Sitting of 16 May 1973

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MALLAIG HARBOUR ORDER CONFIRMATION BILL
Considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  ENVIRONMENT

    Housing Development Dispute (Kensington-Chelsea)
    Mr. Douglas-Mannasked the Secretary of State for the Environment whether he will offer the good offices of the Chairman of the London Housing Action Committee to help to resolve the dispute between the contractors and the Kensington-Chelsea Borough Council which has prevented progress on the major World's End housing development.
    The Uader-Secretary of State for the Environment (Mr. Reginald Eyre): I understand that the council has terminated the contract and is seeking new tenders to complete the work.
    Mr. Douglas-Mann: It is good news that steps are at last being taken to ensure a resumption of work on this project which was originally estimated to cost £5½ million and which will provide 742 flats for 2,500 people in one of the worst housing stress areas in the country, but work on the project has been delayed for eight months. Does not the Minister consider it a public scandal that there should have been this delay, and such secrecy on the part of the local authority concerned as to what steps should be taken to resolve the question of the ex-
    1480
    tent to which local ratepayers are likely to be called upon to foot the bill for the excess and for the delay? Will the hon. Gentleman set up an inquiry into the reasons why this has happened. In saying this. I have the—
    Mr. Speaker: Order. The hon. Gentleman may not say things. He may only ask a question. Mr. Eyre.
    Mr. Eyre: Like the hon. Member for Kensington, North (Mr. Douglas-Mann) I very much regret the loss of the provision of housing in this area of very great need, but I do not think the hon. Gentleman was fair to the local authority because I think he knows that the disputes in this unhappy matter were referred for consideration to the National Joint Council for the Building Industry. The local authority is to consider the scheme again at a meeting later this month. If it decides to accept a new tender to complete the work, I shall do all I can to help it.
    Mr. Worsley: Does my hon. Friend agree that matters such as this—and this one happens to be in my constituency—are delicate issues, involving questions of breach of contract, and that it is unhelpful for Members from other constituencies to interfere and to ask questions? Is he aware that work is likely to restart on this important project in my constituency very shortly?
    Mr. Eyre: I agree with my hon. Friend that disputes of this kind are very delicate matters, but the important thing is that work should go on. My Department will do everything possible to help the council to complete the work as soon as possible.

    Langley Overspill Estate, Rochdale
    Mr. Haselhurstasked the Secretary of State for the Environment if he will visit Middleton for discussions with all interested parties in Rochdale metropolitan district about the problems of the Langley Overspill Estate and how they might be resolved.
    Mr. Eyre: The local authority associations are now being consulted about a circular which will deal with the problems that concern my hon. Friend.
    Mr. Haselhurst: Does my hon. Friend recall that his hon. Friend the Member for

    1481
    Southend, West (Mr. Channon), in a Written Answer in 1970, said that an inquiry by his Department was not considered necessary? Is he aware that unless, in areas such as Middleton, where this problem has arisen there is some overt sign that his Department is finding out for itself why this difficulty exists, there will be lingering dissatisfaction and fear that a decision will be taken which will not be in line with the facts of the situation?
    Mr. Eyre: My hon. Friend will be pleased to know that all aspects of this matter have been considered in regard to the circular which I have mentioned and about which consultations are now taking place. We have to explore the possibility of voluntary agreements for transfer or, failing that, to secure adequate representation of tenants' interests with the housing authority.

    Lorry Weights
    Mr. Deakinsasked the Secretary of State for the Environment if he will make a statement on his progress in discussing EEC attempts to raise maximum lorry weights.
    The Secretary of State for the Environment (Mr. Geoffrey Rippon): There has been no meeting of Council Transport Ministers since last December, when the matter was left open for continued discussion this year.
    Mr. Deakins: Has the decision of this Parliament been conveyed to the appropriate Common Market authorities? If so, what need is there for further discussions with the Common Market?
    Mr. Rippon: The discussion will proceed in the light of the views that were clearly expressed by both sides of the House in the debate to which the hon. Gentleman referred.
    Mr. Peter Rees: Will my right hon. and learned Friend bear in mind, and convey to the Ministers in Brussels, that whatever the long-term economic advantages of raising lorry weights, the road system of East Kent, which bears the brunt of this traffic, is not now, and is not likely to be for some years, adapted to increasing axle weights and overall weights?
    Mr. Rippon: Yes, Sir.
    Mr. Pavitt: In case the right hon. and learned Gentleman is not successful, will he take immediate steps to consult his right hon. Friend the Home Secretary with a view to imposing traffic restrictions in central London, so that long vehicles, for example, may proceed only when they have been cleared by the Metropolitan police, with appropriate escorts?
    Mr. Rippon: That is another issue. I have considerable sympathy with the hon. Gentleman's view.

    West Cross Route
    Mr. Jayasked the Secretary of Slate for the Environment if he can now say when he will publish the report of the inspector on the proposed West Cross Route motorway in west London.
    Mr. Rippon: I anounced my decision and published the inspectors' report on 7th May.
    Mr. Jay: Cannot this report be made available to any member of the public who wishes to have it, and not just to objectors? Further, cannot such reports be published without a six-months' delay?
    Mr. Rippon: As I have said, the report is available to objectors. It is not confidential to objectors. They can make it available to whom they like. As for the delay about which the right hon. Gentleman complains, this was a particularly difficult and complex inquiry, involving development plan amendments, a number of compulsory purchase orders, schemes under the Highways Act, and so forth. We expedited it as much as we could.

    Local Authorities (Members' Allowances)
    Mr. Roy Hughesasked the Secretary of State for the Environment what further consultations he has had about the allowances to be paid to the members of the new local authorities under the Local Government Act 1972; and if he will make a statement.
    Mrs. Doris Fisherasked the Secretary of State for the Environment why his announcement of the level of attendance allowances for councillors has been delayed; and if he will make a statement.
    The Minister for Local Government and Development (Mr. Graham Page): This matter is being considered urgently in the light of the general economic situation and the action which is being taken to regulate prices and pay. My right hon. and learned Friend will announce the maximum rate of allowance as soon as he is able to do so.
    Mr. Hughes: Does not the right hon. Gentleman feel that he has been remiss in not making an announcement before the local government elections, as he originally promised? Does he appreciate that this has made it extremely difficult for hourly-paid work people who contested elections in making arrangements with their employers? Will the right hon. Gentleman confirm that the financial loss allowance is to go and that it will be replaced by an attendance allowance? Will he further confirm that the rates are to be £14 in respect of counties and £12 in respect of district areas?
    Mr. Page: Dealing with the first part of the hon. Gentleman's question, I agree with him, certainly. I regret that the good intentions of my right hon. Friend the present Secretary of State for Trade and Industry and myself were frustrated by the House's passing the Counter-Inflation Act. The attendance allowance is not a salary, but it is a matter which has to be taken into account in the prices and pay legislation, and in policy.
    Dealing with the second part of the hon. Gentleman's question, the financial loss allowance will continue for this year until 1st April 1974, when the attendance allowance will come into operation. The financial loss allowance at present is £4·75, and it is intended to increase that to £5·50.
    Mr. Oakes: Is the right hon Gentleman saying that the payment to councillors will have to wait until phase 3? On the point of the attendance allowance, is the right hon. Gentleman aware that many meetings are now taking place involving considerable financial sacrifice in setting up the new authorities caused by the Government's delay in bringing in the increase now?
    Mr. Page: That does not affect the situation. The attendance allowance was not intended to come in until 1st April 1974. In the meantime, there will be the
    1484
    increase in the financial loss allowance. It was made clear that the attendance allowance would not start until 1st April 1974.

    Housing Stress Areas
    Mr. Horamasked the Secretary of State for the Environment what representations he has received from Shelter on the subject of help for housing associations operating in stress areas.
    The Minister for Housing and Construction (Mr. Paul Channon): I have recently received proposals from Shelter seeking further Government support for certain housing associations.
    Mr. Horam: Is the hon. Gentleman aware that the report was requested by several leading housing associations in stress areas and, therefore, is worth close attention? Can they be assured that the hon. Gentleman sees the work of housing associations as an addition to council activity and in no way a substitute for it?
    Mr. Channon: On the first part of the hon. Gentleman's question, I am studying the matter seriously. I have been concerned with it for only just over a week. I have had other reports on these lines and I want to study them all with great attention.
    As for the hon. Gentleman's second point, I look upon the work of the voluntary housing associations—I know that the hon. Gentleman does not like the expression—as a supplement both to local authority dwellings and to private dwellings. It is not a substitute for either.
    Mr. George Cunningham: Does the hon. Gentleman realise that in the inner London area especially the housing associations are finding it increasingly difficult to acquire and improve property and then to let it at rents which recover the cost and which are fair to the tenants? Will he look at the situation in London especially and see whether additional assistance to housing associations cannot be made available?
    Mr. Channon: I am considering this at present, and the document makes some reference to that fact.

    Maplin
    Mr. Wilkinsonasked the Secretary of State for the Environment whether he

    1485
    intends to take any decisions from the environmental point of view regarding the proposed construction of a new airport at Foulness, in the light of the Civil Aviation Authority's report on airport facilities in South-East England.
    Mr. Rippon: There is no change in the decision we have already taken to develop the third London airport at Maplin.
    Mr. Wilkinson: Why is there this Gadarene rush to get the decision through when all informed surveys and objective analyses show that there is not such a crying need for this project? The demand for runway space is not as great as forecast. The reduction in noise will take place anyway by the mid-1980s because 70 per cent. of the total number of aircraft using London airport will be wide-bodied, quiet-engined types. Therefore, on environmental grounds surely there is no need to construct the attendant environmental new towns, environmental seaports, environmental motorways and other such intellectual dishonesties which are a part of the project.
    Mr. Rippon: I cannot accept my hon. Friends various assumptions. We determined the principle on Second Reading and I must leave the matter there. The CAA report did not deal with the noise and environmental problems to which my hon. Friend has referred. The House agreed with my view that it was vital to do something to relieve noise nuisance around London Airport and other existing airports. I receive many representations about it. As for quiet aircraft, it is worth bearing in mind what we are saying. Many people who now suffer this noise nuisance will, instead of having the continuous effect of a pneumatic drill outside their houses, have the equivalent of 40-ton lorries.
    Mr. Oakes: Is the right hon. and learned Gentleman aware of the concern in the Press and among the public about this enormously costly scheme, and the question of its necessity? Is he further aware that his hon. Friend the Undersecretary of State said in Committee that he was considering approaching the Noise Council on the question whether there would be any substantial diminution of noise around Gatwick and Heathrow even if Maplin proceeded? Cannot the right
    1486
    hon. and learned Gentleman delay the Third Reading of the Bill until there is a report on noise, which is the main matter that this House should be considering in respect of such an enormous expenditure of public money?
    Mr. Rippon: The factor of noise is very important, and we shall certainly consult the Noise Council about the likely effect. But the general proposition about the need to relieve people of noise around existing London airports is still unexceptional.
    Mr. Harden: Is my right hon. and learned Friend aware that one of the main advantages of the Maplin proposals is that hundreds of thousands of people who now suffer day and night from aircraft noise-especially those living round Gatwick, many of whom are my constituents—will receive some relief from it?
    Mr. Rippon: I am sure that my hon. Friend is right in that view.
    Mr. Jay: Will the Government publish full details of the proposed motorway and rail links from London to Maplin before the Third Reading of the Bill?
    Mr. Rippon: These matters are being discussed in Committee. Certainly it is our intention to give as much relevant information as possible at the earliest opportunity.

    Housing Committees (London)
    Mr. Stallardasked the Secretary of State for the Environment if he will have discussions with the newly-elected chairmen of the GLC housing committees.
    Mr. Thomas Coxasked the Secretary of State for the Environment what request he has received to meet the Chairman of the Greater London Council Housing Committee.
    Mr. Channon: I received a request on 8th May to receive a deputation of GLC members and officers, including, no doubt, the council's new housing committee chairman, to discuss various matters relating to housing policy. I welcome such a discussion and steps have now been taken to arrange the meeting.
    Mr. Stallard: I welcome the Ministers reply and his willingness to meet the chairman. Will he bear in mind that that gentleman probably has inherited the

    1487
    gravest housing problems of any local authority in the country? Will the hon. Gentleman assure us that his Government will not obstruct or delay the solution of these grave problems? To this end, will the hon. Gentleman discuss with the chairman the urgent need for the strategic use of compulsory purchase orders, and will he begin by speeding up confirmation of the 140 odd CPOs still outstanding in the London area?
    Mr. Channon: Certainly I will consider the last part of the hon. Gentleman's question. I am sure that this is likely to be one of the topics raised at the meeting.
    Mr. Cox: Is the hon. Gentleman aware that his attitude will determine the success or failure of the GLC's housing policy? He must be aware that London has become a property paradise for speculators. While they are making fortunes, homeless-ness and the waiting lists of local authorities increase month by month. Does the hon. Gentleman intend to give financial help to the GLC to buy up properties throughout London? When will he take action against those outer authorities which so far refuse to have anything to do with helping to solve the problems of inner London.
    Mr. Channon: I cannot accept what the hon. Gentleman has said about that matter. It would be rash of me to enter into hypothetical discussions over this Dispatch. Box about a meeting which has not yet taken place. We had better wait to see what happens at the meeting.
    Mr. Tope: Is the Minister aware that the housing crisis is not confined to inner London? Thanks to the unprecedented rise in house prices and rents over the last two years and the rather strange attitude of many outer London councils, which seem to regard council housing as inferior and council tenants as people who should not be there, there is a serious problem of homelessness in outer London as well. In welcoming the measures taken by the GLC and the Government's support of the GLC, may I ask the hon. Gentleman to take steps to ensure that the homeless in outer London boroughs do not suffer in comparison with those in inner London?
    Mr. Channon: I am only too anxious to do everything in my power to deal
    1488
    with the problem of homelessness. I have already had one discussion with the London boroughs and the Greater London Council about the matter, and a number of measures are under consideration. I am sure that this is one of the topics which are likely to crop up at the meeting.
    Mr. Robert Taylor: Is my hon. Friend aware that the outer London boroughs have problems of their own, with which they are dealing to the best of their ability, and that they have no reason to take care of the problems being created by the inner London boroughs after 30 or 40 years of Socialist rule?
    Mr. Channon: I agree with my hon. Friend that there is a serious problem in Croydon and other outer London boroughs. In the time that I have been in this Department—during the last three years, with a short gap—I have done my utmost to try to help solve the problem of London housing, which is absolutely crucial to all.
    Mr. Freeson: The Minister has understandably said that he cannot go into hypothetical questions and answers regarding a prospective discussion with representatives of the Greater London Council. Will he indicate to the House and, indeed, to the country, whether it is the Government's policy to back the GLC and other local authorities in purchasing properties on a massive scale, to put a stop to the kind of speculative activities that are going on in London and to the erosion of the rental market, in an attempt to cut down on homelessness?
    Secondly, will the Minister indicate whether it is his intention to increase special financial aid in stress areas for this purpose?
    Mr. Channon: I am sure that all these matters will be discussed at the meeting. I do not think that I can unilaterally decide the housing policy for London. That is a matter that the GLC and the boroughs will wish to discuss with me. Each case must be considered on its merits. However, the idea that widespread municipalisation would add a single house to the housing stock is misguided.

    Mortgage Repayments
    Mr. Edwin Wainwrightasked the Secretary of State for the Environment what was the monthly mortgage repayment over a 25-year period of a loan of 80 per cent. required to buy an average modern house in June 1970; and what is the present-day comparable figure.
    Mr. Ashtonasked the Secretary of State for the Environment what was the average weekly mortgage payment necessary to buy the average house in the East Midlands in June 1970, and what is the average payment today.
    Mr. Eyre: No separate information is available on modern houses, as such. On the basis of an 80 per cent. mortgage for 25 years, the average net monthly repayment by all first-time purchasers on houses bought in the United Kingdom in the second quarter of 1970, was £19·75 in the first year. The comparable figure for houses bought in the last quarter of 1972 was £32·74. No reliable information for individual quarters is available on a regional basis.
    Mr. Wainwright: That does not seem like cutting prices "at a stroke". Does the hon. Gentleman realise that due to the tremendous increase in the cost of houses, the increase in interest rates and the reluctance on the part of building societies to lend money to young couples, these young couples are being driven into buying third- and fourth-rate houses at a terrific cost and going to finance houses for loans which bear tremendous interest rates? When will the Government do something for young couples who need homes?
    Mr. Eyre: The hon. Gentleman will appreciate that building society figures show that the number of first-time purchasers has increased, comparing 1970 with 1972, that the number of borrowers under 25 years of age has substantially increased, and that the number of borrowers with incomes up to average industrial manual workers' earnings has also risen substantially over two years.
    Mr. Grylls: Does my hon. Friend agree, putting the matter in perspective, that one must accept that average industrial earnings have risen by nearly 50 per cent. in this period?
    Mr. Eyre: There was a substantial rise in average earnings over the period mentioned. The rise in incomes has increased the capacity of people to compete in the housing market.
    Mr. Ashton: Is the hon. Gentleman aware that I have just been to the Library and ascertained that over that period the increase in average earnings was 34 per cent., whereas the average payment that he is announcing is about 51 per cent. or 52 per cent.? How can we bridge that gap when we have a wage freeze and when house prices are still rising?
    Mr. Eyre: The hon. Gentleman is right about there being a problem for young married first-time purchasers. One way that this problem can be met is for local authorities to encourage building schemes for direct sale. We are encouraging local authorities to develop low-cost housing schemes of that kind.
    Mr. Arthur Jones: Is my hon. Friend in a position to state that more or less unlimited funds will be available for local authorities to grant mortgages?
    Mr. Eyre: Compared with the Labour Government, we have provided greatly increased funds to local authorities for mortgages, and these have been very helpful to special categories of borrowers in particularly difficult situations.
    Mr. Fernyhough: As the hon. Gentleman wishes local authorities to help the homeless and young couples, is he now prepared to withdraw the circular that he sent out, which prevents local authority direct-labour schemes competing? Is he aware that in Hebburn there is a fine example of that local authority's direct-labour scheme building for sale, in that the prices were so much cheaper than private contractors could offer that the district valuer asked the authority to increase them beyond what it wanted to charge?
    Mr. Eyre: There is no question of that circular being withdrawn. There is plenty of scope for direct-labour organisations to get on with other work. This type of work is particularly suitable for the kind of competitive contracting that we require.
    Mr. Wainwright: On a point of order, Mr. Speaker. In view of the unsatisfactory

    1491
    nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment as soon as possible.

    Fleet Line
    Mr. Moyleasked the Secretary of State for the Environment when he proposes to take a decision on the construction of the Fleet Line to Lewisham.
    Mr. Rippon: After we have seen the London Rail Study's report.
    Mr. Moyle: Will the right hon. and learned Gentleman bear in mind that the Fleet Line is an essential part of a decent public transport system in south-east London and Lewisham and that as we are not now to have Ringway I people will expect the Government to devote all the released resources to building the Fleet Line?
    Mr. Rippon: All the various factors will be taken into account. Stages 2 and 3 of the Fleet Line, including all the options, were discussed in the dockland study, but, as the team said, it is not an essential part of the study. It would be wise to await the report of the study.

    Defective Motor Vehicles
    Mr. Hugh Jenkinsasked the Secretary of State for the Environment if he will seek powers to require an immediate test, on the lines of the present MOT test, of all models of car the manufacturers of which have recalled them owing to defects which could affect safety.
    The Under-Secretary of State for the Environment (Mr. Keith Speed): No, Sir.
    Mr. Jenkins: Will the hon. Gentleman think again about that answer? Is he aware that, according to AA figures, in the last six years about 750,000 cars—about one car in every eight—have been subject to recall because of dangerous—not ordinary—defects? Is he aware that fewer than half of those cars have actually been recalled and that, therefore, about 300,000 cars that are now on the roads have defects which the manufacturers themselves describe as dangerous? In the public interest, in the interests of other drivers, and of the drivers of these cars themselves, will the Minister do something about this matter?
    Mr. Speed: I have seen the article in Drive magazine, to which the hon. Gentleman refers. It is true that many owners fail to respond to these calls, but there are problems of enforcement. The relevant defects might be outside the range of testing and I would have to be satisfied, therefore, on evidence, that the time and money involved would be effective in road safety terms. I have no such evidence at this time.

    Urban Areas (Studies)
    Mr. Cockeramasked the Secretary of State for the Environment when he expects to complete the studies designed to formulate a total approach to the problems of the urban inner areas; and if he will make a statement.
    Mr. Rippon: I am now considering the proposals in the consultants' project reports for programmes of study and experimental action to be carried out over a period of two-to-three years. I hope to announce details of the next stage of the studies in July.
    Mr. Cockeram: Will my right hon. and learned Friend note that this study was started largely by a group of voluntary enthusiasts in Liverpool, and that they have now been awaiting replies to the most recent report for the best part of 12 months? Will he take cognisance of the fact that we want to retain this enthusiasm to assist in this situation?
    Mr. Rippon: I am sure that we should take advantage of the valuable work done by the voluntary bodies, not least in the Liverpool area and the area with which my hon. Friend is concerned. It will certainly form part of the consideration of the studies and will be placed in this broader context. I entirely agree with what my hon. Friend says about a total approach to the urban areas. That is of the utmost importance.
    Mr. Freeson: Is the Secretary of State aware that at least part of his reply will be very disturbing to many people, in the House and elsewhere? Does he consider it satisfactory that, having undertaken a study over a period on a theme which has now become widely accepted, as he admits—the needs of the inner city—there should be yet further years of study? Is it not right that some conclusions should be reached about the

    1493
    machinery of local and national government to deal with the inner city problems?
    Mr. Rippon: I am sure that the studies must continue, perhaps for years to come. That is the way in which we learn more about these problems. I should certainly like to see progress made and I agree that we cannot always wait for some action somewhere until we have received all the studies imaginable.
    Dame Irene Ward: Will my right hon. and learned Friend take into consideration the Report on Urban Transport Planning which was presented some time ago by the Sub-Committee on the Environment and the Home Office of the Expenditure Committee? If he does, will he also make some representations to the Treasury to the effect that, if public transport is to be considered in the proper terms taxis should be relieved of VAT, because taxis are part of public transport? We want a proper approach to this matter and not more studies, because a good deal of information is available in that report.
    Mr. Rippon: I shall certainly take into account the report to which my hon. Friend has referred. It was certainly a valuable one. As to representations to the Treasury, I am making those all the time about one thing or another.
    Mr. Kaufman: Is the Secretary of State aware that what, above all, is needed to deal with the problems of inner urban areas, such as my constituency, is sufficient money? Is he aware that the pollution and dereliction which make the lives of thousands of my constituents a daily misery can be solved only if the Government provide sufficient finance to sweep them away?
    Mr. Rippon: Money is a problem for all Governments. I agree with the hon. Gentleman that we must so deploy our resources as to ensure that priority is given to the most urgent needs. I believe that these now arise in housing in the inner urban areas.

    Transport and Communications (South-East)
    Mr. Bruce-Gardyneasked the Secretary of State for the Environment what study he has given to the latest report of the Scottish Council (Develop-
    1494
    ment and Industry) regarding the impact on regional policy of capital expenditure programmes on airports, seaports, roads and rail services in the south-east of England; and if he will make a statement regarding the policy of Her Majesty's Government.
    Mr. Rippon: The council's report has not been submitted to the Government, though I have been given a copy on request. I can see nothing in current expenditure programmes which is inconsistent with regional policy.
    Mr. Bruce-Gardyne: Does not my right hon. and learned Friend consider that at a time when the assumed growth of public expenditure is in obvious and urgent need of some control the expenditure of thousands of millions of pounds on long-range capital programmes in the southeast of England is all too liable to lead to demands for countervailing expansion of expenditure by, for example, the Minister for Industrial Development in other parts of the country, which will lead to a vicious circle of still more rising expenditure?
    Mr. Rippon: That report has still to be considered by the council. I do not believe that what my hon. Friend has said arises out of consideration of that report. On the whole, we have dealt as generously as possible with Scotland. It is a mistake to imagine that because a project in one part of the country is halted another is necessarily helped.
    Mr. Ford: Is the Secretary of State aware that there is grave disquiet throughout the regions about the scale of the resources—in terms not only of finance but of labour and expertise—which are being diverted to such projects as the Maplin Airport development and the Channel Tunnel? Is he further aware that the House was conned by the Government over Maplin because they signally failed to provide detailed evidence of the necessity for, and the detailed costings and economics of, this project?
    Mr. Rippon: I do not accept any of those propositions. This Government, like their predecessors, have been very conscious of the need to have balanced public expenditure programmes of the sort that benefit the economy as a whole,

    1495
    and therefore the regions, but we have always had particular regard for regional considerations over many years. Indeed, it was the Conservative Government in 1963–64 who really set in hand the regional development policies, particularly in the North-East, Scotland, and elsewhere.

