a balance between stability, on the one hand, and the need for change, on the other. The period of two years which we find in Clause 14, and in other clauses is, we hope, a fair and reasonable compromise between the need to secure this stability in industrial relations and the need to provide for orderly change. Yesterday your Lordships discussed the great importance which all parts of the Committee realised there would be in the voting on agency shops, and although the two years' period may not be right, we are convinced that six months, which was the alternative suggestion, would be too brief a period for the stability which we all wish to see in order to promote good industrial relations.
LORD HOY: I do not want to delay your Lordships' House unduly, but I am a little surprised at the way in which the noble Lord has replied to the debate. He was asked two simple and, I hope, plain questions. He said that the Liberal Peers have withdrawn Amendments to-day and he will not have failed to notice that the particular Amendment to which I was referring carried the name of my noble friend Lord Delacourt-Smith. We were quite willing to share this Amendment. All I was asking the noble Lord was whether he would give us the same assurance
904
on this Amendment as we had last night. Why he wanted to make a long story of it I do not know because at the end of the day that is exactly what he was saying. If the debate has been delayed a little the fault lies entirely with the noble Lord; all we want is answers to our questions.
One of the questions which he did not answer was put by my noble and learned friend Lord Gardiner, who said that this was the first occasion he had known in which there was no court of appeal. Once this Court makes its decision that is it; whether the decision be wrong, or whether it seems to be wrong, there is no appeal against it. I thought my noble friend made a very modest request and that the noble Lord would say, on behalf of the Government, "We think you have something here; we will have a look at it along with the other point." If he can give us that assurance we can get rid of this clause pretty quickly. Surely it is not asking the noble Lord too much. I hope he will be able to say now, on behalf of the Government, that he will look at this point, because it is a point of law. It seems a denial of justice to a large section of the community if we are not going to make this provision for them.
LORD BELSTEAD: The answer to the noble and learned Lord's question, on which I had to receive advice, is that there would automatically be a right of appeal to the Divisional Court if the C.I.R., as the noble and learned Lord quite rightly pointed out, exceeded its powers or erred or acted contrary to its statutory duty under this Bill. For this reason we think that there would be no need for a special appeal provision. I think I owe the noble Lord, Lord Hoy, an apology both for being "longwinded" and for not spying that the name of his noble friend Lord Delacourt-Smith was on one of the Amendments which was withdrawn.
Clause 14 agree to.
Clause 15 [Pressure to anticipate result of ballot]:
On Question, Whether Clause 15 shall stand part of the Bill?
5.39 p.m.
LORD DELACOURT-SMITH: We have now come to the end of this Part

905
of the Bill and we are considering a clause which, like those which preceded it, did not receive any specific detailed examination in another place. I should like therefore to direct attention to this clause, and I want to address myself particularly to subsection (2) with a view to eliciting some comment from the Government upon the way in which they see some aspects of the provision made in that subsection. It may at first sight appear to some noble Lords that this is a very reasonable provision, having regard to what I think it would not be unreasonable to call the rather elaborate legal paraphernalia of the clauses which precede it. This subsection in fact declares it to be an unfair industrial practice for any person to organise workers to take certain action within the ambit of the matters dealt with in the clauses which we have been discussing. which, of course, are those dealing with agency shop agreements.
I want to reflect for a few moments upon the concept here of an unfair industrial practice in those circumstances, because it: is one of the features of this Bill that it stigmatises as unfair industrial practices actions which have hitherto been legal, hitherto been, not widespread, but certainly not completely in disuse by the trade union movement in this country. What these references to unfair industrial practices on the part of workers and trade unions, or most of them, do is to impose severe limitations in practice upon the right to strike. These limitations are applied even in the case of those trade unions which by registration have earned for themselves the title of trade unions under the Act. And, of course, they are even more severe limitations in the case of what I think we on our side shall continue to call trade unions, although they do not qualify for that term under the Bill but are perhaps properly described as unregistered trade unions.
The right to strike is an extremely important right, and the right to take proper and reasonable action to make strikes effective is, of course, extremely important, too. These rights have been gradually established in this country, and not only here, but in all advanced countries the right on the part of workers to withdraw their labour is accepted as an important aspect of freedom. And there are, of
906
course, very many declarations—and declarations have been cited on one or two accasions—which guarantee and underline the importance of the right for working men to withdraw their labour when they think it necessary to do so.
I venture to suggest that it is a fact of economic or social history that when effective action has been taken in a country to preclude the exercise of the right of workers to withdraw their labour, that has been accompanied by poor living standards and depressed conditions for working people. I say "when effective action has been taken" to preclude the exercise of this right, because there are a good many examples which one might take from the law of this country and from the legal systems of other countries where efforts have been made in one way or another to limit the exercise of the right to withdraw labour, and the legal arrangements have proved to be inoperative or only very partially operative; but where effective action has been taken in one way or another to nullify the right to withdraw labour, I think it will be found that it has invariably been accompanied by poor living standards and social backwardness. Noble Lords may differ as to whether there is any causal relationship between those two facts. I merely venture to suggest that wherever workers have effectively been deprived of this right, poor living standards have in fact applied.
But we all recognise that this, like some other rights, is a right which should be exercised sparingly, responsibly and with discretion. It has economic effects; it can have important economic effects. Therefore, because of its effects, nobody wishes this right to be exercised unnecessarily. Particularly, I do not think that those who are called upon to withdraw their labour usually want to see this right exercised unnecessarily. As I took the liberty of pointing out to your Lordships, I think on the Second Reading debate, in fact in this country in recent years, with the exception of certain industries which I listed, the number of days we have actually lost in production time through the withdrawal of labour by workers has been pretty small, and I suggested to your Lordships that it would be wiser, or would have been wiser, to have concentrated our attention on those specific industries—the motor

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car industry, the shipbuilding industry, the docks, are ones which I think I particularly mentioned—where the loss of working days has been high, rather than try in this completely broadcast fashion to deal with the industrial relations situation. But I am merely saying that it is common ground between the members of the Committee that nobody wishes to see this right to withdraw labour exercised unnecessarily.
There will always be different views about the justification of its use in particular cases, just as with the right to freedom of speech. In the case of the right to freedom of speech we may often think that individuals have used that right to say silly things or things with which we as individuals disagree, but none of us imagines that that is any justification for circumscribing unreasonably and circumscribing to an extreme degree the right to freedom of speech. For in fact we cannot get away from the fact that the right to withdraw labour is an essential protection for the worker, and Parliament ought to be careful about the ways in which it limits or restricts it. Indeed, I would suggest to your Lordships that it is better to aim at producing circumstances in which workers do not wish to exercise the right than to produce a legal framework, as this Bill does, which makes it perilous and extremely expensive to exercise that right save in a very restricted number of cases.
I think it is necessary to look at the general principles. I appreciate that I have spoken in general terms, but it is necessary, because this is one of the underlying issues, not only in this Bill but in the whole controversy of which it is part. I think it is one of the fundamental issues which perhaps we have not looked at clearly enough and comprehensively enough. I want now to examine the situation in the specific setting of this clause.
For many years, trade unionists have regarded it as important that they should have in practice the right not to work with non-unionists. The Government have not said a great deal about the rights of individuals, but the right of individuals not to work with non-unionists is one for which they have little sympathy. It is already largely qualified, in the clauses
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that we have been discussing, by the device of an agency shop, where the utmost that an individual who does not wish to work with non-unionists will be able to achieve is that he will be able to ensure that his workmates, if not trade unionists, are at any rate contributing to a trade union financially, or have established a conscientious right not to do so. Nevertheless, these are—and the noble Lord who has spoken would be the first to agree—important and serious qualifications of the rights not to work with non-unionists. But, of course, if this clause is adopted in this form, it will become an unfair industrial practice to do anything to jerk along the process which is set out in the preceding clauses.
I must confess that it is not quite clear to me what happens if a person in fact starts to organise or procure or in some other way sets up a strike to induce an employer to enter into an agency shop before application has been made under Clause 10 of the Bill, or without an application under Clause 10 even being contemplated. But, apart from that, this subsection declares it an unfair industrial practice to take any steps to speed up the process. As I understand it, the position of the Government is that they are expecting workers to accept the terms of subsection (2) because in the preceding clauses the Government have provided them with such a comprehensive and detailed scheme under which an agency shop agreement can be created and maintained.
I think that it is necessary to look at the degree to which delays could arise under the arrangements which are being set out in these earlier clauses, especially when one recalls that these clauses in general—and certainly the ballot provision for establishing an agency shop—arise in the case where the trade unions are seeking an agency shop agreement and the employer is reluctant to agree to one. If, indeed, the employer is reluctant to agree to an agency shop agreement, he is not likely to be mollified in his views by the fact that the legal arrangements set out in these clauses are being put into operation. I do not think he will change his views because of that; he is likely to maintain his resistance.
It is important that the noble Lord should tell us candidly how far he believes that the arrangements set out in

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these clauses, and particularly the arrangements set out to provide a ballot under the ægis of the Commission on Industrial Relations if an employer resists a request to establish an agency shop agreement, allow scope for delaying action on the employer's part and what guarantees there are that the procedure will in fact operate speedily.
We are perhaps unfair to the legal profession, but we do not normally associate speed either with lawyers or with legal institutions, and it would be a cause of great frustration and it could bring the provisions to which we have been giving such meticulous consideration into disregard and even contempt if in fact their operation proved so slow as to produce a sense of frustration on the part of the workers who, through their trade unions, were seeking an agency shop—and they would be precluded from exercising any kind of industrial pressure, as I understand it, by the terms of this subsection.
There are other issues which arise: for example, the difficulties that can in practice occur in identifying the individual or individuals who are organising or inducing some of the actions dealt with in terminology of this type which occur in this subsection and elsewhere in the Bill. But I have already detained the Committee long enough and there will no doubt be other occasions to return to this other aspect of the matter. I do not think we ought to let this clause pass without taking note of the fact that it is a part of a process of circumscribing very severely indeed the practical application of the right of workers to withdraw their labour. I hope, therefore, that we may have some comment upon it and some explanation of it both in general and on the detailed points which I have raised with the noble Lord.
LORD POPPLEWELL: I wonder whether the noble Lord will explain the clause a little more clearly in his observations, because Clause 15, subsection (2), line 5, says:
"…any irregular industrial action short of a strike, or threatening to do so…"
Just exactly what does that mean? We complain that there is too much detail attached to this Bill, but here we have something that requires some very clear
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definition. No doubt the noble Lord will say that it may probably be included in a code of practice of unfair industrial action. It is very difficult for us at this stage to give permission for something to be brought in that is not very clearly defined at all. What is "irregular industrial action?" Is it when a person who is engaged on a conveyor belt in the motor-car industry and is absolutely bored stiff, when a little incident arises and there is some impetuous talk says, "Let us stop the job"? We had that very clearly defined earlier this afternoon by what took place in the Pilkington troubles. Those of us with some knowledge of industry know that this type of thing does take place, and we know that people will say, "Let us stop the job," if' they are bored stiff or there has been some trouble developing. It may not come to anything, but is that an unfair industrial practice? I think this is something that we must have very clearly defined.
Now so far as the employer is concerned the clause goes on to say that he must refrain from inducing or attempting to induce a trade union or joint negotiating panel or any other person, from making an application under Clause 10 or Clause 13 of this Bill. The same remarks apply to the trade unions. They must not attempt to influence an employer or try to prevent him from making an application under the respective clauses. We all know that industrial difficulties arise from time to time and that certain loose threats take place, to the effect, that "unless we can get something we will do so-and-so". Is that an unfair industrial practice? If in the negotiations between both sides some difficulty has arisen and the employer says, "If that is your attitude, we will take the appropriate action under the various sections of this Act," or vice versa—the trade union saying the same thing to the employer—is that an unfair industrial practice? We know that this type of thing takes place. Would that be an unfair industrial practice at that time? Very often cooler thinking follows and this type of threat is withdrawn? If this sort of thing develops in future (and I am sure it will) and if it be that commonsense ultimately does not prevail, would that be an unfair industrial practice?

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These are important matters. I hope that the Minister will give us some indication of the Government's views about this type of thing which so befogs industrial relations. If you try to bring compulsion in in this way, it has to be very clearly laid down, and not left to a set of lawyers to define what are the terms of a particular clause. We are told that the unfair industrial practices will be clearly laid down. I hope that this particular item in this clause will be clearly laid down. What is, and what will be, an irregular industrial practice? What is "irregular" to a legal mind is very much ordinary common sense so far as industrial relations are concerned.
LORD DAVIES OF LEEK: In a later clause we get a rough definition of "sympathetic actions". As usual with this Bill, one has to look backwards and forwards to try to get some sense out of it. The calling of sympathetic strikes is to be unlawful. If there is a person outside the works gates who may not be in the union, or who may be at the gates or on a loud speaker, or if there be a group of people outside the gates who are not in the union at all, and if some workers listened to them, would this be an unfair industrial practice?
I know how hard the noble Lord on the Front Bench has been working, and I sympathise with him; he needs support. The amount of work the Government are giving him is shameful, but it is typical of them. They want a stone-waller, and he is batting well. The Government have not given away much, but we recognise talent and grit when we see it.
I want to bring in a nasty phrase. There is an organisation called the "Economic League". At one time they sent out letters to industry offering to keep an eye on people who may be awkward—those who sometimes will not sit down at 2 o'clock in the morning when somebody wants a Bill to go through and wants to go to bed. One of the directors of Securicor was at one time none other than Mr. Carr himself. That was in 1962. Securicor at one time withdrew a letter which suggested that they could be useful to employers. I heard little puffs of irritation elegantly delivered at about 2 o'clock in the morning when I used the phrase "agent provocateur".
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I do not mean that in the wicked sense of espionage, or of the rough stuff which occurred in American trade unionism and industry in the last century.
We have had such wonderful common sense in this country that this sort of thing is what worries me about this Bill. All that kind of thing can creep in. I beg noble Lords opposite, and those who are of Cabinet status, when they get into the calm precincts of No. 10, to have another look at this matter, because as it is mushed up here it will not work. I know that sympathetic strikes and encouraging people to strike in sympathy are all laid out in the clause. I think we are trying to do too much. Something sharp and short, conscientious and constructive, may have been useful for both sides of industry, but this is growing deeper. Please give us some kind of answer that would imply some type of modification.
6.5 p.m.
LORD DRUMALBYN: We are on the Question. That the clause stand part. I willingly respond to the request of the noble Lord, Lord Davies of Leek, to give him some kind of answer, but I am not certain that I could imply some kind of modification at this stage. I am bound to say that the noble Lord does sound better at this time of the day than he does at 2 o'clock in the morning. I think noble Lords who have spoken in this debate have put their points extremely responsibly, and I should like to try to give some reply to what has been said. I think perhaps the noble Lord, Lord Delacourt-Smith, was slightly exaggerating the difference between the two sides of the Committee on this kind of issue. We, in this country, are all fully committed to the defence of the right to strike. The question is, on what occasions should you strike? Our point of view on this is simply that if you can develop a system which will reduce strikes and give a viable alternative, this is a good thing in itself. We are commending this part of the Bill to noble Lords, in the hope that they will ultimately accept it, because we believe that this gives an alternative approach to the strike.
I think the basis of this particular provision is to prevent industrial action, or

913
the threat of industrial action, being used unfairly to deter anyone from exercising the rights given by the agency shop provisions. It will not be an unfair industrial practice for a trade union to take action to induce an employer to enter into an agency shop agreement, when a ballot has been held after an application under Clause 10—I think this is the point the noble Lord asked about—and the ballot has shown that a majority of the workers concerned are in favour of the agency shop agreement. In these circumstances, the employer is under a duty to enter into the agency shop agreement, and if he fails to fulfil that duty he does so at his peril. After all, the chance for him to avoid strike action has already been taken through the agency shop provisions. That is quite plain.
The noble Lord also asked what happens if strike action is instigated before an application is made. Until an application is made it is open for strike action to be taken, but for it to be done properly, it would have to be after due notice in accordance with the contracts of employment. One would hope that during that period, the employer would see sense and in that case an application could be made to the Industrial Court. It might be that the employer is holding out because he does not believe that the union that is making the application really has the support of its members, and in that case he may make the application to the Industrial Court and so presumably avoid the strike action, and then get this system going. There is quite a lot to commend these proposals.
Then the noble Lord asked: to what extent can delays arise? He asked whether the employer who was reluctant to enter into an agency shop agreement would be likely to maintain his resistance. I have already indicated the extent to which he is likely to be able to maintain his resistance, given the rights that are available either to make application or to strike.
LORD SLATER: May I ask what is the difference between a strike and a lock-out? There could be a lock-out by the management, because of an application made by a trade union or by the workers themselves. If the workers preferred
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to carry on to a limited extent, the management might reach the position where they said, "We cannot carry on so we are closing the works. There has to be a lock-out." What would happen then?
LORD DRUMALBYN: This is surely covered by subsection (1), which states:
"It shall be an unfair industrial practice for an employer, by instituting, carrying on, organising, procuring or financing a lock-out, or threatening to do so".
It is also unfair for a trade union to call, organise, procure or finance a strike, or threaten to do so. So that this works both ways.
I was trying to answer the point about the employers' resistance, and about what scope there is for delay which would produce frustration. I think that what I have already said covers those points, and an employer would obviously be delaying at his peril. The noble Lord, Lord Popplewell, asked about irregular industrial action I am sorry to have to refer him to the Bill, but if he will look at Clause 158 he will find that:
"irregular industrial action short of a strike' has the meaning assigned to it by section 31(4) of this Act;"
If he looks at Clause 31(4), he will find exactly what irregular industrial action is. This is not altogether unusual in legislation.
LORD POPPLEWELL: I have been looking at the Bill. It is the definition of "irregular" that I am seeking.
LORD DRUMALBYN: The noble Lord asked about the other point as well, and in the meantime he has found the answer. I was giving the noble Lord the definition of "irregular industrial action". If he will look at Clause 31(4) he will find the answer. It is essential to understand that the concept of an unfair industrial practice depends on its purpose. If its purpose is unfair, then the industrial practice is unfair. The noble Lord also asked about threatening. This is always a question of degree, and it is as well to remember that. One also has to remember what are the remedies. The remedies are simply a definition of rights, or an award of damages. But one will not get large damages out of a mere empty threat, or a cease and desist order

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to stop making silly noises, and one is not likely to go to court for that. So the noble Lord can rest reasonably content. I hope I have answered all the questions I was asked.
LORD DELACOURT-SMITH: The noble Lord did not dwell quite as fully as I might have hoped on the degree to which the Bill limits severely the exercise of the right to strike. He said that it is common ground that we all accept the right to strike, but I am bound to say that it is a very strange acceptance which makes the exercise of that right subject to such extremely severe penalties, which have not been part of the law of this country for some 70 years. It is a very strange way of showing one's devotion to that right.
I come back to the point that it is our view that it would be very much better to set on foot arrangements likely to improve procedures and the whole background of industrial relations, through a constructive use of the Commission on Industrial Relations and all that goes with it, as a means of ensuring that workers do not want to exercise the right to withdraw their labour, than to embark upon the arrangements in this Bill. But that is a decision which the Government have already made and, unfortunately, the noble Lord has to bear the very long proceedings of this Bill because of that unwise and unfortunate decision.
May I come more specifically to the problems which arise here? We are dealing with a situation in which a trade union is approaching an unwilling employer to conclude an agency shop agreement. If the employer was willing, they would presumably have already concluded the agreement under Clause 10(1). Clause 10(2) deals with the employer who is stated to be unwilling. First of all, when is it established that an employer is unwilling? An application is made, and there is not more than the usual delay in getting an acknowledgment from the employer who, by definition, does not wish to embark upon this course of action. He says that he has the matter under consideration but there are many other pressing matters requiring his attention. How long does that have to go on before he is regarded as unwilling for the purpose of Clause 10(2)?
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Once it has been established that he is unwilling, the matter presumably goes to the Industrial Court on the application of the trade union side. There will then be proceedings before the Industrial Court and, although legal institutions and lawyers are much admired and respected in this country, they do not have a great reputation for speed. If I read subsection (3) of Clause 10 aright, there will be some scope for the employer, if he so wishes, to delay the proceedings by raising technicalities. When, eventually, those technicalities have been overcome, the matter is referred to the Commission, which must collect a good deal of information. It is clear that it will require a degree of co-operation from the employer and his agents to get that information, so can we assume that that will always be speedily forthcoming from a reluctant employer?
Once the information has been procured and the Commission has made up its mind, it makes a report to the Industrial Court—we have now come to Clause 11(2)—and the Commission determines whether or not to take a ballot. The report made on the result of the ballot will go back to the Industrial Court. Here we are at Clause 12(1), where
"a majority of the workers eligible to vote in the ballot have voted in favour of an agency shop agreement then it shall be the duty of the employer to take all such action as is requisite".
to conclude an agency shop agreement and maintain it. How quickly does he have to act? What remedy does the trade union have if he is dilatory in carrying out the orders of the industrial court. Throughout this process I am suggesting that there is scope for a reluctant employer to delay the operation of the Bill. I am not saying that every employer will be reluctant. We are not dealing with trade union recognition, because it is a prior condition of this whole operation that there shall be trade union recognition but we know how some employers in the country have for years resisted any attempt to unionise their workers and have refused to give any recognition to trade unions. Others have withstood very long and damaging industrial disputes because they would not afford recognition. It is not to be

917
assumed that every employer will be cooperative about going through this process which, I concede, is a stage beyond recognition, a stage of having to accept an agency shop agreement which by definition he has initially resisted.
At any point in that process, as I understand it, once the course of seeking to make an application under Clause 10 has been undertaken, the employer can regard himself as protected absolutely against any kind of pressure by his work-people or against anything which could be construed as a threat. I do not know whether it is a threat (and this will be a very important point) for a trade union official to say-not, "If something does not happen, I shall call a strike"; but, "If something does not happen there will be trouble." There can often be trouble, as everybody will appreciate, without a trade union official calling for it. One of the difficulties about this subsection is the weak position in which it puts the official trade union representative when a course of action undertaken by the employer causes anger and frustration among the work people.
If a trade union official goes too far in warning an employer of this, he can be regarded as threatening industrial action when, in fact, what he is doing is warning the employer that, irrespective of anything that the trade union may do officially, there is a prospect of trouble arising. It is this kind of difficulty that most genuinely arises in the minds of trade union representatives. There could be extremely frustrating delay in following up the process which this Bill sketches and throughout that period of frustrating delay (which might be quite deliberately undertaken as a tactic) the employer would be immune from any kind of industrial pressure by his work people. The frustration and irritation arises from this. It will be borne by the work people and, incidentally, by the trade union representative who, in my experience, would probably get the brunt of it.
LORD DAVIES OF LEEK: For the Record, this is exactly the point I quoted. It is in Part V and the word "threat" is used.
LORD DRUMALBYN: I realised that the noble Lord was probably referring
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to the original Bill. The points raised by the noble Lord, Lord Delacourt—Smith, are absolutely legitimate. I will answer them as best I can although I think the answer must necessarily lie in the good-will of the parties concerned and the sheer circumstances of the case, with the options open to various people. I have already explained that an employer who delays before an application is made is wide open to threat; if he delays in implementing the ruling of the court he is wide open to threat. I do not know the answer to the first question put by the noble Lord: when is it that an employer is unwilling? It is a very interesting one. I shall have to look at it and I shall be interested to find the answer and to let the noble Lord know. As to the delays in procedure being technicalities, once the thing has actually got under way the court and the C.I.R. will be likely to expedite matters as much as possible. The C.I.R. have very full powers under Part IV of Schedule 3 to get such information as they want and they will not tolerate any delay. Their powers are strong.
While I do not suggest that there should be delays or that delays should be tolerated, it is as well to remember that it is a dispute of rights and not of interests that is involved in a case of this kind. I think the noble Lord, with his wide experience, will confirm that disputes of rights often take rather longer to settle than do disputes of interests. The noble Lord raises the question of threats. This, again, is a question of degree. I do not think that we need worry too much about it. If, in a serious case, the threats actually develop to the stage that notices are sent out, then it would be possible to have recourse to the Industrial Court. But the good sense of the trade union movement is too great for this to be a serious worry. The two sides know the limitations in this matter.
Finally, the noble Lord asked about the position of the trade union official, which he said was weak when the action of an employer excited anger among the trade union members. I would only say slat this is a matter which plainly the Industrial Court could take into account when it came to fix the degree of responsibility in the case. It is given a wide discretion in this matter. If the employer had behaved badly, this would

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be set off by the Court against whatever damages he might have suffered. I hope that I have dealt with all the points raised.
LORD DELACOURT-SMITH: I appreciate the spirit in which the noble Lord has replied to the questions which I put and the problems that I raised. I must say that he has not allayed my anxieties or those of my noble friends. But since this is the first time that we have come across this kind of problem and have had the opportunity of exchanging views about it, I do not propose to invite my noble friends to divide the Committee on this clause.
Clause 15 agreed to.
Clause 16 [Special provisions for approval of closed shop agreement]:
6.30 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved Amendment No. 104:
Page 13, line 17, leave out ("section") and insert ("Act").
The noble Lord said: This is purely a drafting Amendment. In the closed shop provisions the description is intended to apply throughout the Act and not just to this clause. I beg to move.
BARONESS WHITE: For once, we are most happy to accept the suggestion!
LORD DELACOURT-SMITH LORD DELACOURT-SMITH moved Amendment No. 105:
Page 13, line 17, leave out ("approved").
The noble Lord said: This is perhaps an Amendment which the Government might at some stage accept.
LORD DRUMALBYN: May I ask whether it is the intention of the noble Lord also to discuss Amendments Nos. 112, 119, 127, 142 and 190?
LORD DELACOURT-SMITH: I was only proposing to discuss them in a very general way at this stage, and perhaps this might be a convenient point for me to refer to the general approach which we make to this clause. We have already had a good deal of discussion in the Committee proceedings so far upon the concept of closed shop agreements. It is no part of our case that all closed shop
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agreements are perfect, or that closed shop agreements should cover the whole face of industry. We recognise, as did the Donovan Commission, the problems, and, in some cases, the injustices, which can arise through the closed shop. However, we think—and this will be no new point to your Lordships—that the Government have made the handling of this matter a great deal more difficult by their insistence on the statutory right to be a non-trade-unionist, and that this had led them in particular to refuse to recognise the fact that there are areas of industry where, either because of the conditions of recruitment or employment, or because of the outlook of the two sides, there is justification for having a closed shop arrangement. They speak of the practice in a way which suggests that they always wish to circumscribe it most completely—indeed sometimes to the point of rendering it ineffective to fulfil the purpose for which it is intended.
We envisage closed shop arrangements as those which are reached by agreement between trade unions and the employer or employers in a field of employment, in accordance with proposals which are recommended by the Commission on Industrial Relations. We shall be discussing these points in more detail at later stages in the Bill, but we would urge the Government to agree to remove this word "approved" from the text of the Bill. In our opinion it would be much more fitting to recognise these as closed shop agreements and not to give them a rather special characteristic which suggests that they have to be so particularly singled out in the way that the word "approved" suggests. I beg to move.
LORD DRUMALBYN: As the Bill stands, the closed shop has to be approved, and we think that it ought to be approved. The short answer to the noble Lord therefore must be that we think the expression "approved closed shop" says exactly what we mean. We are going to have long discussions on this, I have no doubt, and certainly at this stage, I think it would be inappropriate to pre-empt those discussions by removing the word "approved". I hope therefore that the noble Lord will not press his Amendment. I am bound to say that I cannot hold out very much hope to him that we shall be prepared to

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accept it, because the noble Lord knows that this is really cardinal to the Bill. As the Bill was originally introduced, there was no scope for the closed shop at all. There has already been a move to an approved closed shop, and that is where we are at the moment. Perhaps we might leave it there for the moment in the hope that the noble Lord will not press his Amendment.
LORD POPPLEWELL: We have had this argument before, and the noble Lord, Lord Drumalbyn, is such a decent fellow and has been so patient, when almost anyone else would have said "What a bloody-minded lot you are!" I do not know whether that is a parliamentary expression or not, but it indicates definitely what we are feeling in connection with this matter. These closed shop agreements have been entered into on both sides, and when the Government just say, "No, we cannot say that: it must go through the normal ballot procedure", well, what I have said indicates our line of thought in this particular direction.
LORD DELACOURT-SMITH: I appreciate the point made by the noble Lord, Lord Drumalbyn, that we are early in our discussions on this matter, and I also appreciate his point that in the original Bill, as presented, there was in fact no provision at all for closed shop arrangements. We recognise that there have been moves in the direction of wisdom on the part of the Government. We applaud them, and we indeed hope that they will continue in this direction. Perhaps I may say that I am prepared to accept the words of the noble Lord that in considering this point of terminology we should not pre-empt the more detailed discussions which we shall be having later. In these circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.39 p.m.
LORD DELACOURT-SMITH LORD DELACOURT-SMITH moved Amendment No. 105A:
Page 13, line 20, after ("unions") insert ("or indpendent organisations of workers").
The noble Lord said: Here we come to the first point of real and substantial difference between the two sides. I am conscious that this Amendment is in terms very closely similar to an earlier clause which I moved; but on that
922
occasion. I was drawing attention to the distinction that the Government were insisting upon between the registered trade unions-who alone under this Bill would have the title "trade union"-and independent organisations of workers, and I was drawing attention to that point particularly in the context of the significance of registration and the criticisms which the trade union movement have about the registration arrangements.
I move this Amendment in the somewhat different context of the proposals for sudden limited closed shop agreements. I must urge the Government to consider again their view that only a registered trade union should be embraced in the operations envisaged in this clause. We shall be in a strange situation if independent organisations of workers exist and attempts are made to preclude them from entering into arrangements with employers which would be prefectly proper if undertaken by a registered trade union.
The essence of a trade union is that it establishes itself with its members, and with the employers, as a body with which employers are ready to deal. We might have a quite extraordinary situation if this Amendment were not accepted. Employers might be prepared to make arrangements with an independent organisation of workers, or more than one such organisation, or with an organisation and a registered trade union working together to achieve the effect envisaged in this clause. Such arrangements, of course, would make a contribution to better and more stable industrial arrangements. Are the Government saying that, because of the terms of this clause, such an arrangement would be precluded? This is by no means a hypothetical question, and it would be valuable if the noble Lord would explain what the situation will be. I hope that he will come to the conclusion that the right course would be to allow independent organisations of workers to be covered by this clause.
6.43 p.m.
LORD DRUMALBYN: The position here is that it would be possible for an independent organisation of workers to enter into an agreement with an employer with a view to setting up a closed shop. What would not be possible would be

923
for such an organisation to make application for a closed shop jointly with the employers unless first the organisation accepted the responsibilities of trade union registration. We regard this as a fundamental point. We see no reason why it should be pressed on us that in the special circumstances of the closed shop, which carries a special responsibility, almost the highest responsibility of all, registration should not be accepted by any would-be applicant. We anticipate no difficulty about this. We think that every union likely to be in this position will apply for registration. We do not want to ram registration down anyone's throat, but we firmly take up the position that a condition for examination of an application for a closed shop should be that the matter should be between an employer and a union. I regard this as fundamental. I do not think we can yield, despite the blandishments of the noble Lord, Lord DelacourtSmith. I do not believe that, in his heart, the noble Lord feels that this is something on which we can yield—I hope he does not. Therefore I hope he will not press the Amendment, which we shall certainly have to resist.
LORD DELACOURT-SMITH: I am sorry that I am not able to respond to the noble Lord. Quite apart from his prying into my heart, on which I venture to claim I am a greater expert than he is, he has completely failed to convince anyone on this side of the Committee—
BARONESS WHITE: He has not won our heads.
LORD DELACOURT-SMITH: As my noble friend says, he has not won their heads, let alone their hearts, by his argument.
I was postulating circumstances in which an organisation of workers, which had chosen not to be registered, was able to conclude a closed shop agreement with employers. The noble Lord says that the Government take a strong view on registration but that they do not wish to ram registration down anyone's throat. in view of the emphasis placed on the
924
entitlement to be a non-unionist, as opposed to the entitlement to be a unionist, I cannot see why the Government do not put equal emphasis on the entitlement to be unregistered as opposed to being registered. If the organisation desires one or the other, surely it should be able to choose. There are enough penalties already in the provisions in this Bill to deter anyone from preferring the unregistered state without good reason. If the Government do not want to ram registration down the throats of a particular organisation of workers I cannot see why they are unable to meet us on this point.
The test is a practical one. Can the organisation command the support of its members and the respect of the employers to the point at which it can operate a closed shop arrangement? The employers, who will have everything to gain by an orderly arrangement in their industry, would not be disposed to make such an agreement with an ineffective organisation which could not perform the function it was supposed to perform. Yet even in those circumstances the noble Lord insists that the opportunity to make agreements must, as a matter of doctrine—it is no more than that—be confined to those organisations which have gone through the process of registration and become trade unions. I hope that the noble Lord will respond further.
LORD DRUMALBYN: I would respond very quickly to the question about doctrine. It is not a question of doctrine; it is a question of complying with the rules that are laid down for an organisation to bring its rules into line so that it may be registered. We think this is particularly important in respect of anyone who is to enjoy the privileges of a closed shop.
THE LORD BISHOP OF BLACKBURN: May I inquire whether it is possible for an independent organisation of workers to be registered?
LORD DRUMALBYN: An independent organisation of workers can indeed be registered; and if it is registered it becomes a trade union.
6.49 p.m.
On Question, Whether the said Amendment (No. 105A) be agreed to?