    Unlicensed Motor Vehicles
    Mr. Molloyasked the Secretary of State for the Environment what steps he is taking to reduce the incidence of unlicensed vehicles on the roads.
    Mr. Speed: Enforcement effort is being increased, particularly in the London area. In the longer term the centralisation of vehicle licensing will make it easier to identify unlicensed vehicles and open up new ways of dealing with them.
    Mr. Molloy: Is the hon. Gentleman aware that there is grave disquiet throughout the country at the fact that far too few people license their motor cars? Is he further aware that a survey by the director of the highways department of the GLC in my constituency, which suffers from a large influx of parked vehicles, revealed that 10 per cent. were untaxed, so that it is not unreasonable to assume that this is going on throughout the country, with all the ramifications, such as the likelihood that they do not have an MoT test, or proper insurance? Will he consider calling a conference of local authorities responsible for taxation, the police and his Department, to remedy this situation?
    Mr. Speed: No. With respect, I do not think that a conference is the answer. This year we are increasing the number of enforcement staff in London by 150—this is the key to the problem in the short term—and by 48 in other parts of the country. I am aware of these problems. We are now providing the bodies on the ground to deal with it.
    Sir G. Nabarro: But do bodies on the ground necessarily produce results? Has my hon. Friend not learned from the increase in the bureaucracy, for example, what bodies on the ground connote? Will he take a leaf from the book of the Minister of Posts and Telecommunications, who has succeeded in reducing television licence evasion by as much as 60 per cent. during the last two years,
    1496
    whereas the motor vehicle licensing position has gone exactly the opposite way?
    Mr. Speed: Whether bodies on the ground help or not, I am pleased to tell my hon. Friend that last year the number of reports dealt with by court procedure or mitigated penalties was 9 per cent. up on 1971. We must do better than that, but these 200 additional enforcement staff will make an impact in the short term.
    In the long term, the Swansea vehicle licensing centre can crack this problem.
    Mr. Lipton: Why not simplify the whole procedure by abolishing car licences and stepping up the tax on petrol?
    Mr. Speed: That is another matter, which is for my right hon. Friend the Chancellor of the Exchequer and not myself.

    Motorway Service Areas
    Mr. Fowlerasked the Secretary of State for the Environment whether he will make a statement on the progress of his inquiry into the standards of motorway service areas.
    Mr. Speed: I have now been able to visit officially some service areas in this country, and I hope soon to visit more before I have discussions with the operators.
    Mr. Fowler: Regarding my hon. Friend's visits to motorway service areas, is he aware that no Minister can make a greater self-sacrifice in the public interest than by condemning himself voluntarily to a diet of motorway food? Seriously, does my hon. Friend recognise that there is grave dissatisfaction about the standards of these service areas, particularly on the Ml? Will he, therefore, take measures to consult consumers to see what improvements they want?
    Mr. Speed: I take my hon. Friend's point. I was delighted to see him consuming food at a motorway service area that I visited recently, and sharing in the agonies of that, perhaps. A survey of public opinion will start at the end of this month. This will include many thousands of users—commercial and business men and tourists. We are very interested in the public's views. I am determined that, following this exercise and with the

    1497
    co-operation of the operators we shall radically improve the standards of these areas.
    Mr. Whitehead: Is the Minister aware that many of us consume not only motorway food but motorway prices, at least twice-weekly, as we drive to our constituencies. When he completes his inquiry, as an adjunct to it will he publish details of the profitability and turnover of all the motorway service stations, in view of the quite excessive increases in price in these cafes in recent years?
    Mr. Speed: I do not accept that there have been excessive increases in price. In recent years many operators have been making no profit, or very little profit, on their operation. They have to provide a 24-hour service, free lavatories, parking, and so on. By the terms of the contracts that we have, the taxpayer shares very much in any profits that these service areas make; so it is not all on one side.

    Stevenage
    Mrs. Shirley Williamsasked the Secretary of State for the Environment what representations he has received regarding his proposal for an expansion of Stevenage; and what arrangements he has made for a public inquiry.
    Mr. Rippon: I am considering the development corporation's report on expansion based on the feasibility studies and public participation exercise it has carried out. I am also considering representations made to me direct by local organisations and individuals. If in the light of these I decide to make a draft order to extend the designated area, that will be advertised. If objections are made, a public inquiry will be held.
    Mrs. Williams: Will the Minister confirm that the representations that he has received are overwhelmingly against expansion? Does he agree that the inquiry will be totally independent, in spite of any pronouncements that may have been made by his predecessor? Finally, and more generally, may I ask the Minister about the implications of re-opening a major public inquiry—in which a great deal of money has been spent by objectors—only a few years after a decision was made by a previous administration?
    Mr. Rippon: On the latter point, the fact that it has been inquired into is a relevant consideration. Circumstances do change. I shall, as I have assured the hon. Lady, bear in mind the various representations that have been made to me. Inevitably, the bulk of representations is always against expansion, because I am afraid that in many cases the attitude is, "We will not have Heaven crammed; let all the rest be damned."

    Driving Tests
    Sir G. Nabarroasked the Secretary of State for the Environment whether he is aware of delays in awaiting driving test appointments in the north-western and in the western areas, respectively, leading to complaints to his Department; what steps he is taking to expedite these appointments by the recruitment of additional instructors, including temporary examiners, to meet the current situation; and whether he will make a statement on the anticipated reduction in driving test delays.
    Mr. Speed: Yes, Sir. Additional examiners are being recruited as quickly as possible. My right hon. and learned Friend prefers to concentrate on recruiting permanent, fully qualified examiners. Despite this recruitment drive, my right hon. and learned Friend regrets that it will take some time to achieve the substantial improvement which is necessary.
    Sir G. Nabarro: Does not my hon. Friend realise that there are people in my constituency and elsewhere who are now being called upon to wait up to nine months to receive their licences, which is wholly unreasonable? Surely the fault lies with the pay scale for examiners imposed by the Ministry. Is it reasonable to place a top level of £1,700 a year on an examiner's salary, when examiners ought to command salaries of at least £3,000 a year?
    Mr. Speed: My hon. Friend will be glad to know that we are increasing the bureaucracy, as he has put it, to the tune of 238 additional examiners this year.
    The question of salaries is a matter for the Civil Service Department. I accept that the delay is too long. But once we have these additional 238 examiners, they should be able to cope with the 20 per

    1499
    cent. increase that we have had in the number of people wanting to take a test.
    Mr. William Hamilton: Will the Minister take steps to increase the stringency of the driving test because there are people who, despite having passed it, persist in driving the wrong way round roundabouts, and buy themselves out of trouble in a court of law?
    Mr. Speed: Anyone driving the wrong way around a roundabout during his test is likely to be failed. The failure rate at present is 53 per cent. This is one of the problems that we face. If we could get a higher pass rate it would ease the situation and reduce the waiting time.

    New Towns (Housing Sales)
    Mr. Hordernasked the Secretary of State for the Environment if he will include the New Towns Commission among the housing authorities which will be invited to submit plans to build houses for sale at the permitted discount from unrestricted market value on land they own.
    Mr. Eyre: No, Sir. But my right hon. Friend hopes that new town local authorities will, like local authorities elsewhere, come forward with schemes designed for this purpose. The commission and the development corporations are being asked to help where possible in making land available to those authorities.
    Mr. Hordern: How can the fact be justified that the New Towns Commission, or a housing authority acting in the same area as a local authority, should not be able to offer the same terms and conditions as the local authority, in offering a discount on the prices of houses built for sale?
    Mr. Eyre: Because the needs for extending home ownership in new towns are met in three main ways. The first is that anyone who qualifies for a new town rented house may buy it at a discount. Secondly, houses built for sale by private developers in new towns are available for newcomers. Thirdly, the new town local authorities can bring forward schemes for low-cost sponsored houses in the way that I have described to second generation families in those towns wherever appropriate.
    Mr. Bagier: The hon. Gentleman sounds very convincing in his appeal in regard to house building for those who want to buy houses, but why has he seen fit to issue Circular 60/73, which prevents direct works departments from building houses for sale at considerably lower prices than their competitors? Why has he seen fit specifically to deny local authorities that right?
    Mr. Eyre: That is another question, which is not relevant to the new towns situation. Direct labour organisations have plenty of work on hand, and it is very suitable for the private enterprise building industries to tender competitively for the contracts that the hon. Gentleman describes.
    Mr. Allasonasked the Secretary of State for the Environment whether he will instruct the Commission for New Towns and New Town Development Corporations to offer flats and maisonettes for sale to tenants.
    Mr. Channon: The commission and the corporations may already sell flats and maisonettes to sitting tenants. I am considering further advice to encourage an increased rate of sale.
    Mr. Allason: I could not follow my hon. Friend's reply. Is the answer 'Yes" or "No"?
    Mr. Channon: The answer is broadly "Yes", and I shall be issuing advice shortly.

    Metropolitan Green Belt
    Mr. Dykesasked the Secretary of State for the Environment if he will make a further statement on the long-term protection of the Metropolitan green belt.
    Mr. Rippon: As I said in my statement on the report of the inquiry into the Greater London Development Plan, we are determined to preserve an effective green belt around London.
    Mr. Dykes: I am grateful for that general reply. Does not my right hon. and learned Friend agree that the green belt in the outer London areas is an essential part of the total environment and should be freely available to all members of the public? What proportion of inner London's immediate housing needs does

    1501
    my right hon. and learned Friend consider could be met by full-scale comprehensive development of London dockland areas?
    Mr. Rippon: The question of what can be met by a comprehensive development of the dockland area is a separate one.
    We must try to put this matter into perspective. We have added 70,000 acres of green belt to the 610,000 acres that already exist. Inquiries have shown that 2,000 acres of green belt might be available for housing where it has no other agricultural or amenity value. An area of 2,000 acres might provide 20,000 homes. It is not an answer to the problem, but part of a total package whereby we must meet the needs of the inner urban areas.
    There is much force in the points raised this afternoon that there is always a tendency for people to rest an argument for not wanting council houses in their area on a green belt case that is not well founded.
    Mr. Molloy: Will the Minister consider the new phenomenon which has grown up, certainly in the Middlesex area, in which a remarkable growth of warehousing seems to be taking place in what could be green belt areas? Is he prepared to examine the complaints of residents when they submit features which they believe ought to be examined by him and which are refused by the local authority? Warehouses seem to be taking precedence over all forms of industrial activity.
    Mr. Rippon: In the first instance these arc matters for the local planning authority. If it allows a warehouse on what should be green belt land that is a matter for it to consider. The authority and other interested parties can make representations about what should be added to the green belt. When matters come to me I shall naturally bear in mind all the relevant considerations.
    Sir Gilbert Longden: Is my right hon. Friend aware that nowhere is the green belt more precious than in the county of Hertfordshire, the population of which has doubled since the war? Is he aware that the county council, the Hertfordshire Society and all those who love Hertfordshire are against any further increase in the population, as is suggested for the expansion of Stevenage?
    Mr. Rippon: That is certainly a factor to be borne in mind in considering the expansion of Stevenage, but if we do not expand Stevenage by a certain proportion we may have to consider 2,000 acres or so in the existing Metropolitan green belt. What we have to decide in trying to deal with the housing situation is where it is right to build houses, and very often difficult considerations have to be borne in mind. The land, however, must be provided from somewhere.
    Mr. Lipton: To talk about releasing 2,000 acres out of 610,000 acres of green belt represents a derisory contribution to the solution of London's housing problem. Will the right hon. and learned Gentleman conduct a further investigation to find out how many more hundreds, if not thousands, of acres may be made available near London to solve the desperate housing problem of the inner London boroughs'?
    Mr. Rippon: That shows the dilemma that one faces. The hon. Member calls it a derisory contribution and others call it an outrageous attack upon the whole principle of the green belt. Neither view is correct. It is one of the factors that should be taken into account in trying to deal with the considerable housing problem of the inner areas of our cities.

    Speed Limit (Villages)
    Mr. Madelasked the Secretary of State for the Environment whether he is satisfied with the current criteria for determining 30 mph speed limits in villages; and if he will make a statement.
    Mr. Speed: Yes, Sir. However, they are being kept under review, and, as my hon. Friend knows, I am always prepared to look into particular cases.
    Mr. Madel: Does my hon. Friend agree that when it is not possible to build a bypass round a village, and when traffic in that village is heavy and continuous, it makes sense to impose a 30 mph speed limit? Will he alter the criteria for determining this limit, so that a number of villages in my constituency may qualify—which is what the majority of people living there want?
    Mr. Speed: In the first place it is for the local authority to make an order for limits on principal roads. My right hon.

    1503
    and learned Friend has to give his consent. Studies have shown, however, that realistic speed limits reduce speed and accidents, and unrealistic ones are largely ignored and therefore devalue the whole exercise.

    Fluorspar Crushing Plant, Weardale
    Mr. Armstrongasked the Secretary of State for the Environment when he expects the further investigation into alternative sites for the fluorspar crushing plant in Weardale to be completed; and if he will make a statement.
    Mr. Graham Page: The timing depends on the British Steel Corporation, in consultation with Durham County Council. Meanwhile, my right hon. and learned Friend expects to receive early next month professional advice on the architectural treatment of the proposed plant.
    Mr. Armstrong: I share the right hon. Gentleman's concern that we get the right answer to this very difficult problem. The original application was made in 1971. This is an important development for the area, whatever site is chosen. Will the right hon. Gentleman therefore impart real urgency to the matter, so that a decision is made known quickly?
    Mr. Page: I share the hon. Member's feeling of urgency. The British Steel Corporation has an urgent need for fluorspar. The project will involve about 170 jobs, but it is important to find the right place. The urgency is recognised by the corporation and the county council. The corporation, the local planning authority and my Department had a meeting only this morning to consider the requirements of the further consideration which my right hon. and learned Friend the Secretary of State asked to be taken into account.

    Housing Yardsticks
    Mr. Sydney Chapmanasked the Secretary of State for the Environment if he will make a statement on the current operation of the housing cost yardsticks, including any plans to increase or further vary the differing regional rates.
    Mr. Channon: The arrangements introduced last November are designed to enable local authority schemes to
    1504
    proceed at a cost which reflects local market conditions. The special market allowances given, where necessary, for individual schemes provide the flexibility needed in the present tendering situaton. I am keeping the arrangements under close review.
    Mr. Chapman: I appreciate that the housing cost yardsticks are more flexible than many critics suggest, particularly in the so-called stress areas, since the measures that my hon. Friend announced last November. Does he agree, however, that a totally new approach is needed to this matter, so that resources are given where need is greatest and where officials from the regional departments can check the special claims in the areas of need to see that profiteering is not taking place and to put a real spurt behind what is at present an artificial method of assessing housing costs?
    Mr. Channon: I have a great deal of sympathy with what my hon. Friend said. As he knows, I did not introduce the yardstick system. It has a number of difficulties, which I am considering.
    Mr. Freeson: I certainly agree that over a number of years the housing cost yardstick has introduced financial discipline into this area, where it was previously sorely lacking. Will the Minister support an attempt to seek a totally new approach to this matter by undertaking consultation with the professionals in the field, with local authorities and others, in order to try to work out methods of bringing about efficient common sample testing around the country to ensure that profiteering, inefficiency and financial indiscipline are not occurring?
    Mr. Channon: I shall bear in mind the view that my hon. Friend and the hon. Member have put forward in considering this complicated and difficult matter.

    Oil Refineries
    Mr. Douglasasked the Secretary of State for the Environment if he will list, by economic planning regions, the number of oil refineries for which planning permission has been granted since 1970.
    Mr. Graham Page: I have consulted my right hon. Friend the Secretary of State for Scotland and my right hon. and learned Friend the Secretary of State for Wales; I understand that in addition to the two permissions for new refineries granted in south-east England one was granted in Wales; there was none in any other economic planning region.
    Mr. Douglas: Will the right hon. Gentleman not concede that the expansion of oil activity offshore makes it essential that we get away from the concentration of oil refineries in the South-East, which is harmful to the population there? We should be able to build relatively pollution-free refineries in other parts of the United Kingdom.
    Mr. Page: I have little doubt that there may be application for oil refineries which will be convenient to North Sea oil. However, it is for my right hon. Friend the Secretary of State for Trade and Industry to decide on industrial development certificates. Certainly, the last permission which was given in the South-East was to replace an existing permission which would have located a refinery in a far worse place, and which was granted as long ago as 1965.
    Mr. Spearing: Does the right hon. Gentleman recall that his right hon. and learned Friend the Secretary of State said that there would be no oil refinery developments at Maplin but that nevertheless, since that statement, he has given permission and has overruled his inspector's recommendation that there should be no oil refinery on Canvey Island? Was that the refinery to which the Minister just referred, or was that a new development? If it is a new development, is it not wrong that it should be located in that area, in contradiction of the right hon. Gentleman's previous ban?
    Mr. Page: The one I referred to was indeed the refinery on Canvey Island. The recent permission given took the place of the permission originally given in 1965. The latest permission is in respect of a much better place, because it leaves a wide gap between South Benfleet and Canvey Island.

    Lodger Charges
    Mr. Leonardasked the Secretary of State for the Environment whether he
    1506
    will seek power to enable lodger charges affected by Section 66(4) of the Housing Finance Act to be cancelled in the event of a tenant ceasing to have a lodger.
    Mr. Channon: No, Sir. I consider that those local authorities which did not abolish such charges before the Housing Finance Act came into force have adequate discretionary powers to deal with any problems that may arise.
    Mr. Leonard: That answer is just not good enough. Does the Minister not accept that there is an immediate need for action to remedy the indefensible situation that is arising as a direct result of the Housing Finance Act? The Minister is invariably courteous and considerate to hon. Members. Will he not extend the same qualities to tenants, who cannot be expected in every case to ask local authorities to apply the very complicated discretion under the Act?
    Mr. Channon: To do what the hon. Member would like would need legislation. This matter was debated at considerable length during the proceedings on the Bill, in which the hon. Member and I both took some part. Discretionary powers are given to local authorities, and I think that they can meet most of the problems by use of them.
    Mr. McBride: Surely the situation is indefensible. Once the charge has been imposed and the lodger has departed there is no justification for the continued charging of the fee. In the circumstances the Minister should immediately order the abolition of the provision.
    Mr. Channon: I seem to remember the hon. Member for Swansea, East (Mr. McBride) also taking some part in the debates. I understand his point of view. It would require legislation to do what he suggests and it would mean that some tenants who were, by definition, paying less than a fair rent would receive a rent reduction while others would have their rents increased. That is not a particularly just way of proceeding.
    Mr. Freeson: Is the Minister aware that I. too, have great reservations about the whole practice of introducing lodger charges. If he refers to Section 115 of his Act he may find that it would be unnecessary to introduce fresh legislation. Me has powers in that section to

    1507
    vary the operation of any part of the Act, and he can adopt a variation of local authority rent policies.
    Mr. Channon: I must confess that I have not studied Section 115 for a few days. I shall consider the matter after Question Time.

ICELANDIC FISHERIES
Mr. James Johnson Mr. James Johnson (By Private Notice) asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement regarding the latest incidents in the Icelandic fisheries dispute when the Icelandic gunboat "Tyr" fired three live shells at the Hull trawler "Macbeth" and made a boarding attempt upon the "Lord Alexander".
The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Royle): The incidents to which the hon. Member refers occurred between 2100 and 2200 Greenwich Mean Time on Monday 14th May. According to the information we have received, two Icelandic coastguard vessels, the "Thor "and the "Tyr", approached a group of 24 British trawlers off the North-East coast of Iceland. The guns of the "Thor" were manned before reaching the trawlers. Her cutting gear was streamed. The "Tyr" ordered the trawler "Lord Alexander" to stop or she would fire, and said that she intended to board.
The trawler "Macbeth" then interposed herself between the "Tyr" and the "Lord Alexander", thereby frustrating the attempts of "Tyr" to board the latter. At this point "Tyr" fired a shot which fell close to the "Macbeth". Later, "Tyr" fired another shot in the general direction of the main group of British trawlers. At no time did any British vessel attempt to ram any Icelandic vessel.
On 7th May my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs told the House that if there were an armed attack on a trawler which could not be repelled by the means we have there now, there would be no alternative but to send in the Navy. In this case, an Icelandic attempt to arrest a British trawler has been successfully repelled: and the two shots fired seem to have been warning shots, not an armed attack. It was therefore not necessary to
1508
use the Royal Navy and the fishing industry as a whole has not yet requested naval protection.
If the Icelandic Government continue such actions on the fishing grounds, they will damage, perhaps irrevocably, the prospects of reaching an interim agreement. Her Majesty's Government's policy remains that of reaching a solution fair and satisfactory to both countries.
Mr. Johnson: I thank the Minister for that answer. Does he agree that this is an escalation in the cod war? Further, does he agree that it is an uncivilised attack upon our fishermen going about their lawful business? Is he aware that I speak with the authority of the fish dock in Hull? Unless Her Majesty's Government give our fleet naval support within the 50-mile limit the skippers are unlikely to continue fishing in these waters. Tom Neilson of the Skippers Guild informs me that more and more cables are coming in from level-headed skippers saying,
"Will not go back without protection."
His views are supported by Norman Coxon, the leader of the Fish Merchants Association on the docks. Furthermore, there may soon be a petition by the wives and families of fishermen in this position.
I cannot believe that Her Majesty's Government are waiting for a lead from the industry or from the Joint Action Committee. As this is the tenth time that the Minister has stood at the Govern-men's Dispatch Box and said that he will take action in these events—including the right hon. Gentleman the Secretary of State for Foreign and Commonwealth Affairs last Tuesday—why is it, now that three live shells have been fired at the "Macbeth", that our naval vessels cannot move in within the 50-mile limit? Perhaps we are being influenced by our German partners who are now not seen very much in these waters. Perhaps we are being influenced by our American or NATO partners, or perhaps even by the Chinese about international limits.
Mr. Royle: Obviously I listen carefully to any remarks made by the hon. Member for Kingston-upon-Hull, West (Mr. James Johnson). The hon. Gentleman knows the fishing industry very well. He is constantly pressing, and rightly so, the case of his constituents. However, I cannot do

1509
more about the action which has been taken so far. I certainly rebut immediately any implication that we are taking orders from any other country. We take decisions ourselves in this country. As my right hon. Friend told the House, if there were an armed attack on a trawler which could not be repelled by the men who are there now, there would be no alternative but to send in the Navy. I repeat the assurance which my right hon. Friend gave the House.
We take account of the views of all sides of the industry and we have good machinery for joint consultation. Naturally, great weight is given to the views of the skippers, which were mentioned by the hon. Gentleman. The Government give great weight, in particular, to the views of the skippers on the grounds as well as the views of deck hands and owners.
Mr. W. H. K. Baker: Is it not a fact that the Icelandic Government, because of these latest incidents, appear to be doing their best to precipitate a major crisis? Can my hon. Friend confirm that sufficient Royal Navy forces are conveniently placed in the area should it be necessary for them to intervene if that grave decision has to be taken? Further, are they using all the kinds of eyes available to them to keep Her Majesty's Government informed exactly of what is taking place on the grounds?
Mr. Royle: Clearly the Government agree with my hon. Friend in that we regret an escalation of the situation on the fishing grounds. There are now two frigates near at hand, although not on the fishing grounds. Work has been done to devise means of rendering ineffective cutting gear employed by Icelandic vessels. It would not be appropriate to disclose farther details now.
Mr. Goronwy Roberts: Is the hon. Gentleman aware that the details which he has given of this latest incident deepen the apprehensions within the House and throughout the country that the situation is begining to get out of hand and that further incidents may take place which may make the situation irretrievable in its tragedy for both sides? Is he aware that it is the unanimous view of the House and the British people that the Iceland authorities' attitude is to be deplored in that they have continued to
1510
refuse to engage in realistic negotiations and have unilaterally abrogated the agreement of 1963 which was freely entered into? Is he aware that the Icelandic Government have rejected out of hand the sensible recommendations of the International Court of Justice? Will he, above all, undertake to keep in the closest consultation with both sides of the British fishing industry at every turn in this highly dangerous situation and to keep the House informed at every point in his negotiations?
Mr. Royle: I am grateful to the right hon. Gentleman for his remarks and for his support of the Government's policy. We intend to keep the House informed of developments in the situation and in the area generally. As I stressed earlier, our policy remains that of reaching a solution which is fair and satisfactory to both countries.
Captain W. Elliot: My hon. Friend referred to the means which we have at present to repel boarding attempts. Does my hon. Friend agree that if the Icelanders seriously step up their attempts to board our ships that will greatly increase the risk of serious injury or even of death to the people concerned? Will he bear that in mind?
Mr. Royle: Yes, of course I will.
Mr. George Cunningham: Does the Minister not agree that, whatever else might be said, the Government's method of handling this matter so far has been a total failure and that the incident which we are discussing would not have happened if their diplomacy had been sucessful? Is the Minister seriously saying that because this attack was repelled there is no need to send in the Navy? Does he realise that means that we are waiting for them sucessfully to sink a boat perhaps, and lose lives, before naval units are used? Does he agree that the defensive and protective use of naval units is nothing whatever to be ashamed of? Will he now say categorically to the Icelandic authorities that if there is one more attack we shall send out such naval units as are required to bring in an Icelandic gunboat to a British port?
Mr. Royle: I think that on reflection the hon. Gentleman will realise that he has grossly misinterpreted what I have

1511
been saying. I have said—and I repeat—that if there were an armed attack on British trawlers which could not be repelled by the means we have there now, there would be no alternative but to send in the Royal Navy.
Mr. Cunningham: Too late.
Mr. Royle: We also keep in close consultation with the leaders of the industry as a whole. This is an acceptable policy, I believe, to both sides of the House.
Dame Irene Ward: Will my hon. Friend accept from those of us representing fishing ports and interests that we prefer to be guided by our Government, who are acting in our interests, rather than perhaps by individuals who do not have the responsibility of our Government? All those connected with the fishing industry say that we are perfectly satisfied. I thank my hon. Friend very much for his reply to the intervention of the hon. Member for Islington, South-West (Mr. George Cunningham)—an intervention which was quite unnecessary.
Mr. Royle: I am grateful for the support of my hon. Friend the Member for Tynemouth (Dame Irene Ward). I know
1512
that she has great wisdom and experience in these matters.
Mr. Judd: Will the hon. Gentleman accept that there is a great deal of anxiety on both sides of the House and that the Government will have a great deal of constructive support in all the measures they feel necessary to protect life and limb in this very trickly situation? Will he agree that, whatever our immediate preoccupations with this crisis, it is symptomatic of the sort of problem that will arise increasingly in international affairs as the pressures on world resources increases in the next decade? How soon shall we hear in detail what the Government's thinking is about the policy they intend to put forward at the Conference on the International Law of the Sea next year at Santiago?
Mr. Royle: I am grateful to the hon. Gentleman for raising that point, which is very important. He is correct in saying that the policies of the Conference on the International Law of the Sea will have a fundamental effect on developments in this area for many decades to come. We are now putting together our case and the line we shall take at the conference, and in due course we shall bring them before the House for discussion.

AGE LEVEL OF EMPLOYMENT BILL
3.42 p.m.
Mr. Edward Milne: I beg to move,
That leave be given to bring in a Bill to make it illegal for employers to refuse employment, or for employment agencies to refuse to entertain an application for employment, on the sole ground that the person concerned is aged 45 years or over
On a past occasion when a similar Bill was brought before the House, it received a sympathetic response for its proposals but the Government Departments concerned and what are described as the "usual channels" failed to act in the matter.
In the rapidly changing world of today, when mergers, takeovers and the development of modern technologies increasingly make it necessary for people to prepare themselves for three or four changes in the main direction of their job or career, a Bill of this kind becomes an essential part of legislation. The Bill is designed for three or four main purposes. Its main intention is to prevent employers and employment agencies from refusing to employ applicants solely on ground of age, and specifically persons aged 45 and over.
It does not require a number of charts or graphs and a long series of learned articles in top journals to find out that the older redundant workers find it harder to get jobs than anyone else. The experiences of the last decade have also shown that redundancy and unemployment does not affect only the industrial workers of Britain—badly though many of our major industries have been hit over the last eight to 10 years. Indeed, it was the wholesale closing of pits in my constituency and throughout the Northumberland coalfield which first prompted me to introduce a Bill of this kind into the House.
The agony of a sudden break with normal employment is best expressed by the words of one person so affected, reflecting the experience of thousands. He said to me:
" When they told me "
—that he was redundant—
"I didn't do anything. I mean I didn't shout or lose my temper. No. Do you know
1514
all I could think was 'What on earth do I tell my wife?'".
When one adds to that the endless days spent in seeking alternative employment, to be repeatedly told, "You are too old at 50", or, "You are too old at 45", many people wonder when it is all going to end. How are we as a society facing the problem?
One letter sent to me when I raised this matter on a past occasion contained this comment from a redundant miner who is a constituent of mine:
"Ours is a sick society and the discarding of able men merely because they are 50 is a distressing symptom of this sickness."
Of course the problem has widened. Redundant miners, shipyard workers and other industrial workers are joined by job-hunting executives, managerial and supervisory staffs, employees of nationalised industries, civil servants—indeed, from every sector of our economy.
The Bill would have value in a number of ways. This is not a plea for the over 45s—not a cry from the heart for the middle-aged. It is a vital necessity in the world of today, for from a Bill of this kind will come the understanding that it is not only the age group mentioned who suffer but the nation as well. We are failing to use a valuable part of our manpower assets.
We are lagging behind many other nations in the facilities and measures available for retraining and re-equipping redundant people for new skills and new tasks. Germany, France and Sweden, in particular, have systems of entitlement to retraining or further training, and in the case of Sweden the training facilities offered are carefully co-ordinated to meet the changing needs of the economy and to enable manpower to keep up to date with new developments in all sectors. As far back as 1967, the United States introduced legislation of the kind envisaged in the Bill. President Lyndon Johnson said of it in his Message to Congress that year:
"In our nation there are thousands of people who possess skills which the country badly needs Hundreds of thousands not yet old. not yet voluntarily retired, find themselves jobless because of arbitrary age discrimination."
That is the nature of the problem we should be seeking to solve in this country. In contrast with the statement by President Johnson, it was with some surprise

1515
that we read in The Times a few days ago an advertisement stating that the European Parliament was accepting applications for administrative appointments from persons of 35 or under.
My Bill seeks to end age discrimination at 45. In the United States, it is 40. In the EEC, it appears to be 35. The EEC attitude may make it necessary for us to lower our sights in this Bill and in future legislation.
So difficult is it to obtain employment because of age discrimination that many instances have been quoted to me of people being given unemployment notes for periods of three months because their chances of getting employment were nil in areas such as Glasgow, Wales and the North-East. I consider, as I am sure the House will, that this Bill is urgent, necessary and long overdue. I commend it to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Edward Milne, Mr. Frank McElhone, Mr. E. Fernyhough, Mr. Edwin Wainwright, Mr. Adam Hunter, Mr. David Watkins, Mr. Robert Edwards and Mr. Hugh D. Brown.

AGE LEVEL OF EMPLOYMENT
Bill to make it illegal for employers to refuse employment, or for employment agencies to refuse to entertain an application for employment, on the sole ground that the person concerned is aged 45 years or over, presented accordingly, and read the First time; and ordered to be read a Second time upon Friday next, and to be printed. [Bill 141.]
ORDERS OF THE DAY
  FAIR TRADING BILL
  As amended (in the Standing Committee), considered.
New Clause

  1 TIME-LIMIT FOR PROSECUTIONS
  '(1) No prosecution for an offence under this Act shall be commenced after the expiration of three years from the commission of the offence or one year from its discovery by the prosecutor, whichever is the earlier.
  (2) Notwithstanding anything in section 104 of the Magistrates' Courts Act 1952, a magistrates' court may try an information for an offence under this Act if the information waslaid within twelve months from the commission of the offence.
  (3) Notwithstanding anything in section 23 of the Summary Jurisdiction (Scotland) Act 1954, summary proceedings in Scotland for an offence under this Act may be commenced within twelve months from the commission of the offence, and subsection (2) of the said section 23 shall apply for the purposes of this subsection as it applies for the purposes of that section.
  (4)In the application of this section to Northern Ireland, for the references in subsection (2) to section 104 of the Magistrates' Courts Act 1952 and to the trial and laying of an information there shall be substituted respectively references to section 34 of the Magistrates' Courts Act (Northern Ireland) 1964 and to the hearing and determination and making of a complaint'.—[Sir G. Howe.]
  Brought up, and read the First time.
  3.50 p.m.
  The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): I beg to move, That the Clause be read a Second time.
  This new Clause arises out of an undertaking given in Committee in relation to an amendment moved by my hon. Friend the Member for Kidderminster (Sir T. Brinton). He moved a new Clause in terms of subsection (1) of this new Clause which provides a limitation period of three years between the commission of an offence and the time when proceedings can be commenced in respect of it.
  When he did that we undertook to consider the point. It is the case, as he pointed out, that the mischiefs dealt with in Part II of the Bill are similar to those dealt with in the Trade Descriptions Act

  1517
  1968 and it follows that it is reasonable for there to be similar limitation provisions in respect of these as in respect of offences under that Act. My hon. Friend's new Clause did not entirely succeed in aligning the provisions of the Bill with those of the 1968 Act. His new Clause did not take account of the provisions of Section 19(2) and (3) of the Trade Descriptions Act which allow prosecutions to be brought in a magistrates' court up to 12 months after the commission of the offence.
  It seems reasonable for the alignment to be complete. This new Clause takes on board all the corresponding provisions of Section 19 of the 1968 Act. It meets my hon. Friend's point, it meets almost every reasonable point that can be argued in connection with this topic, and I commend it to the House.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

New Clause 2

  VARIATION OF CERTAIN MERGER REFERENCES
  '(1) Subject to the following provisions of this section, the Secretary of State may at any time vary a merger reference made under section 69(3) of this Act.
  (2)A merger reference made under section 69(3) of this Act shall not be so varied that it ceases to be a reference limited in accordance with that subsection.
  (3)Without prejudice to the powers of the Secretary of State under section 70 of this Act, a merger reference shall not be varied so as to specify a period within which a report on the reference is to be made which is different from the period specified in the reference in accordance with that section'.—[Mr. Emery.]
  Brought up, and read the First time.
  The Under-Secretary of State for Trade and Industry (Mr. Peter Emery): I beg to move, That the Clause be read a Second time.
  Mr. Deputy Speaker (Miss Harvie Anderson): With this it will be convenient to discuss Government Amendments No. 61, 62, 88 and 89.
  Mr. Emery: This new Clause arises from an undertaking given in Committee. It was pointed out by the hon. Member for Farnworth (Mr. Roper) that the power to make a limited merger reference to
  1518
  the Commission brought with it the danger that if such a reference were too narrowly drawn this would prevent the Commission from looking at other difficulties which might emerge during the course of the investigation. I considered the argument put by the hon. Member and also by the hon. Member for Glasgow, Craigton (Mr. Millan) who pointed out that Clause 52—then Clause 48—gave specific power to vary a monopoly reference but that there was no comparable clause concerning merger references.
  This new Clause gives power to the Secretary of State to vary a limited merger reference, as Clause 32 gives him power to vary a monopoly reference. I believe that it meets the undertaking we have given and I hope that it will be acceptable to the House.
  Mr. Bruce Millan: I am grateful to the Government for tabling this new Clause which, as the Minister said, is in response to a point raised in Committee. May I say, without in any way pressing the point, that I find the wording of subsection (1) rather odd because it talks about a merger reference made under Section 69(3) of the Act. My understanding of the Bill was not that merger references were made under that subsection but only that they could be limited in accordance with the provisions of that subsection.
  Reading the new Clause without having heard the hon. Gentleman's explanation, I found it difficult to understand what the Government were doing. In view of what has been said, I have no doubt that they are trying to meet the point made in Committee. Perhaps the hon. Gentleman will look at the wording. On a first reading it is not absolutely clear what is intended.
  Mr. Emery: It might be helpful if I say that it has been done in this way because there is no intention of the power being such as to turn a limited reference into an unlimited reference. In other words, once a limited reference has been made the whole concept is that it should remain as such. It may need to be slightly altered. It is for that reason that it is so worded.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

New Clause 3

  MEANING OF 'CONSUMER TRADE PRACTICE'
  'In this Act "consumer trade practice" means any practice which is for the time being carried on in connection with the supply of goods (whether by way of sale or otherwise) to consumers or in connection with the supply of services for consumers and which relates—

  (a) to the terms or conditions (whether as to price or otherwise) on or subject to which goods or services are or are sought to be supplied, or

  (b) to the manner in which those terms or conditions are communicated to persons to whom goods are or are sought to be supplied or for whom services are or are sought to be supplied, or

  (c) to promotion (by advertising, labeling or marking of goods, canvassing or otherwise) of the supply of goods, or of the supply of services, or

  (d) to the way in which goods are packed or otherwise got up for the purpose of being supplied, or

  (e) to methods of demanding or securing payment for goods or services supplied.'.—[Sir G. Howe.]

  Brought up, and read the First time.
  Mr. Deputy Speaker: With this we can discuss the following Amendments to the new Clause:
  (a), after 'goods', insert
  'or servicing or maintenance thereof'.
  (b), at end add:
  '(f) to the system of marketing and distribution of goods or services'.
  We can also discuss Government amendments Nos. 10, 32, 77, 79, 80 and 81, and the following amendment:
  No. 32, in Clause 17, page 13, line 18, after 'quantity', insert 'and packaging'.
  4.0 p.m.
  Sir G. Howe: I beg to move, That the Clause be read a Second time.
  Half of that Clause 3 will then reappear in the form of new Clause 3 and the intention is that it should reappear at the beginning of Part II of the Bill.
  The reason that makes sense is that as a result of the amendments we shall shortly be considering to Clause 2 the phrase "consumer trade practice" ceases to have any relevance for Clause 2 and is relevant only for Part II of the Bill. This is in response to a general desire expressed in Standing Committee that we should, as it was put, "unstitch" Clause 2 from the
  1520
  definition of "consumer trade practice". We shall deal with Clause 2 in a moment, but we intend to unstitch Clause 3 from it by removing "consumer trade practice".
  What is happening here is that the whole of Clause 3 as it originally was in the Bill is to be removed if the House accepts Government Amendment No. 10.
  Secondly, the other half of Clause 3, that is, subsections (2) and (3), will go into the main definition part of the Bill down to Clause 125, and that change is effected by Amendment No. 77. Amendments Nos. 79 to 81 are consequential on Amendment No. 77.
  The mechanics of the amendments are as follows: Amendment No. 10 to remove Clause 3; new Clause 3 to replace the "consumer trade practice" part of it in Part II of the Bill; Amendment No. 77, together with Amendments Nos. 79, 80 and 81, to remove the definition of the consumer part of the old Clause 3 to Clause 125 of the Bill. I hope that that makes it clear to the House what is happening structurally. Within these changes certain important additional changes are taking place which are in response to points raised in Committee.
  If one looks at new Clause 3 and compares it with Clause 3(1) of the Bill as it is before the House, one finds that it has grown because it has had added to it a new paragraph (d). Paragraphs (a), (b), (c) and (d) of the old clause now appear as paragraphs (a), (b), (c) and (e) of this new clause. The stranger—I hope a welcome stranger—in new Clause 3 is paragraph (d), which says that "consumer trade practice" means, and for this purpose includes, any practice in connection with the supply of goods or services which relates
  "to the way in which goods are packed or otherwise got up for the purpose of being supplied."
  That is related to the point raised specifically by the hon. Member for Fife, West (Mr. William Hamilton) in his Amendment No. 32, which we are also debating. It meets the point raised by a number of hon. Members in Committee as regards their concern that packaging should be one of the matters with which the Director-General and the Consumer Protection Advisory Committee would be able to deal. I think that

  1521
  my hon. Friend the Member for Merton and Morden (Miss Fookes) also raised that point. This meets that point and broadens the scope of Part II.
  A change is also introduced in the form of the definition of "consumer" as that appears in Clause 125. It is a small change and it arises out of a point raised by the hon. Member for Bradford, East (M. Edward Lyons). If hon. Members look at Amendment No. 77 and compare that with the definition of "consumer "as it appears on page 3 of the Bill, they will see that the last two lines on page 3 read,
  "who does not obtain or seek to obtain the goods or services in the course of a business carried on by him".
  The corresponding last two lines of Amendment No. 77 said:
  "who does not receive or seek to receive the goods or services in the course of a business carried on by him".
  That picks up a point raised in Committee so as to make it clear that it is not necessary for there to be an act of obtaining for that clause to apply, and that unsolicited receipt has the same effect. It is a small change but it meets a point raised by hon. Members upstairs.
  Finally, there are two amendments standing in the names of my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim)—amendment (a)—and the hon. Member for Sedgefield (Mr. David Reed)—amendment (b). It is perhaps for the hon. Members to speak to their own amendments first and I should certainly be interested to hear what my hon. Friend the Member for Gloucester has to say on her amendment. It looks to me, on the first assessment of her amendment, that the concept of servicing or maintenance is embraced by the original phrase in Clause 3(1)—namely, "supply of services "—because both servicing and maintenance would be covered by that phrase. I know that this is a point to which my hon. Friend attaches some importance and it may be that her argument will demonstrate that it is insufficient to cover for her interests.
  I think it best to leave the hon. Member for Sedgefield to develop his own case in regard to amendment (b) because his understanding of the breadth of this may go wider than my own. He was courteous enough to send me a letter explaining the significance of the amendment, and no
  1522
  doubt the House will listen with interest to what he says.
  I commend the amendments in my name as representing a number of sensible changes in the direction indicated by hon. Members in Committee.
  Mr. William Hamilton: I very much welcome some of the changes that have been made as a result of the proceedings in Committee. In particular, I want to address a few remarks to the question of packaging which I raised in the Committee and which the Government have seen fit to incorporate in the new clause. However, the wording of the new clause is puzzling. I do not know exactly what it means when it refers to the way in which goods are "packed or otherwise got up". I am not quite sure what the distinction is between "packed" and "got up". The Minister might care to tell us what is the difference.
  The point was well made in Committee that there is a good deal of deception of the consumer in the form in which goods are packaged. I referred upstairs to the question of fake or false bottoms—in bottles, I hasten to add, and other containers. I mentioned the deceptive size of packages, such as packets of detergent, where one gets a giant package which is three-quarters full, or a giant package or packet containing a minute tube of toothpaste.
  The abuse is particularly prevalent in the sale of cosmetics, where one very often gets a jar within a jar, the inner jar representing a minute volume compared with the actual jar purchased. In Committee the Minister rationalised this by saying that women prefer to have a large jar on the dressing table. The hon. Member for Gloucester (Mrs. Sally Oppenheim) made the point that, if it were made clear by the manufacturers that there was a much smaller volume of cream or powder or whatever it was than might be presumed from the size of the outside container, there would be no deception. But quite clearly there is deception. The manufacturers play on the vanity of women, or of men in the case of after-shave lotion, for example. The practice is to be deplored, and I am glad the Minister is taking steps to see to it that it is stopped.
  We spent a little time in Committee dealing with packaging. We talked

  1523
  about dangerous goods being sold, but I do not think that we referred to dangerous packaging. We have read stories in newspapers of children getting polythene bags over their heads and suffocating in consequence. That kind of packaging should be declared illegal, and the Bill is the appropriate mechanism for doing so.
  The hon. Member for Cannock (Mr. Cormack) has introduced a Bill which deals with packaging in the form of plastics and non-returnable containers. The use of plastics for this purpose is equally indefensible because it adds to the already considerable problem of pollution. Manufacturers should not be allowed to use materials which add to pollution with no regard for anyone except their own commercial interests.
  I hope that the Minister will give us the assurance that the clause makes it an unfair and improper practice for a manufacturer to produce goods for the retail market which lead to pollution or danger to life.
  Miss Janet Fookes: In general terms I am delighted with the new Clause that has been moved by my right hon. and learned Friend. But the phrase "otherwise got up", apart from being repetitive, is somewhat inelegant. If some such expression is necessary, is the English language so poverty-stricken that we cannot find a better term than this to go into a Bill which we hope will become a permanent part of our statute law?
  4.15 p.m.
  Mr. David Reed: I want specifically to refer to amendment (b) to new Clause 3, and it may help the House to know that the amendment is intended to be taken in conjunction with Amendment No. 37 which I hope, if I catch your eye, Mr. Deputy Speaker, to have an opportunity to discuss later.
  The object of the two amendments taken together is to give the Minister for Trade and Consumer Affairs and the Director-General of Fair Trading the opportunity to look at a new kind of consumer trade practice—the marketing-oriented type of consumer trade practice which is increasing. Leaving aside Amendment No. 37, amendment (b) will stand up on its own. It seeks to put
  1524
  right an omission in the matters to which the Director-General will be able to apply himself.
  The amended Clause 3 even with its redistribution in the Bill is fine, with one exception. Under new Clause 3 the Director-General will be able to look at the whole gamut of approaches to what is a consumer trade practice. He will be able to look at the way in which goods and services are advertised, packed, paid for and so on. The one thing he is specifically not allowed to look at is the system by which the products or services reach the public, in other words, the way in which they are marketed or distributed.
  I am concerned about the growing abuse of the marketing and distribution system, and that is why my hon. Friends and I have tabled amendment (b). The marketing-oriented abuse is growing rapidly. Marketing is almost a new science and it gives the racketeer, the rogue and the con-man another set of levers to pull in trying to con the public out of their hard-earned savings. The purpose of the amendment is to enable the Director-General to look at the activities of people who, although they may currently be operating within the law, are operating way out on the fringe of it.
  I have particularly in mind pyramid selling, a subject which has concerned many hon. Members. My hon. Friend the Member for Watford (Mr. Raphael Tuck) introduced a Bill to try to deal with it. Pyramid selling is a twentieth century abuse, and new methods of tackling it are necessary. The problem is largely that these super crooks are using such modern techniques that it is difficult for anyone who is interested in their activities to keep up to date with them. They have available to them a whole range of expertise. They use psychologists to advise them about human reactions. They use motivation experts to advise them how to rig a meeting to get the best response from members of the public whom they are attempting to con into investing in their business. They use financial experts who can arrange shady loan deals at high rates of interest. All these people are being used, in addition to 'the general run of marketing and sales promotion people.
  I do not know the extent of this abuse, but I can say with some degree of

  1525
  certainty that tens of thousands of people have lost their life savings to companies of this sort and the total amount of money involved runs into several million pounds.
  I am worried that pyramid selling is just the first of many marketing-oriented swindles that will be developed. The next step for pyramid operators is the crooked franchise operation. A person is invited to invest money in advance for the privilege of distributing a certain product. That person, in return for the investment, is given an area in which to work. The impression is given to the gullible investor that he will get a guaranteed area and that no one will be in competition with him in selling that product in that area. The real rogues are simply "selling" the same area time and again to many different people. Pyramid selling as it is now is merely the first of many similar abuses.
  There are many more such activities There are the variations on the doorstep selling theme—the crooked magazine subscription method in which a student says that he is taking part in a competition. There is the double-glazing firm which offers a psuedo cut in the retail price to induce a sale. We shall be seeing more of the party-plan technique, which may be used by reputable firms on a reputable basis, but is also being used by people who are selling shoddy products. Parties are given and the promoters rely on the guests being reluctant to offend the hostess by not buying anything.
  All these marketing-oriented trade abuses should be looked at by the Director General of Fair Trading. These systems of crooked marketing can result in an eventual mark-up of 1,000 per cent. to the retail consumer on the original cost of a product. I see the hon. Lady the Member for Gloucester (Mrs. Sally Oppenheim) shaking her head, but I know one example of a product which was bought for around 5p a bottle by the original corporate body but was sold to the retail consumer at well over £1 a bottle. That was caused by the markups at the various stages in the crooked marketing system.
  Irrespective of whether we want to look at any one firm or its method, we ought to give the Director General and
  1526
  his staff almost a direction from this House to be aware of what is happening in this area and to go on looking into it. It is not just the retail consumer who is buying in lots of £1, £2, £3 or £4 a time. What is even more important is the sort of person who is pulled into this kind of swindle and who is asked to invest several hundred pounds in advance. Since I started looking at it—and I know the same applies to my hon. Friend the Member for Watford—I have had hundreds of letters from people who have been caught in this kind of operation.
  What it can mean is that somebody invests to earn a part-time income from marketing a product. That is their idea. To do it they will normally have to borrow the money. Quite often they have to borrow it from a bank or a finance house. Quite often they have to use their home as security. They have to obtain a second mortgage on their home to get the money to invest. The result is that when they find products at a 1,000 per cent. mark-up which will not sell retail, their homes, their lives and their family's lives are placed in jeopardy. There are literally hundreds of thousands of people in this position throughout the country because of this kind of swindle. It is extraordinary the way people get involved, with the best of motives initially, to earn a part-time income, to try to produce for their families a better way of life, but end up by being swindled in this way into losing everything, into losing friendships and even their own self respect.
  I do not want particularly to start a debate today on the issue of pyramid selling. If we can get Amendment No. 37 called either later today or tomorrow, I hope that we shall be able to discuss the abuse and how we need to tackle it. It is clear that the Director General of Fair Trading must be placed in a position where he can look at this kind of abuse. He must be able to prepare, for his own advisory committee, for the Minister for Trade and Consumer Affairs, reports dealing with any changes which this kind of operator introduces. I can best describe it in terms of Clause 2 of the Bill. In my view, these are undoubtedly consumer trade practices which may adversely affect the economic interests of consumers in the United Kingdom. For

  1527
  that reason, it is important that we give the Director General these powers, and I commend this amendment to the House.
  Mrs. Sally Oppenheim: I hope it will be in order, in speaking to the amendment which stands in my name and that of my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor) if I refer first to new Clause 3. We shall possibly have some difficulty in debating new Clause 3 because we shall not first have discussed the redrafting amendment to new Clause 2.
  Mr. Deputy Speaker (Miss Harvie Anderson): I should like to make it plain to the hon. Lady that the amendment is selected for discussion only, and that it would not be the appropriate time, even if she wished to move it, to do so at this moment.
  Mrs. Oppenheim: Does this mean that I can discuss only the amendment and not new Clause 3?
  Mr. Deputy Speaker: If the hon. Lady continues, she will get on quite well.
  Mrs. Oppeaheim: With regard to new Clause 3, the fact that there have been drafting amendments to new Clause 2 makes it difficult to discuss the point that no alteration has been made with regard to a satisfactory definition of a consumer trade practice. Paragraph (b), I was about to say—and I have been justified subsequently by the amending subsection that my right hon. and learned Friend moved at the beginning—had a rather curious extension, thanks to the explanation given by my right hon. and learned Friend.
  I welcome the points my right hon. and learned Friend made about paragraph (d) and the packaging provisions therein. I am not quite sure whether this is intended to refer to standard packaging, which we discussed at length during the Standing Committee, or whether it is also likely to encompass unit pricing in relation to my hon. Friend's Bill.
  If this is the case. I would be rather dismayed, as my hon. Friend already has a Bill which has received a Second Reading in the House. Perhaps my right hon. and learned Friend can clarify that.
  1528
  With regard to groceries, necessities and things such as that, I would certainly add a warm welcome to the concept of standard packaging and also to the concept of doing away with misleading packaging.
  As far as cosmetics are concerned, I take the feminine view. Unlike the hon. Member for Fife, West (Mr. William Hamilton), I do not wish to see a spartan array of medicine bottles on my dressing table. I want to see my face cream or my scent in a pretty bottle or a jar. I do not mind how misleading the outside of the jar may be, as long as there is a label describing either the weight or the quantity therein. I leave the hon. Gentleman for Fife, West to his spartan bottles.
  In Standing Committee, my hon. Friend the Member for Glasgow, Cathcart and I—as my right hon. and learned Friend will remember—added an amendment to the original Clause 3, adding new paragraphs (e) and (f) with regard, first, to the quality and performance or standard of manufacture of goods and, secondly, to the servicing of goods, the availability of spare parts, components and so on, for goods at competitive prices. It is on this latter point that We have tabled amendment (a) today.
  During Standing Committee, my right hon. and learned Friend gave assurances that the point made on quality and standard of manufacture was now met in the contemporary definition of merchantable quality in Supply of Goods Act implied terms, and that there was an implied condition that goods were of this quality. I entirely accept that assurance. At that time I put it forward as an alternative. One would hope that the Bill would ultimately provide a form of quality control.
  However, with regard to the availability and the cost of spare parts, and the poor and expensive servicing of parts and domestic appliances, my right hon. and learned Friend indicated at the time—rather differently from that which he has stated more recently—that these would be covered by redrafting Clause 2. To some extent they are. That is one of the difficulties of discussing new Clause 3 before we discuss the amendment or Clause 2. I sincerely hope they are, because although this is a singularly intractable problem—as I am sure my