CONTENTS

Addison, V.

Henderson, L.

Sainsbury, L.

Archibald, L.

Hilton of Upton, L.

St. Davids, V.

Ardwick, L.

Hoy, L.

Serota, Bs.

Balogh, L.

Hughes, L.

Shackleton, L.

Bernstein, L.

Jacques, L.

Shepherd, L.

Blyton, L.

Janner, L.

Shinwell, L.

Brockway, L.

Kennet, L.

Slater, L.

Brown, L.

Leatherland, L.

Snow, L.

Buckinghamshire, E.

Lee of Asheridge, Bs.

Stocks, Bs.

Burntwood, L.

Lindgren, L.

Stow Hill, L.

Champion, L.

Llewelyn-Davies of Hastoe, Bs.

Strabolgi, L.

Chorley, L.

Lloyd of Hampstead, L.

Summerskill, Bs.

Cooper of Stockton Heath, L.

Longford, E.

Taylor of Mansfield, L.

Delacourt-Smith, L.

Maelor, L.

Wells-Pestell, L.

Diamond, L.

Milners of Leeds, L. [Teller.]

White, Bs.

Energlyn, L.

Morris of Kenwood, L.

Williamson, L.

Evans of Hungershall, L.

Peddie, L.

Wootton of Abinger, Bs.

Gaitskell, Bs.

Popplewell, L.

Wright of Ashton under Lyne, L.

Gardiner, L.

Raglan, L.

Garnsworthy, L. [Teller.]

Ritchie-Calder, L.

Wynne-Jones, L.

Hall, V.

NOT-CONTENTS

Ailwyn, L.

Digby, L.

Lloyd, L.

Albemarle, E.

Drumalbyn, L.

Loudoun, C.

Aldington, L.

Dudley, E.

Lucas of Chilworth, L.

Allerton, L.

Dundee, E.

Lyell, L.

Amory, V.

Eccles, V.

MacAndrew, L.

Ashbourne, L.

Effingham, E.

McCorquodale of Newton, L.

Balfour, E.

Elliot of Harwood, Bs.

Malmesbury, E.

Balfour of Inchrye, L.

Emmet of Amberley, Bs.

Mansfield, E.

Barnby, L.

Falkland, V.

Massereene and Ferrard, V.

Barrington, V.

Ferrers, E.

Merrivale, L.

Beauchamp, E.

Ferrier, L.

Milverton, L.

Beaumont of Whitley, L.

Gage, V.

Molson, L.

Belhaven and Stenton, L.

Gisborough, L.

Monck, V.

Belstead, L.

Goschen, V. [Teller.]

Monk Bretton, L.

Berkeley, Bs.

Gowrie, E.

Mountevans, L.

Birdwood, L.

Gray, L.

Mowbray and Stourton, L.

Blackburn, L. Bp.

Grenfell, L.

Napier and Ettrick, L.

Boston, L.

Gridley, L.

Norwich, V.

Brabazon of Tara, L.

Grimston of Westbury, L.

Oakshott, L.

Bradford, E.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Radnor, E.

Bridgeman, V.

L. Rankeillour, L.

Brooke of Cumnor, L.

Hankey, L.

Rathcavan, L.

Brooke of Ystradfellte, Bs.

Hanworth, V.

Rea, L.

Brougham and Vaux, L.

Hastings, L.

Reading, M.

Caccia, L.

Hatherton, L.

Reigate, L.

Caldecote, V.

Hawke, L.

Rhyl, L.

Carrington, L.

Henley, L.

Rockley, L.

Chandos, V.

Hives, L.

Rothermere, V.

Chesham, L.

Hood, V.

Rothes, E.

Clifford of Chudleigh, L.

Howard of Glossop, L.

Ruthven of Freeland, Ly.

Clinton, L.

Hylton-Foster, Bs.

St. Aldwyn, E.

Clwyd, L.

Inglewood, L.

St. Helens, L.

Colville of Culross, V.

Ironside, L.

St. Just, L.

Conesford, L.

Jellicoe, E. (L. Privy Seal.)

Salisbury, M.

Cork and Orrery, E.

Jessel, L.

Sandford, L.

Cowley, E.

Kemsley, V.

Sandys, L.

Craigavon, V.

Killearn, L.

Somers, L.

Cranbrook, E.

Kilmany, L.

Southwark, L. Bp.

Crathorne, L.

Kilmarnock, L.

Strang, L.

Daventry, V.

Kinnoull, E.

Strange, L.

De Clifford, L.

Landsdowne, M.

Strathclyde, L.

De La Warr, E.

Lauderdale, E.

Stratheden and Campbell, L.

Denham, L. [Teller.]

Lichfield, L. Bp.

Swaythling, L.

Their Lordships divided: Contents, 60; Not—Contents, 140.

Swinton, E.

Thurso, V.

Warburton, L.

Teviot, L.

Tweedsmuir, L.

Wigram, L.

Thorneycroft, L.

Tweedsmuir of Belhelvie, Bs.

Windlesham, L.

Thurlow, L.

Vivian, L.

Yarborough, E.

LORD DRUMALBYN: This may be a convenient moment for us to resume the House preparatory to considering the Nullity of Marriage Bill, and I suggest that that should be for one hour, and that we should again resolve ourselves into Committee on the present Bill an hour from now.
LORD GARDINER: I thought that an hour and half was the time usually allotted, if necessary. It may be that we shall be shorter than an hour and a half; but we may not.
EARL ST. ALDWYN: Last week on another Bill we had an hour and half, and I had in fact so many complaints from all sides of the House, about taking out as much as an hour and half, that I felt it was only reasonable to reduce the period to an hour. If we do not complete the Committee stage on the Nullity of Marriage Bill we can of course take it on Friday.
LORD GARDINER: Could we not be a little more flexible than that? If it appears at the end of an hour that another ten minutes will finish it, it seems to me quite unreasonable that we should adjourn until Friday, in the middle of a clause.
Moved. That the House do now resume. —(Lord Drumalbyn.)
On Question, Motion agreed, and House resumed accordingly.

NULLITY OF MARRIAGE BILL
7.0 p.m.
LORD GARDINER: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into committee. —(Lord Gardiner.)
House in Committee accordingly.
[The LORD JESSEL in the Chair.]
Clause 1 [Grounds on which a marriage is void]:
VISCOUNT BARRINGTON VISCOUNT BARRINGTON moved Amendment No. 1:
Page 1, line 17, leave out from ("that") to end of line and insert ("either the presumed husband or the presumed wife is not, or neither of them is, of the sex of which he or she was presumed to be at the time of the marriage.")
The noble Viscount said: In the rather congested state of your Lordships' time, I will not waste time by apologising for introducing as a layman an Amendment in a lawyer's debate, but I think that I ought to apologise for appearing under a false name on the Marshalled List, in case anyone thinks that I am trying to pose as a Life Peer. It was one of those unfortunate oversights at the Printed Paper Office. Having said that, I will come straight to what my Amendment is trying to do and how it is trying to do it. As I understand it, Clause 1 deals entirely with void marriages —in layman's terms, the question of when is a marriage not a marriage?
To compress this into an omnibus case, nobody denies that it will be a void marriage, if a lady already legally married and not separated from her husband were to marry a son while he was still an infant. That would be a void marriage on three grounds. It would be difficult to find a voider one. The Bill has found another reason and I think a good reason —that is, where a son turns

929
out not to be a son but a daughter. I do not think that anybody disputes that where a male marries a female and she turns out to be a male, or vice-versa, that marriage should be void. The question I raised on Second Reading and on which I am now moving this Amendment is that there is some doubt about what would happen in what your Lordships might say was the quite incredible but not logically impossible condition that two people are found to have changed their sex at the same time —as one might say, a double switch.
Before I discuss the terms of the clause and the Amendment, I should like to say that this is not quite so remote and impossible, by reason of the fact that I have myself been a witness of such a marriage at the time when my sister was married in the 'thirties. Before Hansard gets this wrong, I should like to make it quite clear that neither my sister nor her husband changed their sex, either then or at a later date. They were married at a time when it was not unusual for a young married couple to have at least one servant, sometimes two, living in the house. They compromised by having one and a half —an elderly cook-housekeeper between 40 and 45 and a boy (as they thought) between 17 and 19. In the first week when they were in the house the boy came to my sister in a naturally somewhat upset condition and told her that he was changing into a girl. She tried to persuade him that he was not, but he convinced her because he already had claimed this three times.
This was a difficult thing for a young married woman and her husband. They did everything reasonable that they could do. They consulted the best medical opinion they could afford. The verdict was that this was unusual but not impossible. On the whole, he would be happier as a girl. Before they could implement that, the case became academic, because he left the house with the cook—housekeeper as half of a married couple —which half we never knew, but with hindsight, the rumour was that they were interchangeable. This was a genuine case, and if your Lordships doubt it I could give the names.
I come on to what the clause is saying and means to say. It means to me,
930
and I think the noble and learned Lord, Lord Gardiner, is saying, that if the parties are not respectively male and female, it is a void marriage; but that is the only condition apart from the first three. In a double switch, of course, they are certainly male and female, but a great deal depends on the word "respectively". Respectively may have a legal sense. I looked it up in the dictionary and I shall not waste your Lordships' time with quotations which seem to confirm my opinion. The quickest way of explaining what I understand by respectively is to apply it not to parties in a marriage but to political Parties. If, at some remote date, the Liberal Party was no longer thought to be dictating to this House, there would be only two principal Parties. And if someone were to say at an Election that those two Parties consisted respectively of honest men and humbugs, I believe that there would be some doubt in your Lordships' House whether it was a howling libel or a plain statement of fact, unless one knew to which side it referred.
May I take an example from history and quote the late Lady Asquith, when she said that the country was asked to choose between two men as Prime Minister, one of whom was suffering from sleeping sickness and the other from St. Vitus's dance. Every one knew what she meant, but if she had added the word "respectively" I do not think it would have made the matter any clearer, because it would not have referred to the two names. If she had said that Lloyd George and Bonar Law were suffering respectively from sleeping sickness and St. Vitus's dance, everyone would have known that she meant the opposite.
That is the only point I want to make about "respectively". If that is what the Bill is saying, I should like to suggest that my Amendment is worth thinking about, because I do not believe that that is what is meant. I do not believe, if it is intended that a marriage should be void because of one mistake, that it should cease to be void when there are two mistakes. As to the legal sense we shall hear in a moment; but that is quite different. and in any case I shall withdraw the Amendment unless encouraged to go on with it.
As to the desirability of a marriage subsisting on the basis that the husband has married somebody whom he thinks at first to be a woman, I believe that would be intolerable on two grounds. On biological grounds, I suppose that it would be a marriage between male and female like an electro-magnetic coupling. But that is not, as I see it, in the philosophy of marriage.
As to the legal terms of the contract, if somebody announces in either church or registry office, "I, Leslie, take you, Evelyn, to be my wedded wife", and it proves to be the other way round, that the wife has taken a husband, I do not know what the status of that marriage would be in law in terms of contract. I am certain that I should he doubtful about marrying a lady of foreign origin, particularly of different religion. But if I said, "I, Ian, take you, Yasmin, to be my wedded wife", and then found that the sexes had switched —I am giving an extreme case —and instead of being the husband of a devoted wife I was a wife of possibly a devoted husband who might have other wives, that would clearly alter the whole thing. I will not labour that point, because it is a little remote, but I believe it is a real one. On the religious basis (and some people regard marriage as a religious thing) I would say that it is not the same thing, whether the proposition is true or false, to say that the Church is the bride of Christ as it is that Christ is the bride of the Church. Anybody is at liberty to contradict this.
Your Lordships will say that this is all gibbering air, because the odds against it ever happening are so astronomical —it is not worth pursuing. I do not like the word "astronomical" in that connection, in view of some of the predictions that have been made. But in view of the limited time that we have, I will not put those points now because there may be a possibility of putting them later. I am proposing to move the Amendment simply on the ground that I do not think it is clear in what it says. I do not like to sit down without at least one Latintag, which is fiat justitia ruat cœlum. As applied to Acts of Parliament it would mean, I think, not that justice be done even if it brings down the Pope, but let an Act of Parliament say what it means and
932
not what it may be deemed at some future date to mean, even if it meant sending back to another place with an Amendment that Bill which had been sent to us with a clause which was not discussed in Committee in another place. On those grounds I beg to move.
THE LORD CHANCELLOR: I hope on reflection that the noble Viscount will not press this Amendment. I can give the answer to it —I hope he will not think I am discourteous —in a few sentences. I congratulate him of having thought of a situation which most of us I believe had not seriously contemplated. When we had the Second Reading we were talking about a case when the two parties to the marriage were not of opposite sexes and the result would be that there was not the partnership between a man and woman who married competently. The noble Viscount's positive situation is where there is a partnership between the man and the woman, where the presumed wife is a man and the presumed husband is a woman. I do not speculate as to whether that has happened or is likely to happen. I only venture to say to the noble Viscount that he has reckoned without the ingenuity of the Parliamentary draftsman. If the Parliamentary draftsman had wanted to say that marriage should be void on the grounds that the parties were of the same sex he would have said it; but he did use the word "respectively" man and woman in paragraph (c). If you reflect upon the meaning of "respectively male and female" in paragraph (c) I think you will come to the conclusion that it means rather more compendiously exactly what the noble Viscount's Amendment seeks to say.
LORD GARDINER: The noble Viscount, Lord Barrington, need not apologise for having put down this Amendment. Indeed, I am grateful to him because when he raised this somewhat esoteric point at the end of the Second Reading I am afraid that I got the answer to it wrong. I said that I should like to have time to consider it. Having done so, I am of the same opinion as the noble and learned Lord the Lord Chancellor. We all want, in the highly unlikely event adumbrated by the noble Viscount, that the marriage should be void; but I agree with the noble and learned Lord the

933
Lord Chancellor that the word "respectively" must in character have that result. Therefore, I think it has already been covered in the Bill as drafted.
VISCOUNT BARRINGTON: I am grateful to the two noble and learned Lords who have given answers. As a layman, I find it difficult to understand this legal sense of "respectively". I certainly would not question it, though I shall he interested to hear afterwards how it applies in private. Meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.15 p.m.
LORD SIMON OF GLAISDALE LORD SIMON OF GLAISDALE moved Amendment No. 2:
Page 1, line 17, at end insert ("and the court shall not in proceedings commenced after the commencement of this Act pronounce against the validity of any such marriage (whether such marriage takes place before or after the commencement of this Act save by a decree of nullity.")
The noble Lord said: I beg to move Amendment No. 2 standing in my name on the Marshalled List. I think this is a totally uncontroversial Amendment. It is designed merely to ensure that what I conceive to be the purpose of an Amendment that was tabled and carried in another place achieves its purpose. It mainly relates to the matter that your Lordships have just been discussing; namely. paragraph (c) of Clause 1(1), which was the paragraph that was added in another place. So that
"a marriage is to be void if the parties are not respectively male and female".
The noble and learned Lord the Lord Chancellor defined "marriage" on Second Reading as a contract resulting in a status; and that is of course what it primarily means to lawyers, although it means so much else to every one of us. But it is not only to a lawyer a contract leading to a status —that is to say, the status of the parties as married people enjoying particular rights and having particular burdens in the law —because, although that is its primary legal effect, it can have secondary legal effects which can exist independently of the primary ones. The parties may not succeed owing to some defect in ensuring that the primary legal purpose of the marriage that they enjoy the status of married persons is brought about, and yet the secondary legal purposes and effects may be brought about. For example, their
934
children may be legitimate, and they may have rights and obligations of maintenance the one against the other even though they may not be in the eyes of the law married people.
It is to that situation that this Amendment is directed; because the consequence is that there are four ways in which a marriage can be attacked. It can be said to be non-existent, in which case there are no legal consequences at all. It can be said to be void, which is what this clause deals with, in which case it fails to establish the status of married person in the ostensible spouses; but it may still have secondary legal consequences, particularly rights of maintenance. It may be voidable, which is what the next clause deals with. Or it may be dissoluble, the subject of divorce, if something has happened after the marriage which renders it right in the eyes of the law for it to be terminated.
What we are really concerned with here is the case of the trans-sexual; that is a very sad and tragic circumstance which gives rise on occasions to legal consequences. That sort of union can be attacked in two ways. It can be said to be non-existent, in which case there are no rights of maintenance, or it can be said to be void, in which case, although the parties cannot be man and wife, there may be rights of maintenance. Your Lordships will agree that what is highly undesirable in those circumstances is that there should be manoeuvring at law to see who can get in first: the ostensible husband to have the marriage declared non-existent, as he can do under our laws of procedure, or the "wife" to have the marriage declared void, in which she can still have some rights of maintenance which sometimes it may be equitable should be exercised. It is to ensure that that sort of manoeuvring does not take place that I venture to move this Amendment. It forces the parties to have recourse to a decree of nullity only, and precludes them from having recourse to a declaration of non-existence.
That is the purpose of the Amendment. I am conscious that its drafting may be defective, so if I am told that it is all wrong I shall not be offended, so long as the noble and learned Lord goes on to add that he will accept the point in principle, and put the matter right himself before another stage.
THE LORD CHANCELLOR: I hope the noble and learned Lord on the Cross Benches will not press this Amendment too far. He is quite right in saying that it is much too widely drawn. To begin with, supposing I were to go about saying that I had married the noble Baroness, Lady Summerskill, by special licence in my room last Friday, and there had been some sort of ceremony, she might well wish to get a declaration from the court pronouncing against the validity of the ceremony.
BARONESS SUMMERSKILL: I might not!
THE LORD CHANCELLOR: This would be prevented by my noble and learned friend's Amendment. Equally, if somebody left a legacy to a person described as my wife and then were to die, my real wife might easily complain and ask for a declaration that my alleged marriage to the claimant to the legacy was void. On the wording of this clause, it would be impossible for her to obtain such a declaration.
This matter can be dealt with perfectly easily without an insertion in the statute at all, by either a Practice Direction or a Rule of Court. I agree with my noble and learned friend that it is quite undesirable that those who have a right to nullity should try to go by the other route for a declaration. I think this has already been ruled by Mr. Justice Ormerod in a reported case. If it is not so I will seek to see that the Divorce Division either has a Rule to effect it, or has a Practice Direction to ensure it. In those circumstances I hope that my noble and learned friend will not press his Amendment.
LORD GARDINER: I agree with what the noble and learned Lord the Lord Chancellor has said. I agree with the noble and learned Lord, Lord Simon of Glaisdale, that we ought to stop procedural devices of the kind that he has suggested to get men out of their financial difficulties. But the clause could not possibly stand as it is because it would also apply to third parties. I hope that we shall, with the assistance of the noble and learned Lord the Lord Chancellor, be able to devise a form in which the object of the noble and learned Lord would be achieved, but
936
this could not possibly be applied to third parties. There are cases where after the husband and wife are dead a question arises about who is entitled to the estate. Somebody says that one of the relevant marriages was bigamous, and the court has to inquire into that and come to a decision and make a declaration. Such a court may not be a matrimonial court, and it would be lamentable if different forms of proceedings in nullity had to be started in the family division. I hope that the noble and learned Lord will accept the offer which the noble and learned Lord the Lord Chancellor has made to see whether the object he desires can be achieved in particular by Rules of Court.
LORD SIMON OF GLAISDALE: I am very ready to respond to the invitation that has been made. It is quite true that there is a decision at first instance which takes care of this matter. It would be unwise to leave it there. I doubt if it could be disposed of properly by a Practice Direction. It is undesirable that it should be disposed of by Rule. Therefore I would ask the noble and learned Lord to reconsider this matter before the next stage. I have had serious doubts about the drafting, which has been pointed out by the two noble and learned Lords, and I therefore beg to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause I agreed to.
Clause 2 [Grounds on which a marriage is voidable]:
7.27 p.m.
LORD SIMON OF GLAISDALE LORD SIMON OF GLAISDALE moved Amendment No. 3:
Page 2, line 1, leave out paragraph (b).
The noble and learned Lord said: This is an important matter raising matters of principle to which many people attach great importance. In addition, unless this Amendment is carried, what is universally regarded as a major anomaly in the law will be perpetuated. I ventured on Second Reading to draw attention to this matter in fairly general terms. I emphasised, so far as I could, the desirability of logic in the law. I noticed that on another Bill the noble and learned Lord who sits on the Woolsack used a wonderful phrase: "the

937
comprehensive rationality of the law". It is in an endeavour to achieve that that I put down this Amendment. I think he was using the word "comprehensive" not merely in the sense of all-embracing, but that the law should be comprehensible, lucid, understandable and capable of being expounded to students and those who are interested.
What one wants in aiming at law reform is, first, logical cohesion, because anomaly sooner or later leads to injustice. Secondly, lucidity. Thirdly, an absence of anomaly, because anomaly will bring the law into disrepute. What is proposed in the paragraph that I seek to leave out is a major anomaly. It is a matter that arises subsequent to the marriage and is declared to be a ground of nullity. In every other contract, in every other branch of the law, nothing can be a ground for nullity which does not arise at or before the time of the transaction in question. Here, however, we say that something which arises after a marriage shall be a ground for nullity. The absurdity is really more than that, because under the Divorce Reform Act 1939, Section 2(1)(v), wilful refusal to consummate a marriage is also a ground for divorce. And what could be more absurd than to say the same matter can be a ground for nullity and divorce?
If it were only my view against the views of the noble and learned Lord, Lord Gardiner, and the noble and learned Lord who sits on the Woolsack, I should not surrender my judgment to them —because this matter seems to me plain beyond any question —but I should at least defer my judgment to theirs. But this is not a matter which is of my own judgment. As I told your Lordships on Second Reading, this is a matter on which the whole of the Divorce Bench of 17 Judges was unanimous; a majority of the members of the Court of Appeal have sat as Judges of the Divorce Division, and they, too, were unanimous that the provision in the Bill was wrong and ought to be taken out. And my noble and learned friend Lord Hodson, who has unique judicial experience in these matters, was of the same view and indeed has been good enough to put his name to the Amendment. But it is not only lawyers. The Archbishop's Commission on the Church and Nullity
938
of a Marriage was unanimous on this matter; the Royal Commission on Marriage and Divorce, which was a body of very great distinction and thoroughly representative, was also unanimous on it, and so was the Committee that was presided over by the right reverend Prelate the Bishop of Exeter, who also is here this evening, and produced the Report Putting Asunder. That, it seems to me, is a most remarkable unanimity of view on a matter of this kind.
I dealt with some of the general matters on Second Reading. I did not. however, deal with the arguments of the Law Commission. I thought that perhaps I ought to do so at this stage. They are set out in paragraph 27. The noble and learned Lord, Lord Gardiner, read all the arguments out on Second Reading, and I know that your Lordships have extremely important business to transact, so I am not going through them except summarily. But so far as 27(a) is concerned. I would merely point out that it is contradicted by their own paragraph 24(c). So far as their paragraph (b) is concerned. they say that parties would think it strange that the nature of a relief should depend on the court's decision whether non-consummation was due to the respondent's inability or whether it was due to unwillingness. I can only say that I have had frequent experience of trying to explain to clients when nullity is in question or when in the alternative, as often happens, divorce is in question, because what looks at first sight like an incapacity may be an act of desertion; I have never had the slightest difficulty in having that understood and I have no reason at all to think that lay persons coming to the law have any difficulty in appreciating the distinction between nullity and divorce once it is explained to them.
As to (c), which is an obscure point of jurisdiction, I can only say that I asked the officials of the Divorce Registry whether they had known any such case as the Law Commission imagine there, and they said that they had never had any such experience of any such case within any living memory. Indeed, your Lordships in considering the reasons set out by the Law Commission may well be reminded of the famous philosopher Bradley and his definition of "metaphysics", of finding bad reasons

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for what we believe on instinct. The Law Commission are finding very bad reasons for what they want to do, which is to undermine the three-year rule. That is the rule that was introduced in 1937, which bars divorce within three years. I know that the noble and learned Lord, Lord Gardiner, does not like that very much. I imagine that the Law Commission does not like it very much. I do not like it very much myself, not because I believe that frequent and facile divorce promotes human happiness, but because I do not like humbug in the law.
But that is the fourth ground advanced by the Law Commission, and it is the one that the noble and learned Lord who sits on the Woolsack put forward with great force on Second Reading; namely, that it would be a hardship if the marriage had not been consummated by reason of wilful refusal to consummate, to refuse relief until three years had elapsed, whereas by pretending it is nullity and not divorce immediate relief is obtainable. The first point is that if, as the Law Commission says, it would be a substantial hardship, that is virtually the same as a ground on which the court can already allow a divorce within three years; namely, exceptional hardship. Secondly, the Royal Commission themselves, in recommending that wilful refusal to consummate should be a ground of divorce but no longer a ground for nullity, recommended that it should not be subject to the three-year ban. That could have been done in the Divorce Reform Act; or it can be done in a one-clause Act introduced in this or next Session. It is quite unnecessary to make a monkey of the law by pretending what is a matter of divorce is to be called "nullity" to meet that point.
There is, however, one matter that now arises that I think I should draw to your Lordships' attention, which was not and could not be before the Royal Commission, and that is this. One of the evils which we sometimes find is a spurious marriage in order to obtain British nationality. Nothing would be easier, if this Bill goes through in its present form, than for people to agree to marry and then one of them to refuse to consummate, and immediately relief is available. That is completely new, and it arises from later provisions of the Bill
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whereby a voidable marriage is valid until it is set aside, so it would be effective to give the wife nationality, and another provision whereby for the first time the collusive nullity —which would of course be by the sort of agreement that I have referred to —is available.
The Committee may well think that, quite apart from the logical rationality of the law, its comprehensive logic, its comprehensibleness it would be a great evil to open the door to the sort of agreements to which I have referred. I beg to move.
7.40 p.m.
THE LORD CHANCELLOR: It gives me real pain to differ from my noble and learned friend. We argued this point out on the Second Reading of the Bill and I am afraid I still remain completely of the same opinion. What I am concerned about is the immediate and serious in justice which would follow if this Amendment were carried. I must tell the Committee that there can be no possibility this Session of a new Bill bringing in some alteration of the three years rule for dissolution, and it could not be tacked to this Bill. Nor can I promise that there would be much chance of it next Session. Therefore, the result would be that a large number of people who ought to be rid of their marriages on the ground of wilful refusal to consummate would be deprived for three years of their remedy. What is much worse, if they had doubt as to whether wilful refusal to consummate was the real reason for non consummation or whether it was impotence —whether general impotence or impotentia quoad hunc or quoad hanc —they would in fact be in a double difficulty, because if they did not take advantage of that ground I have a feeling that they would be barred by the discretionary bar in Clause 2 from asserting one of their new grounds of complaint. I think these alone are reasons for supporting the Law Commission.
I am of course appalled by the enormous unanimity of the judges on the other side. I must, however, point out that the Royal Commission on Divorce in 1912 (the Gorell Commission) took exactly the same view as another place has now taken, that the law has been as it is now proposed for 37 years without, so far as I can see, any kind of tangible disadvantage to anybody at all.