  1529
  right hon. and learned Friend would acknowledge—it is a serious one.
  In the United States, the 1972 Vehicles Information and Cost Savings Act was introduced in an attempt to deal with this matter. One of the functions of that legislation is to set up a network of independent centres to investigate the cost and effectiveness of the servicing of cars and examination of the replacement of so-called faulty parts.
  On the subject of the availability of spare parts, we discussed the monopolies aspect of the problem. I still hope that what the hon. Member for Clackmannon and East Stirlingshire (Mr. Douglas) described as monopolistic suppliers of components can be investigated under the monopolies section of the Bill.
  Although I wish him no ill will at all, I hope that the Director General will be absolutely snowed under with evidence, under proposed Clause 2(1)(b), of appallingly low standards of servicing, of deception in the replacement of spare parts, of the low standards of quality in the manufacture of some of our products, and shoddy workmanship. As a result, he will press the Secretary of State into action in the interests of consumers, and also in the interests of our export trade because a disgraceful state of affairs exists today at the expense of consumers in this field. We should not blind ourselves to this, either from the point of view of consumers or from the point of view of our export trade.
  4.30 p.m.
  Quite fortuitously, an advertisement appeared in the Daily Mail this week which sums up the problem far more effectively than I can. In view of the proliferation of newspaper clippings during Standing Committee, I give a solemn promise that this is the only newspaper clipping I shall produce during Report.
  The advertisement was put in by the Lucas spare parts and components company and shows a prototype spiv with a prototype blonde and a prototype Jaguar. This is not to indicate that anyone who has a prototype Jaguar, or indeed a prototype blonde, is a spiv. The headline on the advertisement reads:
  "I know the motorists get conned, but I've got to eat, ain't I?"
  1530
  The advertisement reads:
  "Ed was getting a bit short of cash. So he decided to try his hand at the Lucas spare parts game. He started picking up Lucas dynamos, starters, distributors and alternators from scrapyards and abandoned cars. At first he threw away the ones that did not work. As he says himself, 'I didn't have a clue how to fix them.' The ones that did work, ho just cleaned up and repainted. Ed admits, 'As long as they were still working, I couldn't care less how long they'd last.' Ed used to sell his 'Lucas' parts to a friend. Now he's built up a lot of regular custom with several local garages. 'I'm making a fair bit of money out of them, I can tell you,' he says. Naturally the garages make their share, too. Some of them charge as much for Ed's 'Lucas' parts as they would for genuine Lucas B90 exchange units. And they get away with it. You see most motorists never ask if they're getting genuine Lucas B90 exchange units. Worse still, they don't know that genuine B90 units have a twelve-months written guarantee from Lucas. And that the guarantee will be honoured by any Lucas stockist anywhere in the country."
  I am sure the House will agree that Lucas has done a service to the motorist by producing that advertisement. However, Lucas might have taken a further step and said to the consumer "When you get your new spare part, ask for an invoice describing it as such". That would have been more effective.
  This underlines the point which I am trying to emphasise that in some cases the original manufacture and in many cases the servicing of cars and domestic appliances is appalling and the cost is very high indeed. Furthermore, there is a lack of availability of spare parts. We seek to cover this point by the inclusion of She word "maintenance" in Amendment (a). As a possible breach of the Sale of Goods Act, when a consumer purchases a product he should no' be deprived of its use because of inadequate servicing or shortage of spare parts, as is often the case—or even worse by the high cost of repairs which he cannot afford to pay in respect of a domestic appliance or vehicle.
  The question arises whether the goods supplied were in the first place of merchantable quality. My right hon. and learned Friend the Minister for Trade and Consumer Affairs said that some aspects of the problem were dealt with in the redraft of Clause 2 and some aspects of the matter could be dealt with in Part III of the Bill the Restrictive Practices Court, or alternatively in the new Clause to the Administration

  1531
  of Justice Act about the county courts. I wonder how many such cases would find their way to the county courts and, if they did, what evidence would be produced by consumers to prove the point they were making about the replacement of parts or the shoddy nature of the goods in the first place.
  If it turns out that the Director General can act as a catalyst on this subject to bring in the necessary measures to remedy the situation, then this Bill will be justified on that issue alone.
  In the meantime I welcome the new clause. It is slightly better than the old provision, but only just. I ask the Minister to accept our amendment as a token of his concern with regard to a very important consumer issue.
  Mr. Raphael Tuck: I am in a little difficulty on this clause. I am grateful to my hon. Friend the Member for Sedgefield (Mr. David Reed) for tabling Amendment (b) and I give it my support. My difficulty arises because I now have before the House a Bill dealing with pyramid selling which, regularly, every Friday is subject to a cry of "Object" from the Government Whips. Therefore, in the present Bill I tried to insert a clause on Report to deal with the subject with which my Bill is concerned, but I was informed by the Public Bill Office that, procedurally, it was impossible to insert any provision dealing with pyramid selling at this juncture.
  I also received a letter from the Minister of Trade and Consumer Affairs calling my attention to the procedural difficulties and suggesting that the matter might be better dealt with in another place. In those circumstances I did not seek to table an amendment. But now, to and behold, there appear on the Amendment Paper two amendments—Amendment (b) and Amendment No. 37—which deal with the very point with which I sought to deal in my proposed amendment. Wonders will never cease.
  I give my approval to both the amendments, but I do not understand why I was not allowed to bring this matter to light in my own amendment. In the new circumstances I shall have to make my speech now, because I understand that
  1532
  the fate of Amendment No. 37, which is due to be discussed tomorrow, will depend on what happens to Amendment (b). In other words, if that amendment falls, Amendment No. 37 will also fall. Therefore, I shall make a few observations today and hope that it will convince hon. Members to vote for my hon. Friend's Amendment (b).
  I cannot understand why the Minister did not adopt my suggestion of taking over my Bill lock, stock and barrel and amending the definition clause to include horizontal as well as vertical structures, and to get the Bill through Parliament in that way. It would have been simple and swift, and would have succeeded because the consensus in the House is that the Bill is necessary. No doubt the Minister will give his reasons for not doing so.
  Pyramid selling is a terrible evil and I have come in contact with it on a number of occasions. In my room in the House I have a file almost six inches thick containing letters from people who have written to me complaining that because of pyramid selling they have lost their life savings.
  The main emphasis in pyramid selling is the recruitment of other people. The first person involved buys in at a high level in the pyramid structure and pays £1,000 or £2,000, which may represent his life savings. He is then told that if he can recruit others up to his level or to a lower level he will receive £500 for each person he recruits. He is then sold about £850 or £1,000 worth of goods, and has to sell those goods. But the emphasis is not on selling. He will not recoup his £1,000 or £2,000 by selling the product; he will recoup it only by recruiting other people into the system. I understand that Golden Chemicals have a chart which shows that in the first week one person recruits two other people, and in the next week those two people recruit a further two people each, and so on. It has been calculated that after 26 weeks about 67 million people would be recruited. There comes a time, therefore, when the whole community is saturated with recruits and no more can be found because everybody is in the game.
  I remember that when I was in New Orleans I joined a pyramid club just for the devil of it. I paid ten dollars and kissed that money goodbye. I had to find

  1533
  two people in the whole of New Orleans, the population of which was then around 250,000. I could find only one person to recruit, because everybody else was in the scheme. Thus, people who get in early are in for a good time and can earn a lot of money, but people who join in the middle or later often lose large amounts of money, which sometimes represents their life savings.
  Incentives are always given by these confidence companies. My hon. Friend mentioned one. I can tell the House about Koscot. The House will remember that Mr. Justice Megarry made an order for its winding up and said that it reeked of cunning and dishonesty. The company had what is called "opportunity" meetings at a big hotel. People became fired with zeal and desire to join. They came to the promoters saying, "We want to join and to give you our £ 1,500, but we have not got it." The reply was, "Just a moment. We have an accountant who will help you." On seeing the accountant, they were told to cross the corridor, where they would find a finance firm willing to help them. Each would-be participant was lent the £1,500 by the finance firm to buy goods. Later, however, he found that the goods were worthless and that he was unable to recoup his money. On going back to the finance firm, and pointing out that it had guaranteed the arrangement, he was told that the firm denied all connection with Koscot. It had merely lent the money and was not concerned with the purpose for which it was lent. That is how the system works. It is a case of wheels within wheels, and people lose their money.
  I cannot understand why this House cannot pass a simple Bill to deal with the abuses, of which there are five or six. The first is that a person joining one of these firms is not given an exclusive territory. He may find as many as 200 people working against him in a small territory. He has no guarantee that he can sell his goods. Any agreement entered into between one of these companies and a prospective franchise holder should contain a clause to the effect that the franchise holder will be given a specifically delineated exclusive territory. That is the first sine qua non of a just system.
  Secondly, this person has to buy the goods. At present he has to buy say
  1534
  £850 or £1,000 worth of goods. What is the necessity for him to buy them? If the product is any good at all, it will sell, and he can therefore sell the goods on commission. There is no necessity to buy the goods. If they are no good he will not be able to sell them, and that is probably why he has to lumber himself with the goods. He is lumbered with £1,000 worth of goods, and probably sells about £100 worth. When he asks the company to take back the remainder it refuses; indeed, it may well have gone out of business. The unfortunate person therefore tries to sell the goods at knockdown prices in markets, thus spoiling the chances of others to dispose of their goods at the proper price. Many people tell me that when they have tried to sell their goods it has been pointed out to them that they can be bought in markets for half the price. No franchise holder should be required to purchase the goods himself. He should be permitted to sell them on commission.
  Thirdly, no franchise holder should have to pay for joining such a company——
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will not move too far from the new clause.
  Mr. Tuck: I shall try not to, but I have to subsume these arguments under this clause in the course of this debate, because the amendment which we are due to discuss tomorrow may fall if the clause is not accepted today——
  Mr. Deputy Speaker: Order, we cannot anticipate tomorrow. Mr. Tuck. New Clause 3.
  Mr. Tuck: I shall try not to move too far away from the clause.
  The third sine qua non is that a prospective franchise holder should not have to pay to join the company. Today he may be required to pay a great deal to do so. Firms like Kleen-e-ze are in the business legitimately, and charge a man only £5 for his kit. I suggest that a franchise holder should be charged only £10 for his kit and no more.
  The fourth and main sine qua non is that a franchise holder should not be paid for recruiting other people. If a provision of that kind were operated, his whole energy would be put into selling the goods rather than some of it going into

  1535
  recruiting other people. All that he should be paid is commission on the goods that he sells, with perhaps a smaller rate of commission on goods sold by people whom he has recruited.
  Those are the essential conditions. There is a fifth one, which escapes me at present, but it is in my Bill. In my view these conditions could be incorporated into such a Bill, instead of passing this clause. However, as my Bill has not been accepted, and in view of the fact that the right hon. and learned Gentleman has refused to take it over, for his own reasons, I urge the House to adopt my hon. Friend's proposal and add this clause to the Bill.
  4.45 p.m.
  Mr. Edward Taylor: In Committee my right hon. and learned Friend the Minister for Trade and Consumer Affairs was extremely helpful and courteous in dealing with our various points, and he has shown his interest in them by the amendments that he has tabled.
  My hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim) put forward a powerful case in support of amendment (a). However, my right hon. and learned Friend said that in his opinion problems involving the servicing and maintenance of vehicles and household equipment were covered by the words "supply of services".
  I come, then, to amendment (b). We are told that this, too, is covered. In Committee we tabled an amendment saying that we hoped that it would cover the quality, performance and standard of manufacture of equipment. We were told that that was covered, if not by this clause, by the Supply of Goods (Implied Terms) Act.
  It seems, therefore, that every little point which we feel to be important is covered by the words "supply of goods" or "supply of services". I know that my right hon. and learned Friend has considered this matter seriously. But if that is so, what is the point of having paragraphs (a), (b), (c), (d) and (e) in the clause at all? If, as it seems, every possible consumer trade practice is covered, would not it be adequate to end new Clause 3 in line 3 at the word "consumers", simply saying,
  1536
  "In this Act 'consumer trade practice' means any practice which is for the time being carried on in connection with the supply of goods (whether by way of sale or otherwise) to consumers or in connection with the supply of services for consumers"?
  Bearing in mind the very important points raised in Committee, we have been told that everything is covered. I wonder whether the remainder will be helpful or necessary in relation to later clauses, especially those in Part II.
  I have been impressed by the Government's recent decision to set up a committee to see whether we can simplify the law and make it more meaningful. Nothing makes it more difficult to implement or to understand the law than unnecessary definitions. I hope that my right hon. and learned Friend will not think that I am being critical because we are grateful for his various assurances, but will not these paragraphs simply confuse matters?
  I have no doubt that there is a very good answer. It may be that if we did not have these definitions some vast sphere of operations would be excluded. But perhaps my right hon. and learned Friend can tell the House what is included which otherwise would be excluded by having paragraphs (a), (b), (c), (d) and (e), and whether they are really necessary.
  Mr. Patrick Cormack: I wish to address myself to paragraph (d) and at the outset to associate myself with the scathing and justified remarks of my hon. Friend the Member for Merton and Morden (Miss Fookes). Before the Bill becomes an Act I hope that we shall have got rid of "got up" which does not dignify any piece of legislation and is something up with which we should not put.
  Paragraph (d) seems to touch upon an area in which I have a special interest and in respect of which I have introduced two Bills recently, the Weights and Measures (Unit Pricing) Bill and the Container and Packaging Control Bill.
  In the Committee, on which I was not fortunate enough to serve, there was a great deal of debate about unit pricing and this revealed a distinct difference of opinion between myself and the hon. Member for Fife, West (Mr. William Hamilton). Both of us believed that unit pricing was

  1537
  necessary, the hon. Gentleman taking the view that it should be incorporated in the Bill and my taking the view that a separate Bill was necessary, an attitude in which I was supported by the Government.
  On more than one occasion in Committee the Government spokesman said that the Government were waiting to give my Bill a fair wind. That attitude was welcomed by the Opposition spokesman. Due to little local difficulties, it was not until last Friday that my Bill got its fair wind and had a Second Reading. It is due to go into Committee before the end of this Session and I hope that the Government's attitude towards it has net changed, because I believe that a separate Bill for this important measure is necessary. This view is shared most strongly by my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim) who has referred in passing to this issue.
  Another issue with which I am concerned is that of container and packaging control. Paragraph (d) refers to the way that goods are packed. Presumably at the back of my right hon. and learned Friend's mind, or possibly even at the front of it, when drafting this paragraph was the intention to deal with the enormous problems occasioned by deceptive and superfious packaging and all the consequential misfortunes which follow therefrom.
  On Friday, at three minutes to four, we had a short debate on the Container and Packaging Control Bill and my right hon. Friend the Minister for Local Government and Development, who was, in effect, standing in for my right hon. and learned Friend, had time to say that whilst the Government welcomed the fact that the Bill had been introduced and appreciated the complexities of the problem, they felt that it was not sufficiently all-embracing to deal with the matter as it should be dealt with.
  I do not necessary quarrel with that. I am fully aware that I did not produce a perfect Bill. It was a simple piece of enabling legislation. But if that simple piece of enabling legislation, much more all-embracing than paragraph (d) in the new clause, were not sufficient to tackle the problem, I hope that, as an earnest of the Government's good intentions, we shall have a clear indication from my
  1538
  right hon. and learned Friend that something of a more comprehensive nature will follow very soon.
  We are dealing with two enormous problems. At the risk of wearying the House I should like to comment on each of them.
  The first is unit pricing. I think that the discussion which was stimulated last year, partly as a result of the Bill that I introduced for the first time then and the newspaper articles and broadcasts that followed, showed that throughout the country there was a great demand by housewives to have this added piece of consumer protection. Often the housewife in a hurry in the supermarket is bamboozled by the veritable jungle of packages and bottles which confront her and she has no idea what she is getting for her money. She may come out clutching a child in one hand and pushing a trolley with the other only to find when she gets home that the 1lb. of jam is 12 oz. and the half-pound of biscuits is 6½ oz. If she goes into a chemist's shop on the way home and buys her shampoo, toothpaste, and so on, she has no idea how to compare what gives best value for money.
  I risked your wrath last year, Mr. Speaker, when I produced certain examples of deceptive packaging in the Chamber of the House. We could all go out now into the highways and byways of London and our constituencies and produce mountains of such examples.
  It is essential that firms which do not move towards the standard quantity concept for the goods they are selling should give a clear and precise indication of the price per appropriate unit.
  It is fair to point out that some housewives would take no notice of this information, just as some take no notice of the ingredients on the sauce bottle. But there is some information to which the housewife is absolutely entitled. Just as she is entitled to know the ingredients of her tomato ketchup, Daddies Sauce, or whatever else it may be, so she is entitled to know what she is getting in weight and volume for the money that she is spending. It is a small but significant weapon in the fight against inflation for the discriminating housewife. Most housewives are, or at least want

  1539
  to be, discriminating. The trouble is that the old cliche, "The customer is always right", has become for too many, "Let us take the customer for a mug."
  In that context it is appropriate to move on briefly to the second subject with which I am concerned—namely, packaging. I have done a great deal of research on this matter during the last few weeks. I never cease to be amazed by the ridiculous ploys which manufacturers will adopt. I noticed an article in the Sunday Times last weekend about one firm selling ladies' knickers in tin cans. It is certainly novel, but hardly necessary.
  There is a great deal of superfluous packaging on the market. I am not advocating a return to the days of the ubiquitous brown paper bag, nor am I suggesting that we should sacrifice hygiene to other considerations, but we do not need to buy our shoe-laces in plastic bubbles. I am certain that ladies do not need to buy their knickers in cans.
  I am persuaded that plastic is being over-used. For example, when a man buys a small pack of razor blades he will find that it is on a large card with a plastic bubble at the top. This is not necessary.
  A lady may go into a shop and ask for a certain type of cheese spread. She will certainly get the cheese spread but will find that it is wrapped in special paper and inside a box. Last week I bought some sauce which was inside a box. The purpose of the box was to show a picture of the bottle. That is taking packaging to ludicrous extremes.
  Mrs. Sally Oppenheim: Does my hon. Friend agree that a great deal of this extra and superfluous packaging is in some way necessary because supermarkets do not provide adequate bags or carriers in which to put the goods that one has purchased, without having to pay for such bag or carrier? It is the shortfall in the standard of service provided in supermarkets that causes the superfluous packaging of individual items.
  Mr. Cormack: There is a deal of truth in what my hon. Friend said. I believe that she has studied this matter as carefully as anyone. However, I do not accept that the supermarket is entirely
  1540
  the villain of the piece. I think that we are all the victims of the ad-man who far too often becomes the con-man. I refer to marketing techniques which persuade people to put a certain hair spray, first, inside an aerosol and, secondly, inside a plastic sleeve round the aerosol. The total cost of the packaging in that instance is about 40p and the price of the article is about 55p. This is quite ridiculous. I could quote numerous examples of the price of packaging being as much as 35 per cent. of the cost of the item. This is bad and something should be done about it.
  5.0 p.m.
  I am particularly worried about plastic bottles. I hope that whatever else is within the Bill and whatever powers may or may not be indicated by the Clause and subsection it will, at least, be possible to prevent dairies from going over to the plastic milk bottle. I have mentioned this before. If the plastic milk bottle were introduced it would result in 11,500 million bottles a year—sufficient to build six columns to the moon. There are, too, enormous problems of disposal. Some of this packaging is not degradable and most has to be buried in holes in the ground. The amount of superfluous trash collected by the housewife in the supermarket today litters the hedgerows and despoils the countryside tomorrow.
  Likewise something must be done about the non-returnable bottle. Last week I bought two bottles of cider. One bottle contained 3 fluid ozs more than the other. It was a returnable bottle on which there was 3p back. Hundreds of thousands of non-returnable bottles are distributed throughout the country every week, and this creates enormous problems.
  I have given just a few examples at random. I could choose many more, but I hope that I have said enough to provoke an encouraging response from my right hon. and learned Friend. I hope that he will use strong words about these matters and indicate how far the Bill will go, as well as how much further the Government are prepared to go with other legislation or by trying to get a code of practice worked out in the near future. These problems affect every family in the land and will also affect future generations. They call for a positive response.
  Mr. Alan Williams: I recognise that the right hon. and learned Gentleman has attempted in the new Clause to meet some of the points raised in Committee. I join the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) in wondering whether the list is necessary and whether a simple sentence might not have achieved the objective which we all want and which would leave no doubt about possible loopholes. Most of my comments will be concerned with trying to establish whether loopholes exist in the format which we have before us.
  I regret that the definition still exists on consumer trade practices as opposed to trade practices generally. This issue was discussed in Committee, when those of us on this side felt that it should apply to trade at all levels and not just at the consumer trade level. Nevertheless I do not think that it would be fruitful to pursue this matter at this stage because it has been fully discussed on more than one occasion in Committee. There was basic disagreement here and I do not see any reconciliation being achieved.
  There is still a degree of uncertainty about the extent of the term "economic interests" of consumers and also about the full extent of the consumer trade practice. As the right hon. and learned Gentleman knows there is the Nader school of thought which would like to interpret terms in the widest possible sense, following the point made by the hon. Member for Cannock (Mr. Cormack) about disposable bottles and their pollution effect as well as their cost to the consumer. I should like to put to the right hon. Gentleman a set of questions and I should be grateful for his advice, in so far as he can give it.
  In relation to the economic interests of consumers and the question of packaging, which has already been mentioned by several hon. Members, we welcome the attempt to meet the arguments made by my hon. Friend the Member for Fife, West (Mr. William Hamilton) in Committee. He did a service to the consumer by bringing the point to the Government's attention and getting it accepted. But the point was made by hon. Members on both sides, here and in Committee, that packaging affects the consumer in more than one way. It can increase the cost—indeed, perhaps add as much as a
  1542
  third to the cost of the goods, and yet be unnecessary. Packaging can be visually misleading. The hon. Member for Cannock chose the particularly relevant case of a 12-oz jar of jam being all too often mistaken by the housewife for a 11b jar as she rushes around the supermarket. There is also the secondary cost to the consumer. The consumer is also a taxpayer, and as a taxpayer he has an interest in the cost of the disposal of these goods. It is in that sense that we wonder how far the present wording of the Bill goes to meet the Nader group requirement and the public interest research centre requirement that more than the direct impact upon the consumer's pocket can be taken into account.
  In the report produced by the Friends of the Earth earlier this year, the second recommendation was that packaging should be designed ideally for re-use. That is the point which the hon. Member for Cannock was prevented from putting last Friday when the proceedings on the Bill immediately before his on the list went a little longer than expected. How far could the Director General go in this respect? How far could his responsibility overlap into environmental questions? I suspect that, at some stage, this issue will have to be decided. What is the limiting factor specified in the Bill? Is any limitation set, or is it left to the common sense and judgment of the Director General?
  Assuming that the Director General may not be allowed to range as wide as some of us might wish, how far would he be able to comment on and make recommendations about the trend towards enforced disposable packaging as opposed to returnable packaging? Assuming that there is a social disadvantage, consumer choice is also being limited. Supermarkets are among the main initiators of this trend to disposable packaging, because they do not want people coming in for their money back and they do not want their limited storage space taken up with empty bottles and cartons. Nevertheless, a definite trend towards disposable packaging is being perpetuated by the move towards mass selling. Will the Director General be able to comment on trends such as this in the wider consumer interest?
  Will he even be able to comment on the fact that, in some instances, tax may

  1543
  actually aggravate an undesirable development which would come within the scope of the term "undesirable consumer trade practice"? If the hon. Member for Cannock has not heard of this matter, I think that he will be interested in it in view of his deep concern about packaging.
  In The Grocer of 28th April 1973 there is a quotation from Mr. Leonard Reeves-Smith, of the National Grocers Federation, who referred to VAT and returnable bottles and said
  "It is like something out of Alice in Wonderland."
  He said that, when the Chancellor eventually decided to zero-rate the contents of mineral water and squash bottles, he concurrently zero-rated the disposable bottle but not the returnable bottle. So a peculiar anomaly arises. VAT has become a polluter.
  In Mr. Reeves-Smith's words, the Chancellor
  "… either forgot about or decided against zero-rating the containers in which these things were packed. Thus we have the ludicrous situation where mineral waters and squashes are free of VAT but if they are packed in a returnable bottle that bottle is subject to VAT if it is not returned by the consumer."
  He referred to the "monumental bookkeeping exercise" each week of checking out returnable bottles and containers on which VAT is charged and then crediting the VAT charge when the bottles are returned. He said that the return must be negligible but that the bookkeeping headaches for the small trader were considerable.
  In order to avoid this unnecessary monument to VAT and irrelevant paperwork, the small retailers may now add their momentum to that of the multiples and supermarkets, on the principle, "It is easier for us in administrative costs if we are supplied with disposable rather than returnable containers". Therefore, a Government tax decision is exacerbating an undesirable consumer trade practice. Would the Director General be able to comment on that?
  Will the Minister also confirm that credit is fully covered by the new clause? He will remember that there was some confusion about this in Committee. At one meeting, the Under-Secretary and I were locked in lengthy verbal debate
  1544
  about credit, we saying that it should be covered, he saying that it should not. At the next meeting, the right hon. and learned Gentleman said that it was covered by the Bill. If only we had known that at the previous meeting, a considerable amount of time might have been saved.
  Will the Director General hold the fort, pending Crowther? Even if Crowther comes in during the next legislative year, it will mean that 3½ years will have passed since the report was given to the Government before it gets on the Statute Book. One cannot be unconscious of the fact that the next legislative year could be interrupted by a certain political event which may disrupt the legislative programme We might be part of the way through implementing Crowther only to find an election called, in which case we would have to wait another year for Crowther, lengthening to 4½ years the time between the report's presentation and its appearance on the statute book. That would leave a two-year gap between the appearance of the Director General and the appearance of his counterpart on the credit front.
  Will he have adequate powers in the interval, and what will his guidelines be? Will they just be the existing law? In Committee, considerable publicity was given to the voluntary code of practice produced rather suddenly by the Undersecretary in an Adjournment debate initiated by the hon. Member for Gloucester (Mrs. Sally Oppenheim). The headline in The Guardian the next day was, "Code to curb fat home loan profits." Will the Director General be able to implement that code while he is acting as temporary representative of the consumer, pending the implementation of Crowther?
  If so, how far will he be tied by the guidelines put forward by the Ministry in its written guidance to the finance houses? I am sure that, when we saw that Guardian headline, we thought that the gross exploitation of second mortgages was being brought effectively under control. But perhaps the Minister will confirm for us that, in the latest advice to go to the finance houses, it is made clear that the voluntary restraint on second mortgages does not apply to second mortgages over £3,000. Is it not absolutely