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I repeat what I said on Second Reading, that serious damage is done if parties are not allowed to plead in the alternative wilful refusal to consummate or impotence, whether, as I have said, general impotence or impotentia quoad hunc or hanc.
I should like to draw this point to the attention of my noble and learned friend. I have had the figures collated. They appear in Appendix B of the Law Commission Report and they dispose of an argument that he put forward on Second Reading. The average number of petitions based on wilful refusal alone was 193; that is to say, cases in which impotence was not alleged, presumably because it was not believed to be the true reason. The number of decrees made on the ground of wilful refusal to consummate was 333. It follows that at least 140 of these decrees must have been made in proceedings where the grounds were presented in the alternative. I know of some judges (I think my noble and learned friend is one) who in these cases nearly always go on the ground of impotence and not on wilful refusal. But this is not universal practice, and not all judges take the same view. The ordinary practitioner and the ordinary client is put in an impossible position in having to opt in advance for which of two alternative proceedings he is going to take. In my view the amount of substantial injustice which is done by this is quite disproportionate to any theoretical advantage which may be gained by tidying up the law.
In conclusion. I must say that I am not persuaded, despite the great weight of ecclesiastical and judicial authority against me, of the anomaly. I think a lot of ordinary people, despite the Latin tag consensus non concubitus facit matrimonium would think that a marriage which was never consummated at all was not a true marriage if in fact one party from the first had withdrawn his consent to consummation. Also, I think that viewing matters from the point of view of reality and not the Bill, most people would think that if from the start —that is to say, from the day of the marriage—one party refused this essential element in what is normally regarded as part of the partnership, any person drawing a reasonable inference of fact would say that that was a state of mind which dated back to the time of the marriage and therefore
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it would be just one of those things which lie in the realm of nullity and not dissolution. I am quite of the opinion that there is no great anomaly, that the law has worked perfectly well for 37 years; it was based on the finding of the Gorell Commission, it has been supported by another place and to change it now would undoubtedly lead to hardship in the case of many unhappy couples. Despite the enormous weight of judicial authority which my noble and learned friends carry, and the great weight of judicial authority behind it, I hope the Committee will not accept this Amendment.
7.45 p.m.
LORD HODSON: I promise not to detain the Committee long but I feel I ought to add something to what has been said by my noble and learned friend Lord Simon of Glaisdale, for this reason: I think he has overstated my experience in this matter because it is a long time since I sat in the Division over which he has presided with such distinction for so long, and longer still since I practised at the Bar. But in my view there has been some very confused thinking about this question of lawful refusal. During the first War there were cases in which judges pronounced decrees on the grounds of wilful refusal to consummate the marriage, which were reversed on appeal. But medical science has advanced, and was advancing in those days, and by 1924 this House decided —and I rather suspect that the noble and learned Lord the Lord Chancellor, thinks that decision was wrong as well as a great many other decisions —that wilful refusal just does not happen.
I am thinking really of the case of the woman. I am not thinking of the case where there is something which can be diagnosed as vaginismus. There are cases over the years where judges have found that there is an involuntary reaction which is not wilful at all, and it seems to be thoroughly unfair to get rid of the difficulty which has existed in the past (but I do not think it exists now) by saying that it should be a ground of nullity. My noble and learned friend Lord Gardner, for whom I have the profoundest respect—we have been against one another at the Bar in that Division—made an entirely false point in his speech on Second Reading when he talked about the young woman who was in love with

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her husband and so disappointed that nothing happened when they went to bed together —as if that were a case of wilful refusal. Of course it is not wilful refusal at all. That is a way you prove impotence in a man. If a man is normally formed you cannot prove impotence except by showing that he does not act in the way he is expected to act.
The whole of this trouble has been caused by, I suppose, a reluctance on the part of those who are responsible for the legislation to introduce a new ground of divorce. At one time it was difficult to get through divorce legislation, and presumably they thought the legislation would get through more easily if they made the new ground one of nullity. But for my part I am not satisfied that the reason given by the Law Commission —which is simply that we have got on nicely for 37 years, so why worry —is good enough to prolong and make permanent that position. It is really unfair. I know it is unfashionable to talk about blame, and to apportion blame or praise in a divorce case; one does not do that any more. But there is a distinction between the divorce case and the nullity case. In a divorce case it is quite likely that one person is at fault; in a nullity case nobody is at fault. If a man is impotent he cannot help it, just as one cannot help being illegitimate.
To my mind, there is a real distinction between matters which arise after marriage and used to be called "offences" (I do not know what they are called now) and the actual fact of the marriage itself and whether it ever came into existence. For that reason, whatever the fate of this Amendment may be I felt it my duty to justify my own opinion, or to try to do so, because my noble and learned friend Lord Simon of Glaisdale referred to me on Second Reading, and was afterwards good enough to ask me to support the Amendment. I have not regretted doing so. notwithstanding the stern admonitions which have fallen from my noble and learned friend on the Woolsack to the effect that it is not any good.
7.50 p.m.
THE LORD BISHOP OF EXETER: Although I cannot claim with certainty that what I am about to say represents the unanimous opinion on these Benches, it is certainly the case that for many
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years now the Church has disliked the anomaly in our marriage law and has hoped that an opportunity would be taken to remove that anomaly; and we deeply regret that the Law Commission and the other place have not taken advantage of this present opportunity. It cannot for one moment be doubted that there always has been a clear distinction between what constitutes a ground of nullity and what constitutes a ground of divorce. There cannot be any doubt that wilful refusal to consummate a marriage is not and cannot be a ground of nullity but must be a ground for divorce. I could scarcely believe my ears when I heard the noble and learned Lord the Lord Chancellor attempting to argue that a wilful refusal to consummate, something which clearly only comes into effect after the marriage, was somehow present at the time when the marriage was contracted.
THE LORD CHANCELLOR: The right reverend Prelate is doing me an injustice. What happens in these cases —and I say this both to him and to the noble and learned Lord. Lord Hodson—is that you get a marriage in which a young man is perhaps persuaded to marry a girl who is pregnant by him and from the word "go" he never intends to sleep with her. That is not impotence; it is wilful refusal to consummate and it is a state of mind which exists from the very start.
THE LORD BISHOP OF EXETER: In that case, would not the noble and learned Lord agree that the grant of nullity is for defective intention and not refusal to consummate? Putting wilful refusal to consummate into the nullity grounds and not divorce grounds is done for the sake of convenience and the ease of petitioners. This one understands. Lawyers of great experience have said that petitioners find it very difficult sometimes to determine whether the non-consummation has been due to incapacity, general or particular, or whether to wilful refusal. It is very important that it should be possible to make the alternative plea, which of course is sound, but the cost of this is the perpetuation of an anomaly.
This anomaly and the inconvenience could both be avoided if the matter were attacked from another angle. I would

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suggest that our marriage law should continue to include incapacity among the grounds of nullity, but that to the three existing facts which are now in the Divorce Reform Act as prima facie evidence of the breakdown of a marriage there should be added a fourth; namely, failure to consummate the marriage. if that were done it would not be necessary for the petitioner to decide, or even the court to decide, what was the reason of the failure to consummate, whether it was incapacity or wilful refusal. What would matter would be the mere fact of non-consummation. That is fairly easily provable and the court could well take the view that the failure to consummate created an intolerable situation which must be taken into account and would mount up to sufficient evidence of the irretrievable breakdown of marriage.
If something like that were done, then our English law would be brought into line once again with the ancient canon law of Western Christendom and the existing law of the Roman Catholic church on this point, that a marriage which is valid but has not been consummated cannot be annulled but may, for proper reasons, be dissolved; that the bond of such a marriage is capable of dissolution by the mere fact that the marriage has not been consummated. Therefore I should like to support this Amendment and I hope that the two noble and learned Lords will take another look at it to see whether something cannot be done to remove an anomaly which is nonsense and at the same time to provide maximum relief to the parties to these unfortunate marriages.
LORD GARDINER: I am afraid I cannot advise the Committee to accept this Amendment. The first and main point, I think, is the degree to which incapacity and wilful refusal have always gone together, for the simple reason that in so many cases it is quite impossible for anybody to say which it is; and it is about the last thing which a girl, after marrying a man she has fallen in love with and finds he never consummates the marriage, will know. It had been argued that there are cases where there is physical incapacity, but in these cases of what are said to be uncontrollable aversion, who knows whether it, is uncontrollable or not. This, no
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doubt, explains the fact —and it is this kind of nullity which is much more common than any other, as the Law Commissioner's figures show. These are not for some old state of affairs —this is the average for the years 1964 to 1969. Many people of course petition on both grounds. The judges found incapacity in 349 cases, and wilful refusal —which is said virtually by some not to exist —in 333. Some judges, not knowing really what the truth is, tend to make a decree on the ground of wilful refusal,and some on the ground of incapacity. This shows how much the two things are wrapped together.
Before the Gorell Commission wilful refusal was not a ground either of nullity or of divorce. On the Gorell Commission there was the former President of the Probate Divorce and Admiralty Division as Chairman, the Archbishop of York, the Earl of Derby, Sir William Anderson, Sir Lewis Dibdin, Judge of the Arches Court of Canterbury —this Commission was not without ecclesiastical authority —and a young barrister, Rufus Isaacs. They dealt with it by saying that at that date what the judges in fact did, in finding it impossible to disentangle the two, was to treat wilful refusal as evidence of incapacity. This shows how much the two are mixed up together. They thought it would be better to deal with the thing openly as a separate ground of nullity rather than it should be covered up in that way.
It is true that the Morton Royal Commission tok a different view, but it was a very small part of their inquiry. I can only find in the index one witness who dealt with the subject at all, and that reads:
"In Section 8(1)(a) of the Matrimonial Causes Act, 1950, a marriage is voidable on the ground that it has not been consummated by reason of the respondent's wilful refusal to consummate it. There is no corresponding provision in Scots law. We recommend that such wilful refusal should be a major ground of divorce, and not of nullity, in both England and Scotland. We consider that the presentation of a petition on this ground should be made art exception to the restriction, in England, on the presentation of petitions for divorce n the first three years of marriage.
Refusal to consummate the marriage may be evidence of impotence in the psychological sense, as, for instance, some invincible aversion or repugnance which make consummation impracticable. Such incapacity presumed to

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exist at the time of the marriage is a non-statutory ground for nullity in both England and Scotland. Wilful refusal, on the other hand, connotes capacity to consummate the marriage but unwillingness to do so. To make this a statutory ground of nullity suggests some confusion of thought. Nullity should be granted for some defect or incapacity existing at the date of the marriage. Wilful refusal is something that happens after the marriage and should therefore be a ground of divorce."
Everybody can understand the only thing that there is to be said for this Amendment; it is that it would be more logical, as wilful refusal normally takes place after the marriage, to make it divorce rather than nullity. We can all understand that. The law was changed on the recommendation of the Gorell Commission and in the 35-odd years which have passed since then nobody has produced one single case in which dealing with the law in this way has produced any injustice of any kind to anybody at all.
The reasons given by the Royal Commission were, first, this inter-relation of the two:
"Wilful refusal to consummate is in most cases the alternative allegation to impotence as it is often uncertain whether the respondent's failure to consummate is due to one cause or the other. The petitioner may not know whether the respondent refuses to consummate because he is unable to have sexual intercourse or because though able to have sexual intercourse he does not want to have it. In such cases the court must draw an inference from evidence before it and it seems unreal that the relief granted to the petitioner for nullity or divorce should depend in any given case on the court's view as to which of the two reasons prevented the consummation of the marriage."
Then they point out that
"Failure to consummate, whether it be because the respondent is unable or because he is unwilling to have sexual intercourse, deprives the marriage of what is normally regarded as one of its essential purposes."
They go on to say that they think
"The parties would think it odd if the form of relief was entirely different."
Then they point out that
"The jurisdiction in nullity and divorce is not always the same. Therefore, if wilful refusal to consummate were to become a ground for divorce while impotence remained a ground for nullity a petitioner might find himself unable to allege the true grounds of the alternative although he himself might not know which of these was the effective cause preventing consummation of his marriage."
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And of course the last reason, the one which influenced the other place most, was that one cannot alter the three-year period in this Bill; that this would mean that the girl, in what I always think is a very unfortunate position which really ought to be resolved as soon as possible —and it has always been possible to resolve it at once —would have to wait three years, and nothing in this Bill can be done to alter that.
LORD SIMON OF GLAISDALE: May I ask the noble and learned Lord why he says that it cannot be altered in this Bill? He has already a later clause dealing with divorce in this Bill.
LORD GARDINER: I am advised. and I understand the noble and learned Lord the Lord Chancellor was advised, that the three-year period could not be abolished for this in this Bill. This is a Bill dealing with nullity and not a Bill dealing with divorce. Further, it must be argued that this question whether the Bill ought to be altered in this way has already been considered and rejected by the other place. Of course, it is possible to make an application for leave to present the petition within three years. on the ground that the case is one of exceptional depravity or hardship; but this is no form of depravity, and I apprehend that exceptional hardship means hardship exceptional to the particular case. It would not be possible for the judge to say in every case of wilful refusal, "I am going to find there is exceptional hardship". For those reasons, and very largely for similar reasons put forward by the Solicitor General in the other place, namely, that there is nothing to be said for this at all except the mere logical argument that it happens after the marriage and therefore it ought to be divorce rather than nullity, because the existing law creates no hardship for anyone at all, and because the Royal Commission, the second Royal Commission, the Morton one —in whose view, if I may respectfully say so, no argument by the Archbishop of Canterbury's Committee really dealt with any of the four reasons given by the Law Commission —I respectfully support what the noble and learned Lord, the Lord Chancellor, said in resisting this Amendment, which I hope the noble and learned Lord, Lord Simon of

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Glaisdale, may not think it necessary to press to a Division.
LORD SIMON OF GLAISDALE: I am a novice in the service of your Lordships' House and I believe your Lordships have nothing so brutal as a guillotine. Nevertheless, I understand that this debate now comes to an end. I am entirely in your Lordships' hands whether I should reply to this debate now or on Friday, and I should be grateful for instruction and direction in that matter.
THE LORD CHANCELLOR: It is, of course, a matter for the noble and learned Lord, but if he were going to reply at length I do not think he could effectively do it now, because of the agreement made through the usual channels. We do not know what is going to happen on Friday. We already have deferred business for it. There is a real danger, I think, that this Bill might be lost. I would try, of course, to force time for it as well as I could, but if the Bill were amended at all it would have to go back to another place, which is in worse condition than we. I hope the noble and learned Lord will make up his mind —recognising that we have not persuaded him to alter it —whether to press this Amendment to a Division because I would ask the Committee to come to a conclusion now.
LORD SIMON OF GLAISDALE: I do not feel that this is treating me entirely fairly. In effect it is depriving me of replying to a debate in which, I hope I shall not be thought impertinent in saying, the arguments produced against the Amendment have not answered the arguments put forward by those who spoke in favour of it. I certainly should not be justified now in infringing the agreement as to time. I would merely say that the points that have been put forward have not been answered, particularly the point about the spurious marriage, the point about the power of the court to give leave to divorce within three years and indeed the possibility of dealing with that in this very Bill, since it does, in fact, in Clause 6(2) deal with divorce as well as nullity. But although I do feel some resentment I should not be justified in keeping your Lordships longer, and I therefore beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: I think the point has been arrived at at which I am compelled to ask that the House do now resume. I do 'so with regret and apologies to my noble and learned friend.
House resumed.

INDUSTRIAL RELATIONS BILL
8.8 p.m.
House again in Committee.
LORD DRUMALBYN: May I suggest it might be for the convenience of your Lordships' House if we take Amendment No. 106A at the same time. It seems to cover very much the same points.
BARONESS WHITE BARONESS WHITE moved Amendment No. 106:
Page 13, line 20, leave out ("an employers' association") and insert ("one or more employers' associations whether registered or not").
The noble Baroness said: The noble Lord look the words out of my mouth. I was about to propose precisely the same thing because, although the Amendment which I am now moving differs slightly in its wording from that to which my noble friend Lord Archibald has put his name, the object of both these Amendments is, I think, the same. We are disposed to think that the wording chosen in our Amendment is perhaps a little fuller, and possibly a little clearer, but we would not quarrel about the language of either of these two Amendments, and if the Government were disposed to accept the one rather than the other I do not think we would raise any serious objection. What we are concerned about, of course, is the substance of the matter.
I need hardly remind your Lordships that what we are particularly dealing with in Clause 16, with the special provision for approval of closed shop agreements, concerns most especially the employees and employers in theatrical and cinematograph industries, and also, as my noble friend Lord Blyton said earlier to-day in a slightly different context, the seafaring union and employers. The object to this Amendment, in brief, is really to preserve arrangements which have been working to the general satisfaction, to the very great improvement both of acting standards and of levels

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of employment in the theatrical industry; we do not want by legislation to disrupt those admirable arrangements, or to make it more difficult for the objects of this clause to be achieved.
This clause, if I might remind your Lordships, was inserted after discussions in another place when it was generally agreed, including Her Majesty's Government, that the provisions relating to the agency shop in Clause 10, which we discussed earlier, were not adequate, in particular for the two areas of employment which I have mentioned. There may be others, but the ones with which we are best acquainted and best informed in all parts of your Lordships' House are the ones that I have mentioned. We are told —and my noble friend Lord Archibald, and I trust the noble Baroness, Lady Lee, will also intervene, and maybe other noble Lords —that it is quite possible that in the theatrical profession there will be, or can be, difficulties about the registration of employers in the sense in which it is meant to be engaged in this Bill.
When we were discussing the other side of the coin, about the independent organisation of workers, on which we had quite considerable discussion earlier this afternoon, one could at least understand, even if one did not agree with, the Government's point of view on the philosophical objects of this legislation; that they could argue from their own point of view with some cogency that if a union did not register it was not complying with their idea of the way in which a union ought to behave, and that therefore it could not be brought within the purview of this Bill. Our opinion on that has been very clearly put from this side of the Committee. I do not think anyone is in any doubt about where we stand.
But where employers' associations are concerned it would appear to me that the Government really have no such strong ideological or dogmatic reason for insisting that they also should be formally registered. The burden of our Amendment, and of the Amendment in the name of Lord Archibald which we are discussing together, is that there should not be any rigidity about this. Needless to say, if the employers' association wishes to register there will be nothing
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to stop them. What we are concerned about is that if, for reasons of their own, they decide it will not be advantageous for them to register they shall not be forced to do so. In our earlier discussion, when we were discussing the other side of the coin about independent organisations of workers, I thought I heard a noble Lord say he did not wish to ram things down other people's throats, and he went on to say the unions would not get various privileges or rights conferred in other parts of this Bill. But is there any real reason why in these circumstances registration should be rammed down the throats of employers' associations?
I cannot speak with the knowledge of some of my noble friends. I can only say that we are told there are circumstances in which it is apprehended that employers' associations in the theatrical industry will not wish to register; for example, the smaller managements in the provincial theatres who have their own organisations run, as I understand, by honorary officers who are engaged in running their own businesses, their own theatres and so on. They would really find it very difficult and extremely expensive, quite frankly, to conform with all the conditions of registration and the possible consequences of registration; because, if you are a registered association, then under this Bill persons in your employ, for example, can lodge complaints which have to be investigated, and so on and so forth. Records may have to be kept in a way which a relatively informal organisation does not feel obliged to keep them. There may be all kinds of circumstances which a large organisation, a wealthy organisation with full-time staff and a proper office and so forth, might be able to take perfectly in its stride, but we all know that theatres are apt to describe themselves as on the edge of economic viability, and that they really may not feel able to embark on a course which they think may lead them into expenditure which at present they do not have to incur.
We are extremely anxious that the main purpose of this Clause 16 should be fully carried out, because we were entirely persuaded, as ultimately the Government themselves were, that the closed shop —as opposed to an agency shop —was essential for preserving proper

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conditions and, frankly, averting chaos in the theatrical and cinematograph industries. Therefore we wish to do nothing at all that would endanger the success of the objects of this clause, but what we are asking is that the Government should not be rigid or dogmatic in this, and that while they think that something is sauce for the trade unions they should insist it should also be sauce for these employers' organisations. I hope very much that my noble friends and the noble Lords possibly on the other side of the Committee would be able to support us in this. I beg to move.
8.20 p.m.
LORD ARCHIBALD: As usual I shall be brief and, as usual in these recent weeks, I am in somewhat of a dilemma. I am not sure, not being a lawyer, whether the phrase used in Amendment No. 106:
"one or more employers' associations whether registered or not",
or the words used in my amendment:
"or organisation of employers"
is the more effective. I incline naturally to favour my own words, provided that it is understood that that also implies "whether registered or not".
The purpose of both of these Amendments is to allow an approved closed shop agreement between a union, or unions, and an association of employers, even if the latter is not registered under the Act. In other words, the trade unions should not be put in the position where they suffer from the fact that the employers' associations have decided not to register. In the entertainment industry it is entirely likely that some of the major employers' organisations will not register. The disadvantages of registration for some of these organisations, I am advised, are considerable and obvious. My noble friend Lady White has referred to the situation which prevails with regard to the managements in the provincial theatre field where they operate with honorary staff and with, in effect, no overhead expenses. If they are to register and to set up all the machinery to be able to deal with the problems which might face them, some of these organisations might even have to go out of existence. They would be nervous of being exposed to the expenditure of time and money which could be forced on them
954
even by quite unreasonable complaints against them made to the Registrar and to the Court under Clause 79 and the following clauses of the Bill. These are some of the disadvantages that the small and, as one might say, honorary employers' associations might suffer.
As against these disadvantages there does not appear to be any tangible advantage offered by the Bill to an association of employers if it should decide to register. In other words, where you have provincial managers operating on a honorary basis, without premises, without overheads, what advantage is there for them, under the Bill, to register and be put at least at risk of having a great deal of expense to meet? That particular type of employers' association is in quite a different position from any of the trade unions, or at any rate from any of the major trade unions. In respect of that, it is unreasonable that it should become impossible to make an approved closed shop agreement (even with an established employers' organisation which would be willing and indeed perhaps anxious to have such an agreement), for the quite extraneous reason, which is not contemplated under the Bill, that the employers' association is not so constituted as to be able to afford to register under the Bill. There could well be circumstances in which the making of approved closed shop agreements in the entertainment in dustry would be virtually impossible, as they would have to be made by the union with each separate employer.
I think it is now well known —to some extent I covered this ground, perhaps in an irrelevant way, on an earlier Amendment —that both in the theatrical and in the film industries many of the employers are ad hoc companies, set up for the particular theatrical or film production, and have only an ephemeral existence. It is quite impossible, within the terms of the Bill, for the union to make an agreement with every such ephemeral ad hoc employer. These ad hoc ephemeral employers represent a very considerable part of the employment offered in both the cinematograph and theatrical industries.
LORD DRUMALBYN: May I ask the noble Lord for information? Are these ad hoc employers members of an employers' association?
LORD ARCHIBALD: I am sorry; I thought I had, in an entirely irrelevant speech on an earlier occasion, pointed out that there may be the A.B.Q. Company, which is a member of the Film Producers' Association or a member of one of the theatrical associations, but on its next film, or in its next theatrical production, it sets up the A.B.Y. Company. That new company, set up, I imagine, mainly for tax reasons, is not, in itself, a member of the employers' association. In the film industry the situation is covered to some extent by the fact that the major studios are members of the Film Producers' Association, and they insist with any tenant, any production company hiring the studio, that the contract includes that the producer shall observe all the conditions agreed between the unions and the producers' association. But there are small studios outside the membership of the Film Producers' Association, and if the producer wants to do a film, say, mainly on location, with only a little studio time, the processing business could go to one of these small studios outside the Film Producers' Association and thereby escape the obligation to honour any of the agreements between the Film Producers' Association and not only Actors' Equity but A.C.T.T. and all the other unions involved.
There is a real problem here which I am sure the noble Lord, Lord Drumalbyn, who is always so reasonable, will realise needs to be looked at again. We do not want to be dogmatic in our approach to this matter. There is a reasonable ground here for looking at a problem which will exist if the Bill goes through in its present form. It has not been a problem in the past because what, on an earlier occasion, I called not the pre-entry or the post-entry but the point of entry closed shop, really took care of the situation. I do not think that in this situation agency shop provisions are entirely suitable. There has to be some type of approved closed shop, pre-entry closed shop, post-entry, point of entry closed shop, and it has to apply between unions and employers' organisations, whether the employers' organisations are registered or not. The important point is that the unions should not be put at a disadvantage because the employers' organisation, either for reasons of finance
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or for other reasons which it would not be appropriate for me to discuss, decides not to register. I beg to move.
LORD BERNSTEIN: I should like to support the Amendment. But before I try my powers of persuasion on the Minister, may I ask whether he is going to accept this reasonable Amendment? It might save a lot of time if he said, "Yes, of course, subject to a change of wording."
8.30 p.m.
LORD DRUMALBYN: I am afraid that I am not in a position to accept the Amendment. What I propose to tell noble Lords is that for reasons I shall give we shall certainly consider it very sympathetically between now and the next stage. If noble Lords do not wish to speak more on this subject, no one will be more delighted than I am, because that will save time and they can probably make their representations in other ways. But I do not want to interfere in any way with the debate, and if noble Lords who have such great experience of this matter wish to put their points, then I shall be very glad to listen to them.
LORD HENLEY: Does the noble Lord mean that he prefers to discuss this issue when we come to Schedule 1, Part V, because it arises there as well?
LORD DRUMALBYN: If the noble Lord is asking whether I shall then be able to make up my mind and tell the Committee, I am afraid that I shall not be in a position to give a decision at that time. But I really do not think it is necessary to pursue this issue further now, because we shall come back to it on Schedule 1, Part V. Would the noble Lord, Lord Bernstein, like me to say a word?
LORD BERNSTEIN: This is an important matter for a very good union which has functioned very well for many years. As my noble friend Lord Archibald said, it is a point of entry closed shop. Will the noble Lord be willing to meet Equity representatives before the next stage? They would have something to say to him, and it might save a great deal of time if he understood a point which is not covered in Clause 16.
LORD DRUMALBYN: It might be better if I said what I have to say at

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this stage, and noble Lords will then be able to add what they like. As the noble Baroness, Lady White, recognised, it is a fundamental part of the philosophy of the Bill, and of the Government's industrial relations policy, to encourage organisations of workers and of employers alike who are involved in collective bargaining, to accept the obligations of registration. If organisations are to enjoy the very considerable benefits of registration which the Bill provides, then in the Government's view they should accept the responsibility to their members and to the community and accept the very reasonable requirements of registration. These requirements are not, by any stretch of the imagination, onerous, but they will ensure that the rules of trade unions and of employers' associations conform to reasonable standards.
I realise that, even although it may be agreed that the registration of employers' associations is desirable, the argument here is a very much narrower one; not whether the registration of employers' associations is desirable, but whether in the context of Clause 16 and Schedule 1 an organisation of employers should be required to be registered before it can be eligible to make an application for approval of a closed shop agreement. The argument is that a requirement on the employers' organisation to register before it can be a party to a joint application for approval of a closed shop, is a handicap for the trade union and not for the employer because the benefit of a closed shop would he much greater for the union, and the incentive for the employers' organisation to register will not be great in the absence of other reasons for wanting the advantages of registration.
LORD ARCHIBALD: I am sorry to interrupt, but in the case we are discussing the situation which has been operating for many years has been just as much to the advantage of the employers as of the employees.
LORD DRUMALBYN: I recognise that there are advantages on both sides; but the point I am making is that there is in the Bill more incentive for workers' organisations to register than there is for employers' organisations to register.
LORD HENLEY: I am not sure that the noble Lord is not missing the whole
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point. It has nothing to do with whether one side should or should not register. The point is that when everybody agrees that an approved closed shop is right there are circumstances when a "fly-by-night ' employer can escape the whole of the provisions of the Bill.
LORD BERNSTEIN: Is it possible that I made a very bad mistake, and I should have outlined the case?
SEVERAL NOBLE LORDS: No.
LORD DRUMALBYN: I thought that the case had been very clearly outlined by the noble Baroness, Lady White, and the noble Lord, Lord Archibald. I am quite certain that the noble Lord, Lord Bernstein, will have something valuable to add, but perhaps I may be allowed to continue for the moment. It was part of the case made to the Secretary of State by those who sought special exemption of closed shop agreements in certain industries, that the closed shop agreements in those industries were as important to the employer as to the workers, and that those employers were as anxious to have their closed shop agreements continue in force as were the trade unions. Noble Lords opposite really cannot have it both ways.
Clause 16 and Schedule 1 have been based upon the assumption that employers in those industries were anxious and willing to continue their present arrangements. If that is so, they will be as anxious to join in an application for approval as are the unions, and the incentive to register will be as great. But I recognise the handicaps and the special eases which the noble Lord, Lord Archibald, has pointed out. The main argument that is now being advanced is that a joint application can be thwarted if the employers' organisation finds no attraction in registering or, for one reason or another, is unable to register. In other words, we are being told that there may be organisations of employers which would willingly join with trade unions in applying for approval of their closed shop agreement, but not if, as a requirement for doing so, they must accept the very reasonable responsibilities of registration.
I would remind the Committee that, under the provisions for approval of a closed shop, an employers' association must be a willing party to the joint

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application. If, therefore, these Amendments were made to permit an unregistered organisation of employers to make a joint application with the union, it would still be a matter for the employers' organisation to decide whether or not to join in the application. The organisation would still be free to choose not to be a party to the application, or indeed to a draft agreement. No doubt we shall be debating that proposition later on. However, in this one aspect of registration there may be some disparity between the position of the union seeking approval for a closed shop, and the position of an employers' organisation which is willing to join in the application in its own interests, but would find the requirements of registration, of which it would otherwise have no need, a disincentive to participate in the application.
We are fully prepared to look at the matter again to see what we can do to help. But I am afraid that, at the present time, we are not prepared to accept these Amendments because of the implications that they have for the registration features of the Bill, which are so important to our philosophy. But we shall sympathetically consider whether a concession might be made on this point at a later stage. Perhaps I may add this. Some play was made with the fact that non-registered employers' organisations might be open to complaint and might have to incur considerable expenditure for that reason. I think I should make it plain that non registered employers' organisations are just as much open to complaint so far as industrial tribunals are concerned, even although they would not be under the jurisdiction of the Registrar in the way that registered employers' associations are.
The noble Lord, Lord Archibald, made clear the difficulties of what he calls the ephemeral organisations and also of the provincial organisations which work with volunteer staff alone. I can assure him that we shall be looking carefully at this matter to see whether we can help in an appropriate way. There is one other thing that I ought to say on the first Amendment. It is that there is nothing in the provision to prevent more than one employers' association applying jointly with a union for approval of a closed shop agreement. There is nothing in the Bill to prevent that, and so to
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that extent the Amendment is net necessary. It is the second half of that sentence which joins together with the noble Lord's Amendments, and I do not intend to adjudicate between the merits of the words of those two at the present time.
8.40 p.m.
BARONESS LEE OF ASHERIDGE: What we are all seeking to do is to ensure that the spirit of the law is reflected in the letter of the law. It was for very serious reasons that in another place the principle of the closed shop was accepted to meet the exceptional circumstances of the theatre and the film world. It was agreed that they were not to be compared with industries such as mining, engineering or transport, where membership went on continuously and where long-term agreements could be made. Anyone who knows the talent, dedication and sacrifices involved in bringing the theatres of this country to their present eminence realises that again and again you have, as Lord Archibald said, a distinguished group of people who may be together for a matter only of weeks. This is true of London and all over the country as well. Very often it is future talent that is foreshadowed in those very modest enterprises.
We are obviously concerned about bogus organisations, but it seems to me that the intention of the Government in another place was to ensure that the theatre and cinema people, many of whom are more often out of a job than in one should be protected. The figures are really appalling. I am quite sure that Lord Bernstein. with his great knowledge, could bring me up to date. The most recent figures that I have are taken from a 1966 survey which shows the average employment for men as 17 weeks and for women 14 weeks in a year. It reveals that the earnings of an actor in that year were £800 a year and of an actress £450. We can make all the necessary adjustments to bring us up to date and also take into account that Equity has won a basic salary of £18. Actors earn less than industrial workers, and the sacrifices made to maintain our theatres still remains heroic. The point I am making is that you cannot compare the theatre or cinema world with any other industrial organisation.
I venture to say that it is not only difficult for all employers to register;

961
it is impossible. It is impossible because of the improvised nature of much of the work, because of the short time of the work, and no little of the impossibility arises because you must have a kind of divine madness before you enter into such a profession, where you know you are going to be unemployed most of the time. I hope we will not have to quibble over this Amendment. I do not mind what the wording is, provided that we here can accept in that it is not just difficult; it is impossible, even with the best will in the world to have all employers registered. I was impressed by what the Minister said. Like us, he is concerned that the letter of the law should reflect the spirit and intention of the law. That is all we are seeking to achieve.
THE EARL OF BALFOUR: There are one or two points that I am not certain about. I feel that the two most important things in Clause 60 are that it shall he a closed shop so far as the union are concerned, and wherever the employers are in a group they shall be registered. I think that the important thing in the registration of an organisation of employers is that they have the right to alter their own rules (which is referred to in Clause 69 and in the next few clauses). There are problems in allowing any employer or employers' association to be not registered.
The shipping industry has been mentioned. You can have a good shipowner, one keeps his ships in good condition and in good order, and you can have a shipowner who has just one ship. I do not see why the Seamen's Union, for example, could not have a closed shop agreement covering that one-ship owner as well as many others, whether under a company contract or under a shipping federation contract. But to me the problem lies in the case of an employer who, not being in some kind of association, might skimp on the safety regulations. Can we make certain that the lifeboats float in the water? I have been in ships where, when you put the lifeboats in the water they sank. As another example, you have the big organisation of the coalmining industry, and yet you occasionally have little private mines set up who may pay 25 per cent. more than the National Coal Board. This often creates unrest with
962
the unions. I feel that it is important to have the coal owners registered no matter who they are. Let us take one of the biggest groups of private individuals in this country, the farmers. Most of them do not come within the Bill for they do not employ enough people. Most farmers are in the Farmers' Union, and many farmers employ 10, 15 or 20 people.
Let me raise another problem on the question of association. I am wondering whether Lord Drumalbyn can help me. The firebrick industry centres round Falkirk in Scotland. There are about seven companies, most of them in an association. They have pretty well fixed-price contracts for their selling policy of bricks. It depends on the quality of the bricks, on the quantity and on various other things. There is a complete ring. Then there are one or two individual companies, also in the Falkirk area, which, although they may pay exactly the same wages, are outside that organisation. They refuse to have anything to do with the Firebrick Association. They are individual companies, usually selling their products rather cheaper. On the other hand, they cannot afford to have the number of salesmen that the bigger companies have. They rely, probably, upon a smaller circulation of business. If they entered into an association, would they be tied on their selling price? Would this sort of thing come in? These are the things I am not quite certain about.
8.50 p.m.
LORD DRUMALBYN: I think I almost saw the noble Lord, Lord Brown, about to give my noble friend the answer. I think he is really leaving the realm of industrial relations for (dare I say it?) restrictive practices of other kinds. I do not think I ought to venture further into this; bat perhaps I can say this one word to the Committee. It would, I am sure everyone would agree, be illogical if, having taken special steps in another place to provide for approved closed shop agreements, it were then not to be possible to make them. I think one has to make certain that it is possible at any rate to make the applications. But I think I ought equally to warn the Committee that, of course, in the long run this is bound to depend on the decisions made by the Commission in relation to what we put in the Bill. We put the gateways

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in the Bill and then it is the Commission which has to decide. I am saying this only to make clear that the mere fact that we make alterations here and there ought not to make it too easy —this is the Government's view —to form closed shop agreements, because we think that for the broad range of cases the agency shop agreement should meet the case. But having said that, I repeat that we shall gladly look very sympathetically at the case which has been made with a view to helping it as far as we can.
BARONESS WHITE: I think in the light of the very sympathetic response from the Minister we would not wish to press this Amendment, and I hope I have the agreement of the noble Lord, Lord Archibald, in that sense, as we are discussing his Amendment with our own. I do not want to enter into argument with the noble Earl, Lord Balfour, but I think he would find that some of the industries that he was referring to would have a good deal of difficulty in getting accepted under the Schedule as industries for which closed shop provisions would be suitable. We of course entirely understand the attitude of the Minister, that he cannot completely commit himself at this stage as to how the Government will meet this difficulty, but we are at least at one, I think, that, having had this clause inserted into the Bill, we all want to make it work. That, I think, is the nub of the argument. In those circumstances, while of course entirely reserving our position on Report, I beg leave to withdraw the Amendment.
Amendment, by leave withdrawn.
LORD ARCHIBALD LORD ARCHIBALD had given Notice to move Amendment No. 106A:
Page 13, line 21, after ("association") insert ("or organisation of employers").
The noble Lord said: The noble Lord, Lord Drumalbyn, is always so reasonable and sympathetic that I had hoped that on this occasion he might be even a little more sympathetic than he was, but I accept his good will in this matter and, in consideration of that, I do not intend to move my Amendment.
8.56 p.m.
LORD BELSTEAD LORD BELSTEAD moved Amendment No. 107:
Page 13, line 26, leave out from beginning to ("and") in line 28, and insert ("if he is
964
not already a member of that trade union or of one of those trade unions, as the case may be, must become such a member unless specially exempted").
The noble Lord said: This Amendment is intended to improve the drafting of this subsection, to clarify the provisions and to avoid misinterpretation, and to that extent it is a drafting Amendment. It has been suggested that it is possible to construe this subsection as meaning that, under an approved closed shop agreement, the terms and conditions of employment may include a condition that a worker must already be a member of a trade union; in other words, that the terms of the approved closed shop agreement would be that the terms and conditions of employment of the workers concerned should include a condition that every such worker must be or become, as the case may be, a member of that trade union. This Amendment removes this possible ambiguity and clarifies the meaning of the clause, which is that the condition of employment shall be that if a worker is not already a member of the union he must become such a member unless specially exempted; and the phrase "as the case may be", which might have occasioned the misconstruction, is, I hope, by this Amendment, clearly shown to refer to the words
"that trade union or of one of those trade unions".
There are just two brief points which perhaps I ought to add. There really was never any intention that the provisions of the clause should permit the approval of pre-entry closed shop agreements which require a worker to be a member of a particular trade union as a prerequisite for engagement. Such agreements are made void by the provisions of Clause 6, for the reasons which the Committee has already discussed. Of course, as I have said before, trade unions and employers will not be prevented by the provisions of the Bill from making agreements to regulate entry based on such relevant matters as skill, experience, qualifications or other valid criteria. The Government do not consider that trade union membership is a proper or reasonable ground of selection for employment, though it is important that trade union membership should be encouraged, as indeed it is encouraged

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under Clause 5 of the Bill, once employment has been taken up. I beg to move.
LORD DIAMOND LORD DIAMOND moved Amendment No. 107A as an Amendment to the Amendment.
Line 3 after ('union') insert C or independent organisation of workers').
The noble Lord said: The explanation of this Amendment, which I have moved as a manuscript Amendment, is that the Amendment which the noble Lord has just moved would make it impossible for Amendments Nos. 108 and 109 on the Marshalled List to be moved and, therefore, in order.to enable the principle of these Amendments to be kept alive, they have been altered to Amendments to Amendment No. 107, and I now beg to move the first of them. We have heard with interest what the noble Lord has said about his Amendment No. 107, and the clarification of the Bill which this seeks. I comment on it only to this extent, that this is an area where, as a result of the arguments made to them, the Government have moved very considerably from the Bill as originally introduced into another place, and we are delighted to see this element of flexibility and 'the willingness of the Government to meet, up to a point, the facts of the situation as they discover them to be after a Bill is introduced.
This is not an unprecedented happening. It is not wholly unprecedented for a Government to put forward proposals, whether in a White Paper or in a Bill, and, in the light of the facts as established during the course of debate, to move their point of view somewhat. Indeed, if my recollection serves me correctly there was a certain movement of opinion between the White Paper which was published by the Labour Party on this and the Bill which was put before Parliament but which never got beyond its First Reading. Therefore, the Government are in very good company in taking the point of view that, having put forward in the first place proposals which excluded anything in relation to closed shop agreements, and having subsequently listened to the arguments moved with considerable force and persuasion by employers of all Parties and no Parity, and trade unions, some affiliated to the Labour Party and some not, it was right to move to what I might call a considerable extent —perhaps not to the full extent —which Clause 16 represents.
What I am most anxious to do is not to say one word which might prevent the Government's continuing on this progressive course. I am all in favour of progress. Progress is quite simply defined: it is what I think is the right direction in which other people should go! I am most anxious that the Government should continue on what we on this side would call a progressive course. They have not yet gone quite far enough, but an attitude of flexibility will no doubt enable them to absorb all the facts of the situation which have been made so clear during the course of the debate, and to move a little bit further.
The essential point of this small but helpful Amendment is to prevent closed shop agreements not being available in all the circumstances in which employers and unions would wish them to be available. At the moment, approved closed shop agreements will be available under this Bill where the trade union, as defined in the Bill, has entered into arrangements with employers —and the trade union as defined in the Bill is of course a trade union which has registered. We should be making life unecessarily difficult for ourselves if we tried at this point of time to consider all the advantages and disadvantages of registration. They are many: they are covered in the Bill. They cover a number of clauses and two Schedules and all I perhaps need say to your Lordships at the present time is that it is a matter for consideration whether a union should seek to become a trade union within the definition of the Bill, by registering, or whether it should not.
What we are considering is the improvement of industrial relations. We are not under any compulsion to consider any particular framework which has been suggested as being the best means of achieving that. The question we really must ask ourselves is: "Which is the best method of improving industrial relations?" It has been accepted by the Government and it was previously the view of many responsible employers (and there are some very considerable and very responsible employers sitting in your Lordships' House at the present time —and it was the view of responsible trade unions) and again we have the privilege of including among the membership of

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your Lordships' House many of those who have the greatest possible knowledge and who speak with the greatest authority regarding trade unions —that the principle of the closed shop was a wholesome one for achieving good industrial relations in certain circumstances. They are not very widespread, but they are sufficiently important to be taken into account; and the Government are coming round to that point of view.
The question I am putting to the Government and to your Lordships is this: why, when there is now agreement between employers, employees and the Government that the closed shop has a proper position in the achieving and maintaining of good industrial relations, should we now seek to deny ourselves and our country the benefit of the continuation of these good industrial relations simply because a particular framework happens to have been suggested on a particular piece of paper called a Bill —no more than that. And the Bill is in our control: it is not our master. We are framing the Bill according to what we think is the best way of achieving peace in industry. Why, when these three important Estates of the Realm are satisfied that it is for the benefit of peaceful industrial relations that closed shop arrangements should continue, should we deny ourselves the availability of them simply because there is a technicality called registration which has to be undertaken?
I am suggesting that that is a wholly unimportant detailed technical issue, not worthy of comparison in relation to the important issue of maintaining and improving industrial relations, and therefore I am saying to your Lordships that surely it would be to our advantage, to the nation's advantage and, in particular, to the advantage of good industrial relations that there should be a closed shop arrangement of the kind about which the Government are now satisfied. I am therefore saying that, in order not to deny ourselves the continuation of good industrial relations, we should widen the issues so as to include both trade unions and independent organisations of workers. I therefore beg to move.
9.8 p.m.
LORD BELSTEAD: The Committee have listened to the noble Lord, Lord
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Diamond, moving the manuscript Amendment with his customary clarity. But the point which I do not quite understand is why the noble Lord should place such great weight on unregistered organisations of workers in the closed shop situation. It would seem to me—we have been over this ground before—that the rules for registration will strengthen the authority of the trade unions. To refer to only one point: the Registrar being empowered to investigate breaches of the rules will bring into play an initiative when unauthorised people call members of a union out on strike. Under the rules the authority for industrial action in a registered trade union must be clearly identified.
I find it hard to follow the logic of the noble Lord that, in a situation which all his noble friends have wished to see, and which was argued for with great persuasion in another place, the post-entry closed shop situation, after the five gateways have been gone through, the noble Lord should say, "We should like to see it with unregistered organizations." This would bring down powers which his friends in another place, and indeed all of us, would not like to see. The second reason why I am at a loss is that I would have thought the guiding principles of Clause 63 were all the more important in relation to a post-entry closed shop situation. If a worker knows that he or she is to become a member of that organisation or, on conscientious grounds, will be exempted —and with only those two choices —is it not all the more important that the guiding principles of Clause 63 should remain in play?
Mainly for those two reasons I would put again to the noble Lord that, although we have followed him and realise his feelings on this subject, we on this side of the Committee believe that registration is all the more necessary in a closed shop situation; also we believe, as we have said all through the passage of this Bill, that it is reasonable and democratic, and does not impose onerous conditions on any organisation of workers. For those reasons we must resist these two manuscript Amendments.
LORD DIAMOND: The noble Lord, Lord Belstead, was good enough to say that he had listened to what I said, but did not follow why I attached so much weight to unregistered, that is to say, to

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independent organisations of workers. May I impinge on the patience of the Committee to go over the ground again, and to make the point even more clear than it is at the moment? I hope I shall be forgiven for saying that the difference between us is that the noble Lord, Lord Belstead, regards his Government as the repository of all wisdom—
LORD BELSTEAD: Oh, no!
LORD DIAMOND:—Oh, yes—and that we on this side of the Committee do not. Let me explain that. The noble Lord is a Member of a Government who are proposing to introduce certain provisions. I do not want to go into details, because we shall argue for hours if we start going into detail about registration and all the clauses referred to by the noble Lord. I am anxious not to waste time but to get on with the Bill. The noble Lord has referred to certain registration provisions. I would merely say that there is a difference of opinion between the two sides of the Committee about the "worthwhileness" of these provisions.
Were we on the Government Benches we would be introducing provisions of the kind introduced into the Bill which had its First Reading in another place before the General Election and to which all unions at present registered would find no difficulty in subscribing. But the noble Lord's Government are proposing certain procedures which will present very many difficulties, and so there will be many unions who will exclude themselves from the definition of a trade union because they will not register —certainly not to begin with, and probably not for a very long time —because the provisions for registration are in their view very onerous indeed.
I am not at this point wishing to enter into the argument about who is right on this; I am merely saying that, if we were the Government, registration would be accepted by all unions which are at present registered under the previous Act. Under this Bill, when it becomes an Act, many unions will not register. We shall therefore have a situation which would not apply if we were the Government. We shall have a situation in which industrial relations will be disturbed when
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this Bill becomes an Act, since a number of unions will not register because of their view that registration would be onerous for them. Accordingly, they will not be able, unless my Amendment is accepted, to continue their present closed shop arrangements, Which are satisfactory to employer and to union alike, and which correspond with the principle embodied in Clause 16, merely the question of registration being absent.
I hope I have made the position clear. We are not entering into the argument about who is right on registration. I am merely drawing your Lordships' attention to the fact that, owing to the registration provisions later on in the Bill, there will be many independent organisations of workers. These independent organisations of workers will in certain cases have closed shop agreements. They are conducive to good industrial relations, and they should not be upset.
TIE EARL OF DUDLEY: May I ask the noble and learned Lord one additional question, further to those asked by the noble Lord, Lord Diamond. If an unregistered organisation of workers was sued in the civil courts for breach of a collective agreement, would the penalties be greater, or less than, or commensurate with those which a trade union would suffer if it were to be taken before the Industrial Court in the event of a corn-plaint under the Bill?
THE LORD CHANCELLOR: I suppose that was intended for me, owing to the reference to learning with nobility. I hope it was, at any rate, because I do not think there is another noble and learned Lord in sight —the noble and learned Lord, Lord Stow Hill, is far more learned in some ways than I, but he is not learned in this House by designation. I could not, within the scope of this manuscript Amendment, answer at any great length to my noble friend. Broadly speaking, everybody who is sued —if sued is the right word —who is the respondent to a complaint for an unfair industrial practice, in so far as compensation is payable, pays the same measure of damages as anybody else, that is to say, the measure of damages is limited by the actual loss suffered by the

971
complainant. For a registered trade union there is a ceiling. For unfair dismissal there is a ceiling, which puts an artificial top to that measure of damage. For an unregistered body this is not so.
Resolved in the negative, and Amendment to the Amendment disagreed to accordingly.
9.28 p.m.
LORD DIAMOND: On Amendment No. 107, we have taken a careful note of the only material alteration, which I take it is that, whereas in the original
9.19 p.m.
On Question, Whether the said Amendment to the Amendment (No. 107A) shall be agreed to?
Their Lordships divided: Contents, 33; Not-Contents, 103.
drafting it was possible, or was laid down that it should be
"a condition that every such worker…must be or become a member of the trade union…",
and in the redraft the words "must be" are left out and we have only to deal with the case of "becoming". I do not

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think that this is a substantial point; therefore we do not wish to delay the Committee on it. For the rest of it, we recognise that it is an improvement in the drafting.
On Question, Amendment agreed to.
9.30 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 110:
Page 13, line 29, leave out ("an order of the Industrial Court") and insert ("recommendations of the Commission on Industrial Relations").
The noble Lord said: We are still dealing with the principles of an approved closed shop agreement. One of the elements in the definition is that such an agreement is made in accordance with proposals approved by an order of the Industrial Court. The Amendment which I seek to move is that such an agreement should be approved on recommendations of the Commission on Industrial Relations. I am not claiming that this wording has everything to recommend it in terms of lucidity of expression or literary qualities, but it makes the position clear that we are suggesting two things: first, that the Industrial Court is not the appropriate body; secondly, that an order is not the appropriate method. Instead of an Industrial Court we should much prefer to see the Commission on Industrial Relations. Instead of
"an order of the Industrial Court"
we should much prefer to see:
"recommendations by the Commission on Industrial Relations".
I am sure that I have made it clear that what we are seeking to suggest is that the Bill will be improved if instead of reliance on a court and on an order of the court in an area where you are concerned with industrial relations, with relations between human beings it would be far better to rely on the wisdom, experience and knowledge of the Commission on Industrial Relations, and to rely not on an order by them, or compulsion by them, but on their patience and understanding and on recommendations which ensue from such patience and understanding. We think that would be a far better way of arriving at the same conclusion which the Bill seeks. I move.
THE LORD CHANCELLOR: This has a rather marked resemblance to some other Amendments which stand in the names of the same noble Lords. It raises a rather similar question, although here it arises in relation to Clause 16 and not in relation to some of the other clauses. It is based upon a misunderstanding of the constitutional position which we are trying to establish. The functions of the Commission are advisory and are intended to remain advisory. We think that this is for the advantage of industrial relations to the parties to any dispute that there may be and essential for the retention of the prestige of the Commission.
The functions of the court are judicial and, like all superior courts of record, include the function of recording a concluded decision which has been arrived at. I have been particularly careful to try to limit the functions of the court to things which are justiciable. The noble and learned Lord, Lord Gardiner, raised with me late last night a question of a rather different nature relating to the court. It is important to establish for the court that they have either to decide a disputed question of fact, when the nature of the question of fact is prescribed by the Act, or to apply a principle of law when the principle of law is enunciated by the Act. When there is something which requires negotiation, expertise and advice it goes to the Commission, and the Commission then report back to the Court.
The Commission's function therefore remains advisory. The Court, after hearing both sides of a case on justiciable principles, records a decision —in many cases, I hope, a decision which will he predetermined by the admitted facts of the case, but still a decision which is based on justiciable principles. This is all set out at great length in Schedule I to which we have not yet come. But in order to understand the context in which this Amendment is moved, we find that the policy of the Party opposite is to exclude the functions of the Court and our policy is to retain them, provided, of course. that it can be established that their functions are judicial and not executive or advisory, because it is not the business of the Court to be either executive or advisory.

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In fact, the Court is designed to protect those who are subject to the new Act and to protect them in two ways. In some ways the Court stands in the shoes of the Secretary of State in the old Labour Bill which was given, I think, a First Reading before the General Election—at any rate, the old Labour Bill which was published before the General Election. Many functions which the Secretary of State could operate on his own authority are now subject to the scrutiny of the Court on the application either of the Secretary of State or of some other party that makes an application to them. Equally, the Court record decisions after argument based on reports reaching them from various sources, or evidence reaching them from various sources, which may be oral or written—oral or affidavit—and in particular reports from the Commission on Industrial Relations. This is a difference of policy between us, but we think that the function of the Commission on Industrial Relations should be advisory; and if this is accepted as its constitutional role it follows that this Amendment would fall.
9.37 p.m.
LORD BYERS: I wonder whether I might ask the noble and learned Lord for one point of guidance. I agree with him—and I think the Government are right here—that the Commission should be kept as an advisory body and the Court as a judicial body. The guidance I should like is on the following case. There have been a number of occasions when a particular union, for instance, the Musicians' Union, has taken action to force a person into a certain position. For instance, a professor of music has to decide whether he is going to join the Union, in which case he can play serious music with other professionals; but if he does that he cannot play with his own staff in the university where he is a professor because they are not members of the Union. Contrariwise, if he does not join the Union he is not allowed to play with serious orchestras. This is a case in point which occurred within the last two years. Is this the sort of case which would be dealt with by the Industrial Court in the circumstances of this clause, or is it better caught under Clause 63? If so, we will raise it when that clause is considered.
THE LORD CHANCELLOR: I do not think it would arise on this clause. This clause is really dealing with the circumstances in which a post-entry closed shop can be allowed as the result of an order of the Industrial Court, and as the noble Lord will see, reading the clause with the Schedule, there is first an application for which certain facts have to be established; there is then a reference. As a result of the reference there is a report; as a result of the report there may be an argument; and finally, as a result of the argument, or absence of argument, there may be an order. This deals only with post-entry closed shops because the policy of the Bill is to exclude pre-entry closed shops. But I think the noble Lord is right in certain circumstances—I do not want to name particular unions or to prejudge particular cases, for reasons which may be obvious. But where a question arises as to whether there has been an unfair industrial practice under the later clauses of the Bill, it may be discussable under Clause 63 but probably under the later clauses of the Bill even more discussable. We shall see that the Industrial Court has a function to determine whether an unfair industrial practice has taken place.
The general policy of the Bill (although I am now going outside what I really should be saying on this particular subject) is that, where an individual has a grievance, he goes in the first place to the industrial tribunal, with an appeal to the N.I.R.C.—the Court. Where an organised body has a grievance, it goes straight to the Industrial Court. This is not an absolute rule; it is like almost everything else one says—an oversimplification; but it is a rule of thumb.
LORD BROWN: May I just ask another question? In the case cited by the noble Lord, Lord Byers, would the union which indulged in that practice—which on the face of it appears to be unfair to the individual—be caught under Clause 63 if they had to register? Would they not be allowed to register as long as they maintained the condition to which the noble Lord, Lord Byers, referred?
THE LORD CHANCELLOR: Clause 63 is a subject in itself, and anyone who gives "off the cuff" legal opinions is apt to be proved wrong in the event, but my

977
first impression is that Clause 63 probably does not catch them. Clause 63 really gives certain guide lines on how a union has to conduct its affairs or frame its rules if it wants to secure registration under the Act, as it will be, and the sort of thing is that the rules must provide against discrimination subject lo certain qualifications; unfair discrimination. It must give the member a right to terminate his membership. It must give him a fair and reasonable opportunity to cast his vote. If they want to discipline him they must give him notice of the charges, they must give him a fair hearing, they must send him a written statement, and finally they must give him a right of appeal. I could go on enumerating the various things in Clause 63, but I would not myself have thought that a situation such as that envisaged by the noble Lord, Lord Byers, would easily arise under Clause 63, although of course it can be discussed under that Clause.
LORD BROWN: The reason I ask the question was that reading subsection (7) it says
"No member of the organisation shall he subjected by or on behalf of the organisation to any unfair or unreasonable disciplinary action …"
and it goes on. Does that not catch the practice to which the noble Lord, Lord Byers, referred?
THE LORD CHANCELLOR: That will depend upon whether the action described is unfair or unreasonable. It would involve me in a particular judgment which I am anxious to avoid. The only thing I said to the noble Lord, Lord Byers, was that the problem which he posed about the Musicians' Union does not arise under this Amendment, but it certainly will be discussable at a later stage.
LORD SOMERS: Since the Musicians' Union has been mentioned, may I point out one or two facts concerning it? First, it cannot in any sense of the word be described as a "closed shop", in that there is no compulsion on any musician to belong to the union if he does not want to. The only thing is that if you happen to be an orchestral player, and you want
978
to get a permanent position in one of the major orchestras, you will probably be asked to join. In that case, of course, you will have to obey the union rules, and I am not denying that the Musicians' Union has in some cases behaved in a rather high-handed manner. On the other hand one must remember the good things which they have done, which are many. They have obtained fair and reasonable payments for their members, and they have reduced rehearsal times, which used to he stretched to such a point by some conductors that it was absolutely impossible for the players to maintain their standards.
LORD BYERS: May I put it to the noble Lord that the Musicians' Union is not on trial? I was merely asking where in this Bill we could discuss the protection of individual rights in any union.
LORD DIAMOND: The noble Lord, Lord Byers, has had his answer: it is not on this Amendment. Perhaps therefore I could return to this Amendment, and the most interesting speech made by the noble and learned Lord. I do not know whether he will be gratified or not by what I am going to say. I do not think I differ in one word from what he said, namely that the Industrial Relations Commission is, under the Bill, given advisory functions, and ought only to be given advisory functions. I entirely agree. That proposal, that attitude, is based on the desire to help. I think the noble and learned Lord said that it is in the interests of good industrial relations. I agree.
He said that there is a philosophical difference between us. I agree. I cannot see why we should not, as the Amendment proposes, rely on the good offices, experience, advice and recommendations of the Commission on Industrial Relations, and why we need to have an order of the court at all on this very important issue of maintaining in appropriate cases a closed shop agreement. Therefore I can only say that the noble and learned Lord has helped us all by clarifying our minds as to the essential difference between us. We prefer advice, patience and persuasion. The noble and learned Lord prefers the order of the court. We do not think this is the way to deal with industrial relations.
9.47 p.m.
On Question, Whether the said Their Lordships divided: Contents, 34;
Amendment (No. 110) shall be agreed to?

CONTENTS

Archibald, L.

Donaldson of Kingsbridge, L.

Ritchie-Calder, L.

Ardwick, L.

Durham, L. Bp.

St. Davids, V.

Bernstein, L.

Hoy, L.

Serota, Bs.

Blyton, L.

Hughes, L.

Shepherd, L.

Brockway, L.

Janner, L.

Slater, L.

Brown, L.

Kennet, L.

Stow Hill, L.

Burntwood, L.

Lee of Asheridge, Bs.

Strabolgi, L. [Teller.]

Champion, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Taylor of Mansfield, L.

Chorley, L.

Wells-Pestell, L.

Davies of Leek, L.

Milner of Leeds, L.

White, Bs.

Delacourt-Smith, L.

Morris of Kenwood, L.

Wynne-Jones, L.

Diamond, L.

Popplewell, L.

NOT-CONTENTS

Aberdare, L.

Drumalbyn, L.

Merrivale, L.

Abinger, L.

Dudley, E.

Mersey, V.

Ailwyn, L.

Dundee, E.

Merthyr, L.

Allerton, L.

Elliot of Harwood, Bs.

Monck, V.

Balerno, L.

Emmet of Amberley, Bs.

Monk Bretton, L.

Balfour, E.

Exeter, M.

Mowbray and Stourton, L. [Teller.]

Balfour of Inchrye, L.

Falkland, V.

Barrington, V.

Ferrers, E.

Moyne, L.

Bathurst, E.

Ferrier, L.

Napier and Ettrick, L.

Beauchamp, E.

Fraser of Lonsdale, L

Nelson of Stafford, L.

Beaumont of Whitley, L.

Gage, V.

Netherthorpe, L.

Belhaven and Stenton, L.

Gisborough, L.

Radnor, E.

Berkeley, Bs.

Goschen, V. [Teller.]

Rankeillour, L.

Blackburn, L. Bp.

Gowrie, E.

Redesdale, L.

Boston, L.

Gray, L.

Redmayne, L.

Bradford, E.

Gridley, L.

Ruthven of Freeland, Ly.

Bridgeman, V.

Grimston of Westbury, L.

St. Aldwyn, E.

Bristol, L. Bp.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

St. Helens, L.

Brooke of Cumnor, L.

St. Just, L.

Brooke of Ystradfellte, Bs.

Hankey, L.

St. Oswald, L.

Byers, L.

Harvey of Tasburgh, L.

Sandford, L.

Caldecote, V.

Henley, L.

Sandys, L.

Clifford of Chudleigh, L.

Hives, L.

Somers, L.

Clitheroe, L.

Hood, V.

Strange, L.

Colville of Culross, V.

Jellicoe, E. (L. Privy Seal.)

Stratheden and Campbell, L.

Conesford, L.

Kemsley, V.

Swaythling, L.

Cowley, E.

Killearn, L.

Teviot, L.

Craigavon, V.

Kilmany, L.

Thomas, L.

Cranbrook, E.

Kinnoull, E.

Thurlow, L.

Crathorne, L.

Lansdowne, M.

Thurso, V.

Crawshaw, L.

Latymer, L.

Tweedsmuir, L.

Croft, L.

Lauderdale, E.

Tweedsmuir of Belhelvie, Bs.

Cromartie, E.

Lloyd, L.

Verulam, E.

Daventry, V.

Lothian, M.

Vivian, L.

De Clifford, L.

Luke, L.

Wigram, L.

Derwent, L.

Mansfield, E.

Windlesham, L.

Digby, L.

Massereene and Ferrard, V.

Yarborough, E.