  1545
  absurd, therefore, that what the Government are saying is, the bigger the deception the less the deceiver's risk? Is this harmful limitation on the working of the code being applied, and will it also apply to the Director General when he eventually takes over?
  The hon. Member for Gloucester helpfully mentioned servicing and repairs in Committee. I, too, would like confirmation that this area is adequately covered. I have examples here, but for the sake of progress I will not quote them. Certainly, however, the availability of spare parts is an issue on which we should like some guidance.
  5.15 p.m.
  The Slough and District Consumer Group's Newsletter No. 7 of March 1973 states:
  "Four years ago, a Prestcold deep freeze with a capacity of some 6·5 cubic feet cost around £70. Prestcold have unhappily gone out of business since then, but their spare parts concern is looked after by the Acre Company Ltd. Today the asking price for a new lid for the said Prestcold deep freeze is £26.45 or rather more than one-third of the original total cost of the article."
  What function will the Director General have in ensuring not only that spares are available but also that they are available at a reasonable price? That is not a trivial question. As goods become more complex they are more likely to go wrong. As models change more rapidly, a member of the public can find himself with a perfectly useful but, in market terms, obsolescent product, be it a car, a washing machine or any household appliance. It is directly in the consumer's interest that there should be a continuing and economically justifiable—in price terms—supply of spares. Will the Director General be able to ensure that that situation exists?
  What could the Director General do about the story carried by the Sunday Times on 15th April about the cigarette firm Gallahers? It was indicated in the report that Gallahers was deliberately rationing the supply of the safest of their cigarettes—that is, the least harmful, for we had better be sure what we mean. In a report entitled "Silk Cut—Follow-Up Action", signed by the firm's general sales manager, salesmen were told
  "Please memorise it, do not show it to anyone and return it to your manager at the next team meeting."
  1546
  When trying to sell the products, the advice given to salesmen is
  "Continue tactfully to discourage stocking of Extra Mild; where the outlet insists, you should limit his order to a maximum of 400 per retailer, and 1,000 per wholesaler."
  In other words, that is a system of rationing of a cigarette which contains one-third of the tar and nicotine contained in other cigarettes within the Gallaher range.
  Mr. T. H. H. Skeet: Disgraceful.
  Mr. Williams: It is disgraceful. How did the firm justify this in morality on the health impact? At a sales conference in London last week, an area marketing manager told salesmen:
  "Extra Mild are so mild and tasteless they could put people off smoking for good."
  It might be a good thing if they sold more widely rather than less so. Here is a deliberate attempt to frustrate the efforts being made at public expense to win the public away from smoking.
  What could the Director General do about this sort of abuse? What heading would that come under? The right hon. and learned Gentleman may be able to satisfy us on this point, but if he cannot he must revert to the formula suggested by his hon. Friend the Member for Cathcart (Mr. Edward Taylor), which we would support.
  Regarding pyramid selling, it might reduce the length of our discussions later on the Bill and hasten our proceedings if the Minister indicated, as he did in Committee, that he would look at the possibility of covering pyramid selling in the Bill. We realise that the time between the end of consultation and our debate today has not been very lengthy. Is the Minister envisaging introducing changes in the other place? An indication of that would be helpful. I ask the Minister to let us know at the earliest date the nature of the change he might consider. We regard this as a matter of urgency.
  My hon. Friend the Member for Sedge-field (Mr. David Reed) proposed an enabling amendment which deserves consideration regardless of whether pyramid selling is to be dealt with separately. As the right hon. and learned Gentleman the Minister for Trade and Consumer Affairs and my hon. Friend the Member for

  1547
  Sedgefield have pointed out, the rate of change in marketing methods is so rapid that it is almost inevitable that any precise formula produced by the Government will be outdated by developments in marketing techniques.
  Where my hon. Friend is doing a service is in giving a formula which will enable the Director General and the Minister, without need for legislative action but by order, to keep pace with the changes which take place in undesirable marketing techniques. It may be that the precise wording is inadequate. If it is not, perhaps the Minister will consider introducing in the other place an amendment along these lines which would give this future flexibility to the Minister and the Director General.
  I am a little puzzled, as a non-lawyer, by the significance of new Clause 3 now appearing at the start of Part II. Does this in any way alter the import of the new clause? Will it limit, for example, the ability of the Director General in terms of making orders, particularly orders covering health and safety? Does it affect the ability of the advisory committee to have regard to health and safety? We are a little confused on this matter. We have not had prior notification that this change of position was envisaged.
  Mr. Edward Taylor: The hon. Gentleman has said that new Clause 3 will appear at the beginning of Part II. Why?
  Mr. Williams: Exactly. I am sorry that the hon. Gentleman was not present at the outset of the debate. I believe that he missed a few moments. His right hon. and learned Friend made the point that the new clause would now appear at the beginning of Part II. He is nodding agreement. There is no indication of that on the Order Paper.
  Mrs. Sally Oppenheim: I understood that the definition of "consumer" would reappear in Clause 125, but I did not understand the position about the new clause.
  Mr. Williams: The right hon. and learned Gentleman the Minister can see this clearly. I have one of my hon. Friends to thank for picking up the possible significance of this matter. There
  1548
  is doubt on both sides of the House about whether this has altered the balance of the Bill.
  We should be grateful for guidance and answers to the various small points we have raised.
  Sir G. Howe: In response to the last point made by the hon. Member for Swansea, West (Mr. Alan Williams), I fully understand why hon. Members are confused about where new clauses will appear in the Bill and the implications of the amendments to the Bill. The procedure of this House, frankly, does not enable us, whether Government or backbench Members, to use the Order Paper in a way which would make clear our intentions.
  I forget which hon. Member it was who expressed his welcome to the appointment of my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) to the Committee to inquire into the process of legislation. I endorse that welcome wholeheartedly. This is one of the many illustrations that occurs to me—for all my sins, I have had something to do with a variety of legislation in the past two or three years—of ways in which the process of legislation is made less intelligible and more difficult as a result of the rules under which we operate.
  One should be able at least to say "New Clause 3" and then in brackets, and not quite in this language, "By the way, chaps, this new clause will turn up at such-and-such a place and such-and-such a page and line of the Bill". I should like to add, "We are doing this for the following reasons". As I am discussing this slightly irrelevant matter, I should mention that I have also been attracted by the pattern of Law Commission Bills and proposed legislation introduced in the Canadian legislature, which has explanatory notes on facing pages of clauses. Again, legislators when dealing with them can understand more readily what they are dealing with. I hope very much that the inquiry being undertaken will look widely at all these matters. I do not say that either of these suggestions is necessarily right but they deserve attention.
  The explanation that I have to give in this way—because the rules do not allow me to give it in any other way—

  1549
  is that the new clause, which is the first part of old Clause 3, will appear at the beginning of Part II of the Bill. The second part of the old clause, namely the definition of "consumer", will appear in the definition Clause 125, because that is of wider application.
  The reason that "consumer trade practice" is being uprooted from Part I and transplanted into Part II is that it will now no longer have application to Part 1. The concept of a consumer trade practice is designed to provide a definition of the field within which the Director General and the Consumer Protection Advisory Committee can propose the making of orders which can lead to the imposition of criminal sanctions. We have therefore unstitched it from Part 1, and when we debate the amendments to Clause 2 we shall find that the Director General has been liberated and unshackled and is able to operate over a wide field as a result of the changes in Clause 2, which is no longer tied closely to the definition of "consumer trade practice", which is therefore to lurk later in the Bill.
  I am slightly dismayed by the extent to which some hon. Members have given a mildly grudging welcome to the proposal. Even my hon. Friend the Member for Gloucester (Mr. Sally Oppenheim) did not latterly seem as enthusiastic as at the outset of her speech I thought she might be. I say that in no sense of grievance, but only because I have listened to the points made by hon. Members and none of them has suggested changes to the new clause which are strictly relevant in the context of what we are trying to do in the Bill. Throughout our debates there has been a tendency to load upon the Director General a mountain of expectation and high hopes which would surpass the prowess or capacity of any man or woman in this House or outside it.
  The hon. Member for Swansea, West regretted that the Director General would not be able to police business morality at all levels. That is quite a tall order when added to consumer protection. My hon. Friends have been talking about the extent to which they want environmental matters to be covered by the Bill. Again, it is quite an additional burden to take on the whole of the environmental lobby as well as the consumer protection lobby. If we study the scope of what we are try-
  1550
  ing to do, the amendments then take reasonable shape.
  Mr. Alan Williams: The point I was trying to get at in my comments on the environment was to see whether a limitation exists for the Director General and how far the right hon. and learned Gentleman could go towards the points that hon. Members on the Conservative side and I were making about the possible work of the Director General.
  5.30 p.m.
  Sir G. Howe: I shall try to deal with it but there must be a limit in the context of the Bill. I shall not be able to answer all questions posed by hon. Members. The hon. Member for Swansea, West, has a capacity for producing a sheaf of interesting newspaper cuttings and asking detailed questions upon them upon which I am expected to speak at short notice. Also, while I try to study all the Bills introduced by my hon. Friend the Member for Cannock (Mr. Cormack), I cannot deal with the merits of all of them in one afternoon.
  Several hon. Members, including my hon. Friend the Member for Merton and Morden (Miss Fookes), my hon. Friend the Member for Cannock and the hon. Member for Fife, West (Mr. William Hamilton), have an astute concern for the quality of the English language and for legislative language in particular. They were somewhat dismayed by the appearance of the words "got up". When this expression was first in contemplation we wondered whether there was not a more elegant way of phrasing it. If we contemplate what we are trying to deal with, it is not only the packaging, the box or the jar—deceptive or otherwise—with which we are concerned; these are comparatively straight forward. We are concerned with the trimmings, the buttons and the bows.
  Mr. Raphael Tuck: Decked out?
  Sir G. Howe: The hon. Member proffers an alternative phrase. "Got up" and "decked out" are two attractive, slightly mediaeval ways of presenting what we all understand and I suspect that parliamentary counsel could have said "packaged". There was a statutory instrument during the war called the Tins, Cans, Kegs, Drums, Packages and Bales Order, and that is the kind of

  1551
  legislative language we are accustomed to from the nineteenth century. We could indulge in that exemplary style going on for half a page but I think that "got up" is not at all bad.
  Mr. Cormack: May I get up? I cannot see anything much wrong with the word "presented" and it might be a good investment if Sir Ernest Gowers' "Plain Words" and Fowler's "Modern English Usage" were presented to the draftsmen and assistants.
  Sir G. Howe: I must defend the parliamentary counsel, particularly from that charge in relation to this phrase. One could hardly hope to find two words more Anglo-Saxon, terse, monosyllabic and appropriate for the first page of "Plain Words" than "got" and "up". It is a phrase in use in some other branches of the law and it is not a bad way of describing what we are about.
  Questions were addressed to me on the wider implications with which my hon. Friend the Member for Cannock is concerned in his penultimate Bill about which he said something this afternoon. The answer is that this Bill is not designed to deal with environmental pollution. We are here attempting to deal with measures for the protection of consumers. There are, of course, important questions which can arise in relation to the disposability, biodegradability, and all the rest of it, of all products and packages of this kind. There are even matters which can arise in relation to the impact of VAT. The hon. Member for Swansea, West raised one, and that is no doubt under consideration, but this Bill is not designed to deal with the point with which my hon. Friend's Bill is designed to deal, namely the environmentally pollutive quality of packaging or "get-up".
  My hon. Friend also asked me questions about the relation of this Bill to unit pricing. We discussed that subject extensively in Standing Committee. The Bill does not enable provisions to be made about unit pricing and that is why I and the hon. Member for Swansea, West wish my hon. Friend's Bill well and why we are glad that it received a Second Reading. I hope that that will be an indication of the Government's favourable attitude to the powers that my hon. Friend is introducing on unit pricing.
  1552
  I hope, however, that it will not lead people to believe that unit pricing is a magic cure for all consumer problems. Many of the examples raised by my hon. Friends were more related to the need to prescribe standard quantities in relation to jams, biscuits, toothpaste and so on, and I am hopeful to be able to make progress in prescribing standard quantities for biscuits and toothpaste, which is a step along the road, quite apart from unit pricing.
  If my hon. Friend's Bill is able to make headway during the Session he knows that my Department is in touch with him about technical amendments which will be necessary to make it effective, but beyond that we shall have to see what kind of progress it makes. The hon. Member for Swansea, West asked several other detailed questions and I shall come back to them very shortly.
  The Bill covers transactions concerning the supply of the service of credit to the extent provided for by the Bill. It does not go in many respects as far as the Crowther recommendations so that it cannot hold the fort until legislation based on Crowther arrives. It could be used to meet, but by no means completely, certain important matters which are dealt with by Crowther. That is true in relation to some of the provisions in the code enunciated by my hon. Friend the Under-Secretary of State. I am sure that by no means all of those matters could be dealt with under the Bill if it becomes an Act. That is why I told the Committee that the Government are anxious to make headway as soon as they reasonably can with the introduction of consumer credit legislation founded on Crowther.
  My hon. Friend the Member for Gloucester and my hon. Friend the Member for Glasgow, Cathart spoke to Amendment (a). My hon. Friend the Member for Cathcart, with characteristic incisiveness, wanted to dispense with all the qualifications contained in paragraphs (a) to (e) of the new clause. The reason that we cannot embark on that is that it would allow for the making of orders, as we discussed in Committee, on all questions related to quality or price. We can now allow the Director General and the Consumer Protection Advisory Committee to go that far. That is why we have made an extension to described the matters which should be covered.

  1553
  If I said that the clause as drawn covered the subject of amendment (b) I did not mean to make that statement. In fact, I do not think I said that. I said in relation to amendment (a) that the clause as drawn applies to the promotion of the supply of services and therefore to the promotion of the servicing or maintenance of goods. I hope that I did not say—I did not mean to say by implication—that the definition of "consumer trade practice" would enable Part II of the Bill and orders made thereunder to apply to the servicing and availability of spare parts for goods.
  I appreciate the importance which hon. Members attach to that matter. It was a matter which we discussed a great deal in Committee. However, it is not something with which it is possible to deal by the making of criminal orders. What we have done to meet the concern expressed by some of my hon. Friends and some Opposition hon. Members about servicing and spare parts has been to introduce an amendment to Clause 2. That places the provision of services of that kind in the Director General's territory and enables him to make recommendations. We do not think it is right to regard that as a matter which could be dealt with by the making of criminal orders. We can discuss that matter later when we discuss the amendment to Clause 2.
  I know that the hon. Member for Watford (Mr. Raphael Tuck) and the hon. Member for Sedgefield (Mr. David Reed) have taken a close interest in the problem of pyramid selling. I read in the Press in the North-East of England that the hon. Member for Sedgefield was preparing a dossier on pyramid selling. Every day in the papers in that part of the country it was reported that the hon. Gentleman was about to present his dossier to me. I waited for weeks and finally the document arrived. It was very interesting and informative.
  I have also studied the Bill of the hon. Member for Watford. I hope that the publication of the consultative document before Easter made it perfectly clear that it is our intention to deal with pyramid selling as soon as we can and as soon as it is clear what is the best way of doing so. The hon. Member for Watford had a sense of mystery as to what amendments were or were not admissible in the House on that subject. I can understand that. As
  1554
  I understand it, amendments dealing with pyramid selling specifically and precisely are not in order in the House. The hon. Gentleman asked me why it was that I did not take on board his Bill. I did not do so because his Bill deals with multilevel marketing. I was advised that, defined in that way, the scope could not be extended to deal with horizontal pyramids. That is one of the practices with which we are concerned to deal.
  I have studied the hon. Gentleman's Bill and I have studied his reaction and the reaction of others to the consultative document. It is clear that there is a general will to get a solution and to tackle pyramid selling. We must be sure that we produce a solution which is right and sufficiently flexible and responsive to remain right. That is the point which was made by the hon. Member for Sedgefield.
  I share the concern of every hon. Member who has spoken about the growth and extension of the worst kind of pyramid selling activities. I echo and underline what hon. Members have said and what I have said in the past as a warning to all citizens and consumers to beware of becoming involved in such schemes without having received the most careful and independent advice.
  The amendment would not be acceptable because it is an amendment to the specifically consumer part of the Bill. If we are to deal with that, as I hope we shall be able to do, we shall need to devise a reasonable tailor-made package. I hope that in the light of the comments which we have received on the consultative document we shall be able to take action shortly. We shall certainly be considering the possibility of introducing the necessary measures at a later stage.
  The difficulties encountered by the hon. Member for Watford are by no means out of the way. We must try to get the right answers in the light of all representations and then try to introduce satisfactory measures as early as possible.
  Mr. Raphael Tuck Mr. Raphael Tuck rose——
  Mr. David Reed Mr. David Reed rose——
  Sir G. Howe: I give way to the hon. Member for Sedgefield.
  Mr. David Reed: I accept that the right hon. and learned Gentleman's intentions about pyramid selling are in line with the

  1555
  intentions of my hon. Friend the Member for Watford and myself. It was our hope that the amendments would give him the sort of flexibility which he needs. Irrespective of pyramid selling, will he explain whether the definition of "consumer trade practice" will cover the general business of marketing and distributing a product? There is a danger that other forms of marketing abuse arc growing and it is important that the Director General should be able to consider them.
  Sir G. Howe: I am glad that the hon. Gentleman reminds me of that. The hon. Gentleman gave a number of specific examples. He talked about magazine subscription selling, double glazing selling on unattractive lines and crooked franchising. He also mentioned party-plan selling. Magazine subscription selling and double glazing selling are clearly sales to a consumer in one form or another. It is true that they can be perfectly well and properly conducted but it is known that sometimes they can be conducted on the wrong basis. Party-plan marketing methods involve the recruitment of marketing assistants and sometimes sales to the consumer.
  We believe that the definition is wide enough and flexible enough to cover all consumer transactions. Marketing techniques of a franchising kind and crooked franchising, of which pyramid selling is perhaps a principle example, are not matters which are covered by "consumer trade practice". To achieve that coverage we would need rather differently designed legislation. That is not something which I would ever contend the Bill is likely to produce. I do not claim that the Bill will produce a completely satisfactory outcome.
  Mr. Raphael Tuck: Will the right hon. and learned Gentleman consider amending the definition clause of my Bill so as to include horizontal structures as well as vertical structures? Does the right hon. and learned Gentleman not agree that the consultative proposals in the consultative document do not go far enough to remedy all abuses?
  Sir G. Howe: It is not possible, for a variety of reasons, to deal with the hon. Gentleman's Bill in the way which he suggests. I have taken account of his commendation of his Bill in the light of the consultative document and in the
  1556
  light of views which other people have expressed about the document and the hon. Gentleman's Bill. We hope to be able to produce something which will be effective. That deals with all the points which were raised as far as I can do so.
  5.45 p.m.
  Mrs. Sally Oppenheim: Could my right hon. and learned Friend reconfirm a point he made in Committee—that if practices such as those described in the Daily Mail advertisement were persistently pursued by persons like "Ed" of the advertisement, they could be dealt with by the Restrictive Practices Court and the Director General, as implied in Standing Committee?
  Sir G. Howe: I was trying to follow my hon. Friend's description of the activities of "Ed" of the Daily Mail, but I was beguiled and distracted by the inclusion in his activities not only of a Jaguar but of a blonde. I could not see how they came into it. I understand that "Ed" was marketing defective or falsely described products repeatedly—I think that is a short summary of the long narrative which my hon. Friend read out. If so, he would qualify under Part III of the Bill for action by the Director General.
  Mr. Cormack Mr. Cormack rose——
  Sir G. Howe: I hope that my hon. Friend the Member for Cannock will forgive me but, having dealt with two of his other Bills in the course of this short reply, I fear that I must now draw to a conclusion.
  I invite the House to accept new Clause 3 and to conclude that Amendment (a), as it seeks to amend what is in the new Clause, is unnecessary because its intention is met by later amendments to Clause 2. I ask the House also to reject Amendment (b) as being not apt to deal with the problems the hon. Member for Sedgefield raised, important though they may be.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

New Clause 4

  THE TIED PUBLIC HOUSE
  'The Secretary of State may by regulation declare a monopoly situation to exist in any local authority area of the United Kingdom

  1557
  where more than 10 per cent. of the public houses in that area are restricted to the sale of any one brewer's products'.—[Mr. William Hamilton.]
  Brought up, and read the First Time.
  Mr. William Hamilton: I beg to move, That the clause be read a second time.
  I shall try to couch my language in my typically moderate way. We discussed this question in Committee on 10th April, when I quoted in aid the report of the Monopolies Commission on the supply of beer—Command 216—which was published in April 1969. I should like to quote from it again. In paragraph 414, the commission said:
  "… in England and Wales … the tied house system operates against the public interests and … a remedy for the defects of that system is called for."
  It also said in paragraph 383:
  "The choice offered in brewers' public houses is such as to enable each brewer to avoid exposing his own beers to the competition of other brewers in his own houses except to a limited and controlled extent … competition is concentrated upon amenities because price competition is largely absent and because the brewers' attitude to retailing affects the attitude of the tenants."
  It is clear that the tied house is not in the interest of the consumer. It adversely affects him in more ways than one. We have had that report for over four years. We have had no debate on it in this House. We have had no action whatever by the Government on its recommendations. In other words, four years have gone by and nothing has been done to remedy the abuse that the commission exposed in the supply of beer.
  It is true that the report went on to say that the difficulties which the commission had found in the tied house system might be remedied by substantial relaxation of the licensing system in England and Wales. Scotland is being dealt with by another committee of inquiry. In paragraph 416, the commission said:
  "We recommend that, by way of remedy for the defects which we have found in the tied house system in the United Kingdom, the licensing system in England and Wales should be substantially relaxed, the general objective being to permit the sale of alcoholic drinks, for on or off consumption, by any retailer whose character and premises satisfy certain minimum standards. We are not in a position to specify what the minimum standards should be or how they should be administered or precisely what other relaxations (e.g. as to
  1558
  flexibility of opening hours, access by children) might be necessary and advisable. We recognise that these are matters which would call for consultation between the departments concerned and for the approval of Parliament."
  I do not think that there is any denying that a monopoly situation exists in the supply and the sale of beer. Paragraph 14 of the report related to the situation as it was in 1967, and, of course, the position has got steadily worse in the concentration of the supply and retailing of beers. It said:
  "Seven brewers, operating some 70 of the 240 breweries in the United Kingdom, together accounted for 73 per cent. of total United Kingdom production of beer in 1967."
  It went on to list the "Big seven" as they then were. There have been amalgamations since which I related to the Committee.
  Not only has the monopoly situation intensified, but the quality of the beer has declined—at least so I am told, for I am not a major consumer of the product. This point was challenged in Committee by the hon. Member for Bedford (Mr. Skeet). I invite him to look at the foot of page 10 of the report, where he will find that the beer has indeed got weaker. There is a lot more water in it than there was.
  The average original gravity of beer fell from 1037·53 in 1963 to 1037·15 in 1968. There is a good deal of evidence to show that some of the beers now being sold as beer are little stronger than lemonade. The brewers are doing this precisely to get young people to start drinking and then get them on to the harder stuff as they get older and become more used to the taste. The brewers refuse to declare to the consumer the original gravity of the beer, although Northern Clubs Federation Brewery does—that is the working men's brewery.
  The substance of new Clause 4 concerns the local monopoly position and I quote in aid paragraph 176 of the report, which dealt specifically with the local monopoly situation. It said:
  "Apart from small villages where the single public house has a monopoly, there are a very few larger areas where the great majority of the public houses are owned by only one or two brewers. In the County Borough of Bristol, out of a total of 517 public houses, 461 are owned by brewers and over 90 per cent. of these are owned by Courage, and Courage is the major supplier of beer to the free trade in that area also."