Resolved in the negative, and Amendment disagreed to accordingly.
9.56 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 113:
Page 13, line 34, leave out ("notwithstanding") and insert ("in place of").
The noble Lord said: I beg to move Amendment No. 113, to leave out "notwithstanding" and insert "in place of",
Their Lordships divided: Contents, 34;Not-Contentents,180.
and I do not intend to delay your Lordships for more than a moment on this. Your Lordships will appreciate that Clause 16(2) provides that
"Where an approved closed shop agreement is for the time being in force, the following provisions of this section shall have effect notwithstanding anything in section 5(1)(b) of this Act".
Clause 5(1)(b) is the clause which provides the right of an individual to be a member

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of no union. I hope none of your Lordships thinks I am being facetious when I say that it provides that right; that is, in fact, the right it does provide. It is frequently referred to as the right not to be a member of a union. The right is in fact in Clause 5(1)(b), and for the sake of greater accuracy perhaps I could read it:
…if he so desires to be a member of no trade union …"
a curious description; language which the draftsman has to use in order to make clear a very curious attitude of a curious Government creating a most curious nonexistent right. However, that is referred to under Clause 16(2) and relates to the Amendment which I am now putting.
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Because of that I think it would be far better, notwithstanding anything in Clause 5(1)(b) of this Bill, to have the words "in place of". It is clearer and more easily understood. I beg to move.
LORD DRUMALBYN: I suppose it would be facetious to refer to the preference of the Party opposite for the words "in place of". We should just like to have a look at this Amendment to see that there is really not any difference in that. If the noble Lord would be good enough to withdraw the Amendment, we will have a look at it.
LORD DIAMOND: I am very grateful. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
10.0 p.m.
LORD ARCHIBALD LORD ARCHIBALD moved Amendment No. 113A:
Page 13, line 34, after ("5(1)(b)") insert ("or 6").
The noble Lord said: In rising to move this Amendment, I have to confess that I shall not be quite as brief as I usually am on Amendments of this kind. I also admit that, not being a lawyer, I find it quite difficult to line up the technicalities of the Amendment with the substance of what we are seeking to do.
I would start by saying that I think this is an Amendment of very great substance and importance. The purpose of the Amendment is to establish or, if you like, to make it clear, that a closed shop agreement may be approved even if it contains elements which technically constitute a pre—entry closed shop. In other words what, on an earlier occasion, I called neither a pre—entry, nor a post—entry, but a point of entry closed shop.
There was considerable reference during last Thursday's debate to the position of Equity in this connection. My noble friend Lady White said that Equity was asking to be allowed to operate a pre-entry closed shop, while the noble and learned Lord the Lord Chancellor claimed to have information that Equity required no such thing. The noble and learned Lord said that the object of Clause 16 was to provide for a post-entry closed shop to enable Equity to do what they have been doing. My argument is that this would not allow Equity and the employers' association to do what in fact they have been doing in the past.
Equity's position is that it has never sought agreement, nor enforced conditions which it believed to amount to a pre-entry closed shop of the kind which was criticised by the noble Lord, Lord Drumalbyn, last Thursday. But Equity has been advised, and this is really the important point here, on high legal authority, that its casting agreements with the employers in the entertainment industry —which Equity and many of the employers also (for example, the Theatres Advisory Council, the Council of Repertory Theatres, the Film Producers' Association) all regard as of critical importance —constitute technically pre-entry or point of entry closed shops,
984
while no practical alternative method has been found so far in the Bill to achieve the same necessary object.
I have said that the casting agreements are really the essential elements in this. The need for casting agreements arises from a variety of facts. First, there is the impossibility of defining a qualification for entry into the theatrical profession, whether it be the theatre or cinematograph, such as exists in the case of lawyers, doctors, accountants, et cetera. There is no qualification, except the offer of a professional engagement by an employer. Secondly, there is the fact that the profession is enormously overcrowded, and employment in it is in any event so casual that there is a very high incidence of unemployment and actual hardship among established and dedicated professional performers.
I have just heard this evening of a lady, a highly professional performer, who is only in her fifties, who has not, in periods of employment, lived at the high level of luxury, but even so whose employment has been so intermittent that she is now faced with the possibility, in fact the probability, of being made bankrupt by the Inland Revenue because she is unable, at her present period of what is in effect non-earning, to pay the tax on previous periods —even though short periods —of fairly high earnings. I mention that only to indicate the importance of having some protection in the theatrical field.
The profession is a glamour one, which is probably one of its greatest evils, because it has an inherent attraction which is so great that there are literally thousands of people seeking to enter it, who would almost ask for no conditions at all to get a foot inside the door. In these circumstances, the purpose of the casting agreements is not only to create some kind of security for the dedicated professional, but also to maintain and improve the standards of performance by trying to secure that established performers are not driven out of the profession by lack of opportunity and, on the contrary, are given the opportunity to work more regularly.
In essence, the casting agreements are agreements by the employers that they will not bring newcomers into the profession except when it is necessary to

985
do so. The agreements vary in detail between, for example, the film producers and the different sections of theatrical employers, but they all contain two basic principles. The first is that the employer will not offer an engagement to a newcomer unless he has satisfied himself that there is no existing professional available to do the part in question. Before offering an opportunity to a newcomer the employer undertakes to give Equity the opportunity of making representations on this point, but no more than that. The second principle is that whatever may be the strength of Equity's objection in any given case, the last word is left with the employer. Equity does not lay down a hard and fast rule. It may make representations, but the last word rests with the employer.
Each agreement contains, in one form or another, a provision such as that in the film industry casting agreement, which states:
"if the company and Equity are not in agreement, the company shall nevertheless have the right to proceed with and complete the engagement."
I cannot think of any agreement between employers and employees which could be fairer, more reasonable and more liberal than that. In these circumstances, if the employer proceeds with and completes the engagement, Equity undertakes to accept the newcomer into membership. It may well be argued that the casting agreements have no teeth in them. But they work, and that is what matters. Although they are such gentlemanly agreement, the relationship between Actors' Equity and the employers is such that these toothless agreements work. It would be a great pity, if we are to have any regard to industrial harmony, to upset such gentle and gentlemanly agreements which work at present, and which if upset by the Bill may produce chaos in a very good industry.
There is no professional qualification which can be defined for entry into the theatrical profession. Equity for many years has had 100 per cent. membership on what I prefer to call a point of entry basis. The only criterion which it has been found practicable to apply in determining whether a person is a newcomer or not, is whether that person is already a member of Equity. This is where the
986
element of technical pre-entry, point of entry or post-entry closed shop comes in. From what I have said, I think it must be apparent that the union cannot alone exclude anyone whom an employer, having gone through the agreed consultations, wishes to employ. So there is no absolute right, in fact no claim of right, on the part of Equity to exclude anyone. The agreements do not deny anyone employment because he is not a member of the union. If a person is excluded it is not only because he is a newcomer and not only because there is no room for him in an overcrowded business. There is no overriding reason causing the employer to exercise his rights under the casting agreement to carry on with the engagement in spite of an adverse representation from Equity.
In the subsidised repertory theatre, for which perhaps we have more responsibility titan in some of the other fields, there is a rather different agreement. Here the theatre managers have agreed that the collective intake of newcomers should be reduced in the interests both of employment and of standards. They have accepted a quota of a given number of newcomers a year; and the managers, not Equity, decide among themselves into which theatres these newcomers shall go. Here, again, the definition of a newcomer is a person not yet a member of Equity. I do not think that anything could be fairer. In connection with that definition of a newcomer, it should be added that in the relatively rare case of a performer being in fact experienced and therefore not a newcomer but yet not a member of Equity because his previous work has laid outside their jurisdiction (for example he may have been working in the Commonwealth), there is no inhibition to his engagement.
Other examples of those who will not, cannot and never have been excluded are: child performers, who obviously would not be existing members of Equity (these are child performers up to the age of 16); and concert singers who have previously worked outside the theatre, for films and so on. Evidence of previous professional experience is sufficient by itself to ensure that in the spirit in which the casting agreements were made the union raises no objection and has never raised any objection in such case.
Since this Bill was introduced, much consideration has been given to finding some alternative method, even some alternative phraseology, which might reduce the danger that these casting agreements will be rendered void because of the technical element which they contain of what is called a pre-entry closed shop. In fact, there are no alternatives which are not either (a) unworkable in practice or (b) equally in danger under the Bill. One of the problems here is the speed with which engagements have to be offered and accented in the theatre, in films and on television, and therefore agreements of this kind can work only if there is an immediate way of establishing, as between the employer and the union, whether the person seeking an engagement or to whom the employer wishes to offer one is a newcomer or not. That, of course, is the possession of an Equity card. But, as I have said, Equity is entirely realistic and effective because of the arrangements which have persisted and worked so well for so long.
It has been suggested that other alternatives might be the consideration of individual cases by joint committees. That is quite impracticable because of the element to which I have just referred—the need for speed. Engagement may be offered to-day for employment to start next Monday, and there is not really time for consultative committees to go into the case and make a decision. I do not know whether this applies to other unions, but, in the case of Equity, what this Amendment seeks is to preserve the possibility of controlling, jointly with the employers, entry into a greatly overcrowded profession by methods which are both effective and flexible in operation, as they need to be in a fluid and creative industry. It would be a tragedy if these attempts, already showing some success, to give some small protection to a profession which is as vulnerable as it is dedicated, should be destroyed by what is really a legal technicality and not a matter of substance so far as the purposes of this Bill are concerned. I hope that the Minister who is to reply—and I hope it will be the noble Lord, Lord Drumalbyn —will give this the sympathetic consideration which he normally would give to an Amendment of this type. I beg to Move.
10.17 p.m.
BARONESS LEE OF ASHERIDGE:Have I detected a certain consternation on the face of certain Members of your Lordships' Committee as my noble friend Lord Archibald has conducted us with such skill and such thoroughness through the mazes of this particular understanding between Equity and theatre employers? That is not surprising. If a foreigner wanted a definition of typical British compromise, I do not think he could do better than to read Lord Archibald's speech; but, in effect, what he has been pleading for is that we should leave well alone. It may not sound logical, it certainly does not sound simple, but it works. We have to remember that if we were living in an authoritarian society we would not have to tie ourselves in knots and do somersaults in order to try to make the impossible possible. If we were living in authoritarian society, there would be a careful measurement of the intake of recruits into the theatrical profession and the needs of the community. But we do not have that kind of measurement. We do not want that kind of measurement. We do not want to be living in an authoritarian society, but at the same time we must all be concerned about the tidal wave of young hopefuls seeking to make their way in what, as Lord Archibald said, is a profession with a great deal of glamour. Those who think it is an "easy ride" are soon weeded out—there is no place for them there. Those who survive have to accept immense discipline.
I sometimes think that our best artists are the saints of the modern world, for the discipline needed to become a really great ballet dancer or opera singer, to reach the heights in theatre work of any kind, has to be seen at close quarters to be fully appreciated. Survival represents a fantastic struggle, and we shall never know the talent we lose because of economic pressures and the inability to sustain one period after another of unemployment. But if, in spite of everything, there are some who are prepared to tackle this obstacle race with all its difficulties, disappointments and hardships, and manage to establish themselves as dedicated and gifted performers, we must do something, however illogical and tortuous the process might be, to protect them.

989
Those of us who have talked with representatives of Equity and of the theatre managers have not been able to think of anything better than the status quo; so I hope that the whole spirit of this debate, like that of an earlier one, will be not to raise sharp controversy between the two sides of your Lordships' House but to see what can be done to keep talent in the profession with hope, and reasonable hope,of employment. After all, they have given us the most vital and wonderful theatre in the world, and we must do something to protect them. We cannot do much, but I hope we may at least co-operate so as not to take away.the present provisions which, however extraordinary they may seem, actually work.
LORD STRABOLGI: I should like to support everything that my noble friends, Lord Archibald and Baroness Lee, have said. They speak from a great wealth of experience. The noble Lord, Lord Drumalbyn, said that the Government were entering into talks with Equity. One hopes that as they learn more about the situation they will realise the great importance of the splendid work done by Equity and how essential it is that this organisation should be strong. I should like to mention just two points which have not been covered before. The first is that one of the great things done by Equity is to maintain standards of performance in the theatrical profession, which is very important in this permissive age. It is one reason why 100 per cent. membership is essential in order to achieve the necessary control over performers. The other thing is the splendid work they do in vetting dubious contracts, and. particularly dubious overseas contracts, together with the great work they do in dissuading young girls from entering into engagements of a kind which could put them in great moral danger. If the Government weaken this organisation, for what they describe as their philosophical reasons, they will put that many more young girls into danger.
10.25 p.m.
LORD DONALDSON OF KINGSBRIDGE: My noble friend, Lady Lee of Asheridge, gave me an opening by speaking about opera singers. I think I may state without fear of contradiction that the two major opera houses in London are entirely satisfied with the closed shop
990
arrangement they operate with Equity, and would find it very difficult to operate in any other way. My noble friend, Lord Archibald, has described the situation with great precision as the "point-of-entry closed shop".
If you are a singer and you wish to get in the chorus at Covent Garden or the Coliseum, you go for an audition. Anyone may go for an audition, and a lot of people do go. If you are accepted as a suitable person, you join Equity. This is the point-of-entry closed shop. It is worth mentioning that there are something like 600—that was the figure a year ago; it may now be 650—full-time careers available for people in serious singing in this country. The number is very small, but it is a hundred times more than twenty years ago, which is a marvellous development, and it is very important that we should not start pulling about this rather subtle arrangement. The problems of the acting profession are much more difficult, but I wanted to put on record that from the point of view of major employers of operatic singers the present system works extremely well and we should deeply regret any change.
LORD BERNSTEIN: I wish to support the Amendment. My noble friend, Lord Archibald, made a clear-cut case. I am not sure whether it was a case of English understatement, but it had support from a Glasgow lad and a Glasgow lass—
BARONESS LEE OF ASHERIDGE: Not Glasgow—Edinburgh.
LORD BERNSTEIN: I stand corrected. My noble friend, Lord Donaldson of Kingsbridge, commented on his experiences in the opera houses. I can speak with experience of other areas of entertainment. Equity has functioned in the best interests of the theatre, films and also radio. It has also functioned in the best interests of television since the B.B.C. transmitted its first programme from Alexandra Palace. I would say to The Minister, "Do not overlook radio, because you have just introduced a White Paper and when you have commercial radio you will need all the help you can get from Equity." I wish the Government would accept the view expressed by the noble Lord, Lord Archibald. It is

991
the view of everyone in management. Perhaps later the noble Lord, Lord Windlesham, will give us the benefit of his experience with Equity.
Equity has been a help to everyone in the acting profession. I speak from experience extending over forty years. To me it is inconceivable that anybody would wish to add to the problems connected with this Bill by not allowing actors and actresses to have the benefit of the support of Equity. Artists have a 100 per cent. membership on a pre-post entry basis. Equity has had to deal with special situations. The noble Baroness, Lady Lee of Asheridge, referred to the unemployment problem. In the last ten years the number of repertory companies in the country has gone down from 232 to 84. In the last two years the number of Cinema and Television films made has gone down from 94 to 58. The number employed has been reduced from 2,500 to 1,500. Between 1948 and 1969 the number of members of Equity increased from 9,000 to 19,000 which does not suggest that Equity was trying to keep people out. There are problems for Equity, caused by overstaffing and under-employed yet Equity has never been involved in unfair industrial practices during all the years that I have known them.
There have been no battles with responsible management over the entry of new discoveries, whether glamour girls, or glamour stars, or the young boy who got into trouble at school. As was said by the noble Lord, Lord Archibald, the present system works, and he told the Committee how it worked, if an artist has not an Equity ticket, Equity is asked to give one. If there is another artist available of equal quality, Equity will put forward a case for that artist; but the casting director or the film director, or the producer have the final say in the matter. Why upset an arrangement which has worked for years so satisfactorily? Is it being done to satisfy a doctrinaire approach? A legal approach? How unconservative can Conservatives be? I asked the Minister earlier whether he would meet Equity. Would it be a good idea for the Equity lawyers to meet the drafting lawyers, and for the Government to instruct the drafting lawyers to produce a clause which
992
would satisfy them, satisfy people in television, in films, in radio, management and Equity? I hope the Government will accept the Amendment.
10.31 p.m.
THE EARL OF MANSFIELD: It may come as a considerable surprise and shock to noble Lords on the Benches opposite to find that on this occasion my sympathies are wholly with the noble Lord, Lord Archibald. I myself have no personal experience of acting. I have never wanted to act, and I have never had the slightest reason to believe that I should have any talent at it. But I have been, ever since it was founded, patron and president of the Pitlochry Festival Theatre, and therefore I have learnt a little about some of the problems of this—as has already been stated by practically every speaker sadly overcrowded profession. When the Pitlochry Festival Theatre sets out to get a new cast each year—and there are usually only one or two of the old cast remaining—for that cast, usually of somewhere between 20 and 25 people, you have applications from between 6,000 and 8,000. It is not just owing to the fact that there is now a very considerable cachet for anyone who is taken on by Pitlochry, a theatre which has worked up a very great reputation for itself, it is also an indication of how desperately badly needed work is for so many of the theatrical profession.
I do not think it has been sufficiently stressed by noble Lords and Ladies opposite that this is the one skilled profession into which, if one is not careful, the enthusiastic but untalented aspirant can gatecrash. We know how in the past young ladies of undoubtedly considerable physical attractions, but a mediocre capacity for acting, have suddenly appeared as leading ladies, and the reasons for that I think have been obvious to anyone. But we are also in a position where you get stag-struck people of either sex, who, just because they want to strut on the boards, never mind if they make an exhibition of themselves; the mere fact that they are there makes them happy. In this case they are willing, some of them having private means, to take reduced salaries, no salary at all, or even to make a sub rosa payment to the management of a theatre engaging them. That means that there could be the risk of these really talented performers being kept out by

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people who were utterly and completely sticks on the stage.
I think everyone will agree that it is vitally necessary that our living theatre should survive. It means a great deal more to us, and has meant over the centuries, than do nowadays the posturings of overpaid, overexposed and under-talented persons on the cinematograph screen. If we are going to retain this wonderful living theatre of ours, something ought to be done to ensure that the real professionals, who have given to us all the pleasure they have given me over more than half a century, should continue to survive and to enjoy reasonable conditions of life, and the possibility of reasonable salaries. For that reason I support the noble Lord, Lord Archibald.
LORD GARDINER: May I just say one word in support of my noble friend Lord Archibald and other noble Lords who have spoken? I do not remember a time when I was not interested in the theatre, and all my life I have been concerned with the development of Equity and what it has done. I think I am one of the few who are not members of Equity in the theatre who all my life has had my Equity letter.
I think that there is no country which has a better theatre than this country. The first thing that every tourist, including Americans, wants to do is to see the London theatre. Equity is as highly regarded among employers as it is among its own members. It is a unique profession, for the reasons mentioned. I think I am right in saying that the average remuneration of male members is £800 a year and of women members, £450 a year. A great deal in the theatre depends on Equity. I know it does not fit into the Bill. The question is whether the Government will save it or not. If they want to save Equity, it is really a question of saying to their draftsmen, "We have taken a decision to save Equity and keep it as it is. See what the necessary Amendments are."
10.37 p.m.
LORD DRUMALBYN: This has been an extremely interesting debate and I cannot say that it has been all one-sided. I think your Lordships would expect me to indicate that there are certain counterpoises in this matter. It is only fair
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to indicate to the Committee exactly what is being asked in this Amendment. If I may say so, the noble and learned Lord, Lord Gardiner, put the matter more in perspective in his last remarks than had been done before. What the Amendment does, taken at its face value, is to remove what we regard as one of the main pillars of the Bill in order to accommodate this one industry. I have to put this quite brutally and frankly. That is what the Amendment seeks to do. The noble and learned Lord and other noble Lords have said that this is necessary to save the industry and to save Equity. I must acknowledge straight away that what has been said about Equity is absolutely true. It does a very fine job. I know out of my own personal experience that what the noble Lord, Lord Strabolgi, for example, said about maintaining standards of performance and vetting dubious contracts is right. But to go on from that to postulate that no change can be made in Equity and everybody else must come into step, is a long move to take.
I must start from that point of view. It has: been argued that entry into the theatrical profession can be regulated only on a basis of union membership; that the profession can be distinguished from almost all other employments because of the constant and unremitting clamour for admission. If I understood the argument of the noble Lord, Lord Archibald, there is really no closed shop, but unfortunately Equity is caught by a technicality. That is the argument, as I understand it. It is necessary to change this basic part of the Bill in order to meet a technicality for one particular industry. I accept the need in the entertainment world to regulate entry to protect established workers and to safeguard reasonable standards and conditions of employment for those already in the industry, but I find it much more difficult to agree that the only way to deal with this problem is by permitting a pre-entry closed shop, by requiring workers to be members of Equity before they accept or can be offered employment in the industry. The Bill will not prevent unions from making agreements with employers about qualifications, skill, experience or the like, for employment in particular occupations. It has been suggested that there is no sort of test

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that can be applied. I think that this is what the noble Lord, Lord Archibald, said in respect of those seeking work in the acting profession. If that were so, one must wonder how anyone ever enters the industry. If the condition of entry is union membership, and there is no test for deciding who should be granted membership, and thus entry into the industry, we must ask on what basis anyone gets into the industry.
LORD ARCHIBALD: I am sorry to interrupt the noble Lord—
LORD DRUMALBYN: Perhaps the noble Lord will allow me to develop the argument. I have listened patiently to what has been said, and the argument here is important. The answer is that there are tests which are applied to the granting of union membership, and thus to entry. In the West End theatres, for example, the casting agreement provides that an actor cannot be accepted for a job unless he is a full member of Equity. But the qualification for full membership of Equity is, I understand, 40 weeks' experience in the theatre. That test can easily be applied without the requirement for an actor to be a member of Equity, and so bring it within the technicality which the noble Lord says justifies this Amendment.
Similar agreements to these have been made with provincial managements. Under the casting agreements made with managers in repertory, the managers have agreed not to offer engagements to any person not a member of Equity in excess of what is known as the quota. This quota in the case of non-subsidised repertory is 50 artists per year, I understand, and in the case of subsidised repertory it is 130 artists a year. These agreements permit a certain number of newcomers to gain professional experience, but their main purpose is to ensure that the greater proportion of repertory casts already have acting experience.
Again, I wish to make the point that the test of whether an applicant for engagement already has such experience need not he membership of Equity. There is no need for the pre-entry membership condition. The qualification for engagement is prior experience, and this can be ascertained by some method which does
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not involve membership of the trade union. Casting agreements in the theatres are based, as the noble Lord, Lord Archibald, acknowledges, on restricting the entry of newcomers; that is to say, those without experience. It is not, or at least need not be, essential to establish who is the newcomer to determine whether or not he is a member of Equity. The Government therefore are not convinced on the evidence produced by Equity that it is essential for the theatre agreements to require as a pre-condition for engagement membership in Equity. Nor are the Government convinced that it is not practicable to find some other means of determining who is a newcomer than the evidence of Equity for membership.
These are the problems here. At the present time, we see no justification for any Amendment to permit the continued operation of pre-entry closed shop agreements because of the particular case. For that reason, and because we do not believe that it is as impossible as the noble Lord, Lord Archibald, says to find other tests, I must ask your Lordships to reject this Amendment.
LORD ARCHIBALD: The noble Lord seems to me to have stood the argument on its head. There is no pre-entry condition for a new entrant into the profession to be a member of Equity. My own experience is particularly in the film production industry. If the noble Lord, Lord Drumalbyn, was a film producer and wanted to start a film next week, and had the admirable idea of casting my noble friend Lady Lee as his leading artist, he would go to Equity to agree that she was the most suitable person to play the part. If they put up a reasonable case—and I know how reasonable the people in Equity are—they would say, "Of course; this is an obviously suitable choice. You have the engagement, and we give her the Equity card". There is no pre-condition that the noble Baroness should be a member of Equity. If the producer (and I am casting the noble Lord. Lord Drumalbyn, in that part) and Equity agree that the noble Baroness is the right person to play the part, she automatically gets her Equity card. The fact that she is a newcomer is established by the fact that she has not previously held an Equity card.

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In many years' experience of the film production industry, I have never known the Equity people to say "No" to any reasonable request for a newcomer to be given an engagement and automatically to be given an Equity card. That is why I have tried to make the point that it is not a pre-entry or post-entry but a point-of-entry condition which we are seeking to establish. I had hoped for a much more sympathetic reply from the noble Lord, but I feel that on this occasion he has stood the argument upside down on its head.
THE EARL OF DUDLEY: It is quite clear from what the noble Lord, Lord Archibald, says that Equity are performing in this respect a recruitment function rather than an entry control function. Noble Lords might be well advised to consider this point, because if his assurances are correct the entry control function to which we on this side of the House object is not being exercised here, but it is a recruitment function, which is far less objectionable.
THE EARL OF BALFOUR: I was very interested in everything said by the noble Lord, Lord Archibald. But in his Amendment 113A he has suggested the addition of the whole of Clause 6. May I refer him to subsection (2) of Clause 6, which says that Clause 6 shall not apply to Clause 16? Therefore is it necessary to move this Amendment?
LORD DRUMALBYN: I pointed out at an earlier stage that the effect of subsection (2) of Clause 6 was purely declaratory, because closed shop agreements could not possibly contain any pre-entry condition under this Bill. The argument of the noble Lord is that the arrangements in Equity are not pre-entry closed shop arrangements; therefore let us amend the pre-entry closed shop arrangements. That seems the most absurd logic I have heard. I quite understand when he says-and no doubt he has had legal advice—that although they are not pre-entry closed shop agreements they may be marginally caught. If that is so, either Equity, or the drafters of the Bill, can move on this matter. What I think is quite improper is that the noble Lord, on behalf of Equity, should come along to Parliament and say. "It is the Government that must move on this and chance the Bill."
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If the suggestion had been that we might reach some kind of compromise on this point and that it would be possible to preserve, as we must, the banning of the pre-entry closed shop and retain Clause 6 substantially in its present form, applying universally, then we should have been glad to get together with Equity to see hew far we could reach something which would, as the noble Lord put it, save Equity. I think that would be the sensible way to do it. But I return to this point: that it is odd that the noble Lord should come along with the argument."This is not really pre-entry closed shop at all, so will you please change your requirements for pre-entry closed shop?" I think he will appreciate the force of that argument. He accuses us of turning the argument on its head, but he is, as we say in Scotland, bowling it round and round.
10.51 p.m.
BARONESS WHITE: We are all deeply disappointed to-night in the attitude taken by the noble Lord because, as he has rightly said, this has been a one-sided argument, and really he is the only one out of step. We had a carefully argued case put forward by my noble friend Lord Archibald, and it was powerfully supported by noble Lords on both sides of the Committee. We were particularly glad t,) receive the support of the noble Earl, Lord Mansfield, on this occasion; we do not very often have it, as he correctly said. We were very glad indeed to have his support, especially with the close personal interest and knowledge he plainly has in theatrical matters. The others who have spoken—my noble friends Lady Lee of Asheridge, Lord Donaldson of Kingsbridge, and Lord Bernstein—all have a great personal experience in this field.
There is a very real problem here. I do not pretend for one moment that it is easy. When we were discussing Clause 6 on an earlier occasion the noble and learned Lord the Lord Chancellor, with one of those gestures of the hand, suggested that I was entirely wrong in my attitude on Clause 6. Equity told me I was entirely right. I pointed out in our earlier discussion that I believed something on the lines we were discussing on Clause 6 was necessary for Equity, because they had been given high legal

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advice, so they assured us, that technically their casting arrangements could be caught under the provisions of Clause 6 as having an element of pre-ntry closed shop about them. They were certainly of that opinion, whatever the noble and learned Lord the Lord Chancellor thought they were advancing.
The Equity situation is a most unusual one. For the noble Lord, Lord Drumalbyn, to say, "We cannot do this because this is just one industry" is not satisfactory. Clause 16—let us face it—was put in by the Government largely for the sake of two unions: Equity and the National Union of Seamen. If they can do that, they should in logic try to go a little further and benefit from their own benevolence towards Equity, and try to make sure that what they are doing by having put in Clause 16 is not now to be frustrated by not being prepared to find some way of meeting the problem that my noble friend Lord Archibald put so clearly and succinctly.
It is a point of entry closed shop—ot pre-entry. It is also post-entry of course, but it is at the point of entry that one becomes, and has to become, a member of Equity. The noble Lord seems to suppose that one could manage it by some other method. All I can say is that we have had discussions with representatives of Equity at the highest level, and they assure us they have looked at what they thought might be possible methods of determining who was a newcomer. But all the time, as my noble friend Lord Archibald said, they are up against the difficulty of the time factor. Anybody who knows anything about theatrical production or the film industry knows that one is constantly in a situation where very rapid decisions have to be made about who is to be cast for a particular part. All kinds of things can happen. You think someone is going to be available and then you find it is not so—he or she has been taken ill, or whatever. Speed is absolutely of the essence.
The great value of the arrangements which have subsisted hitherto is that one had a straightforward test: has the person an Equity card? If he or she has, then we know just where we stand. If they have not we know equally well where we stand, that they are to be regarded as
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newcomers. It is for these practical reasons that the Equity arrangement has worked so well. Everybody knows where they are. The employers know where they are; they know who it is they are proposing to engage, an Equity member or a newcomer, as the case may be. If it is an Equity member there is no problem; if it is a newcomer they go through the normal procedure and Equity can make recommendations, either approving or, if they feel that one of their own members is suitable, putting him forward. But as the noble Lord, Lord Archibald, made quite plain, the last word lies with the employer and therefore it is not a complete free entry closed shop; it is a point of entry closed shop.
It does not lie with a particular organisation to instruct Parliament how to draft an Amendment; it is for the organisation to bring forward the point for consideration, but it is the duty of the Government to find a way of meeting a point if they recognise it to be valid. What are we here for? We are legislators, we are not actors some of us are actors, too, of course, but we are basically legislators and it is our job, if we agree that there is a fair point, to find a way, and more particularly it is the job of the Government. For this reason, I hope very much that my noble friend will persist with this Amendment.
LORD BEAUMONT OF WHITLEY: The noble Lord, Lord Davies of Leek, has spoken of Liberal arrogance. I am now going to produce an example of Liberal arrogance because I do not think we have yet got to the right principle in this clause, and I do not think that even the Government have done so. The question is not just in regard to Equity as such. Far less is it what the noble Baroness, Lady Lee of Asheridge, said, that we must find a solution to Equity however tortuous it may be. What we have to do is to find a way within the framework of this Bill to produce provisions for those unions and those professions who need to have special provisions made for them, whether they are Equity or any other.
In this case Equity is very important, because it is the exception which proves the rule, and at least in one learned Chamber like this—and I hope I see the noble Lord, Lord Conesford, nodding—I do not have to point out to your

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Lordships what an exception that proves the rule does: it tests. It does not have to prove that the rule is good, but it tests what has been said so persuasively by noble Lords on these Benches and on the Benches opposite. It tests the kinds of rules that the Government have vested in this Bill. But having tested it and, I think, probably found it wanting in this respect, we have got to find rules and exceptions which will fit into the framework of the Bill as a whole.
The Government, I think rightly, started off by trying to ban all closed shops and went on to find certain exceptions. There are obviously a number of noble Lords and Ladies on this side who have spoken who do not agree with that, but this Bill is going through with this idea behind it. What we have to try to do is to find the way within this Bill for Equity and for any other union which may find itself in the, same position, because I think there will be others. I think we have to produce Amendments to this Bill which will produce a closed shop which is enforceable by the union against the employers, with the permission of the Commission on Industrial Relations. Obviously you have to have a judge on this, but equally, in these circumstances you have to have a situation where the union can say that if it is in the public interest the employers as well as the unions should be bound to a particular agreement. That is one point we have to get through and it does not seem to me to be impossible.
There are certain Amendments put down by the noble Lord, Lord Archibald, which go a long way to meet this situation. They may not be faultless, but we have another two stages of this Bill to improve them. We have to find the way to control entry to a profession, any profession. May I suggest that this is a matter which concerns not only Equity. This problem has not been faced at all. It has been raised two or three times in the debate on various Amendments but it has not been faced at all, and we have to work out ways in which, in professions like Equity—and I should like to reiterate that this concerns not only Equity —we can find a way which does not derogate from individual rights but which will control entry into the professions in situations like this.
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Thirdly, we have to produce Amendments which are not in the Bill at the moment so far as I can see: the abuses which have been suspected of closed shops in the past (and I do not think probably only of Equity), whereby someone's union card and, therefore, their right to earn their living, can be removed for some reason which is not, in the view of everyone, adequate. We have to have safeguards against this happening. The fact that this is not in the Bill at the moment—and I do not think it is—is due to the fact that Clause 16 came in at a later stage and the Government have not yet had a chance to amend it. But that has to go in, too.
I have probably missed one or two of the other points which must be met, but I should like to go back—I am sorry if I have not managed to comprehend the whole problem in spite of the liberality which I have portrayed, but I think this is the way to approach it—to find within the logic of the Government's own rules how we can make a way for Equity and other unions which may have the same problems within this framework. If the Government will say that they have sympathy with this and will work hard to find a way to deal with it, they will not build up the tremendous resentment which they would otherwise build up amongst us who have such enormous sympathy with Equity.
THE LORD BISHOP OF DURHAM: I
rise to support the noble Lord, Lord Beaumont of Whitley. I knew very little about Equity half an hour ago, but I have learned a good deal since then. I can sympathise with the noble Lord, Lord Drumalbyn, when he says that the way to provide for Equity is not to have a back references to Clause 6. I take that point, but I hope he might feel able to give some undertaking that exceptional groups such as Equity, and perhaps others, may find some way of being provided for in the Bill ultimately.
11.0 p.m.
LORD DRUMALBYN: One is always in the difficulty that when an Amendment comes along one has to deal with that particular Amendment. It is on the Amendment that one votes if one does vote. Of course, one can consider the idea behind the Amendment, but when

1003
it comes to the crunch—if that is the right word—one has to deal with the Amendment.
I am sorry to say that we cannot accept this Amendment as it is, but perhaps I could just say that we shall continue to look very carefully to see if we can find a way round it. We doubt whether we shall be able to do so, but I can tell your Lordships that if some of the dire prophecies that have been made this evening about the effects of legislation on industrial relations in the theatre are even partially fulfilled, the Government will certainly he ready to consider whether some special even statutory provisions should be made to meet the problems which it is suggested may arise. The Government do not believe they will arise.
The Secretary of State has given very careful and lengthy consideration to the many representations made to the Department of Employment by Equity, and as a result the Government have included in the Bill Clause 16 and Schedule 1. If, contrary to our expectations, these concessions are found not to go far enough, well then, let experience of the operation of the Bill decide whether a further special solution is necessary. The noble Lord has got to face the fact that it is very difficult to draft for exceptions; it is very difficult to give a privilege to a particular unit, a particular organisation, a particular industry; we have had some experience of this in the past and it has rarely worked.
These are real problems. I would only give the utmost assurance to your Lordships. Your Lordships know how much attention has been given to this problem; there have been many discussions with Equity. The good will that we have towards Equity has already been shown by this. All I am saying is that we do not think it is right to discard, even in the case of closed shop agreements, this main pillar of the Bill, which might affect not only Equity, it might affect much less appropriate organisations that got through. That being so, I hope that the Committee will reject this Amendment, simply because, as I have previously emphasised, with Equity we are not really dealing with a pre—entry closed shop. As the noble Lord, Lord
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Archibald, has said, this is a technicality. We hope the technicality will be resolved before the Bill goes through. Even if it is not resolved, we believe the troubles that Equity foresees will not be realised, but if they are we shall take action.
LORD DAVIES OF LEEK: Is the noble Lord making any sort of approach to this valuable little debate? I withdraw my arrogant accusation of the Liberals; I thought the case was pungent, powerful and cogent, and not comprehended, apparently, by the noble Lord.
LORD BYERS: You are always changing your mind.
LORD DAVIES OF LEEK: I am like the Liberal Party. I am sitting too near to them, and it is affecting me. All we are asking is that the Government will look at this. The Government seem to resent the fact that we have the audacity to question their ability, their brilliance. We are here to criticise the Government. I have some knowledge of Cabinet working. We had plenty of courageous people in the Labour Cabinet. Surely there are courageous people in the Conservative Cabinet. I can see one now, a very able one. He can say, "We had a bad time in the House of Lords; it was unpleasant, but there was real meaning in the people who spoke". Will not the Government accept the knowledge and experience shown on both sides and give some kind of promise, before the Bill leaves here to go back to another place, that they will look into this?
LORD BEAUMONT OF WHITLEY: The noble Lord, Lord Drumalbyn, said at the end of his speech—and I apologise that I did not quite follow him—that he hoped the technicality could be resolved before the passage of the Bill. What technicality was he actually speaking about?
LORD DRUMALBYN: I was speaking about the technicality that the noble Lord, Lord Archibald, was referring to, namely, that this is not really a pre-entry closed shop but, by a technicality, it is brought in under Clause 6.
LORD BEAUMONT OF WHITLEY: I am rather encouraged by this. On the basic problem of trying to find, within the framework of this Bill, a valid rule for

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the acceptance of Equity agreements—and similar agreements in other unions, with appropriate safeguards, because I take the point about other unions which may or may not be slightly less worthy—is the noble Lord saying that the Government are still going on, looking at, and consulting draftsmen and experts on how this can be done? If he is saying that, and if they really are doing this, I am fairly convinced that a solution can be found.
LORD DRUMALBYN: Our minds are not closed to this. If ways can be devised I am sure we should be very glad to do it, but we cannot depart from Clause 6. As Clause 6 stands, what we have to do is to find some other way of dealing with this.
LORD BYERS:Is the noble Lord telling the Committee that he, as a member of the Government, is going to take the initiative to try to find a solution? If he is saying that, I think it makes a difference.
LORD DRUMALBYN: I shall certainly use what influence I have, but I do not know about initiative. Noble Lords know the position that a Minister has in this House. If the noble Lord likes to say "Take the initiative" well, I will say "Take the initiative". I will start the ball rolling.
11.13 p.m.
LORD SHACKLETON: This really is a test case of our consideration of this whole Bill. There has been a strong attempt, particularly from the Liberal Benches as well as from my noble friends, to persuade the Government to meet this point, and while they do not fully accept that it is necessary, they see the very strong feelings held in the Committee. It was our hope—and we have been discussing really hard matters on this clause —that the Government would consider this. Though I acknowledge that it is always difficult for a House of Lords spokesman, what I fear is that there is no willingness on the part of the Government to touch any of their sacred pillars. They have continually said that they will not infringe the basic principle, and they are prepared to say that they will not do so at any price, and they justify this by saying that they do not believe that the fears of Equity in this matter are real.
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I am bound to say that we had hoped that we were going to make improvements to this Bill. There is not a sign of movement. The noble Lord has been begged to meet us on this, and it is obvious that there are noble Lords on his side of the House who are deeply anxious about this, and also on the Bishops' Benches. Unless the noble Lord undertakes seriously to consider the case, and with a view to coming back with a solution—it has been suggested that a solution can be found; there have been representations and the Government have gone some way, but it is argued that they must go further—on the Report stage, then we have no option but to test the opinion of the Committee, but with deep anxiety and deep foreboding about the future of this Bill.
11.14 p.m.
LORD CONESFORD: I think it would be cowardice if, taking a view which is in stark contrast to many views put forward. I did not speak now. I thought it might be more appropriate on the Question, That the Clause stand part, but it would be cowardice on my part if I did not say a word in support of Her Majesty's Government on this point, though in criticism of the clause. Let me make it absolutely clear that I am entirely convinced, and always have been convinced, that there is need for a strong trade union in the acting profession—I have never doubted that—and for a great deal of the arguments that have been put forward from many sides I have considerable sympathy and some agreement. Nevertheless, I think that there is in this clause matter which directly breaches the Universal Declaration on Human Rights.
I am not going to repeat the argument, but there is under Section 20, paragraph 2, a direct prohibition. A person must not be compelled to belong to an association, and in the clause which we are considering there is a breach of that. I do not however think that for that reason we can completely oppose the clause in this Committee. It has passed in another place after consideration. It is true that it only passed with a majority of two, the smallest majority recorded on this Bill, but it passed. But taking the view which I do that there is mischief in this clause, I think we must do

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our utmost to protect all parties against the tyranny that can result from a breach of this principle in the Universal Declaration on Human Rights. Therefore, I think that the Government are not being merely stubborn, I think they are being right in insisting that they are not now going to abandon what is set out in Clause 6.
May I say one word about Equity? I am rather appalled at the frequent allusions to the acting profession as "this industry". It is not an industry; it is a profession and an art, and in this country, as has been said from many sides, it is an art of which we can be proud. I thought the most hopeful remark my noble friend made in stating the Government's case was that, if necessary, they would consider providing even statutory protection. He did not think it would be necessary, but he mentioned that. I should be much happier if, instead of having this general clause which I think breaches an international Declaration, we had specific provision for the particular cases where we think provision ought to be made, such as the stage and the seamen. Then, indeed, the matter would be controlled by Parliament instead of being left at large, as I am afraid it will be under this clause.

CONTENTS

Archibald, L.

Delacourt-Smith, L.

Morris of Kenwood, L.

Bathurst, E.

Diamond, L.

Plummer, Bs.

Beaumont of Whitley, L.

Donaldson of Kingsbridge

Ritchie-Calder, L.

Bernstein, L.

Gardiner, L.

Shackleton, L.

Blyton, L.

Greenwood of Rossendale, L.

Shepherd, L.

Brockway, L.

Henley, L.

Stow Hill, L.

Brown, L.

Hoy, L.

Strabolgi, L. [Teller.]

Burntwood, L.

Hughes, L.

Swaythling, L.

Byers, L.

Janner, L.

Thurso, V.

Champion, L.

Lee of Asherdige, Bs.

Wells-Pestell, L.

Cooper of Stockton Heath

Llewelyn-Davies of Hastoe, Bs. [Teller.]

White, Bs.

Davies of Leek, L.

NOT-CONTENTS

Aberdare, L.

Brooke of Cumnor, L.

Digby, L.

Abinger, L.

Broke of Ystradfellte, Bs.

Drumalbyn, L.

Ailwyn, L.

Carrington, L.

Dudley, E.

Allerton, L.

Chelmer, L.

Elliot of Harwood, Bs.

Balerno, L.

Clitheroe, L.

Emmet of Amberley, Bs.

Balfour, E.

Colville of Culross, V.

Exeter, M.

Beauchamp, E.

Conesford, L.

Falkland, V.

Belhaven and Stenton, L.

Cowley, E.

Ferrers, E. [Teller.]

Belstead, L.

Cranbrook, E.

Ferrier, L.

Berkeley, Bs.

Crawshaw, L.

Fraser of Lonsdale, L.

Boston, L.

Cromartie, E.

Gisborough, L.

Boyle of Handsworth, L.

Daventry, V.

Goschen, V. [Teller.]

Bradford, E.

De Clifford, L.

Gowrie, E.

Bridgeman, V.

Denham, L.

Gray, L.

But on the short issue raised at this moment, I would unhesitatingly support the Government in thinking that Clause 6 of this Bill is of importance and ought to be maintained. I hope that the Committee will forgive me for having spoken, but I think it would be cowardice on my part if it were to be assumed that the whole weight of opinion in this short debate was against Her Majesty's Government.
LORD ARCHIBALD: May I say one or two words? First of all, I am bitterly disappointed that the noble Lord, Lord Drumalbyn, has not been able to go further on this occasion. If he had said that the Government accepted the principle and would seek means for the Parliamentary draftsmen to give expression to it, I should have accepted that. But he said that if our worst forebodings were borne out Government legislation would be introduced. We know what that means. It means years and years before amending legislation can be brought in. In these circumstances, I am afraid that I must press my Amendment.
11.20 p.m.
On Question, Whether the said Amendment (No. 113A) shall be agreed to?
Their Lordships divided: Contents, 34; Not-Contents, 91.

Gridley, L.

Lucas of Chilworth, L.

Ruthven of Freeland, Ly.

Grimston of Westbury, L.

Luke, L.

St. Aldwyn, E.

Hailsham of St. Marylebone, L. (L. Chancellor.)

Massereene and Ferrard, V

St. Helens, L.

Merrivale, L.

St. Just, L.

Harvey of Tasbugh, L.

Mersey, V.

St. Oswald, L.

Hastings, L.

Monk Bretton, L.

Sandford, L.

Hives, L.

Mowbray and Stourton, L.

Sandys, L.

Hood, V.

Moyne, L.

Strange, L.

Inglewood, L.

Napier and Ettrick, L.

Stratheden and Campbell, L.

Jellicoe, E. (L. Privy Seal.)

Nelson and Stafford, L.

Thomas, L.

Kemsley, V.

Netherthorpe, L.

Tweedsmuir, L.

Killearn, L.

Pender, L.

Tweedsmuir and Belhelvie, Bs.

Kilmany, L.

Rankeillour, L.

Vivian, L.

Kinnoull, E.

Redesdale, L.

Wigram, L.

Latymer, L.

Redmayne, L.

Windlesham, L.

Lauderdale, E.

Rochdale, V.

Yarborough, E.

Lothian, M.

Resolved in the negative, and Amendment disagreed to accordingly.
11.28 p.m.
LORD DELACOURT-SMITH LORD DELACOURT-SMITH moved Amendment No. 118:
Page 14, line 3, after ("charity") insert ("or other fund approved by the trade union or independent organisation of workers").
The noble Lord said: This is a simple Amendment which I trust will commend itself to the Committee. We have already discussed the question of the donations or contributions to charity which may in certain circumstances be made, and the purpose of this Amendment is the modest one of seeking to extend somewhat the destinations of contributions paid by the individuals who claim exemption under these arrangements. It appears (to us that there may be appropriate organisations and appropriate funds, possibly of an educational character or associated with the trade union movement, which may not fall within the definition of "charity" given elsewhere in the Bill, and we feel that this modest widening of the scope is justifiable. I beg to move.
LORD WINDLESHAM: We are considering here, as the noble Lord said when moving the Amendment, the very small minority of people who have a genuine conscientious objection to trade unionism. They do not represent any threat to the strength and growth of trade unions and neither do they represent any dissident minority which seeks to undermine the rights of workers who want to enjoy the benefits of trade union membership. It is an indication of the tolerance and quality of a society that it is willing to make provision for the nonconformist.
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Trade unions have long made provision in closed shop agreements entered into in the past to exempt those with genuine conscientious objections to joining a union. Those provisions have worked well on the whole, and the corresponding provisions in the Bill have taken full account of them. Exemption of the individual worker to join a union is granted on agreement by the conscientious objector to contribute to a charity an amount equivalent to the union subscription. That seems very reasonable. However, these Amendments would only serve o introduce contention into what is, and should remain, a satisfactory area. It is suggested that a conscientious objector should be required to contribute his appropriate contribution not to some charity agreed between the union and the worker but to any other fund to which the union directs that the contribution should be made. The union might direct that the contribution should be paid to some other fund or organisation, the objects of which were equally in conflict with the worker's beliefs and conscience. We have to ask ourselves why this should be necessary. I think we can agree that the trade union movement is big enough to tolerate the conscientious objector and to allow him to contribute to charity—which is what takes place in most instances now. This is not a case of a man getting a "free ride" but of making a contribution to an appropriate charity which will not conflict in any way with his beliefs or conscience. This will not damage the trade union. Arrangements of this kind for payments to an agreed charity work well enough in practice, and we believe it is only sensible to continue them.
LORD DAVIES OF LEEK: May I ask whether the noble Lord thinks that the

1011
word "charity" is defined clearly enough in the Bill? What is to stop an employer and I getting together, or any small group in a factory amalgamating to make a "charity"? I believe there should be a clear definition of the word.
LORD BEAUMONT OF WHITLEY: Your Lordships will remember that we attempted earlier to suggest that payment to a charity in the agency shop as well as in the approved closed shop should be decided by the worker alone; and it was pointed out by the noble Lord, Lord Conesford, among others, that the point of the Amendment was to simplify the Bill. There are two ways, by making it a decision up to either the worker or the trade union. We accept that. We still think that to give the worker the decision would be the best solution, but since the members of the Labour Party are opposed to that we certainly propose to move an Amendment on Report suggesting that the trade union should have the sole right of decision, so as to simplify the whole situation. I do not ask the Government to be precipitous, but, judging by the support from both sides of the Committee, I think there is a chance that this may be accepted. If that is so, I ask the members of the Labour Opposition not to press this Amendment. I assure the noble Lord, Lord Davies of Leek, that the point he raised is pertinent and we shall seek to put down an Amendment —I have already started an investigation —to narrow the definition of what is a charity.
LORD BROWN: May I ask the noble Lord, Lord Windlesham, a question? In the terms of payment by choice to a charity, outlined in Clause 8, the reference is to charitable payments within an ambit of an agency shop agreement. Does that apply to a charitable payment in the closed shop which we are now discussing? It is not clear to me whether it does. If the Clause 8 provisions—that is to say, that the choice of charity is shared between the trade union and the worker —applies to the clause under consideration, what the Minister has said so far is, with respect, not correct. It will not be open to the trade union alone to decide to pay to something other than a charity.
LORD CONESFORD: May I put a point to my noble friend? I think that
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the charity for the purposes of the present clause is dealt with in paragraph 22 of Schedule 1. A charity, as mentioned by the noble Lord, Lord Brown, is defined in Clause 8(3). Is there any reason why that definition should not apply?
LORD DAVIES OF LEEK: I also looked at Part IV of Schedule 1 where it says
" appropriate contributions to a charity to be determined by agreement between him and the trade union."
Here is ambiguity again. This is legalism gone mad.
LORD WINDLESHAM: I prefer to describe it as consistency. It is exactly the same provision which applies in the agency shop which we discussed earlier on Clauses 7, 8 and 9, and the approved closed shop agreement which we took on Clause 16. As my noble friend Lord Conesford correctly said, drawing the attention of the noble Lord, Lord Brown, to Part IV of Schedule 1, the mechanics of the payment, the charity to which it is paid, is set out in that Part of the Schedule. I was asked by the noble Lord, Lord Davies of Leek, about the interpretation and the meaning of the word "charity". In Clause 8(3) there is a definition which we discussed last night and which I described as rather tautologous:
"In this part of the Act 'charity' means any institution or other organisation established for charitable purposes only …"
What are regarded as charitable purposes is a matter that has exercised the courts since 1601. There is no statutory definition of charitable purposes in this Bill or any Act; and I explained at some length the meaning of the words "charitable purposes".
LORD DAVIES OF LEEK: I do not want to make heavy weather of it.
LORD CONESFORD: I am sorry, but the noble Lord has not answered my question: why should we define charity in Clause 8(3) but should not define charity for the purpose of Clause 16?
LORD WINDLESHAM: We do, because the reference in Clause 8(3) is to this Part of the Act, and we are still in the same Part of the Act.
LORD BROWN: I have got the answer. I am grateful to the noble Lord, Lord

1013
Conesford, for clearing up the point that the decision to which body the sum is to be paid rests between the trade union and the worker. I think the Minister indicated that he could not accept the Amendment because it would leave it to the union to decide. But with great respect it does not; it is between the union and the worker.
LORD WINDLESHAM: The noble Lord is not following the discussion with his usual close attention. What the Amendment does is to extend the procedure so that not only has a charity to be agreed. That is what is in the Bill, but the noble Lord, Lord DelacourtSmith, has in mind a fund, not a charity; a fund nominated by the union. So this would be an extension.
LORD BROWN: With the greatest respect, I am not the one who is not following the argument; it is the Minister who is not following what I think I said quite clearly. There can be no objection to the Amendment if the worker and the union, both the interested parties, have to agree. There can be no extension of it beyond the charity. If they both feel that it should be given to some worthy object other than what is defined by "charity", what is the objection to the Amendment?
LORD WINDLESHAM: I take the point, but the Bill does say—and this is a carefully constructed scheme, as I explained yesterday—that in these rare cases where there is a man with a conscientious objection we feel that it would be better that the payment should be made to a charity, and only to a charity. Furthermore, although we did not carry the noble Lord, Lord Beaumont of Whitley, with us, we felt that, since both the union and the individual had an interest in the amount of money which was going to the charity, both of them should have a say in which charity it should be, and that where there is a dispute it should be decided by the Industrial Tribunal.
LORD DELACOURT-SMITH: I am sorry that the noble Lord has taken a somewhat rigid attitude in response to this modest Amendment. He said that it was a very carefully constructed scheme, which the Government was
1014
defending. It must indeed have been extremely carefully constructed if it will be imperilled by so modest an Amendment as this. But the hour is late, and we have many important matters to discuss, and I take note of the point which was made by the noble Lord, Lord Beaumont of Whitley. In the circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
11.43 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved Amendment No. 120:
Page 14, line 10, leave out from ("not") to ("a").
The noble Lord said: Perhaps we could discuss Amendments Nos. 123, 125 and 126 together. It may help noble Lords if I were to read out the subsection as it will be after the Amendment, if the House accepts the Amendment:
(5) to accordance with subsections (3) and (4) of this section, it shall not be an unfair industrial practice for an employer to whom an approved closed shop agreement applies, or for a person acting on behalf of such an employer,—

(a) to dismiss, penalise or otherwise discriminate against a worker to whom the agreement applies, on the grounds that he is not a member of the trade union, or (as the case may be) of one of the trade unions, with which the agreement was made, and has refused to become or has been excluded from being such a member, or, if specially exempted, has refused or failed to pay appropriate contributions to a charity.

These Amendments seek to clarify the meaning of subsections (5)(a) and (5)(b) of Clause 16. They will, I think, be welcomed by all your Lordships, particularly perhaps by those who sit on the Benches immediately opposite. They are intended to make it quite clear that a worker who refuses to comply with the terms of an approved closed shop agreement may legitimately be refused employment or dismissed. Unless an employer has this power, the primary purpose of an approved closed shop agreement would be undermined.
The clause as drafted does not make clear what would be the position of a worker who quite properly was expelled by an approved closed shop union or was refused membership of it. He could not be said to have refused membership, but clearly the employer should in such circumstances be able to dismiss him or

1015
refuse to engage him in order to maintain the closed shop agreement. Neither do the provisions differentiate between failure on the part of the worker to apply for membership and failure on the part of the union to accept him. I think that the Amendments make it clear that the employer might properly enforce the closed shop where the agreement has been approved. A worker may not be unreasonably or arbitrarily excluded from membership of a union. He is protected from such arbitrary actions under Clauses 63 and 64.
Obviously, to safeguard the worker's position properly, there must be a stay of execution before an employer takes action against him to enforce the terms of an approved closed shop agreement in order that he may appeal against the trade union's decision. That safeguard is provided in the new clause which we shall be discussing. However, I am sure that your Lordships will agree that these Amendments are improvements to Clause 16 and I commend them to the Committee.
LORD DELACOURT-SMITH: We shall be discussing the bearing of these Amendments when we come to the new clause, which appears as Amendment No. 128. The matters are closely related and one cannot appreciate the effect of the Amendments to which the noble Lord has spoken without looking at Amendment No. 128. For the moment, we do not wish to challenge the Amendments, save that I should like to put one question, which the noble Lord may find it convenient to answer now or when we come to Amendment No. 128. I would ask whether the original phrase "failed to become", which appears on page 14, line 10, and would be deleted by Amendment No. 120, in the noble Lord's view norrawore or wider than excluded from being a member", which appears in subsection (2) of the new clause. In other words, are there circumstances in which an applicant could be regarded as having failed to become a member of a union in addition to those which would be regarded under the new clause as being excluded from the Bill?
THE LORD CHANCELLOR: I speak now very much off the cuff, but my first
1016
impression is that there is a terra media here. If a worker refused to become a member of a union, that is not the same thing as having failed to become a member. That is certain. And being excluded from a union is not the same thing as having failed to become a member of a union. Therefore, there is a territory in between, in which a person may fail to become a member because of some misunderstanding or negligence on either side or on both sides which is not dealt with in the latter set of circumstances and which would have been dealt with in the former set of circumstances. That is my immediate reaction to the question the noble Lord has asked.
LORD DAVIES OF LEEK: In practical experience, in the old days in the mining industry, if a man was dubbed an agitator in one pit and he moved over the hills to the next pit, suddenly he became known as an agitator and he would not get a job in that pit. If the union also had some feeling against this man—who had tried to join the union but the union said, "No. We will have nothing to do with you. You are a disrupter"—he would not be a member of the union, although he had tried in two or three places to join. With all respect, I think there is a difference in semantics and in meaning. I stand to be corrected—I am not legally trained—but I should have thought that the clause is now wider. That is a point to which it might be worth having an answer.
LORD DRUMALBYN: I think I ought to say in amending this clause that it is my intention to accept Amendment No. 126A—I think it has relevance to what the noble Lord has in mind—if that is moved when we come to Amendment No. 126, one of the Amendments that we are taking together with this one. To that extent, the meaning would narrow the provision.
On Question, Amendment agreed to.
LORD DRUMALBYN: I beg to move Amendment No. 123.
Amendment moved—
Page 14, line 13, after ("made") insert ("and has refused to become or has been excluded from being such a member").—(Lord Drumalbyn.)
On Question, Amendment agreed to.
LORD DRUMALBYN: I beg to move Amendment No. 125.
Amendment moved—
Page 14, line 17, leave out ("and has refused to become").—(Lord Drumalbyn.)
On Question, Amendment agreed to.
LORD DRUMALBYN: I beg to move Amendment No. 126
Amendment moved—
Page 14, line 19, at end insert ("and has refused to become or has been excluded from being such a member").—(Lord Drumalbyn.)
LORD GRAY LORD GRAY moved Amendment No. 126A as an Amendment to the Amendment.
Line 1, leave out ("has refused") and insert ("refuses").
The noble Lord said: I believe that my noble friend Lord Drumalbyn has already indicated that he is prepared to accept this Amendment. It may be for the convenience of the Committee if I move it formally. I beg to move.
On Question, Amendment to the Amendment agreed to.
Amendment, as amended, agreed to.
On Question, Whether Clause 16, as amended, shall stand part of the Bill?
LORD DELACOURT-SMITH: We have now completed our consideration of the clause which establishes the so-called approved closed shop agreements. I am bound to say that in the course of the discussion there has not appeared much sign at this stage of a Government disposition to move very far from their revised conception which is set out in the clause as it stands. Even upon the very powerful case, so widely supported in the Committee, of the theatrical profession, the response of the Government was a disappointment to many of us.
I should not like this clause to be added to the Bill without making one or two general observations upon it. In so doing, I shall try to avoid repetition of the points which have already been made. I will not again labour the position of the theatrical profession, or the Merchant Navy, which was mentioned earlier by my noble friend Lord Blyton. The fact that I am making so brief a reference at this stage will not in any way lead noble Lords in any other parts of the Committee to think that we do not still regard these as two serious examples of industries
1018
and occupations in which difficulties are going to arise because of the doctrinaire approach of the Government. The noble Lord, Lord Drumalbyn, made it clear when he replied about the theatrical profession that the Government's position is that satisfactory industrial relations, in a situation which nobody criticises, have to be sacrificed or imperilled because they do not fit in with the Government's philosophy. There are a number of sections of industry in which the maintenance of arrangements is going to be made very difficult, if not impossible, if the present attitude is not modified—and I sincerely trust that it will be modified.
Let me take one example from the wool textile industry. I have seen statements from the National Union of Dyers and Bleachers, who substantially represent the workers in wool textiles. In this union, approximately 20,000 people are currently covered by a pre-entry closed shop agreement, which was voluntarily negotiated in 1946 with the employers in the dyeing trade. These workers are engaged in the textile finishing industry, and the pre-entry closed shop arrangements give to the union a measure of control over the labour supply. This is administered by the union's full-time officers, with the full support of the active membership of the union and managements. There has not been a major strike in this section of the industry since the inception of these arrangements 24 years ago. The record of industrial peace goes back to 1929, apart from a very small number of local stoppages.
It is almost inevitable, in the view of this union, that dissention and argument will result from the effects of the Bill, and the probability of stoppages at some firms. They think it may be a considerable number of months before the industrial relations in the industry can be restored. They do not look forward with any great enthusiasm to attempting to re-negotiate these arrangements under the present provisions of the Bill in the climate which they believe will be created by its operation.
I take that as one example of one industry where arrangements which it appears offend the susceptibilities of the Government have continued for a very long time—incidentally, continued for years, from 1951 to 1964, under Conservative Governments—without difficulties arising, and to the general advantage

1019
of all those concerned in the industry and to the general advantage of the national economy. When one thinks of the transformations and the degree of restructuring which has taken place in this industry one realises what a possibility there would have been of greater difficulties arising if there had not been the degree of mutual confidence created by the arrangements to which I have made reference.
I have taken one example; one could take a number of other industries where arrangements, which will be disturbed and indeed rendered impossible, or are likely to be rendered impossible, by the Government's approach, have been applied to general advantage. It seems very sad that at a time when we are all seeking, perhaps in very varying ways, to promote better industrial understanding steps should be taken—for such abstract reasons (to be perfectly frank)—which are likely to have the sort of results I have described.
We believe that this matter will still require further consideration. We have indicated our view and we shall pursue it, of course, when we look at the Schedule to which this clause makes reference. As I said in opening the discussion on this clause, speaking on an early Amendment, there is scope for the creation of closed shop agreements on a wider basis than the Government envisage. We envisage them as coming into existence by agreement between the employers and the trade unions in the industries concerned, and as being made in accordance with recommendations of the Commission for Industrial Relations. We accept, of course, the view that the Commission is an advisory body and believe that it is of an advisory character; and the standing which we believe it could secure, if it could be rather dissociated from the close connection with the Industrial Court which the Government propose, would be the proper safeguard for the public interest in connection with closed shop agreements.
We very much hope that it will be possible for the Government to keep this matter under close examination during the remaining stages of this Bill; that they will be mindful not only of debates which have been held in another place but of the discussions on this Bill in your Lordships' House; and that they will also
1020
be receptive to views which may be expressed directly by trade unions and the employers who believe that some aspects of the present proposals in connection with this clause will militate against the improvement of industrial relations. I very much hope that the noble Lord will be able to give us assurances that the Government's mind is open to move in these directions—the directions in which we believe events and facts will force them, the more they examine these facts and the more events develop.
12.5 a.m.
LORD DAVIES OF LEEK: Again, because of the hour and the work we want to do I shall not be very long. We have had an appeal and it has been said that Her Majesty's Government were looking at the point of human rights. It was beautifully put by a noble Lord opposite who spoke of the rights of belonging or not belonging to a union. What we did not hear is written clearly in Clause 16(5), where it says
"In accordance with subsections (3) and (4) of this section"—
I will not read it all, because noble Lords can read it for themselves—
"it shall not be an unfair industrial practice "—
and that is the operative phraseology—
"for an employer to "—
to what?
"…to dismiss, penalise or otherwise discriminate against a worker to whom the agreement applies".
How much rope do the Government want to hang themselves? What do they want to do? We are not in the age of cooking and' frying in the medieval Church, Sombody said the modern trade unions are more powerful than the mediæval Church, but as I said the other evening at least the trade unions do not cook and fry people because they have different points of view, as the mediaeval Church did. But now the Government are saying it shall not be an unfair industrial practice to dismiss a fellow, to penalise him or otherwise discriminate against him.
LORD BROWN: May I interrupt the noble Lord? This really is too much.
LORD DAVIES OF LEEK: I know it is too much.
LORD BROWN: The noble Lord cannot know anything about closed shops.