  1559
  Clearly, there is a monopoly situation in Bristol. It added:
  "In the County Borough of Birmingham, 729 of the 815 public houses are owned by the two brewers, Bass (with 422 houses) and Allied (with 307 houses), and these two brewers are also the major suppliers to the free trade, which includes some 400 registered clubs and 86 public houses."
  That is the substance of the new clause which I am seeking—
  Mr. Ronald Brown: Would my hon. Friend not agree that the monopoly is being exacerbated by the brewers deliberately removing licensees from public houses and putting in their own managers to make sure that they have absolute control?
  Mr. Hamilton: I am coming to that point. My hon. Friend the Member for St. Pancras, North (Mr. Stallard) has introduced a Bill to try to protect tenants from eviction. This position was one of those which the brewers undertook to remedy in 1970. They have gone in the reverse direction. The Minister knows that. The right hon. and learned Gentleman who is in charge of the Bill called in aid the declaration of intent that the brewers made in December 1970. Far from carrying out their promises, they have gone back on them.
  The increase in the number of tied houses between 1962 and 1972 has been quite remarkable. I quoted the figures in Committee. I will not bother the House with them again, except to say that Bass Charrington, who linked up between 1962 and 1972 had 3,665 tied on-licences in 1962 and in 1972 the number had risen to 9,225. Courage, who had 1,042 tied houses in 1962, had nearly 5,998 in 1972. There is abundant evidence that the number of tied houses increased substantially in that period.
  Mr. A. G. F. Hall-Davis: I think the hon. Member knows that I have an interest in this matter, and I shall declare it. Is the hon. Member suggesting that, of the totals he quoted, the houses were not tied previously and that this is not just an aggregation through a merger? There may be an argument to deduce from that, but it does not surely imply that there has been an increase in the number of tied houses as such.
  Mr. Hamilton: That may be so. I am glad that the hon. Member has declared his interest, because I will declare some others in a short while. Not my own. I have none.
  When the Minister replied to me in the debate in Committee, he quite fairly reminded us that the Monopolies Commission had expressed its considered view that there were no practical alternatives to the tied house system within the framework of the existing licensing laws. He said that it was not within the Commissions' purview to recommend alternatives unless there was some liberalisation of those laws.
  That being so. the Government set up the Erroll Committee to investigate the licensing laws. Its report has been in the hands of the public for some months and in the hands of the Government for much longer. We have had no action by the Government. In his speech on that occasion the Minister quoted in aid the statement made by the Brewers' Society on 1st December 1970 by saying what actions it was taking to overcome the deficiencies of the tied house system. I have a copy of that statement. I do not know whether my hon. Friend the Member for Shoreditch and Finsbury (Mr. Ronald Brown) has seen this. These are the proposals made by the Society to keep away Government action in dealing with the abuses connected with the tied house.
  6.0 p.m.
  The second paragraph of the statement reads:
  "Security for tenants.
  The Society has already made recommendations which have been accepted by its members, and by the retail trade for the granting of longer-term tenancies to brewers' tenants."
  We know that exactly the opposite is happening, that the tenants are being removed and managers are being put in. The purpose of the Bill which my hon. Friend the Member for St. Pancras, North has introduced is to stop this kind of thing. The statement went on in paragraph 3 to say:
  "Ownership of licensed premises.
  The Society is aware that concern exists about the large proportion, in particular places, of licensed premises owned by one brewer. The Government has asked for information on this subject and for proposals from the Government to widen the choice to the public in such places. The Society is providing this to the Minister at an early date."

  1561
  That is the statement made nearly 3½ years ago by the brewers. I ask the Minister: what information has been given by the Brewers' Society to him about proposals for widening public choice in conformity with paragraph 3 of that declaration of intent of December 1970?
  Mr. Ronald Brown: Is my hon. Friend aware that two years ago I went to the Department of Trade and Industry and drew to the attention of the Under-Secretary's predecessor my concern about this issue? I finally tabled a Question to the Prime Minister. It is true that the right hon. Gentleman sacked the former Under-Secretary and appointed the hon. Gentleman but nothing has been done in the way that my hon. Friend is asking.
  Mr. Hamilton: I am sure that that is true. I want confirmation of it from the Minister. Either he has the information and is withholding it for party reasons or he has not got it, in which case the brewers are ratting on the statement of 1970. There is evidence available which can be substantiated and which in some cases has been registered on the files of the Department of Trade and Industry to illustrate that the operation of the tied house system is against the public interest.
  The restrictive ownership of licences in conjunction with the operation of the tied house system is considered to constitute a monopoly operating against the consumer interest. We want to abolish the tied house for all non-beer drinks. We want to refer automatically to the Monopolies Commission any acquisition or mergers by brewers that would increase their holdings of licensed outlets. Answers given to my right hon. Friend the Member for Barnsley (Mr. Mason) a few months ago showed that mergers are going on at an ever-increasing rate in the trade. We ask that the Government should automatically refer to the Monopolies Commission any acquisitions or mergers which would increase their holdings of licensed outlets.
  Failing the abolition of the tied house system for all non-beer drinks the Government should obtain an undertaking from individual members of the Brewers' Society to honour the recommendation made by it in December 1970. The Government have shown absolutely no interest
  1562
  whatsoever in these matters. They mouth phrases about the efficacy of competition. This Bill repeatedly refers to competition being the extra protective armour for the consumer. We have seen what a nonsense that is during the last few years.
  We would not have had this Bill if the Government believed that competition was a protection for the consumer. There is no industry that is less competitive than the drink trade. The price of beer has gone up as the strength of the beer has gone down. No one in the Government has done anything about it. The Government have sat on their bottoms because their election coffers are filled by the brewers. I have already put these facts on the record but let me do so again.
  Mr. Skeet: The hon. Member is talking about this being the least competitive industry. The National Coal Board is a complete monopoly. There is no competition there.
  Mr. Hamilton: The hon. Member can talk about the board here. Every year he can ask questions and initiate debates on the coal industry because it is publicly accountable. Brewers are publicly accountable to no one.
  Mr. Joseph Ashton: Is my hon. Friend aware that anyone can sell coal without a licence, irrespective of whether he is over 18, and at any hour of the day?
  Mr. Hamilton: We are not talking about coal. We are talking about beer. We are talking about the brewers, the paymasters of the Government. I will quote the sums of money that individual brewers gave to the Conservative Party for the 1970 election. The Government won the 1970 election on drink money. One of the greatest curses of Britain today is alcoholism and this Government rode to power on the money given by the brewers. They are there because of the great social curse created by their paymasters.
  The figures make interesting reading. In 1968 Allied Breweries gave either to the Tory Party or its front organisations more than £1,200. In the same year Arthur Guinness and Son gave £16,700 and in 1969, nearly £17,000. Bass Charrington gave—Oh! They are a miserable lot. They are fairly mean. They

  1563
  gave just £100. A nominal sum. Boddington Breweries—I do not know what happened to it—gave £500 in 1968 to the Tory party and £100 to the Economic League. Courage, Barclay and Simmonds gave £850 in 1968 to the Conservative Party and the Economic League, the front organisation. In 1969 it gave £15,627 to the Tory party and £788 to the Economic League. Hardy's Kimberley Brewery—God knows where that is——
  Mr. Deputy Speaker (Mr. E. L. Mallalieu): Order. The hon. Gentleman is straying a little from the new clause.
  Mr. Hamilton: With great respect, Mr. Deputy Speaker, I am pointing to an extremely important social and economic curse and to a corruption very near to Watergate in America.
  Mr. Skeet: Rubbish.
  Mr. Deputy Speaker: All that the hon. Gentleman says may be true. What has it to do with monopolies?
  Mr. Hamilton: It is true, not "may be true". It may be out of order but it is certainly true.
  Mr. Deputy Speaker: The hon. Gentleman has not answered my question. What has it to do with monopolies, which is the essence of this new clause?
  Mr. Hamilton: The breweries who are giving all this loot to the Tory Party are monopolistic suppliers and retailers of a product.
  I am seeking to destroy the monopolistic powers of these individuals. That is the purpose of the new clause. I want the Minister to say that where there is a local monopoly in the supply and retailing of beer he will refer it to the Monopolies Commission. I am trying to point out the abuses connected with that monopolistic position. One of the abuses is that the breweries supplied a great part of the funds of the Tory Party with which that party won the election. That is why it is not acting. That is why it will not accept this clause. The Minister will say that the Government are waiting for Erroll; they are having consultations. Let me tell the Minister that the Erroll recommendations go even further than the brewers' ones. Erroll himself was a Tory Minister. I do not say that
  1564
  his report was biased on that account, although it might have been, but certainly the brewers have been very grateful for the recommendations of the Erroll Committee.
  One of the monopolistic brewers that I want to deal with is Watney Mann. In 1968 and 1969 Watney Mann gave the Tory Party £50,000.
  Mr. Deputy Speaker: The hon. Gentleman must not pursue that line any further. It really has nothing to do with monopoly.
  Mr. Ronald Brown: On a point of order, Mr. Deputy Speaker. May I draw your attention to the fact that I saw the Government about the very matter that my hon. Friend was going to pursue and they agreed that it was a monopoly at that time, but refused to act? I think my hon. Friend has the right to proceed with that point.
  Mr. Deputy Speaker: I did not say it was not a monopoly. What was being put forward was that it is because of a monopoly that funds are or are not going to a political party. That is why it is not in order on the clause.
  Mr. Hamilton: You are familiar with these arguments, Mr. Deputy Speaker. You were Chairman of the Committee when we dealt with the denationalisation of the State pubs by this Government, when I made pretty much the same kind of point. Whenever we get the opportunity we endeavour to pursue these things. We try to keep in order. We appreciate your tolerance in allowing us to pursue these matters, but not too far. I just said those things in parenthesis.
  I will leave the point there and tell the Government that if they are serious about abuses of monopolistic practices, one of the most serious abuses occurs in the drink trade. The Bill provides specifically for dealing with local monopolies. There is a special clause dealing with local monopolies and I am trying to define more closely what is meant by a local monopoly, with specific reference to the drink trade. In any local area where more than 10 per cent. of the pubs are owned by and sell only the products of one brewer, a monopolistic situation should be declared that ought to be referred to the Monopolies Commission. That is all I am saying.

  1565
  I simply want the Government to tell us when they are going to allow a debate on Erroll, when they are going to say what their intentions are, whether they are going to accept the view of the Monopolies Commission that this problem can and should be dealt with by reference to the licensing laws. Then the debate on this clause will have served a useful purpose. But I am pretty sure the Government will say they are not going to do anything about it, because their paymasters are important to them and they had better not offend them too much.
  6.15 p.m.
  Mr. Skeet: I do not think any Government in their senses would adopt a clause of this nature. It is well known that the hon. Member for Fife, West (Mr. William Hamilton) has a vendetta against the breweries. He thinks that everybody has an interest in breweries. I suppose I should declare my interest. I like a glass of a beverage from time to time, but that is all my interest in breweries amounts to. I am not going to support them any more than to say that I think this vendetta is directed at an entirely wrong goal.
  Let me have a look at one or two of the suggestions that have been made. The hon. Member for Fife, West belongs to a party that supports the nationalisation of various industries—coal, electricity, transport, and so on. They are complete and utter monopolies. Indeed, we have very little say in them. The public have no say whatever, except to account for their losses through taxation.
  If the new clause were accepted there would be a monopoly situation if there were more than 10 per cent. of tied houses. That is all they would be allowed to have. On the other hand, the State can have a 100 per cent. interest and nobody must complain. So we have the extraordinary position that the Labour Party is prepared to harry the private sector but is prepared to vest all sovereignty in the State and give it supreme power in other industries. Indeed, we find in the absurd party manifesto that it wishes to take an interest in 25 of the 100 leading companies.
  I think the public have enough common sense to see through these recommendations and to realise what disaster it could
  1566
  lead to if there were State capitalists as opposed to the competitive private enterprise which now exists.
  Mr. Ashton: Is the hon. Member aware that with State monopolies there is always a consumers' council, and invariably tribunals to which the consumer can complain, and the outlet of Parliament and public accountability, with the accounts open to public scrutiny? That is not the case with breweries.
  Mr. Skeet: The hon. Member well knows that many members of the public have found that although their complaints have been examined they have received very little satisfaction. As for accountability, we have an opportunity once a year of debating this matter.
  I do not want to go beyond the amendment, but I have been led into this point. It has been argued that these are very important matters, and that this amendment should be subscribed to by hon. Members. When have the Opposition applied for a Supply Day to deal with either the Erroll Report or the Monopolies Commission Report of 1969? It just shows the importance of this topic in their minds.
  The amendment would expose the brewing industry in the private sector—once it exceeded 10 per cent. of the market—to all the detailed procedure of the State machine, plus all the expense involved, and that would have to be added to the price of beer. Therefore, the consumers would suffer. In Clause 10 we provide for monopoly reference. Clause 7 provides that a monopoly condition will exist if one company has approximately 25 per cent. of the market. If the general ruling is that a monopoly position is created by 25 per cent. of the market, why should a monopoly position be created in a particular industry when there is only 10 per cent. of the market? That would create a very dangerous precedent, which could be extended. I do not think that anybody in the House would contemplate such a situation.
  There is some concern about the recommendations in reports. There are two before us now for consideration. I dare say something will be made of the tied house system. Suffice it to say that that system is quite compatible with the situation in Europe.
  Mr. Thomas Cox: We are not interested in Europe.
  Mr. Skeet: I know you are not. You are not even in the European Parliament.
  Mr. Deputy Speaker: The hon. Member really should not attribute views on Europe to the Chair.
  Mr. Skeet: These are important matters. I was only observing that although the Opposition complain about the European situation, they are not even represented there. But the tied house system does extend to Europe and we are part and parcel of Europe. This Bill is part of the legislation which we hope to be able to extend to our fellow Europeans in future years. However, I will take your guidance on that point, Mr. Deputy Speaker, and will not refer to the European situation, except to say that the tied house system is quite acceptable in European countries provided it does not extend over the territorial State limits.
  Coming back to the main theme, we should subscribe to the provision in the Bill that once the proportion exceeds 25 per cent. of the market a monopoly situation can be investigated. To reduce that proportion to 10 per cent. would be inequitable to the private sector. If there were a challenge on the basis of fair competition, quality of products, reasonable prices and standard of service, there might be a tenuous argument for reducing the figure from 25 per cent., but it would be absurd to do that on any of the arguments which the hon. Member for Fife. West adduced, none of which is valid.
  I recommend the Minister not to accept the clause. It is not in the interests of the consumer or of the country. The right way to deal with this matter is to follow the recommendations of the Erroll Report and extend the licensing system.
  Mr. Michael Cocks: The hon. Member for Bedford (Mr. Skeet) complained that the Opposition had not chosen to debate the brewing industry on Supply Days, but so assiduous has been my hon. Friend the Member for Fife, West (Mr. William Hamilton) in pursuing this question throughout the years that it has not been necessary to do so. I am glad to support the clause.
  1568
  Brewers are blatantly in the brewing business to make money, but it must be remembered that a great many people—particularly the elderly—often of limited resources, go to the public house because it provides them with the opportunity for social contact. For many people a visit to the public house once or twice a week is their main contact with their fellows, and they should be protected against exploitation by a monopoly.
  The hon. Member for Bedford objected to the 10 per cent., but he should remember that public houses may often be far apart and in these days of breathalysers we have to be careful not to infringe the driving laws. People prefer to visit public houses which are within easy walking distance or which are possible to get to by public transport. They do not like to make long car journeys to the public house. It is therefore reasonable to reduce the 25 per cent. figure substantially. This is an exceptional case and Parliament should provide a reasonable freedom of choice.
  Brewers are usually thought of as supplying their own products in monopoly tied houses, but that applies also to a whole range of products such as soft drinks, cigarettes, crisps, nuts and other ancillary sales which are made on the premises. It is the custom of the brewer to insist that the licensee of a tied house presses on the consumer the brewer's own brand of spirits and only if a specific brand name is asked for is anything else supplied. So there is not only a lack of choice within the area, there is a lack of choice within the public house.
  As a proponent of competition, the Minister should embrace the clause with enthusiasm. If he wants an example of what competition can do in an area, he should go to the north of England where he will find that the Federation Brewery, by making its products freely available to working men's clubs and elsewhere, has forced the major breweries to keep down the price of their main beers.
  A further reason why I support the clause is that the Government have deliberately refused to make available to the beer drinker information to enable him to decide whether he is getting value for money. The amount of tax paid depends upon the original gravity of the beer. Yet the consumer is not allowed to know what

  1569
  is the original gravity of the beer that is being served. He cannot, therefore, even estimate the amount of tax he is paying on it. If he wishes, the brewer can charge an inflated price for a weak beer or, alternatively, reduce the original gravity and so obtain for himself a concealed price increase.
  Sir Tatton Brinton: in that case, would not he be assisting the hon. Member for Fife, West (Mr. William Hamilton) in his campaign against alcoholism?
  Mr. Cocks: The hon. Gentleman misjudges my hon. Friend the Member for Fife, West, who holds catholic views on the drink industry. As he has said, he is not a great partaker—he is the House's great moderate. Although he does not go to extremes—and I feel sure that he is not a strict teetotaller—he does not begrudge people who enjoy a social drink.
  The consumer does not know the amount of tax he is paying, and he does not know the strength of the beer he is drinking. This monopolistic position is compounded by the high pressure advertising of the brewers. In an area where there is freedom of choice this advertising is not so dangerous. The situation would be helped if a monopoly position could be declared to exist where more than 10 per cent. of the public houses in an area are restricted to the sale of one brewer's products. In an area where there is limited choice advertising exerts insidious pressures.
  Watney-Mann has recently been advertising a beer as being stronger than it was before. The public have no criterion by which to judge whether that is true and, if it is, how much stronger is the beer. One advertisement which appeared on television seemed to suggest that the way to find this out was for a person to come home in an inebriated condition. It is disgusting that advertising of this sort should be permitted because a person who usually knows his own capacity might well make a mistake about it in this way.
  We are also being subjected to advertising about Continental lager beers, which are extremely weak. They are almost as weak as water. They are poor value for
  1570
  money and often highly priced. It is difficult for a person in an area in which there are few public houses offering a choice to make a judgment.
  The clause is in the public interest and helps to compensate for the Government's deficiencies in not remedying the abuses which I have outlined. The Minister may feel that I have over-stated the case, but I doubt it because he is a reasonable man who is always prepared to give credit where it is due.
  In the Second Reading debate on the Licensing (Abolition of State Management) Bill in 1970 I spoke of the Courage Brewery offering a new beer—Full Brew—to the Bristol public and claiming that it was the result of widespread consumer research and was exactly what the Bristol public wanted. The brewers said that they had undertaken exhaustive tests and research and had eventually evolved this magic potion. The ordinary Bristol drinker, who is a reasonable, sensible man, suspected that the brewery intended to cease to supply ordinary bitter and to substitute for it this higher-priced Full Brew beer.
  6.30 p.m.
  I apologise for wearying you, Mr. Deputy Speaker, because you were Chair-main of our Committee and you have heard this before, but the House has not. The House has not heard the ending of this story. Only recently the brewery discontinued the manufacture of Full Brew because the stuff would not go down the throats of good honest Bristolians.
  Mr. Deputy Speaker: I fail to see the connection between this and the clause.
  Mr. Cocks: I accept your guidance in this matter, Mr. Deputy Speaker. I have really made the point I wanted to make. I will not, out of deference to you, Sir, dwell on the point made by the hon. Member for Fife, West in naming the party opposite as the lackeys of the brewers. However, new Clause 4—with its figure of 10 per cent.—is just about right to protect the general public, especially in our large urban areas, the dormitory towns, the large metropolitan areas, from the kind of abuses to which they have been subjected by a Mafia type organisation for the best part of one hundred years.
  Dame Patricia Hornsby-Smith: the new clause provides that it
  "may by regulation declare a monopoly situation to exist in any local authority area of the United Kingdom."
  There are not merely vast metropolitan areas like London, where 10 per cent, would be quite a slice of the brewing trade; there are hundreds of thousands of villages and townships where there are not 10 pubs. If there were under 10 pubs, it would be quite impossible for any brewer in hundreds of thousands of villages and towns in the country to own one pub.
  The pernicious application of this suggested new clause is so unrealistic that none of the great brewing firms would be able to own a public house in any parish or in a considerable number of urban districts if there were less than 10 pubs in the area.
  Many of us deplore the fact that some of the better-run, free house country pubs are going out of individual ownership. I will support the hon. Member as far as to say that in certain areas mine host is a local institution. However, let us not blind ourselves to the fact that with the invaluable increase in our tourist trade we also have tens of thousands of pubs whose owners have not the capital to put them into decent condition and repair, and are not prepared to provide the car parks and the reasonable and decent toilets that tourists and visitors would wish to use. Only as a result of the large brewing companies can many of the public houses in this country be uplifted. Many of the brewing companies have now provided, way out in the country, food and accommodation that was not available before. That has helped open up the tourist trade, not merely to come to London, Edinburgh and Stratford-on-Avon but to go round the country and be able to stay a night in the Cotswolds, in Yorkshire, or elsewhere. That is solely because of the practical ability of the larger companies and combines to provide modern accommodation, facilities and qualities within their pubs.
  It is ridiculous to suggest that no area in the country which has less than 10 pubs could possibly be managed by any one of the brewers. Those arguments make nonsense of the new Clause.
  Mr, Ashton: I shall not attempt to take up the remarks of the right hon. Lady in too great a depth. I have a rural constituency, where this is a serious problem. The village pubs do little business, and the breweries often attempt to close them down rather than give them up, whereas if the clause were allowed to stand someone would have the chance to take them under his own private scheme and improve them.
  We are talking today about a product in which the manufacturer also exercises a great control over the retailer—which is unusual in this country. We used to have a Resale Price Maintenance Act, which the Government abolished in 1963 because it was not in the best interests of efficiency. With this product we have practically the same thing. The manufacturer is to all intents and purposes the retailer. There is only one other instance where the same thing applies—with petrol. The position there is slightly different, because petrol came on to the market later than beer. A petrol station can open as and when it likes, according to what the trade will bear. One does not have to be over the age of 18 to buy a gallon of petrol, as is the case with beer. Petrol can be sold with give-away gimmicks, or whatever the man who operates the station likes to provide, or he can do a bit of car repairing on the side, or exercise more free enterprise to benefit his customers.
  That is not the case with beer. In this country, because of what has happened in the past, the customer is receiving a lower standard of service and the landlord or the tenant has an ever more precarious standard of living. In the past two or three years a landlord has often gone into a pub which has been decrepit and in a bad way, as the hon. Lady mentioned, and, by virtue of his own efforts, through the exercise of overtime by his wife and himself, has started a catering service and has put on strip shows or drag shows, pop groups or some form of entertainment. Inside two years he has made that pub into an excellent, going concern. Then along has come the brewery, saying that it will increase the rent by 400 per cent. or 500 per cent., or will kick the landlord out and put in a manager who will be on a flat wage and will have no incentive.

  1573
  That happens time and time and time again, to literally dozens of landlords. In fact, they have now formed their own association, and many have been talking about having a one-day strike in June because of the monopoly situation that the brewers enjoy. We have had a Prices and Incomes Board report into the brewery industry, which stated that seven brewers virtually monopolise the whole country with their product and that the smaller brewer was going to the wall. We have had a new organisation setting itself up called CAMERA—Campaign for the Protection and Revitalisation of Ale—which publishes a great deal of information on the threat to small breweries.
  In my part of the world, Barnsley bitter had a first-class reputation among customers. It has now been taken over by one of the big combines and has been relegated. There is little anybody can do about it, simply because these people have a monopoly of the retail outlets. Until that monopoly is smashed, the situation will get worse and worse, until in 20 years we shall have something very like State ale. Perhaps we shall have one or two manufacturers of ales. The ales will be called by different names, they will have different labels on the bottle and different advertisements will appear on television, but virtually the same people will be operating them.
  Unless something is done—and the Director General has the power to do this—we shall never have the situation about which my hon. Friend the Member for Bristol, South (Mr. Michael Cocks) was speaking—in which a measuring yardstick is put on the gravity of beer.
  We have had the Consumer Council on petrol. It used to be called premium, four-star, or five-star, and it did not mean a thing. It did not mean a thing until it had the octane rating put on it. It was then 101, 99 or 100, which was a sort of yardstick for taxation purposes. The yardstick of specific gravity in beer is used for tax purposes in declarations to the Inland Revenue.
  The brewers say that the specific gravity varies from brew to brew. It may have done a few years ago when it took 22 days to brew beer, but the process now takes 48 hours and there is little
  1574
  difference in the specific gravity of different brews. There is no reason why the specific gravity should not be shown on a beer pump in the same way as the octane rating is shown on a petrol pump. There is no reason why, when we are able to buy a bottle of whisky marked as 72° proof, or a bottle of port marked as 22° proof, there should not be some kind of rating for beer.
  That is one of the things which I hope the Director General will bring into operation. People who drink beer are entiled to know the relative strengths of beers, so that over the years they can find out whether a certain specific gravity suits their stomach, or whether it makes them eligible for the breathalyser test, and so on. They are entitled to know what suits them best, but they will never be able to find out while the monopoly situation that exists today continues to operate.
  Unless some action is taken we shall never get, in public houses the kind of situation that we get in supermarkets, or at petrol stations, where the initiative rests with the supplier to provide goods which suit his customers. Any new enterprise initiated by a landlord is threatened by the fact that hanging over him is the fear of the brewer turfing him cut at a month's notice.
  Perhaps the figure of 10 per cent. should be altered to suit the situation in different areas. In certain rural areas it may be necessary to have a different yardstick, but the Director General should have power to make the necessary rules to meet varying situations. In my rural area, many commuters come in from cities such as Sheffield. The hon. Members for Belper (Mr. Stewart-Smith) and Cannock (Mr. Cormack) no doubt know that because of electoral changes many people have moved into rural areas, but the only new pubs built there are those owned by the existing brewers.
  If someone wants to set up a new working men's club, strong objections are raised to the proposal by the brewers in the area. It sometimes becomes necessary for the club to go outside the area to borrow money. Enormous difficulties are experienced in satisfying consumer demand because of the present restrictions.
  Mr. Skeet: If there were an alteration in the licensing laws to enable new applications to be granted, would not that meet the difficulty?
  Mr. Ashton: Not necessarily, because there are also questions of capital financing, supply and distribution to be dealt with. It may be that the brewer in the area has a monopoly and that the only alternative source of supply is 50 miles away, which gives rise to tremendous difficulties.
  Federation bitter is on sale in the House of Commons, having been brought down from Newcastle. I am certain that if it were possible to sell Federation bitter in London pubs the sales of other brews would drop enormously. We in the House of Commons can buy bitter at 51½p a half pint, or 11p a pint. According to Which?, this beer has a specific gravity that is acceptable to the ordinary beer drinker, and I repeat that if it were possible to sell this brew in London pubs there would be a tremendous demand for it. But it is not possible to do so because the pubs are owned by monopoly brewers, who charge anything from 13p to 15p for a pint of ordinary bitter. The price depends on the pub and the area in which it is located.
  Hon. Members have the privilege of being able to enjoy high specific gravity beer at 11p a pint whenever the House is sitting, and for an hour after it rises. What special rule is there which says that hon. Members are allowed to drink this beer, but the public outside are not? Why is it that we can enjoy certain facilities, while the public outside cannot?
  Surely that is what a fair trading Bill should be all about. That is one angle which the Director General ought to have the power to investigate, or make rules about, so that the public are enabled to enjoy what their representatives enjoy in this place.
  6.45 p.m.
  Mr. McElhone: My intervention will be brief. I support what was said by my hon. Friend the Member for Fife, West (Mr. William Hamilton), and I support his new clause.
  The right hon. Member for Chislehurst (Dame Patricia Hornsby-Smith) said that tens of thousands of areas had fewer than 10 pubs. I submit that because of the
  1576
  reorganisation of local government the number of licensing authority areas in England and Wales will be reduced, and therefore the point made by the right hon. Lady is not valid. She said that if the figure of 10 per cent. were applied in areas where there were 10 pubs, or fewer than that number, serious difficulties would arise.
  Dame Patricia Hornsby-Smith: The clause does not refer to licensing authority areas. It refers specifically to local authority areas, and they go down to the smallest unit.
  Mr. McElhone: I admit that there may be a slight defect in the clause. I defer to the right hon. Lady, but I have made the point, and I think that it has been accepted in general by those present.
  For a time I was chairman of the licensing court in Glasgow. That was a difficult assignment, as anyone who knows the licensing situation in Glasgow will agree. A serious situation has been developing there for some time. The city is going through a large redevelopment programme, which means that hundreds of public houses are being pulled down. The licensees have to submit applications for public houses in the new areas, which in many instances are shopping precincts with high rents and rates. If a publican who is dispersed because of redevelopment does not own his premises, he gets very little compensation and he finds that he cannot afford the costly business of erecting a new establishment.
  During the last few years we have seen the development of a substantial monopoly of the licensing trade in Scotland. The publican has had to depend on Scottish and Newcastle beers, on Bass Char-rington, or on some of the beers brewed by the large English concerns that are now appearing on the Scottish scene.
  There are large housing estates on the periphery of the city of Glasgow. Some of them have populations of 35,000 or 40,000. Until recently, something called the 1890 Resolution did not allow the building of public houses or licensed restaurants in these areas. That resolution has now been rescinded, and it is my fear that, because of the costs involved, when new licensed premises are built in these peripheral housing estates the brewing monopolies will get control of the

  1577
  licences and the choice of particular beers will be restricted.
  The new clause is vitally important to the licensing trade in Glasgow, in particular. When new public houses or licensed restaurants are built in these new areas, many of which are completely dry now, I fear that the large brewers—Scottish, Newcastle, Bass Charrington, and so on—will come in—I am sorry to say that that has been a developing trend in the West of Scotland—and the choice open to the customer will be severely limited.
  I do not expect the Minister to be familiar with the situation in Scotland, but there we also have restricted areas, and there is a possibility that the Scottish Office may have a rethink about the Scottish licensing laws in the near future. As a result, there could be a large extension of drinking facilities. It is now difficult to get a drink on a Sunday, but the situation could change. There is certainly a trend towards an alteration in the system.
  My fear is that the monopolistic brewer will dominate the scene when licences are allocated. If the new clause is not accepted there could be real injustice to the new licensing areas in Glasgow and in the West of Scotland. The small, independent man who has made a lifetime career of the drink trade and now has the opportunity to take over premises will find himself faced by application from the large brewers and, in turn, the choice of the customer will be restricted.
  The Bill is aimed at the protection of the public and a better choice for the customer. The Conservative Party has always been said to be the party which advocates freedom of choice, but unfortunately since June 1970 very few of us have seen this exercised. I hope the Minister will take note of these brief comments and will attempt to answer some of the important points which have been made in this debate.
  Mr. Millan: I should like to say a few words in support of the new clause. I cannot claim to speak with all the detailed knowledge possessed by some of my hon. Friends on this subject, although on another occasion I would have been happy to take up the points put forward by my hon. Friend the Member for Glasgow, Gorbals (Mr. McElhone) in
  1578
  educating the Minister about the drinking habits of the constituents of Glasgow.
  I wish to take as a starting point what the Monopolies Commission said in 1969. It is true, as the right hon. Lady the Member for Chislehurst (Dame Patricia Hornsby-Smith) said, that the tied house system has certain advantages in improving the amenities of certain public houses. That was recognised by the Monopolies Commission, but the commission found that the tied house system operated against the public interest on a number of grounds. The commission felt that the system was detrimental to efficient distribution. It weakened the position of independent wholesalers. It did not ensure that any benefits from reduced costs were passed on to the customer. It prevented the entry of new producers into the market. And it operated in a way which limited and avoided price competition. Unfortunately, the commission did not go on to make a number of detailed recommendations to government. It simply recommended that the matter should be considered in the context of the licensing system. Since then the Erroll Committee has been set up and has reported on the licensing system generally.
  There was another consequence of the Monopolies Commission report of which the House should be reminded and it was mentioned by my hon. Friend the Member for Fife, West (Mr. William Hamilton). The Brewers' Society made a statement in 1970 following the report of the Monopolies Commission and, in effect, made certain promises to improve the practices of the large brewers in relation to the tied house system. Those promises have not been carried out, and in some respects they have been deliberately breached by the large brewers since the statement was made in 1970. Since the Monopolies Commission reported, the extent of concentration in the tied houses belonging to the major breweries has increased significantly and since the Monopolies Commission reported in 1969 there have been a number of substantial brewery mergers.
  I quote a few figures to demonstrate the increase in the holding of the big brewers in public houses. The number of on-licences held in 1962 by Bass Charrington, as it then was, amounted to 3,600. In 1972 it rose to 9,200. Courage in 1962 had just over 1,000 on-licences.

  1579
  In 1972 it had nearly 6,000. This concentration has continued since then so the up-to-date figures would be even more significant than the ones I have quoted. One of the promises made by the Brewers' Society in 1970 was to give greater security to tenants, but the present position is that the big brewers are displacing tenants and putting in managers.
  I should like to quote from an article in The Times on 3rd April this year which underlines the fact that Charring-ton, for example, are putting in more pub managers. The item said:
  "Bass Charrington has notified 45 licensees in key public houses in London and the south-east that their establishments are to be taken over by managers employed by the company."
  The article then went on to say that in the previous month Truman had told 82 of its 800 or so public house tenants that they too would be replaced by managers.
  The point about this—apart from the fact that it is undesirable for other reasons—is that it is specifically in breach of the promises made by the Brewers' society in response to the Monopolies Commission report with the aim of diverting the Government's attention.
  There was some doubt whether the Erroll Committee should be allowed to deal with tied houses at all. Therefore, all that the Erroll Report said about tied houses was that if the Government wanted to do anything about the situation they should do it through monopolies legislation. The new clause follows the Erroll recommendation in saying that there should be something specifically in the Bill to deal with the growing monopoly of the brewers and the growing menace of tied houses and suggests that this should be done in the Bill since it is a piece of monopoly legislation.
  There are a number of things which the Government could announce now. All that the Government have done so far is to say that they are considering the matter in relation to the general recommendations of the Erroll Committee, but so far we have had nothing from the Government about what they intend to do about the increasing concentration in the brewery industry and the growth of the tied house system.
  1580
  There are a number of obvious things which the Government could now do. They could announce that they will allow no more brewery mergers without reference to the Monopolies and Mergers Commission. I would go further and say that the Government's attitude should be, "Unless there are very special reasons there will be no further mergers at all in the brewery industry". The Government could make that announcement now as part of their policy in respect of fair trading.
  Some of the aspects of the tied house system, quite apart from the supply of beer, are completely unnecessary. There certainly need to be no ties in respect of soft drinks. Some of these practices should be banned by the Government and there is an overwhelming case for eliminating some of the more objectionable features of the tied house system.
  I do not pretend that the new clause contains all that we want. We discussed this matter to some extent in Committee and we put up ideas to the Government. In fact, in Committee we tabled a much stronger new clause which would have abolished the tied house system altogether. But that was not accepted by the Government.
  My point is that something requires to be done. Whether it is by introducing a new definition of a monopoly situation in a local area, as my hon. Friend the Member for Fife, West proposes, or in some other way, something is urgently required in this Bill to deal with the increasing concentration in the brewing industry and the increasing growth of the tied house system, with all its detriment to the customers of our public houses. It is from that point of view that I support the new Clause.
  7.0 p.m.
  The Under-Secretary of State for Trade and Industry (Mr. Peter Emery): I think that it is fair to say that at the beginning of the debate we had the normal political knockabout which we have come to expect when the hon. Member for Fife, West (Mr. William Hamilton) gets on his hobby horse about brewers and tied houses. We have heard his allegations many times before. We are becoming fairly used to them.
  The new Clause would entitle the Secretary of State by regulation to provide

  1581
  a separate and much more rigorous monopoly test for the purpose of the Bill in respect of tied public houses. It is a test which would not apply in any other area in terms of a monopoly reference. It would enable monopoly references to be made, therefore, in situations in which more than 10 per cent. of the public houses in any local authority area were restricted to the sale of any one brewer's product.
  Many hon. Members have neglected to notice that, as it stands, the Bill tightens up very much the ability of the Government to look into some of the situations about which there have been complaints. Perhaps I might refer specifically to that of the hon. Member for Bristol, South (Mr. Michael Cocks). Does he realise that in this Bill for the first time the Government are taking powers to look into local monopolies in a way that has never been done before? In the same way, we have lowered the percentage factor for an investigation from 33⅓ to 25 per cent. This is a major step to deal overall with the monopoly situation, and not just that affecting the brewing industry or that affecting tied houses.
  There have been a number of references to the Erroll Committee. That committee was set up to investigate the overall licensing laws. Hon. Members will know that my right hon. Friend the Home Secretary is considering carefully the Committee's Report in the light of public reaction to it—and there has been some very strong reaction. The hon. Member for Fife, West would lead public reaction in one way, whereas his hon. Friend the Member for Glasgow, Gorbals (Mr. McElhone) would lead it in another way. To believe that this is a simple matter in terms of an extension of the licensing laws is to misjudge the situation.
  Mr. McElhone: I am sure that the hon. Gentleman does not intend to mislead the House by suggesting that I am in any way as cross-purposes with my hon. Friend the Member for Fife, West (Mr. William Hamilton). I am afraid that I did not hear all my hon. Friend's speech, but I know his views, having had many private conversations with him on the subject. I concur in all that he has said and support the new clause.
  Mr. Emery: I do not doubt that the hon. Gentleman supports the new clause. However, I suggest that the nonconformist views of the hon. Member for Fife, West are not exactly the same as those which have been expressed by the hon. Member for the Gorbals about the problems of getting a drink in Scotland on a Sunday. I quite understand the hon. Gentleman's worry about that.
  Mr. McElhone: The hon. Gentleman must be very careful when he refers to sectarian interests in Scotland. He is liable to get me and my hon. Friend the Member for Fife, West in terrible trouble back home.
  Mr. Emery: If I were being naughty, I should say that I am delighted. However, I do not mean that. Nor do I wish to misrepresent the hon. Member for Gorbals.
  The Erroll Committee considered the tied house position in the licensing trade in Chapter 21 of its report, which dealt with general matters. There have been a number of suggestions that it did not. However, it is interesting to see that it agreed with the view of the Monopolies Commission which was that the best method of dealing with tied houses lay in an alteration of the licensing laws. In view of that, the Government set up an inquiry to look into the method by which the recommendations of the Monopolies Commission should be carried into effect.
  It would not be right in this Bill to single out the brewers or any other sector of society for different and more rigorous treatment. A criterion of 25 per cent. should be fully adequate to enable any significant local monopolies to be investigated.
  It is interesting that, following the publication of the report on beer, the Department had discussions with the brewery companies with a view to remedying some of the defects which the Monopolies Commission had found in the tied house system. It was recognised that since the commission's only recommendation had been about a relaxation of the licensing system, it would not be appropriate to seek formal undertakings from the brewers. None the less the brewers issued a statement in December 1970 containing a number of recommendations to their members. The recommendations

  1583
  dealt with four specific matters: increasing choice to the public, security for tenants, ownership of licensed premises, and the use of restrictive convenants in sales of licensed premises.
  There was a major follow-through of those recommendations. I have in mind one specific instance where there were definite restrictions on the type of tonic water available at certain public houses. Today "Schhh" is available to a very much greater extent throughout the trade than ever before. In the same way different types of lager are much more evident than before.
  My right hon. and learned Friend the Minister for Trade and Consumer Affairs is meeting the brewers to consider the whole of this code, and I have already announced to the House that the Brewers' Society has put forward proposals for a code for their tenants.
  If hon. Members have specific allegations to back up their speeches I should very much like them to be forwarded to my Department. Too often generalisations are made which, when they come to investigation, cannot always be substantiated. Dealing specifically with tied houses, an example of what I mean is to be found in a parliamentary Question which I have answered in recent weeks. In the course of my reply, I said that in the last quarter of 1967 the percentage of tenanted public houses was 76·4 whereas that of managed tied houses was 23·6. In June 1971, the last period for which figures are available, 74·9 per cent. of tied houses were tenanted and managed houses were down to 25·1 per cent. I suggest that is not the large sweeping trend that hon. Gentlemen have implied. However, I do not wish to mislead the House. There is in these figures one trend which is somewhat hidden. On the whole, there has been an increase of managed houses, particularly of the larger establishments. I do not want to mislead the House into thinking that that is not the position.
  Mr. Ashton: Is the Minister aware that the figures are not valid without taking into account slum clearance? In many slum clearance areas in the big cities pubs have been pulled down and not been replaced, except perhaps by one licence on a new estate replacing five old licences in an old type area.
  Mr. Emery: I have given the figures. The hon. Gentleman may look at them. I think they go some way to disabuse some of the allegations that have been made.
  The hon. Member for Fife, West asked why we had not had a debate on the Erroll Report. We seem to be having a debate now. I was delighted that the hon. Gentleman was answered by his hon. Friend the Member for Bristol, South who said that such a debate was not necessary as we had had enough debates on this matter led by the hon. Member for Fife, West.
  The hon. Gentleman stressed the situation regarding local monopoly. We accept that there is some substance in his argument. However, we have taken steps to deal with this situation, if necessary, in a way that we never could before the Bill was introduced.
  Mr. W. R. Rees-Davies: Before my hon. Friend leaves this point, may I make one comment about it? The new clause is unnecessary because the brewers have already got distribution arrangements between themselves, have they not, whereby they can distribute in any area each other's beers? They have indicated that they do not wish to have a concentration of one brewer's beer in any one area. They are now making arrangements to ensure that there is an infinitely greater variety. Is that not part of the arrangements which are to be discussed betwen my right hon. and learned Friend and the Brewers' Society when he comes to consider these matters?
  Mr. Emery: I will not add to what my hon. Friend has said. This is fulfilling part of the recommendations by the Erroll Committe on increasing choice for the public.
  Mr. John Hall: Does not the point that has been made make it clear that the new clause, as drafted, would be quite ineffective because most brewers have an exchange system whereby they sell each other's beers in their houses so that no one house could be said to be restricted to the sale of one brewer's products? To that extent it is not possible to bring into effect the intention of the new clause.
  Mr. Emery: That argument also applies. We can mount an argument that the new clause is merely brought forward as a peg on which to hang a debate about the tied house.
  The new clause was admirably summed up by my right hon. Friend the Member for Chislehurst (Dame Patricia Hornsby-Smith). She put her finger on the ridiculousness of the proposal made in the new clause.
  7.15 p.m.
  The hon. Member for Bristol, South and other hon. Gentlemen have talked about the public house being the major and only social contact for many people nowadays. I accept that. I believe that the pub is a major amenity for a large section of our community to whom the price of beer is of particular interest.
  Mr. Michael Cocks Mr. Michael Cocks indicated assent.
  Mr. Emery: The hon. Member for Bristol, South nods assent. The Labour Government should have thought about that when they were thinking of increasing the tax on beer. Whenever there has been a Labour Government the tax on beer has increased, whereas under a Conservative Government the tax has, on the whole, come down. The Labour Government obviously did not take into consideration the effect that an increase of 3d on a pint of beer would have on large sections of society who use the pub as a social amenity.
  Mr. Alan Williams: In view of this great achievement by the Conservative Government, may I ask the hon. Gentleman to tell the House by how much the price of beer has gone up since they came into office and by how much brewers' profits have gone up?
  Mr. Emery: I have not got those figures at my fingertips. The hon. Gentleman still has time to make a speech on that point if he wishes.
  The Brewers' Society, in an independent survey, claimed that beer in brewery company owned pubs averages 16·lp per pint compared with 17·9p per pint in non-brewery company owned pubs. That is an illustration that not everything is wrong with the action taken by the brewers regarding tied houses.
  I should stress that my right hon. and learned Friend is to meet the brewers
  1586
  regarding the code and my right hon. Friend the Home Secretary is reviewing the Erroll Committee's recommendations.
  The allegation made by the hon. Member for Fife, West, that the brewers are the paymasters of the Tory Party, is not only a lot of nonsense, but grossly inaccurate. If the hon. Gentleman will do the homework that he normally does, he will see that none of the major English breweries has contributed to the Tory Party in the last two or three years. That hits absolutely on the head the allegation that he has been making today.
  Mr. William Hamilton: The Minister's reaction speaks for itself. If what he said in the last few sentences is true, then I ask him to publish the figures.
  I asked my right hon. Friend the Member for Barnsley (Mr. Mason), who was then the Minister responsible, to provide the figures of brewers' contributions to political parties before 1970, and he gave me those figures. This is provided for in the companies law that was passed by the Labour Government. Those were the figures that I was quoting. Therefore, the hon. Gentleman does not know what he is talking about. If what he says is true about the brewers having not given any contributions to the Conservative Party in the last two or three years let him publish figures, as my right hon. Friend did when we were in Government. I will be very glad to withdraw if it is found that I am wrong.
  Mr. John Hall: A little while ago I looked up the contributions made by quoted brewery companies to the Tory Party. I was ashamed at the small, insignificant and, indeed miserable amounts which were given by the brewery industry to the Tory Party.
  Mr. Hamilton: Some people think of £130,000 compensation for the loss of a job paying £50,000 as reasonable. It depends on the figures with which one is used to dealing. What the hon. Gentleman may regard as derisory figures from the brewers might be regarded by others as quite substantial. It depends on the context in which one is speaking.
  The Minister says that his right hon Friend is in consultation with the brewers. How long has he been in consultation? The Monopoly Commission reported in April 1969 and the Erroll Committee

  1587
  reported about six months ago. I do not know how many meetings have taken place, but if there has been constant consultation, it is time that the Minister came up with some answers. It is very easy for those with a weak case to pinprick and nit-pick about the exact wording of a new clause.
  There is clearly a monopoly situation in the brewing industry, in the production of the product and in its distribution and retailing. This monopoly is intensifying and the Government have not given any indication that they have done, or intend to do, anything about it.
  The hon. Member for the Isle of Thanet (Mr. Rees-Davies) gave the case away when he said that the brewers had decided amongst themselves to carve up the market. Of course they have. Although there are different labels on the bottles and cans, the brewers are all producing the same kind of rubbish and the same kind of mass product. This carve-up of the market has taken place up and down the country. We all know this. Take for instance keg beer. It does not matter a damn whether it is drunk in John o'Groats or Land's End: it is the same rubbish.
  The Minister has spoken about information being provided by the brewers as to
  how they have carried out the undertakings which they gave in December 1970, but all the evidence points in the opposite direction. Far from giving security of tenure to the tenants, the brewers are moving over to the use of managers. This is what the row has been about in the last seven months. The tenants are organising themselves and trying to prevent this switch to managers. I would not accept any information from the brewers, for they have a vested interest in the status quo. Any information they give to the Minister is for the express purpose of maintaining the status quo.
  The Minister and the Government seem determined by means of the Bill to protect the consumer from monopolistic abuse, and the greatest monopolistic abuse occurs in the drink trade. The measure of the Government's sincerity in protecting the consumer will be the way in which they deal with the drink trade. I suspect that they will not take action because of the reasons which I gave in my original speech. I hope that the House divides on the new clause.
  Question put, That the Clause be read a Second time:—
  The House divided: Ayes 168, Noes 185.

  Division No. 137.]

  AYES

  [7.25 p.m.

  Archer, Peter (Rowley Regis)

  Davis, Clinton (Hackney, C.)

  Huckfield, Leslie

  Armstrong, Ernest

  Davis, Terry (Bromsgrove)

  Hughes, Robert (Aberdeen, N.)

  Ashton, Joe

  Deakins, Eric

  Janner, Greville

  Barnett, Joel (Heywood and Royton)

  Dell, Rt. Hn. Edmund

  Jay, Rt. Hn. Douglas

  Bennett, James(Glasgow, Bridgeton)

  Dempsey, James

  Jenkins, Rt. Hn. Roy (Stechford)

  Bishop, E. S.

  Doig, Peter

  John, Brynmor

  Boardman, H. (Leigh)

  Douglas, Dick (Stirlingshire, E.)

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

  Booth, Albert

  Douglas-Mann, Bruce

  Johnston, Russell (Inverness)

  Bottomley, Rt. Hn. Arthur

  Duffy, A. E. P.

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

  Boyden, James (Bishop Auckland)

  Dunnett, Jack

  Jones, Gwynoro (Carmarthen)

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

  Eadie, Alex

  Jones, T. Alec (Rhondda, W.)

  Buchan, Norman

  Edwards, Robert (Bilston)

  Judd, Frank

  Butler, Mrs. Joyce (Wood Green)

  Edwards, William (Merioneth)

  Kaufman, Gerald

  Callaghan, Rt. Hn. James

  English, Michael

  Kelley, Richard

  Campbell, I. (Dunbartonshire, W.)

  Evans, Fred

  Kerr, Russell

  Cant, R. B.

  Ewing, Harry

  Kinnock, Neil

  Carmichael, Neil

  Faulds, Andrew

  Lambie, David

  Carter, Ray (Birmingh'm, Northfield)

  Fernyhough, Rt. Hn. E.

  Lamborn, Harry

  Castle, Rt. Hn. Barbara

  Fletcher, Ted (Darlington)

  Lamond, James

  Cocks, Michael (Bristol, S.)

  Ford, Ben

  Latham, Arthur

  Coleman, Donald

  Forrester, John

  Lawson, George

  Concannon, J. D.

  Galpern, Sir Myer

  Lee, Rt. Hn. Frederick

  Conlan, Bernard

  Gilbert, Dr. John

  Leonard, Dick

  Corbet Mrs. Freda

  Gourlay, Harry

  Lestor, Miss Joan

  Cox, Thomas (Wandwortn, C.)

  Grant, John D. (Islington, E.)

  Lewis, Ron (Carlisle)

  Crawshaw, Richard

  Hamilton, William (Fife, W.)

  Lomas, Kenneth

  Cronin, John

  Hamling, William

  Loughlin, Charles

  Crosland, Rt. Hn. Anthony

  Lyons, Edward (Bradford, E.)

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

  Harper, Joseph

  McBride, Neil

  Cunningham, Dr. J. A. (Whitehaven)

  Harrison, Walter (Wakefield)

  McCartney, Hugh

  Dalyell, Tam

  Hattersley, Roy

  McElhone, Frank

  Davidson, Arthur

  Heffer, Eric S.

  Mackenzie, Gregor

  Davies, Denzil (Llanelly)

  Hooson, Emlyn

  Mackintosh, John P.

  Davies, G. Elfed (Rhondda, E.)

  Horam, John

  Maclennan, Robert

  Davies, Ifor (Gower)

  Houghton, Rt. Hn. Douglas

  McMillan, Tom (Glasgow, C.)

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

  Perry, Ernest G.

  Thomas, Jeffrey (Abertillery)

  Marsden, F.

  Prentice, Rt. Hn. Reg.

  Tope, Graham

  Marshall, Dr Edmund

  Reed, D. (Sedgefield)

  Torney, Tom

  Meacher, Michael

  Rhodes, Geoffrey

  Tuck, Raphael

  Mellish, Rt. Hn. Robert

  Roberts, Rt. Hn. Goronwy (Caernarvon)

  Varley, Eric G.

  Millan, Bruce

  Robertson, John (Paisley)

  Walden, Brian (B'm ham, All Salnts)

  Milne, Edward

  Rodgers, William (Stockton-on-Tees)

  Walker, Harold (Doncaster)

  Mitchell, R. C. (S'hampton, Itchen)

  Rose, Paul B.

  Wallace, George

  Molloy, William

  Ross, Rt. Hn. William (Kilmarnock)

  Weitzman, David

  Morris, Alfred (Wythenshawe)

  Rowlands, Ted

  Wellbeloved, James

  Moyle, Roland

  Sandelson, Neville

  Wells, William (Walsall, N.)

  Murray, Ronald King

  Sheldon, Robert (Ashton-under-Lyne)

  White, James (Glasgow, Pollok)

  Oakes, Gordon

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

  Willey, Rt. Hn. Frederick

  O'Halloran, Michael

  Silkin, Hn. S. C. (Dulwich)

  Williams, Alan (Swansea, W.)

  O'Malley, Brian

  Smith, John (Lanarkshire, N.)

  Wilson, Alexander (Hamilton)

  Orbach, Maurice

  Spearing, Nigel

  Wilson, Rt. Hn. Harold (Huyton)

  Oswald, Thomas

  Stallard, A. W.

  Wilson, William (Coventry, S.)

  Owen, Dr. David (Plymouth, Sutton)

  Stoddart, David (Swindon)

  Woof, Robert

  Paget, R. T.