1021
The object of these clauses is to enable an employer to carry out the wishes of a union in maintaining a closed shop. If the noble Lord knew anything about industry he would know this. The only way to enable an employer to maintain a closed shop is to give him the right to fire a man because he refuses to join a union. The noble Lord has got this completely upside down.
LORD DAVIES OF LEEK: He has not; that is just the point. The right to fire and penalise is all right but it does not just say that. How much does the noble Lord want? Does he want a ducking stool or something? The Government are asking for the power to dismiss—fair enough; to penalise or otherwise discriminate against him. Is the employer being asked to send him to Coventry or to hold kangaroo courts? I know industry well enough. There are so many phrases in this that are unnecessary. I know the noble Lord is a little irate, but I take it in a jovial way.
LORD BROWN: I am not; I am full of pity.
LORD DAVIES OF LEEK: And I am full of pity for the noble Lord. There is no reason for all that phraseology in the Bill.
EARL BATHURST: Is it possible to ask Her Majesty's Government to pay special attention to Amendment No. 113A, moved by the noble Lord, Lord Archibald, and not only to the theatrical industry and the entertainment industry but to the special problems that I believe may be involved for all employers of small staffs, and particularly varying staffs —workers who are employed for a certain time and then go away and come back again later? I understand the average business in this country employs about 200 people and I believe such employers could be involved in difficulties as a result of this clause. I support the clause, but I do ask for that assurance.
LORD DRUMALBYN: May I take my noble friend's request for an assurance on this clause first? We are of course dealing with a compartively narrow area here. We shall be dealing more widely with the kind of point he has in mind later, and perhaps it would be more appropriate for him to raise it when we come to it.
1022
The noble Lord, Lord Delacourt-Smith, has just given a somewhat qualified welcome—if I may describe it in that way—to this clause. Undoubtedly he must regard it as an advance on the Bill as it started out. He is asking that we should keep a completely open mind on any future amendment, but I think he will appreciate that we did introduce this clause in another place for very special reasons and to meet very special cases. He says that our reasons for Clause 6 were abstract reasons, but I do not think that is true. Whenever you take legislation you decide on the principles, as we did, for example, in the case of restrictive practices legislation. You decide on the principles involved, you erect gateways, and then you see whether particular cases fall into those particular gateways in order to be exceptions from the general rules of the Bill.
The general rules of the Bill have been dealt with and I think they are clear. Here we are dealing with exceptional cases. The noble Lord has mentioned the dyeing trade. This also has come to my attention. I know how difficult it is, and how very irksome when there has been an agreement in existence for a long time, one containing a no—strike clause, and they have a very good history of industrial relations, to re—negotiate that. But it is not a bad thing from time to time to look at the agreements that you have negotiated. I do not believe that 'this should necessarily do any harm provided it is approached in the right spirit. As the general spirit of this Bill is to improve industrial relations, and all the machinery that is being devised is designed for that purpose, I am very hopeful indeed that the dyeing industry will retain its very high reputation for the standards of industrial relations in that industry. I see no reason why it should not do so. As the noble Lord said, we shall be coming very soon to the Schedule, and there we shall be discussing the detailed implementation of this clause.
I do not think I need say any more about that, except comment in one word on what the noble Lord, Lord Davies of Leek said. He did not criticise "dismiss" and he did not criticise "penalise", but he did criticise "discriminate". As an instance, it may well be that in a particular section of a plant special arrangements with a particular description of

1023
employees might have to apply. Those special arrangements might carry special benefits in the form of terms and conditions of employment. If this was in the nature of a closed shop then in that case the alternative might be given either of dismissal or of employment in some less remunerative capacity. That might be an instance of what discrimination would mean. I do not think this is so very terrible, given a closed shop agreement. I do not think I need carry the matter further, except to say that we had already passed these words on an earlier occasion when we dealt with Clause 5.
LORD DAVIES OF LEEK: Some of us know what we are talking about as well as other noble Lords. With husbands and wives working in industry, with the phraseology, "penalise", "discriminate", or otherwise, sometimes all the family could suffer and not merely the worker. If the noble Lord behind me does not know this he does not know the conditions in industry. I am looking at the whole matrix of employment. I think all that phraseology was unnecessary. "Dismiss" or "fire" was the word used behind me. All right, it has been noted, and the day will come when some of this will come home to roost to the Party opposite.
THE EARL OF BALFOUR: On a point of information, a good deal has been said about the seamen's Union having difficulty in joining a closed shop. From my experience as a retired Merchant Navy officer, and also as a member of the seamen's union of New Zealand, which was a closed shop, I do not think you will find that there are any complications whatever. In fact, when I was with the seamen's Union of New Zealand we were actually able to carry out a ballot on board the ship, a secret ballot, for the appointment of officers of the union. It was carried out by the chief officer and the bo'sun. Everybody put his vote in an envelope, which was sealed and sent back to the union headquarters. While I am on the point of the closed shop, in New Zealand, I think in 1948, they had a small breakaway from the closed shop union, but it only lasted a year and they went back to the closed shop. Whether it is so to—day I cannot say. From my personal experience of
1024
13 years at sea I do not see any complications there whatsoever.
Clause 16, as amended, agreed to.
12.17 a.m.
LORD BELSTEAD LORD BELSTEAD moved Amendment No. 128:
After Clause 16, insert the following new clause:
Supplementary provisions as to approved closed shop agreements
".—(1) For the purposes of section 16(5)(a) of this Act a worker, notwithstanding that he has not expressly refused to become a member of a trade union with which an approved closed shop agreement was made, shall be treated as having so refused if he does not duly apply for membership of that trade union before the end of the relevant period or if, having applied for such membership, he withdraws that application
(2) For the purposes of section 16(5) of this Act a worker shall be treated as having been excluded from being a member of a trade union if (but only if)—

(a) his application for membership of the trade union has been rejected, or he has been expelled from membership of the trade union, and

(b) the conditions specified in the next following subsection are fulfilled.

(3) The conditions referred to in subsection (2)(b) of this section are that—

(a) under the rules of the trade union the worker has a right of appeal against his rejection or expulsion, and

(b) his appeal has been heard and dismissed or has been withdrawn or the time for appealing has expired without his having exercised that right.

(4) Subject to the next following subsection, in this section "the relevant period" in the case of an approved closed shop agreement—

(a) in relation to a person who, on the date on which the agreement takes effect, is a worker to whom the agreement applies, means the period of three months from that date, and

(b) in relation to a worker subsequently engaged, means the period of one month from the date on which he begins to be employed as a worker to whom the agreement applies,

(5) The Secretary of State may by order made by statutory instrument provide that, in so far as any approved closed shop agreement relates to workers engaged, or seeking to be engaged, in work of a description specified in the order, subsection (4) of this section shall have effect as if, for the references to three months and one month, there were substituted references to such shorter periods as are specified in the order."
The noble Lord said: Under an approved closed shop agreement, the employer agrees that it shall be a condition of employment that a worker must either

1025
be or become a member of the appropriate trade union, unless the worker has a conscientious objection to joining a trade union, in which case he is specially exempted. Amendments made to Clause 16 a few minutes ago by my noble friend Lord Drumalbyn made clear the intention that an employer might legitimately dismiss a worker to whom an approved closed shop agreement applied if that worker refused to become a member of the appropriate trade union or was excluded from membership of it. The proposed clause which I am now moving would make it clear that the worker will be regarded as having refused to become a member, and failed to comply with the terms of his contract, if, after a relevant period, he has refused to apply or withdrawn his application for membership. The clause also would make clear that refusal of membership to the worker by the union, in other words exclusion, is to be taken as either rejection of his application for membership or his expulsion from the union, provided that he has been given an opportunity to appeal against the union's decision. I think my noble friend amplified that point in speaking on the previous Amendments.
Finally, the clause provides that in the case of an agency shop, the worker covered by an approved closed shop agreement will have one month from engagement or three months from the making of the agreement, if he is an existing employee at the time, in which to join the appropriate union. The Secretary of State has power to reduce those periods by Order for particular categories of workers. The clause, therefore, provides clear safeguards of the worker's rights where an approved closed shop applies to him, but makes clear that if the obligation to join the union in an approved closed shop is not accepted the employer may, unless the worker has a conscientious objection to joining a trade union, legitimately dismiss the worker. I beg to move.
LORD DELACOURT-SMITH: This is a comprehensive clause which deals with a quite important aspect of the matter dealt with in the preceding clause. It deals with a subject of some degree of complexity, and one does want to look at it against the circumstances of various industries. I would not like this evening
1026
to be seeking to make any very definitive statement upon it, although I think we may well have to do so at some later stage.
I am bound to say, and I think this requires some comment from the Government, that the relevant period as defined in subsection (4) seems to me to be unduly long. I cannot understand why, in relation to a worker subsequently engaged—that is to say, a worker who comes under (b)—there is to be a period of one month from the date on which he begins to be employed as a worker to whom the agreement applies. I observe that subsection (5)—and the noble Lord drew attention to this when he moved the Amendment—gives the Secretary of State power, by Order, to bring into operation shorter periods in such occupations as the Order may define. I should be grateful if we could have some more clarification of this, because this is profoundly unsatisfactory in the case of those industries—and we have made particular reference to some of them—in which employment tends to be of a casual and short term character.
It is quite obvious that there are a number of sections of industry in which the application of subsection (4)(b), unmodified by action under (5), would render the arrangements in Clause 16 virtually meaningless. One obvious example: is the Musicians' Union, which has already featured in our discussions. Very frequently, as everybody in the Committee will know, an employer of musicians wants a particular musician at quite short notice for an engagement of quite limited duration. If the individual is to have a month in which to join the union after he has been engaged he will have completed the engagement and moved on to some other, and started a fresh month long before the original month has expired. I appreciate deeply the terrible difficulty which this creates for the Government, because in some of these industries they will really have to define some formula which will be very nearly indistinguishable from a pre—entry closed shop. I am quite sure that, in the end, they will have to come at least to the formula which my noble friend Lord Archibald has repeatedly emphasised, that of a point of entry closed shop.
I offer these observations, which are an indication of the fact that this new

1027
clause is not one about which we can feel completely happy, even on the relatively short examination which we have been able to give it since it appeared on the Order Paper. I should like the noble Lord, who is to reply for the Government, to make some observation on the points which I have made, and in particular to address himself to the practical problem which arises in industries which are characterised by short engagements, if the arrangements in Clause 16 in respect of those industries are not to become quite inoperable.
LORD BELSTEAD: I know that the noble Lord, if it had been a different hour of the day, would very likely have gone into this in greater depth, and would have liked my noble and learned friend, or my noble friend Lord Drumalbyn, to have replied. May I briefly pick up the points the noble Lord made? As regards the "relevant period" being unduly long, this is to equate with the agency shop provisions. I do not know whether or not that is an acceptable reason to your Lordships. The noble Lord then spoke about industries in which employment is of a casual or short-term nature. They are precisely why subsection (5) has been inserted in the new clause, giving the Secretary of State power to act by Order. I thought the noble Lord would surely not expect the Government to list the industries in which there are problems of this nature, and if he would not expect that to be done, then surely there are only two alternatives: either once again one lays down criteria, or one gives the Secretary of State regulation powers, and in this case the Government have taken the second option. I do not know whether those replies are satisfactory, but those are the reasons why the latter part of the new clause is drawn in the way that it is.
LORD DELACOURT-SMITH: May I first make it quite clear that my reaction to this clause is made neither more favour-

CONTENTS

Aberdare, L.

Boston, L.

Chelmer, L.

Ailwyn, L.

Bradford, E.

Chesham, L.

Balerno, L.

Bridgeman, V.

Clitheroe, L.

Balfour, E.

Brooke of Cumnor, L.

Colville of Culross, V.

Bathurst, E.

Brooke of Ystradfellte, Bs.

Conesford, L.

Belhaven and Stenton, L.

Byers, L.

Cowley, E.

Belstead, L.

Carrington, L.

Cranbrook, E.

able, nor more hostile, nor more brief, nor more prolonged by the hour at which we are considering it. I should take precisely the same view of this clause whether we were considering it at three o'clock in the afternoon or at six o'clock in the morning. I am afraid that I did not find the noble Lord's answers very convincing. I was not impressed, and neither were my noble friends, with these periods of three months and one month when they appeared in the agency shop agreement, and we are no more impressed by seeing them recur. They seem in both cases to be unnecessarily long. I referred in particular to paragraph (b) of subsection (4), although putting my emphasis on that in no way suggests that I am satisfied with the three months period referred to in paragraph (a).
But in respect of the occupations with engagements of short duration, we must press to know what is the Government's thinking on these. I appreciate that it is a very satisfactory arrangement from their point of view to tuck this difficulty away in subsection (5), and allow it to be dealt with by the Secretary of State by means of Orders at a later stage. This is a clear-cut indication that the arrangements set out in subsection (4) are unsatisfactory. The Government know that they are unsatisfactory; they do not know quite what to do about them; they do not want to have to defend them; they do not want to have to rephrase them. Therefore, they offer them rather timidly to the Committee saying, "Well, do not look too harshly upon them because, after all, they are followed by subsection (5) which will enable the Secretary of State in God's good time to produce Orders which will solve all the difficult problems." This is not good enough, and I must press the noble Lord on this.
12.29 a.m.
On Question, Whether the said Amendment (No. 128) shall be agreed to?
Their Lordships divided: Contents, 86; Not—Contents, 21.

Crawshaw, L.

Hastings, L.

Rankeillour, L.

Croft, L.

Henley, L.

Redesdale, L.

Daventry, V.

Hives, L.

Redmayne, L.

Denham, L.

Jellicoe, E. (L. Privy Seal.)

Rochdale, V.

Digby, L.

Kemsley, V.

Ruthven of Freeland, Ly.

Drumalbyn, L.

Killearn, L.

St. Aldwyn, E.

Dudley, E.

Kilmany, L.

St. Helens, L.

Dundee, E.

Kinnoull, E.

St. Just, L.

Elliot of Harwood, Bs.

Lansdowne, M.

St. Oswald, L.

Exeter, M.

Latymer, L.

Sandford, L.

Falkland, V.

Lauderdale, E.

Sandys, L.

Ferrers, E.

Lothian, M.

Somers, L.

Ferrier, L.

Luke, L.

Strange, L.

Fraser of Lonsdale, L.

Mansfield, E.

Strathcarron, L.

Gisborough, L.

Massereene and Ferrard, V.

Stratheden and Campbell, L.

Goschen, V. [Teller.]

Merthyr, L.

Thomas, L.

Gowrie, E.

Monk Bretton, L.

Tweedsmuir, L.

Gray, L.

Mowbray and Stourton, L. [Teller]

Tweedsmuir of Belhelvie, Bs.

Gridley, L.

Vivian, L.

Grimston, of Westbury, L.

Napier and Ettrick, L.

Wigram, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Nelson of Stafford, L.

Windlesham, L.

Pender, L.

Yarborough, E.

Harvey of Tasburgh, L.

NOT-CONTENTS

Archibald, L.

Diamond, L.

Shackleton, L.

Bernstein, L.

Donaldson of Kingsbridge, L.

Shepherd, L.

Brockway, L.

Greenwood of Rossendale, L.

Stow Hill, L.

Brown, L.

Hoy, L.

Strabolgi, L. [Teller.]

Burntwood, L.

Hughes, L.

Wells-Pestell, L.

Champion, L.

Lee of Asheridge, Bs.

White, Bs.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Delacourt-Smith, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
12.37 a.m.
LORD SHACKLETON: On business, I think it might be to the convenience of the Committee if the Government were to give us some idea of their intentions. I am really moved to do this because the noble Lord, Lord Belstead, speaking in reply to my noble friend Lord DelacourtSmith, said that he quite understood that because of the lateness of the hour my noble friend did not wish to make a long speech. But I did not understand that this also implied that the Government were going to give no reply at all. If the Government intend to keep us sitting at this hour, we assume they wish to discuss business seriously. We have been moving ahead quite well. I think that, on the whole, progress is being made with this Bill, but we shall expect answers from the Government. If the noble Lord, Lord Drumalbyn, thinks that the last Amendment we dealt with was a nice, simple affair which really was in common form, or something like that, and did not need to be argued at all, and if the noble Lord, Lord Belstead, assumes that we are all too tired to put the arguments,
1030
I must disillusion them on this point. We shall expect the Government to reply—and I am sure the noble Lord with accept this. If we are going to debate this Bill, we must do it properly, and we hope the Government are feeling strong enough. They are having a very tough time, but they are doing very well. The noble Lord, Lord Belstead, is a popular figure on this side of the Committe. I was asked not to be too nasty to him on this subject, but none the less we have our duty to discharge on this matter.
LORD DRUMALBYN: The mere fact that the hour is late does not in the slightest mean that we should not expect noble Lords opposite to deploy their arguments, and certainly we shall be very willing to participate to the utmost in the debate. But this is always a question of judgment. My noble friend answered the questions, which seemed to me to be put almost in the same form, and there did n3t seem to be any further substance to be answered. As the noble Lord quite rightly said, this was a common form provision to catch up exceptions. I can only assure the noble Lord that, just as the noble Lord, Lord Delacourt-Smith, said earlier, we should have taken exactly

1031
the same attitude had this been at any other time of the day. We felt that this matter had been sufficiently explored and that no fresh point had been raised, so that there was no fresh point to answer. I hope the noble Lord will accept that this was just a question of judgment.
LORD SHACKLETON: It seems that the noble Lord assumes that his judgment is always correct: I think it is shockingly bad at present. But I wish him luck, and we will leave the matter there.
12.41 a.m.
LORD ARCHIBALD LORD ARCHIBALD moved Amendment No. 128A:
After Clause 16, insert the following new clause:—
Provisions as to Central Councils of Employers and Trade Unions
".Notwithstanding any provision in this Act it shall be lawful for an employer or an association or associations of employers or an organisation or organisations of employers to enter into an agreement with a trade union or trade unions and such agreement may provide that the employer or association or associations of employers or organisation or organisations of employers and trade union or trade unions as the case may be and all constituent members of such bodies shall agree to enter into a contract or contracts under the teams which—

(a) all workers and all employers in an area of employment shall agree to establish a Council;

(b) the rules of such a Council may provide that all employers in that area of employment shall be required to conform to the reasonable rules of the Council;

(c) all workers shall be subject to the regulations of such Council;

(d) such rules and regulations may provide that the trade union and its members shall not take strike officially or unofficially during the period of a collective agreement within the meaning of section 32 of this Act;

(e) that the Council shall have power to regulate the number of new entrants into that area of employment or into part of that area of employment."

The noble Lord said: After what has just been said, I must admit to the Committee that I am tired, old and confused. I will not claim that this new clause introduces any spectacularly new element into the Bill, but it is quite clear in what it seeks to do. I think that members on this side of the Committee at least will agree that it is unique to have a clause which is absolutely
1032
clear in what it seeks to do. One of the effects of this clause, if carried—which I think is highly unlikely—would be to enable the London and provincial theatre councils to continue as at present. The Bill, in its present form, renders these councils powerless because it contains no provisions to apply coercion to the unwilling employer. There are many provisions in the Bill to apply coercion to the unwilling trade unionist, but here is a flagrant case of not apply coercion to the unwilling employer.
The new clause permits two essential things; it enables all employers in a field of employment to be forced to conform to the rule of the council which is set out in the Amendment, whether or not they are members of it and whether or not they register under the Bill. In the theatre industry it is difficult to cope with the bogus manager. In the second place, it enables councils to regulate entry into the field of occupation. In other words, it permits the Equity casting agreements to continue operating; and I will not go over that argument again. If these two concessions are not made, the bogus employer will flourish, to the detriment, first, of the performers and, secondly, of the public. This, combined with the unstoppable flood of new entrants, will bring down, in months rather than years, the reputation of the British performing arts from the high place they now enjoy, and will bring great hardship to all performers. With the support and assistance of the more far—sighted managers in the theatrical industry, Equity has beaten out from the jungle an area of civilisation. The new clause seeks to restore to Equity the tools without which British artistic excellence and material success could not have been achieved; and without which it will not long remain.
12.45 a.m.
LORD DRUMALBYN: I agree with the noble Lord that his meaning in the proposed new clause is clear, which is a great advantage.
LORD SHACKLETON: It is better than the Bill in that respect.
LORD DRUMALBYN: I was going on to say that he will recognise that because something is clear, it does not mean that it is suitable to be put into a Bill. The

1033
difficulty is in the provisions which the noble Lord mentioned:
"that the Council shall have power to regulate the number of new entrants into that area of employment or into part of that area of employment."
The noble Lord's conception is of employers and trade unions entering into agreements for certain purposes which are, first, establishing a Council and, secondly, to provide that
"all employers in that area of employment shall be required to conform to the reasonable rules of the Council;

(c) all workers shall be subject to the regulations of such Council; and

(d) such rules and regulations may provide that the trade union and its members shall not take strike action officially …"

I suppose that is a kind of quid pro quo for the number of new entrants. These are powers which, if they were developed on various bodies, would be subject to the very closest supervision by the Privy Council, or whatever it might be, in the normal way.
While the powers the noble Lord has suggested might easily fit the industry of which he is a distinguished member, it does not follow that they would be generally suitable. We think that the provisions we have made in the Bill will cover the needs without this kind of arrangement, which would be very much of the order of an extended closed shop; a kind of arrangement we do not wish to see, except after the closest supervision and examination before approval. The noble Lord's idea is ingenious but I am afraid it will not fit into the Bill.
LORD ARCHIBALD: Would the noble Lord be any more receptive to the proposed new clause if it referred to a Council with an independent chairman?
LORD DRUMALBYN: Here we are dealing with the regulation of rights. In a Bill which sets out legal rights and duties, it is difficult to introduce a concept of independent bodies set up statutorily without any apparent responsibilities. It is possible for councils of this kind to be formed voluntarily, subject always to the law. Here the proposal is that they should be formed and given certain powers to make regulations, and so on, by which everyone will be bound, but they have no real corresponding
1034
duties. This may contain the germ of an idea but it has not been worked out to the point at which the clause could be incorporated into the Bill.
BARONESS WHITE: It may not have been worked out in such a way that it could easily be included in the Bill, but as I understand it—I am subject to correction by my noble friend—what he is really trying to insert into the Bill is a description of what actually happens, and has happened over a number of years. My noble friend referred to the London and provincial theatre councils. I gather that the London Theatre Council was established many years ago, with the great encouragement of the late Oliver Stanley, known I am sure to some members of your Lordships' House, who took an interest in this—he was at that time Minister of Labour. From that has grown this organisation of councils, which has helped to regulate the industry in the way which has been described.
Although I can understand that the noble Lord may not find it easy to insert the new clause into this Bill, I think one should take account of the fact that, not only in respect of the matters that we were discussing on earlier Amendments, but in other respects, these councils really have done an extraordinarily good job in helping to keep some sort of order in an industry which perhaps by its very nature does not naturally take to order. One of the provisions, as I understand it, is that under the present council the managers and the artistes reach agreements whereby, inter alia, neither the union nor its members may take any action to impede or endanger the production or run of a play. That surely is a most important contribution to industrial peace and to good order in the entertainment industry.
Therefore, just because this clause as it is now put before the House is not very easy to fit into the Bill, I do not think one should dismiss so lightly bodies which have done extremely good and admirable work. Could the noble Lord perhaps enlighten us? Would it be possible, apart from the one matter in paragraph (e), for all the rest of the activities of the councils to be carried on legally once this Bill is enacted?
LORD DRUMALBYN: What this clause says is:
"…it shall be lawful for an employer or an association or associations of employers or an organisation or organisations of employers to enter into an agreement with a trade union or trade unions and such agreement may provide that the employer or association or associations of employers or organisation or organisations of employers and trade union or trade unions as the case may be and all constituent members of such bodies shall agree to enter into a contract or contracts under the terms which—".
The noble Baroness has put a question to me off the cuff. So far as I can see it would be in order for the councils to make contracts of this kind, but one would have to look very carefully at the indivdival provisions to make certain that they did not infringe any Act of Parliament in any way. What I did say earlier was that it is one thing for unions to get together and do this sort of thing without legal provision; it is quite another thing to give statutory authority to them. If you are giving statutory authority to them it is presumably because you want to give them powers which would conflict with some other statutory duty. The noble Baroness then mentioned (e), and there at least it would appear that there is a conflict with the statutory duty.
LORD ARCHIBALD: For the second time I have to confess that I am disappointed at the reply from the noble Lord, Lord Drumalbyn, particularly because in the past he has been so helpful. He has already accepted two Amendments from me and I was hoping that to-night he would enable me to do the hat trick. However, he has not been helpful and I am afraid that we must press this Amendment to a Division.
LORD SHACKLETON: May I ask the noble Lord once again: can he make no gesture to my noble friend? I see that some Liberal Lords had their names to this Amendment. Perhaps it was to them that the noble Lord, Lord Belstead, was referring when he spoke of noble Lords wishing to keep the Committee late at night, because they do not seem to have contributed at all to what seemed to be their own Amendment. I thought that we were discussing a Bill, but we seem to be discussing a sacred cow. Cannot we get the Government to move on this? Cannot the noble Lord even offer to consider this, even if the noble and
1036
learned Lord the Lord Chancellor, who has now moved to the elder statesmen's Benches, is getting a little disturbed? It is the Government who are keeping us here, not the Opposition.
LORD DRUMALBYN: The problem here is quite simple. There is nothing in the Bill to prevent Equity continuing to operate as they do now in a way which regulates the number of entrants into the acting profession, provided the regulations are not based on union membership. Nor will the Bill in any way discourage voluntary councils from establishing standards to be applied to and to be applied by those who are represented on the councils. What we cannot accept is the right of councils to bind those who are not parties to the agreements reached by the councils. This is what we cannot accept. I hope that the noble Lord will not press his Amendment to a Division. He has not given us long to consider this Amendment. If he would like it to be considered further at greater leisure, we will certainly undertake to do that without, of course, any commitment whatsoever. Perhaps in these circumstances the noble Lord will not press his Amendment.
LORD ARCHIBALD: On the undertaking just given by the noble Lord, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule 1 [Provisions as to certain closed shop agreements]:
1.0 a.m.
LORD HENLEY LORD HENLEY moved Amendment No. 135A:
Page 122, line 15, at end insert:
".—(1) Where one or more trade unions has made a proposal to one or more employers or an employers association or organisation of employers for an agreement which if made in accordance with proposals approved by the Industrial Court under this Schedule would be an approved closed shop agreement and the employer or employers or employers association or organisation of employers has refused or failed to enter into such agreement, the said trade union or trade unions may make an application to the Industrial Court under this part of this Schedule for the approval of such an agreement and in such a case the Industrial Court and the Commission shall deal with such application as though it were a joint application under paragraph I of this Schedule.
(2) Where the Industrial Court makes an order in respect of such application under paragraph 4 or paragraph 14 of this Schedule

1037
then the proposals embodied in the draft agreement shall be binding upon the employer or employers or employers association or organisation of employers (as the case may be) in every respect as though such draft agreement had been made between the trade union or trade unions concerned and the employer or employers association or organisation of employers concerned and as if it were a closed shop agreement within the meaning of section 16 of this Act."
The noble Lord said: I rise to move this Amendment on behalf of the noble Lord, Lord Archibald, who says that he is old and confused. He certainly is not confused and I do not believe he is very old, either. I also move it on behalf of my noble friends, who, after their arduous intervention earlier on, have moved.
LORD BELSTEAD: Before the noble Lord continues, can he say whether he is going to take any other Amendments with this one?
LORD HENLEY: No; I am going to take this one alone, and if I get no satisfaction I will press it to a Division. The purpose of the Amendment is to enable trade unions to make unilateral application for a closed shop where an employer or employers' association unreasonably refuses to join in making such an application. It will be rioted that it is only an application, and the criterion of having a closed shop accepted are so rigorous that an application can perfectly well be rejected. I should also like to remind your Lordships that where it appears that a closed shop is a desirable thing to have, Equity—and this in no small measure concerns Equity—has operated one to everybody's satisfaction for many years. The argument on Lord Archibald's earlier Amendment, No. 113A, was not about whether Equity should have a closed shop, but how to ensure within the framework of the Bill that it could go on offering a closed shop in the way it has done so successfully and to everybody's satisfaction for forty years.
The present provisions of Clause 16 and the Schedule are not good enough in this respect. This was mentioned by my noble friend Lord Beaumont of Whitley on Thursday last when he spoke to Amendment No. 44. First of all, I think it is unfair that the union cannot exert any pressure upon the employer here. Secondly, it seems to me that the question of the ballots is not fair. The employee cannot compel an employer or
1038
association of employers to join in putting the problem before the Commission and the Court. On the other hand, the employer can, if he so manages it, destroy a closed shop by the use of the ballot. The effect of this is to give an unchallengeable veto to the employer, and this veto is entirely one-sided. The possession of this one-sided veto by the employers, either collectively or by an individual employer, seems to me to be an unfair weapon in relation to the general collective negotiations. There is a great danger of the closed shop in this particular industry being abandoned, first of all, by disreputable managers, and then, because they are inevitably driven into this position, by other managers as well.
I think I mentioned at the beginning of my speech that the Commission have to be satisfied that the very tough criteria in Schedule 1 are met, and there is no good reason why it should be made impossible for the union to make a unilateral application for opportunity to prove the existence of the facts that make a closed shop necessary. As I have said, it is an application, and it has to be proved. It seems reasonable that it should be possible to enforce an application on the employer. I think it is recognised, so far as Equity is concerned, that it does rely very much on the closed shop, and there should not be an entirely one-sided state of affairs where the employer can avoid even the application. I beg to move.
LORD STOW HILL: May I supplement what has been said by asking one question of principle? If one is dealing with an agency shop agreement, the procedure which is now contemplated by the proposed new clause is allowed. Under Clause 10(2) of the Bill a union can ask for an agency shop agreement without the co-operation of an employer, and indeed, despite his opposition. Clause 16 and Schedule 1 envisage only a joint application by unions and employers. I should like to ask the noble Lord, Lord Drumalbyn, why the distinction? It may be said that the closed shop agreement invades rather more drastically the principle for which the Party opposite contend; namely, that Clause 5 (1) (b) should be sacrosanct, subject to limited intrusion. When one looks at the complicated procedure set out in Schedule 1, and takes into account the stringent requirements

1039
contained in that Schedule, and the degree of proof that must be furnished before an approved closed shop can be obtained by going through the procedure envisaged in Schedule 1, I would submit to the Government that there is not sufficient reason to draw the distinction between the facilities afforded to a union to ask for an agency shop agreement, despite the opposition of an employer, and the procedure whereby an approved closed shop can only be asked for with the co-operation of both. The new clause at present before your Lordships is designed in effect to equate the two positions.
The submission I would make to the Committee is that if you consider the nature of the two agreements which are contemplated both by Clause 10 and Clause 16, the degree of difference between them does not warrant the radically different procedure which has to be followed before either of them can be obtained. There is strong reason to adopt the new clause which can be supported by argument which is difficult to resist.
1.7 a.m.
LORD BELSTEAD: This Amendment is to facilitate the approval of closed shop agreements by enabling the application to be made by one party to the agreement only. It is our firm intention to approve closed shop agreements only when the Commission is fully convinced, having investigated the circumstances, that the criteria set out in the Schedule are satisfied, and that an agency shop agreement would not be equally satisfactory. This is because we believe that only in the most exceptional circumstances should such an agreement be approved. Also, if we are to have stable industrial relations, it must only be approved where both sides of the industry are equally convinced of the necessity. We are opposed to unilateral applications. The noble Lord, Lord Stow Hill, has referred to the balnace between the agency shop agreement and the closed shop agreement which we are studying at the moment. It is true that the draft agreement will require both sides to agree. The Bill deliberately distinguishes between the closed shop and the agency shop in the way that the noble Lord, Lord Stow Hill, has pointed out and asked the question. The reason the Bill is drawn in this way and the Government
1040
take the view they have is not only because we realise the gravity of the situation when a closed shop agreement is to be formed, but that we have been told many times—and the Government were told in another place—that in closed shops both sides invariably desire the closed shop situation.
We feel that in drawing the Schedule in this way we are not doing something which will militate against closed shop agreements. That was not the advice given in another place or on Second Reading in this House. We are moreover, opposed to agreements being imposed upon all employees in any particular field because it is important to ensure that when such important obligations are being imposed as will be necessarily be imposed by a closed shop agreement, it would only result from an agreement entered into freely.
Listening to the noble Lord, Lord Stow Hill, one further thought came to my mind. We often refer—it has certainly been referred to in another place—to the vital need to protect workers, the third partner in industry, when on occasions management and trade unions for their part decide that they wish to form a closed shop agreement: that is the moment when it is so necessary to make sure the third party is protected. But, under these Amendments, employers who were not parties to the agreement and their workers could well find themselves hound by terms to which they had never consented.
There was just one other joint which arose from the speech of the noble Lord, Lord Henley. The noble Lord criticised the balloting provisions in the Schedule. I confess that I did not follow the noble Lord on this point, and I am not armed with an answer for him. If he would care to elucidate what it was he was getting at, perhaps we could draw this to a conclusion.
LORD HENLEY: I would be only too pleased to spell out exactly what I meant. There is no provision in the Schedule by which the union can secure a ballot, the outcome of which could be to compel the employer, or organisation of employers, to join in bringing the problem before the Commission and the Court. On the other hand, provision is made by which the ballot procedure can be invoked in order to destroy a closed

1041
shop agreement which has been established and approved. That is in terms what I meant by saying that I felt the ballot procedure operated unfairly.
THE EARL OF DUDLEY: I rise briefly to support the Government on this. The point here really is that any closed shop, by its nature, must carry with it an exclusion threat; and because of the exclusion threat, and because of the consequences that an exclusion threat can carry for an individual worker, the highest degree of consent must be required between all parties before an agreement can be made which carries such a practice with it.
LORD HENLEY: I entirely agree that very special obligations are put upon an employer in this case, and therefore very special circumstances only should apply to the closed shop being granted. But the criteria are so very tough that I should have thought that this point was met. All one is asking for here is that it should be possible to make an application. The application can be turned down.
BARONESS WHITE: I feel we should press the Government a little further on this. As the noble Lord, Lord Henley, has very rightly pointed out, in the Schedule which we are about to come to, the most stringent conditions are laid down before consent would be given to the establishment of a closed shop. Noble Lords will have studied Part I of the Schedule, which makes it perfectly plain that it is going to be no easy matter to obtain the establishment of a closed shop. As the noble Lord, Lord Henley, and my noble friend Lord Stow Hill have pointed out, what we are really asking for is that the employer should not have an absolute veto, which is what he has at the moment—a complete veto—on a union asking that the Industrial Court should be able to refer the matter to the C.I.R. The Commission cannot examine it; they have no right, as I understand it, even to look at the matter, or even to consider whether a possible closed shop might be appropriate, unless there is, as it were, a dual application. In other words, however strongly a union may feel that in their particular circumstances, in their particular industry, there was a good case for a closed shop, a case cannot even be examined unless the employers also are in complete agreement.
1042
It might possibly be that the Industrial Court and the Commission would come to the conclusion, after examination of the case, that it was not good enough; that it did not fall within the criteria set out in the Schedule. In that case, of course, they would obviously refuse the application. But they cannot even look at this at the moment unless the employer also is in agreement. In most cases we would assume that the employers and the unions would be in agreement, but we do not feel that the difference between an agency shop and a closed shop—although it is a significant one— is so great that one should eliminate from the provisions for the closed shop the possibility of a union trying to put its case and having it examined, even though the employers might not be in complete agreement. We feel this is really putting a constraint on the unions, and putting a rather unfair weapon of complete veto in the hands of employers.
LORD DRUMALBYN: I think we can narrow the point of disagreement quite easily, because we feel that in the special circumstances of the closed shop it is not right to force the closed shop on an employer, or indeed on a union, against his will.
LORD HENLEY: Will the noble Lord allow me? We are not asking to force it, but to apply for it to be considered.
LORD DRUMALBYN: But this is not logical, because if you are not forcing why not have a joint application to start with? It is only in the case where one side or the other—say, where the employer is reluctant to have the case for a closed shop examined—that such an application would be made by the trade union, and obviously the effect of that would be that, assuming that the C.I.R. after examination recommended that there should be a closed shop, then in that case it would be forced on the employer, and we do not think this is right.
In any event, as the noble Baroness, Lady White, has said, in the sort of case that has given rise to the special provisions there has been pressure from both sides of industry for this to be done. She is right about that. What she is saying in effect is that there may be some other industry coming along where the circumstances are not the same; but we believe

1043
that it should be difficult, and the gateways should be narrow for this particular purpose, and we do not think it is right to force a closed shop on unwilling parties.

CONTENTS

Archibald, L.

Donaldson of Kingsbridge, L.

Shackleton, L.

Bernstein, L.

Greenwood of Rossendale, L.

Shepherd, L.

Brockway, L.

Henley, L.

Stow Hill, L.

Burntwood, L.

Hoy, L.

Strabolgi, L. [Teller.]

Champion, L.

Hughes, L.

Wells-Pestell, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

White, Bs.

Delacourt-Smith, L.

Diamond, L.

NOT-CONTENTS

Aberdare, L.

Ferrers, E.

Mowbray and Stourton, L. [Teller.]

Ailwyn, L.

Ferrier, L.

Balerno, L.

Fraser of Lonsdale, L.

Napier and Ettrick, L.

Balfour, E.

Gisborough, L.

Nelson of Stafford, L.

Bathurst, E.

Goschen, V. [Teller.]

Pender, L.

Belhaven and Stenton, L.

Gowrie, E.

Rankeillour, L.

Belstead, L.

Gray, L.

Redesdale, L.

Boston, L.

Gridley, L.

Redmayne, L.

Bradford, E.

Grimston of Westbury, L.

Rochdale, V.

Brooke of Cumnor, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Ruthven of Freeland, Ly.

Brooke of Ystradfellte, Bs.

St. Aldwyn, E.

Carrington, L.

Harvey of Tasburgh, L.

St. Helens, L.

Chelmer, L.

Hives, L.

St. Just, L.

Chesham, L.

Jellicoe, E. (L. Privy Seal.)

St. Oswald, L.

Clitheroe, L.

Kemsley, V.

Sandford, L.

Colville of Culross, V.

Killearn, L.

Sandys, L.

Conesford, L.

Kilmany, L.

Somers, L.

Cowley, E.

Kinnoull, E.

Strange, L.

Cranbrook, E.

Lansdowne, M.

Strathcarron, L.

Croft, L.

Latymer, L.

Stratheden and Campbell, L.

Daventry, V.

Lauderdale, E.

Thomas, L.

Denham, L.

Lothian, M.

Tweedsmuir, L.

Digby, L.

Luke, L.

Tweedsmuir of Belhelvie, Bs.

Drumalbyn, L.

Mansfield, E.

Vivian, L.

Dudley, E.

Massereene and Ferrard, V.

Wigram, L.

Dundee, E.

Merthyr, L.

Windlesham, L.

Elliot of Harwood, Bs.

Monk Bretton, L.

Yarborough, E.

Falkland, V.

Resolved in the negative, and Amendment disagreed to accordingly
1.26 a.m.
LORD DELACOURT-SMITH LORD DELACOURT-SMITH moved Amendment No. 136:
Page 122, line 16, leave out ("Industrial Court") and insert ("Commission on Industrial Relations").
The noble Lord said: As the Committee will have observed, it has not been the practice, from this side of the Committee, to move Amendments which have been substantially covered in the terms of the clause, but I wish to move Amendment No. 136 because this is the first of a group of Amendments which include Amendments Nos. 137, 138 and 139. If
1.18 a.m.
On Question, Whether the said Amendment (No. 135A) shall be agreed to?
Their Lordships divided: Contents, 20; Not-Contents, 80.
noble Lords will look at the Schedule and relate the Amendments to the text of the Schedule they will see the point which we are endeavouring to establish.
In the first place, we are seeking to substitute the "Commission on Industrial Relations" for the "Industrial Court" and we are then suggesting that the Commission shall not entertain any application in respect of a draft agreement if it is made before the end of a period of six months, beginning with the date at which the previous application was made in respect of the workers proposed to be covered. And we are further proposing to omit subsection (3)(b). I think this is consistent with the view we have expressed

1045
previously, that what we wish to do is to simplify the consideration of this matter; to place it in the hands of the Commission and to shorten from two years to six months the period which must elapse after any previous application, under this Schedule, of this character has been made, and to omit, as I say, the provisions which at present appear in subsection (3)(b). I beg to move.
THE LORD CHANCELLOR: I do not know how this Amendment has come to be moved rather than one of the others, because if one looks at the Schedule, page 122, line 16, one finds that, at a stage at which it is wholly inapposite to do so, the noble Lord is suddenly in the middle of things trying to take out the Industrial Court and substitute the Commission on Industrial Relations, when clearly under Schedule I and Schedule 2 the Industrial Court is already seized of the matter. As a mere matter of drafting, clearly it would not do.
Looking at the substance of the matter, as I have tried to follow it from the noble Lord's speech, I do not see anything to differentiate this Amendment, in principle, from one which we discussed some time ago, in which quite clearly a difference emerged between the two sides of the Committee. We believe that the Industrial Court has a function, and the Opposition do not. We also believe that that function, being judicial, is different from that of the Commission of Industrial Relations, which has an advisory purpose to deal with matters of policy. I cannot see anything to differentiate this Amendment, in principle, from the one negatived some time ago in which a similar attempt was made to substitute the Committee of Industrial Relations for the Industrial Court.
LORD DELACOURT-SMITH: There is perhaps some misunderstanding here. I rose to move Amendment No. 136 because it seemed to me necessary to do so to make sense of the sequence of Amendments to which I referred. The noble and learned Lord is right in that, if one looks at Amendment No. 136 alone, it is an issue which we have examined and on which a decision has been reached. But if one looks at the other Amendments in this sequence, and in particular at No. 138, this is not a point to which attention has been directed.
THE LORD CHANCELLOR: I was just coming to that. I had not quite understood from the noble Lord's speech that he recognised so plainly that No. 136 wins inappropriate. This brings me to the second part of the Amendment, which would reduce the period of stability from two years to six months. I detect there an extraordinary inconsistency between the attitude taken by the Opposition some two or three hours ago over the period of stability after the initiation of an agency shop and after the failure of an attempt to upset an agency shop, and the period of stability which is now proposed. The whole case argued from the Opposition Benches two or three hours ago was that two years was much too short a time, because it would cause a constant period of unrest; now it is said to be much too long, and the noble Lord wants unrest every six months. I think the two years period is just about right, and I hope the Committee will take the same view. There is a certain virtue in consistency. The Opposition have not achieved it, but we have.
LORD DELACOURT-SMITH: If I may say so, this verges almost on a debating reply which we have had from the noble and learned Lord, because the two cases are completely different. The previous case to which he was referring was one in which we were deprecating the idea of upsetting, in a short period, arrangements which had been made for an agency shop, in the case to which the noble and learned Lord is referring. We were saying that once an agreement had been reached to set up some stable form of industrial relationships, this should not be called into question until it had been in existence for a fairly long period of time. Here we are dealing with a fundamentally different situation. We are dealing with a situation in which consideration has been given to an application that has failed. The more highly organised system of industrial relations has not been established. We are saying that the fact that this application has failed should not debar consideration of a further application for a period as long as two years. We say that in that case, when it is a question of considering whether there should be a more developed form of industrial relations, the two-year period should be shortened to six months.
On Question, Amendment negatived.
LORD DELACOURT-SMITH LORD DELACOURT-SMITH moved Amendment No. 140:
Page 122, line 32, leave out paragraph 4.
The noble Lord said: This Amendment is consistent with our approach to this matter, and we are moving to exclude paragraph 4 because it includes a reference to the Industrial Court. I beg to move.
THE LORD CHANCELLOR: This Amendment really only raises the point which we were debating earlier. I recognise in this case the noble Lord's consistency and I hope that he will recognise mine.
LORD DELACOURT-SMITH: I am very glad that we have reached a situation of mutual recognition of consistency. However, I do not propose to carry it to the point which the beginning of the noble and learned Lord's intervention on the earlier Amendment almost tempted me to do, of moving every one of our Amendments in order to demonstrate our complete consistency. In these circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
1.37 a.m.
LORD STOW HILL LORD STOW HILL moved Amendment No. 140A:
Page 122, line 32, after ("3") insert ("and paragraph 27")
The noble Lord said: This Amendment would have the effect of adding the words "and paragraph 27" after the words "paragraph 3" in the first line of paragraph 4 of the Schedule. That sounds rather cryptic and mysterious and will remain so unless I tell your Lordships what paragraph 27 would be. If it is to the convenience of the Committee, perhaps I may discuss with this Amendment No. 191A which contains the text of the new paragraph 27 which we seek to insert at page 127 after line 42. In other words, that would be the new paragraph 27 and, if it is to your Lordships' convenience, I will indicate the purpose of that new paragraph. If one looks at the agency shop, the position as it is left by Clause 5(1)(b) and Clause 10, as I understand it, is that where when the Bill comes into operation there is in existence an agency shop, it will remain in existence; and I think the Government spokesmen indicated not long ago
1048
their concurrence in that view. Then, under Clause 10, the necessary application can be made for an agency shop should the circumstances be appropriate, and the matter proceeds in that way. The situation is wholly different when one is considering the closed shop.
May I go back to the speech of my noble friend Lord Delacourt—Smith and his description of the situation in the dyeing industry? There, he told us, there is a closed shop in existence, and it has been in existence for some 24 years. That is a situation which can be found in different forms throughout industry. There are at the moment a large number of closed shops. They have conduced to great stability in industry and have served their purpose very admirably; and still do so. As I read the Bill and, again, the effect of Clause 5(1)(b), the wording produces this result. In that dyeing industry—and indeed in all other industries and sections of industry where there is now in existence a closed shop—when this Bill comes into operation, or the appropriate clauses are brought into operation by Order in Council, the effect will be that those closed shops will immediately become unlawful, and any employer who seeks to implement them will be committing an unfair industrial practice if he acts in accord with their terms. They become unlawful agreements and must be discarded.
Clause 16 provides the procedure whereby an approved closed shop can be brought into being. Examining the provisions of Schedule I which sets out the mechanism of the procedure, one sees that these are very complex. A great deal has to be proved by the joint applicants for the closed shop and it will take a considerable time. I have only to refer to paragraph 7(2) which provides that when a favourable report is received by the Industrial Court from the Commission the Court has to specify a time "not being less than one month", or it may be as much as three months, during which application can be made for a ballot to be held. There is a lapse of some months. The Commission's inquiries must take a considerable time, and before an approved closed shop can be made part of an order of the Court, a very considerable time must elapse. The result is that all these closed shops, which are working well, and are fully

1049
understood and accepted by both parties spreading over a large part of industry, having been in operation for many years, may suddenly, when the Bill comes into operation, become unlawful. They cannot be replaced by an approved closed shop agreement until a considerable time has elapsed, unless the joint parties to the application have measured up to the high standard of proof required by the provisions of Schedule 1; and then they may not succeed.
The new paragraph which I seek to insert into the Schedule, and for which the Amendment that I am now moving paves the way, provides for the making of an interim order. If noble Lords look at page 14 of the Marshalled List they will see that it operates in the first place where there is in existence a closed shop; where there has been a closed shop for some time—for instance, in the dyeing industry situation described by Lord Delacourt—Smith. Where a closed shop is in existence, both parties—the employers and the trade union—may approach the Industrial Court and ask, as a kind of measure to preserve the situation, for an interim order to perpetuate and to continue the lawfulness of the existing closed shop until the Court can finally pronounce on the question of whether there should be an approved closed shop in pursuance to an application in that behalf by the joint parties.
If the application is made for an interim order, the same procedure must be gone through. The interim order can last only a specified time. It will be seen in the last paragraph that the interim order shall expire at the end of one year unless by that date a joint application has been made; so if the Court thinks it appropriate, the procedure in so far as it can be gone through in the appropriate time having been gone through, it is directed that there should be an interim order. It lasts for one year in order to give the parties the opportunity of getting together and mobilising their evidence and equipment to lay the foundation for an application for a permanent approved closed shop. This procedure would have the result that, instead of the existing closed shop coming to an end, it would be perpetuated, or perpetuated, perhaps, after a very short interval of time necessary to allow for the making of the application for the interim order and for
1050
the making of the interim order by the court. The existing closed shop would then remain in existence for a year unless and until an application was made, in accordance with Schedule 1, by both parties for an approved closed shop. That would secure a continuity of the existing situation, in which there is now a closed shop, up to the time when a decision could finally be taken by the Court as to whether it would direct that there should be an approved closed shop.
The object of the paragraph is to eliminate what might be a disastrous hiatus in time from the time when, on the passing of this Bill, the existing closed shop becomes unlawful, until a decision can finally be taken by the Court—perhaps many months later; perhaps even longer than that—as to whether the existing circumstances justify the making of an approved closed shop order.
I respectfully submit to both sides of your Lordships' Committee, and to all three Parties concerned, that in making that proposal I am not making a proposal which in any way conflicts with the thinking of the Party opposite; and it is, I should have thought, wholly in accord with the thinking of both the Liberal Party and my own Party. We on this side of the Committee all take the view that these closed shops are extremely valuable, and we are really appalled at the idea that they can be wrecked, as it were, by a stroke of the pen, on the passing of this Bill. We regard it as really disastrous that that should be the situation. Once they are gone, it may be difficult to revive them, and a long time will have to elapse before that is necessary. I should have hoped that the Party opposite might say that it certainly does not infringe their own views about the necessity for preserving a freedom of choice, in terms of Clause 5 of the Bill, if what is done is simply that the Court is enabled to keep the status quo until a final decision is arrived at as to whether closed shop in terms of Clause 16 should be brought into being. I beg to move.
1.47 a.m.
LORD DRUMALBYN: I very much appreciate the clarity with which the noble Lord has moved his Amendment: it is very clear indeed. But the difficulty, of course, is that he is starting from a totally different point of view from that of

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my right honourable friend the Secretary of State. The concept of the Secretary of State when he had Clause 16 and Schedule 1 written into the Bill was that the closed shop should be a wholly exceptional institution and that the agency shop, which was originally envisaged, should be the main form of this kind of collective bargaining arrangement. The noble Lord is concerned, I think quite rightly, that there should not be a hiatus. The question is, of course: a hiatus between what? We envisage quite clearly that most of the existing closed shops, whether pre-entry closed shops or post-entry closed shops, will be re-negotiated as soon as the Bill passes. This would be the sensible thing to do. Everybody with closed shop arrangements will appreciate whether or not they are likely to have any chance of passing through the gateways that are laid down in the Schedule. If they are not, and if agreement between the two sides cannot be obtained at that stage of application for a closed shop, then obviously the right thing for them to do is to negotiate an agency shop agreement. As I mentioned at an earlier stage, there is evidence that agency shops are already replacing closed shops where closed shops fall due to be re-negotiated just now, before the Bill becomes law, and one would expect this to continue, because firms will take notice of points proposed to become law and will make their preparations.
The noble Lord knows that there will be a gap between the time when the Bill becomes law and the time when the first Part of it comes into operation. As was said earlier, there will be a further interval before this Part of the Act comes into operation; so there will be a reasonable time for new arrangements to be made on a voluntary basis between the two sides. It seems very unlikely indeed that where closed shops are now in existence an employer will resist their replacement by agency shops; so one need anticipate little difficulty there. Where there is resistance, there will inevitably be a hiatus and the trade union will have to take the matter to the Industrial Court for examination as to the setting up of agency shop agreements. The hiatus is unlikely to arise, but we are looking at the possibility. We expect to be able to take such measures as will ensure that it
1052
will be unlikely to arise in any particular case. I cannot announce details of those measures now, but I should like to express gratitude to the noble Lord for having moved this Amendment with great clarity and for giving me the opportunity of bringing out the way in which we hope to deal with this matter.
On Question, Amendment negatived.
1.54 a.m.
LORD STOW HILL LORD STOW HILL moved Amendment No. 142A:
Page 122, line 41, leave out ("as mentioned in section 1(1)(c) of this Act").
The noble Lord said: this particular Amendment, which again looks rather mystic in form, is really of a probing nature in order to invite discussion and attention concerning some aspects of Schedule 1. The actual words which the Amendment seeks to leave out are to be found in line 41, paragraph 5(1)(a). These words have been chosen for the purpose of the Amendment to enable me to draw the attention of the Committee to what has to be proved before any headway at all can be made towards the attainment of an approved closed shop agreement. I do not think any useful purpose would be served by reading out sub—paragraphs (a), (b), (c) and (d). When one looks at sub—paragraph (a) and sees there the reference to Section 1(1)(c) of the Act, one recalls the whole argument about the code of conduct which is to reflect the provisions of Section 1 but which has not yet been before us.
I do not wish to take up time by repeating the complaint made about our having to argue about that in the dark. That is now reproduced in paragraph (a). Let it be assumed that an application in form has been made to the Industrial Court. The application complies with the first three paragraphs of the Schedule and the Court refers the matter to the Commission. The Commission then has to ask itself whether it is perfectly satisfied that it is necessary for those workers to be comprised in an approved closed shop agreement for the purposes of (a), (b), (c) and (d). It does not stop there. Having looked at the paragraphs the Commission then has to look at subsection (2) of paragraph 5 and consider

1053
whether the purposes specified in paragraphs (a), (b), (c) and (d) could not be equally satisfactorily achieved by an agency shop. Having done that it has to draw up a report for the Court announcing whether it is affirmatively satisfied with regard to all 'those matters. If it cannot so report to the Court, nothing more is done.
This is an enormous volume of proof to undertake. How is the Commission to operate? Is it to summon witnesses? How on earth is it to answer the questions? Does it proceed to go into the numbers of the members of the union who are availing themselves of the right to pay a contribution to the union without being members of it? Is it to ask them individually what are their motives and how deep are their convictions, and whether they would be prepared to join in a closed shop? This sounds to me the sort of thing which in the olden days would have been embodied in a large brief with a fat fee, and lawyers would be delighted about it. But this has to be done before the Commission can get to work to prepare its report. How is the Commission to know whether it is satisfied as to those five matters? Suppose it looks at the dyeing stuff industry about which we were told by my noble friend Lord Delacount-Smith. In that case the information would be that a dosed Shop was in existence, and had been for many years, and was working very well. How on earth can the Commission say whether the same result could have been achieved by an agency shop?
That is one possibility. The other possibility, I suppose, is that the Commission, in so far as that part of its inquiry is concerned, merely rubber-stamps. It does not make any real inquiry; it just makes a rough guess; it makes a hit-and-miss assessment of the situation which is really abolutely valueless. I should have thought that if the latter was the case these provisions in the Schedule are utterly valueless. They might just as well not be there. All they will do is puzzle people; puzzle those who want to make the application, and puzzle the members of the Commission until they accommodate themselves to the situation, if that is to be the situation, that what they are really to do here is rubber—stamping, to make no real inquiry at
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all. It is in order to direct attention to that aspect of this Schedule that I have put down this Amendment.
It is erecting a mountain of proof which cannot be scaled. I should have thought that in answering the questions it has to ask itself the Commission would say, "We have not the remotest idea of the answer and we cannot find out. It is pure speculation and as probable as not that the answer would be 'Yes ' or ' No' in each case." The Commission will have the advantage of seeing the code of practice which we have not seen, bat I apprehend that the Commission would take a long time over this, and as often as not would have to say, "We do not know what is the answer." If that is what the Commission says, it is an end to the application. In that event the Schedule directs the Court to take no further steps.
I should be grateful if the Government spokesmen could at least give their estimate as to what is likely to happen. Is this to be an automatic process, completely without significance? Are these words really all waste? Is it simply verbiage and no more? If it is not verbiage, how is the Commission to address itself to the task? How real is to be its inquiry? What sort of evidence is it to take? How on earth is it to answer the question as to whether an agency shop would or would not be just as satisfactory to achieve these objectives? The Amendment is put down to obtain an answer to those questions, because I would respectfully submit to the Committee that in its present form paragraph 5 of the Schedule is utterly unsatisfactory. It either imposes an encumbrance which will block a large number of these applications, or, if it does not do that, it is utterly and absolutely valueless and should be discarded.
LORD DRUMALBYN: It is perhaps a little difficult to relate the noble Lord's remarks to the peg on which he has hung them. But I do not complain of that: he has obviously wanted to get information from the Government about how it is expected to proceed on paragraph 5, and this seems as good a peg as any for the purpose. The noble Lord asks how the Commission is going to proceed. He will of course have studied the provisions regarding the Commission,

1055
as to what it does, when it makes inquiries and so on, on page 137 of the Bill. The Commission is well accustomed to doing things which the noble Lord and I are not accustomed to doing; that is, to look into the affairs of trades unions from various points of view. The Commission has great experience of this, and it will probably be able to make judgments of this kind, which I suspect would be quite beyond the noble Lord, and certainly would be beyond me. It also has full latitude to make inquiries, attitude surveys, Gallup Polls, opinion polls and all the rest, in the area, as well as in the area proposed to be covered by the agreement, and the right to receive direct evidence from those immediately concerned, those representing the unions and the employers and the like, and to assess the kind of question that it has to assess.
It seems to me that the questions the Commission has to examine do coincide to some extent, at any rate, with the provisions of Clause 1(1) of the Bill, but in any case these seem to be the main points that it would be right for it to examine whether
"it is necessary for those workers to be comprised in an approved closed shop agreement for the purposes … f enabling them to be organised, or to continue to be organised, in such a manner as mentioned …";
that is,
"so organised as to be representative, responsible and effective bodies for regulating relations between employers and workers,
"of maintaining reasonable terms and conditions of employment, reasonable prospects of continued employment for those workers."—
That is well within the scope of judgment of the Commission, and
"of promoting and maintaining stable arrangements for collective bargaining …
That is exactly the sort of thing the Commission will be doing in other parts of its inquiries. The last point mentioned is
"of preventing collective agreements relating to those workers, which have been or may thereafter be made by the applicants, from being frustrated."
The Commission will have to look into all this sort of thing.
As to the last point, in sub—paragraph (2):
"whether …he purposes specified in the preceding sub—paragraph could not reasonably
1056
be expected to be fulfilled by means of an agency shop agreement,"
if the Commission cannot answer that, certainly nobody else would be able to do so, because, as I have said, it will be highly specialised in this. I do not think that the concern of the noble Lord is justified in this case but I understand why he has raised the matter and I hope that to some degree at any rate I have been able to satisfy him.
On Question, Amendment negatived.
2.6 a.m.
LORD SHACKLETON: I wonder whether I may interrupt. I had hoped that the noble Lord was going to rise to propose the adjournment of the debate. Though we have made no agreement, we have made progress and the Government are not far short of their target.
LORD DRUMALBYN: It looks to me as if noble Lords would like to have a debate on the next point and this is one of the reasons, as well as the clock, why they are thinking of adjourning now. We have made considerable progress and I hope that we shall be able to start fresh and be able to make good progress tomorrow. I beg to move that the House be now resumed.
House resumed.
EARL ST. ALDWYN: Before I move that the House do now adjourn, I should like to ask which noble Lords require taxis to give their names to the Head Doorkeeper. Every effort will be made to get taxis, but obviously we do not want to call a lot of taxis and not have them used.

NEW BROKEN HILL CONSOLIDATED LIMITED BILL [H.L.]
Returned from the Commons agreed to, with an Amendment; the said Amendment considered and agreed to.
  SERVICES DISABLEMENT PENSION: WIFE'S ALLOWANCE
  SERVICES DISABLEMENT PENSION: WIFE'S ALLOWANCE