  Stonehouse, Rt. Hn. John

  Palmer, Arthur

  Strang, Gavin

  TELLERS FOB THE AYES:

  Pardoe, John

  Summerskill, Hn. Dr. Shirley

  Mr. James A. Dunn and

  Parry, Robert (Liverpool, Exchange)

  Taverne, Dick

  Mr. James Hamilton.

  Pavitt, Laurie

  NOES

  Allason, James (Hemel Hempstead)

  Griffiths, Eldon (Bury St. Edmunds)

  Monro, Hector

  Atkins, Humphrey

  Grylls, Michael

  Montgomery, Fergus

  Awdry, Daniel

  Gummer, J. Selwyn

  More, Jasper

  Baker, Kenneth (St. Marylebone)

  Gurden, Harold

  Morgan, Geraint (Denbigh)

  Baker, W. H. K. (Banff)

  Hall, John (Wycombe)

  Morrison, Charles

  Batsford, Brian

  Hannam, John (Exeter)

  Murton, Oscar

  Beamish, Col. Sir Tufton

  Harrison, Brian (Maldon)

  Nabarro, Sir Gerald

  Biffen, John

  Haselhurst, Alan

  Neave, Airey

  Biggs-Davison, John

  Hastings, Stephen

  Normanton, Tom

  Blaker, Peter

  Havers, Michael

  Nott, John

  Boardman, Tom (Leicester, S.W.)

  Hawkins, Paul

  Onslow, Cranley

  Boscawen, Hn. Robert

  Hayhoe, Barney

  Oppenheim, Mrs. Sally

  Bossom, Sir Clive

  Hicks Robert

  Owen, Idris (Stockport, N.)

  Bowden, Andrew

  Higgins, Terence L.

  Page, Rt. Hn. Graham (Crosby)

  Brinton, Sir Tatton

  Hiley, Joseph

  Parkinson, Cecil

  Brocklebank-Fowler, Christopher

  Hill, John E. B. (Norfolk, S.)

  Percival, Ian

  Bruce-Gardyne, J.

  Hill, James (Southampton, Test)

  Pike, Miss Mervyn

  Bryan, Sir Paul

  Hornby, Richard

  Pounder, Rafton

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

  Hornsby-Smith, Rt. Hn. Dame Patricia

  Powell, Rt. Hn. J. Enoch

  Bullus, Sir Eric

  Howe, Hn. Sir Geoffrey (Reigate)

  Price, David (Eastleigh)

  Butler, Adam (Bosworth)

  Howell, David (Guildford)

  Prior, Rt. Hn. J. M. L.

  Chapman, Sydney

  Howell, Ralph (Norfolk, N.)

  Proudfoot, Wilfred

  Chichester-Clark, R.

  Hutchison, Michael Clark

  Pym, Rt. Hn. Francis

  Churchill, W. S.

  Irvine, Bryant Godman (Rye)

  Quennell, Miss, J. M.

  Clark, William (Surrey, E.)

  Clegg, Walter

  James, David

  Raison, Timothy

  Coombs, Derek

  Jenkin, Patrick (Woodford)

  Rawlinson, Rt. Hn. Sir Peter

  Redmond, Robert

  Cormack, Patrick

  Jessel, Toby

  Rees, Peter (Dover)

  Costain, A. P.

  Jopling, Michael

  Ress-Davies, W. R.

  Crowder, F. P.

  Kellett-Bowman, Mrs. Elaine

  Renton, Rt. Hn. Sir David

  d'Avigdor-Goldsmid, Sir Henry

  King, Evelyn (Dorset, S.)

  Rhys Williams, Sir Brandon

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

  Kinsey, J. R.

  Ridley, Hn. Nicholas

  Deedes, Rt. Hn. W. F.

  Kitson, Timothy

  Roberts, Wyn (Conway)

  Dixon, Plers

  Knight, Mrs. Jill

  Rost, Peter

  du Cann, Rt. Hn. Edward

  Knox, David

  Scott, Nicholas

  Dykes, Hugh

  Lamont, Norman

  Scott-Hopkins, James

  Eden, Rt. Hn. Sir John

  Lane, David

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

  Edwards, Nicholas (Pembroke)

  Langford-Holt, Sir John

  Elliot, Capt. Walter (Carshalton)

  Le Marchant, Spencer

  Shelton, William (Clapham)

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

  Lewis, Kenneth (Rutland)

  Sinclair, Sir George

  Emery, Peter

  Loveridge, John

  Skeet, T. H H.

  Eyre, Reginald

  Luce, R. N.

  Soref, Harold

  Fenner, Mrs. Peggy

  MacArthur, Ian

  Speed, Keith

  Finsberg, Geoffrey (Hampstead)

  McCrindle, R. A.

  Spence, John

  Fisher, Nigel (Surbiton)

  McLaren, Martin

  Sproat, lain

  Fletcher-Cooke, Charles

  McNair-Wilson, Michael

  Stainton, Keith

  Fookes, Miss Janet

  Mather, Carol

  Stewart-Smith, Geoffrey (Belper)

  Fowler, Norman

  Maude, Angus

  Stokes, John

  Fox, Marcus

  Mawby, Ray

  Stuttaford, Dr. Tom

  Gardner, Edward

  Maxwell-Hyslop, R. J.

  Suteliffe, John

  Gibson-Watt, David

  Meyer, Sir Anthony

  Tapsell, Peter

  Gilmour, Ian (Norfolk, C.)

  Mills, Peter (Torrington)

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

  Godber, Rt. Hn. J. B.

  Miscampbell, Norman

  Taylor, Frank (Moss Side)

  Goodhart, Philip

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

  Taylor, Robert (Croydon, N.W.)

  Gorst, John

  Mitchell, David (Basingstoke)

  Tebbit, Norman

  Gower, Raymond

  Moate, Roger

  Temple, John M.

  Gray, Hamish

  Money, Ernle

  Thomas, John Stradling (Monmouth)

  Green, Alan

  Monks, Mrs. Connle

  Thomas, Rt. Hn. Peter (Hendon, S.)

  1590

  1591

  Thompson, Sir Richard (Croydon, S.)

  Walder, David (Clitheroe)

  Woodhouse, Hn. Christopher

  Trafford, Dr. Anthony

  Ward, Dame Irene

  Wylie, Rt. Hn. N. R.

  Trew, Peter

  Weatherill, Bernard

  Tugendhat, Christopher

  White, Roger (Gravesend)

  TELLERS FOR THE NOES:

  Turton, Rt. Hn Sir Robin

  Wilkinson, John

  Mr. Kenneth Clarke and

  Waddington, David

  Mr. Tim Fortescue.

  Question accordingly negatived.

New Clause 7

  PAST MERGERS
  Where not less than two years have elapsed since the date of a merger, a reference to the Commission may be made under this Act, but if the merger concerned has already been the subject of a reference under section 64 or section 74 of this Act, the reference shall not be made earlier than three years after the date on which the report of the Commission or the earlier reference was laid before Parliament.—[Mr. Millan.]
  Brought up, and read the First time.
  7.30 p.m.
  Mr. Millan: I beg to move, That the clause be read a Second time.
  The new clause would allow a reference to the Monopolies Commission of a merger that has already taken place, so that the commission could examine its results and compare them with the expectations and with the original claims made by the merging parties for the benefits that would accrue. This matter was discussed in Committee, when I quoted the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). I am glad to see him here, and I hope that he will support the new clause.
  One of the difficulties with monopolies, and particularly mergers, legislation is that little information is available about the results of mergers that have taken place and the benefits or otherwise that mergers bring to the economy and the public interest as a whole.
  A certain amount of work has been published on the results of mergers, but most of it is fairly inconclusive. Much of it demonstrates that a good many of the claims made for mergers at the time of the mergers are falsified by subsequent events. The advantages claimed seldom occur—advantages such as increases in profitability and productivity and better opportunities for the workers, and so on. Many of these things do not happen in practice. There is, therefore,
  1592
  with the benefit of hindsight, a case for saying that it would have been far better in the public interest and for the efficiency of the economy if the merger had never taken place.
  A report by the National Institute for Economic and Social Research on the increasing concentration in private industry is due for publication within the next few weeks. The Under-Secretary very kindly made available in the Library a printer's proof copy of that report. I have read it very quickly, without considering it in detail, as will be necessary if we are to draw the appropriate lessons from it. In the context of the new clause, the report confirms what I have said—that is, that there is a lack of information about the results of mergers and a good deal of justifiable scepticism whether the majority of mergers have had the favourable results that were claimed for them.
  In those circumstances it would be salutary—indeed, it is necessary to our understanding of the whole merger situation and the development of a coherent, intelligible mergers policy—to have the opportunity available to the Monopolies and Mergers Commission in appropriate circumstances to investigate mergers which have already taken place. That is the purpose of the new clause.
  It is not my intention that virtually any merger which had taken place should be investigated at some time after it had taken place, the Monopolies Commission having allowed it without investigation. It is certainly not my intention that this power should be used regularly or on a very extensive scale. But it is a very important power which ought to be available to the Government and the Monopolies and Mergers Commission where circumstances indicate that this kind of inquiry would be sensible.
  The purpose of the inquiry would not only be to bring out the facts about the particular situation being investigated. It would also increase our knowledge of the effects of mergers generally so that we could adopt a more coherent mergers

  1593
  policy and have clear ideas about what that should be.
  On Second Reading I said that we were facing a situation of increasing concentration in private manufacturing industry. I repeat what I said then, that the Government should adopt a much more rigorous and sceptical attitude towards mergers than has been adopted by any Government, including the previous Labour Government.
  That is the standpoint which my hon. Friends and I have adopted in approaching the Bill. It is in line with this that we want these additional powers to be placed in the Bill. As we are now on Report, I shall not repeat many of the arguments about increasing concentration in private manufacturing industry. We had those arguments in Committee. We hold very strongly the views which were expressed then.
  There are great dangers in the present situation of increasing concentration. Our mergers policy should be developed towards at least slowing down this increasing concentration in industry. Whether or not one takes that view, however, one of the essential things which we ought to have is a good deal more information about the results of mergers which have taken place so that we can develop policy more intelligently. It is the purpose of the new clause to give us that additional information.
  Mr. Charles Fletcher-Cooke: It was very kind of the hon. Member for Glasgow, Craigton (Mr. Millan) to refer to the fact that I have rejoined the column after many months of absence. It will come as no surprise to him that I agree with almost all that he has said, particularly in view of the short and attractive manner in which he put the point.
  It is certainly true that the claims made for mergers, both before the Monopolies Commission and in many other ways, have frequently not been justified by the events two or three years later, and sometimes even later than that. Therefore, it is important that studies should be made, in so far as that is possible, of the results of mergers, to test to what extent the claims that were made are in the
  1594
  event justified. Whether they should be made as a matter of great but only academic interest by the Monopolies and Mergers Commissions is a question.
  What would the Monopolies and Mergers Commission do in such circumstances? After experience of a merger, either a merger allowed by the commission or a merger which took place without a reference, if two or three years later, as the case may be, the commission decided that on the whole the claims made by those anxious to merge had not been fully justified, is the hon. Gentleman suggesting that there should be a "de-mergerisation"? That would be an extremely heavy hammer with which to crack the nut. It might be, for example, that the fulfilment of the claims by those in favour of the merger was delayed longer than was expected. It might be that another four or five years would prove that they were right. But if after two or three years they are found not to have reached the expectations but that, nevertheless, the organisation was treading water, it would be an extreme act to "de-merger" it because it had not satisfied all the hopes. The hon. Member is nodding in agreement with me to that extent.
  It is only because I fear that this would be using the Monopolies and Mergers Commission more as a seminar or a research group—no doubt a very powerful group—rather than as an instrument of activity and action, that I doubt whether this power is justified. I am open-minded about it. I shall listen to what my hon. Friend the Minister says about it with the greatest interest. He must meet the basic philosophy of the hon. Member for Craigton, namely, that mergers have not, by and large, justified those who have advocated them, as far as we can see.
  I have not had the opportunity of reading the draft report mentioned by the hon. Gentleman but I accept from him that this is its general message. That being so, we need some method of testing whether the merger policy is right. My only doubt is whether it is right to use the Monopolies and Mergers Commission for this purpose, bearing in mind that it is difficult to see what sort of action could result from the kind of report one might get, which

  1595
  may be "The claims have not been justified, but it would be unthinkable after two or three years to try to unscramble the omelette and restore the eggs in their shells".
  That is my approach. I shall listen to what my hon. Friend the Minister has to say with great interest.
  7.45 p.m.
  Mr. Emery: The purpose of the amendment, as the hon. Member for Glasgow, Craigton (Mr. Millan) said, is to allow the Secretary of State to refer completed mergers to the commission after a lapse of two years and, in certain circumstances, three years if the merger had been subject to a reference. I must point out to the Opposition, in case they want to vote on the clause, that it is clearly technically defective, in that it is not stated whether the assets and monopoly tests in Clause 64 should be applied as at the date of the merger or the date of consideration for a reference after two or three years. If the clause were carried that factor would have to be made clear. Nor is it clear what sort of report is required from the commission, or—and this is the major point which was so ably sketched out by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke)—what action, if any, should follow. I was glad to see that he gave up the term "demer-gerisation"—which seems to me a ghastly piece of English—for the more simple "unscrambling" of a merger. Those who are proposing this action have neglected to say how that would be done.
  There are many things which it is right that I should make clear. We have undertaken to try to ensure that more information is made known about mergers and a number of learned individuals, not only right hon. and hon. Members but people outside, want to know more about what has been the outcome for companies once they have merged. The report of the National Institute for Economic and Social Research, which will soon be published and about which the hon. Member for Craigton commented a little, will go some way to providing information along those lines.
  The Government wish to ensure that there is a full and proper rationalisation of industry for the benefit of the community as a whole, but they do not want bigness for its own sake, nor do they
  1596
  want to see many of the medium and small companies which have played a major part in the British economy disappearing just because a large conglomerate wants to gobble them up. In the same way, there is considerable concern in certain areas about mergers which lead to the manufacturer carrying his interest in and his control of his product through to the retail or marketing side. It would be wrong to suggest that the Government are not concerned about this because we are.
  To some extent the information is already available in certain ways. Annual reports, Press comments, articles and individual pieces of research, particularly in learned journals, can provide it. The Government accept that there is a need for information on a continuing basis and on the experience of companies after mergers. However, this can best be met by a follow up responsibility placed upon the Director and through research. It would place a very grave burden of uncertainty on the shoulders of the companies concerned if they were to remain indefinitely subject to a reference to the commission. If the merger were suddenly referred back again after a company had been in operation for two or three years, it would be bound to have an adverse effect upon its operations and upon confidence in the company and its products. Therefore, to remain indefinitely subject to a reference to the Commission, or even to a series of references at intervals—as would be possible under the clause, once there had been a merger falling within the scope of the Act—is unacceptable.
  We understand the concern to obtain information expressed by the hon. Member for Craigton and by my hon. and learned Friend, but it would not be right to accept the new clause, because it would go much further than is desirable and would put in jeopardy industries which had merged—and that would be particularly deleterious. Therefore, I must ask the House to reject the clause.
  Mr. Millan: I do not accept the Minister's arguments about uncertainty. Those arguments could equally well be made against the whole of the monopoly legislation, because any company in a technical monopoly situation could be referred to the commission at any time. As was made clear by the Minister during

  1597
  our proceedings, by reducing the monopolies criterion from one-third to one-quarter, as we are seeking to do in the Bill, we are bringing more than 100 new products within that criterion, and therefore we are potentially subjecting about 100 new companies to monopoly investigation.
  If all the difficulties arise from companies being exposed to the risk of investigation under the clause, the same difficulties must arise from the Government's own change in the criterion in the Bill. Of course, if people who are not at one time subject to investigation find themselves potentially subject to investigation they are placed in a certain amount of uncertainty. However, it also encourages them to behave in a responsible and respectable manner and to me that is not a disadvantage. It is a considerable advantage. It is not enough to argue against the proposal on the basis of uncertainty, as the Minister has sought to do. The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) raised a valid point. If the clause were passed, what would happen? Would there then be an availability of power for the merged companies to be demerged, and for the divestment of their assets, and so on, or would this simply be producing additional information on which we could more certainly base our merger policy in the future? Basically, I have the second consideration in mind, not because I do not want to see the divesting powers contained in the Bill and in present legislation being used. It is most unsatisfactory that the divesting powers provided in the 1965 Act have not been used in a single instance since then, but they are continued in the Bill and we can always hope for something in the future.
  There is another piece of uncertainty which hangs over every technical monopoly in this country. If there is a reference to the commission the result may be a recommendation for the breaking up of the company. However, I should like to see the prevention of undesirable mergers. I am much more interested to see references made before a merger goes through, so that they can be stopped if they are undesirable. That should be the object of the legislation.
  1598
  Later amendments provide for automatic references to the Monopolies and Mergers Commission in certain circumstances if certain mergers met certain criteria. There is an implication that many of these mergers would be stopped. The basic objective must be to get the references in the first place. I should be happy, if we had the kind of reference policy which we should have, for the clause to be used simply to provide more information and for the various other powers not to be attracted to the clause.
  The clause as it stands is uncertain. It could be used one way or the other. If the clause were accepted a considerable number of other amendments would be made. If the amendments were made in a way that did not result in subsequent Government action, I should regard that as a considerable improvement.
  I remind the House that the Bill already contains provisions for references of a sort for which no specific action follows. For example, Clause 77 deals with general references to the Monopolies and Mergers Commission. None of the powers otherwise available to Ministers follows from that clause. Clause 78, to which we have strong objections, deals with references to restrictive labour practices. It includes no power on the part of the Minister to act specifically on the commission's report of a restrictive practice. I do not say that I should not like some additional powers to be available. If they made the clause more acceptable I should be happy for the new clause to be accepted on that basis. If the clause were accepted, the necessary amendments to the Bill could provide for that situation.
  I am absolutely sure that the kind of power which the clause would provide need not be used frequently with a more active merger policy. Nevertheless, it should be part of the armoury available to the Government and to the commission in dealing with mergers.
  As the Government are obviously not willing to accept new Clause 7, and as I do not consider the arguments which they have put forward to be valid or substantial, I recommend my hon. Friends to press the new clause to a Division.
  Question put, That the clause be read a Second time:—
  The house divided: Ayes 159, Noes 177.

  Division No. 138.]

  AYES

  17.58 p.m.

  Archer, Peter (Rowley Regis)

  Forrester, John

  Morris, Alfred (Wythenshawe)

  Armstrong, Ernest

  Galpern, Sir Myer

  Moyle, Roland

  Ashton, Joe

  Gourlay, Harry

  Murray, Ronald King

  Barnett, Joel (Heywood and Royton)

  Grant, John D. (Islington, E.)

  Oakes, Gordon

  Bennett, James (Glasgow, Bridgeton)

  Grimond, Rt. Hn. J.

  O'Halloran, Michael

  Bishop E S.

  Hamilton, James (Bothwell)

  O'Malloy, Brian

  Boardman, H. (Leigh)

  Hamilton, William (File, W.)

  Orbach, Maurice

  Booth, Albert

  Harrison, Walter (Wakefield)

  Oswald, Thomas

  Bottomley, Rt. Hn. Arthur

  Hattersley, Roy

  Owen, Dr. David (Plymouth, Sutton)

  Boyden, James (Bishop Auckland)

  Heffer, Eric S.

  Paget, R. T.

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

  Hooson, Emlyn

  Palmer, Arthur

  Buchan, Norman

  Horam, John

  Pardoe, John

  Butler, Mrs. Joyce (Wood Green)

  Huckfield, Leslie

  Parry, Robert (Liverpool, Exchange)

  Callaghan, Rt. Hn. James

  Hughes, Robert (Aberdeen, N.)

  Pavitt, Laurie

  Campbell, I. (Dunbartonshire, W.)

  Janner, Greville

  Prentice, Rt. Hn. Reg.

  Cant, R B

  Jay, Rt. Hn. Dougias

  Radice, Giles

  Carmichael, Neil

  Jenkins, Rt. Hn. Roy (Stechford)

  Reed, D. (Sedgefield)

  Carter, Ray (Birmingh'm, Northfield)

  John, Brynmor

  Rhodes, Geoffrey

  Castle, Rt. Hn. Barbara

  Johnson, James (Kston-on-Hull, W.)

  Roberts, Rt. Hn.Goronwy (Caernarvon)

  Cocks' Michael (Bristol, S.)

  Johnston, Russell (Inverness)

  Robertson, John (Paisley)

  Coleman, Donald

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

  Rose, Paul B.

  Concannon, J. D.

  Jones, Gwynoro (Carmarthen)

  Ross, Rt. Hn. William (Kilmarnock)

  Conlan, Bernard

  Jones, T. Alec (Rhondda, W.)

  Rowlands, Ted

  Cox, Thomas (Wandsworth, C.)

  Judd, Frank

  Sandelson, Nevllle

  Crawshaw, Richard

  Kaufman, Gerald

  Sheldon, Robert (Ashton-under-Lyne)

  Cronin, John

  Kelley, R'chard

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

  Crosland, Rt. Hn. Anthony

  Kerr, Russell

  Silkin, Hn. S. C. (Dulwich

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

  Kinock, Neil

  Smith, John (Lanarkshire, N.)

  Cunningham, Dr. J. A. (Whitehaven)

  Lambie, David

  Spearing, Nigel

  Davidson, Arthur

  Lamborn, Harry

  S oddart, David (Swindon)

  Davies, Denzil (Lianelly)

  Lamond, James

  Stonehouse, Rt. Hn. John

  Davies, G. Elfed (Rhondda, (E.)

  Latham, Arthur

  Strang, Gavin

  Davies, Ifor (Gower)

  Lawson, George

  Summerskill, Hn. Dr. Shirley

  Davies' Clinton, (Hackney. C)

  Lee, Rt. Hn. Frederick

  Taverne, Dick

  Davies, Terry (Bromsgrove)

  Leonard, Dick

  Thomas, Jeffrey (Abertillery)

  Lestor, Miss Joan

  Tope, Graham

  Deakins, Eric

  Lewis, Ron (Carlisle)

  Tomney, Frank

  Dell, Rt. Hn. Edmund

  Lomas, Kenneth

  Tuck, Raphael

  Dempsey, James

  Loughlin, Charles

  Varley, Eric G.

  Doig, peter

  Loughlin, Charles

  Varley, Eric G.

  Douglas, Dick (Stirlingshire, E.)

  Lyins, Edward (Bradford, E.)

  Walker, Harold (Doncaster)

  Douglas, Dick.

  McBride, Neil

  Wallace, George

  Douglas-Mann, Bruce

  McCartney, Hugh

  Weitzman, David

  Duffy, A.E.P.

  McElhone, Frank

  Wells, William (Walsall, N.)

  Dunn, James A.

  Mackenzie, Gregor

  White, James (Glasgow, Pollok)

  Dunnelt, Jacl

  Maclennan, Robert

  Willey, Rt. Hn. Frederick

  Eadie, Alex

  McMillan, Tom (Glasgow, C.)

  Williams, Alan (Swansea, W.)

  Edwards, Robert (Bilston)

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

  Williams, W. T. (Warrington)

  Edwards, William (Merioneth)

  Marsden, F.

  Wilson, Alexander (Hamilton)

  English, Michael

  Marshall, Dr. Edmund

  Wilson, William (Coventry, S.)

  Evans, Fred

  Meacher, Michael

  Wool, Robert

  Ewing, Harry

  Melllsh, Rt. Hn. Robert

  Fernyhough, Rt. Hn. E.

  Millan, Bruce

  TELLERS FOR THE AYES:

  Fletcher, Ted (Darlington)

  Milne, Edward

  Mr. Joseph Harper and

  Foot, Michael

  Mitchell, R. C. (S'hampton, Itchen)

  Mr. Ernest G. Perry.

  Ford, Ben

  Molloy, William

  NOES

  Allason, James (Hemel Hempstead)

  Bullus, Sir Eric

  Finsberg, Geoffrey (Hampstead)

  Atkins, Humphrey

  Butler, Adam (Bosworth)

  Fisher, Nigel (Surblton)

  Awdry, Daniel

  Chapman, Sydney

  Fletcher-Cooke, Charles

  Baker, Kenneth (St. Marylebone)

  Clark, William (Surrey, E.)

  Fookes, Miss Janet

  Baker, W. H. K. (Banff)

  Clarke, Kenneth (Rushcliffe)

  Fowler, Norman

  Balniel, Rt. Hn. Lord

  Ciegg, Walter

  Gardner, Edward

  Batsford, Brian

  Coombs, Derek

  Gibson-Watt, David

  Beamish, Col. Sir Tufton

  Cormack, Patrick

  Glimour, Ian (Norfolk, C.)

  Biffen, John

  Costain, A. P.

  Godber, Rt. Hn. J. B.

  Biggs-Davison, John

  Crowder, F. P.

  Goodhart, Philip

  Blaker, Peter

  d'Avigdor-Goldsmid, Sir Henry

  Gorst, John

  Boardman, Tom (Leicester, S.W.)

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

  Gower, Raymond

  Boscawen, Hn. Robert

  Deedes, Rt. Hn. W. F.

  Grant, Anthony (Harrow, C.)

  Bossom, Sir Clive

  Dixon, Piers

  Gray, Hamish

  Bowden, Andrew

  Eden, Rt. Hn. Sir John

  Green, Alan

  Brinton, Sir Tatton

  Edwards, Nicholas (Pembroke)

  Griffiths, Eldon (Pury St. Edmunds)

  Brocklebank-Fowler, Christopher

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

  Grylis, Michael

  Bruce-Gardyne, J.

  Emery, Peter

  Gummer, J. Selwyn

  Bryan, Sir Paul

  Eyre, Reginald

  Gurden, Harold

  Bucharun-simith, Allck (Angus, N&M)

  Fanner, Mrs. Peggy

  Hall, John (Wycombe)

  Harrison, Brlan (Maldon)

  Maude, Angus

  Roberts, Wyn (Conway)

  Harrison, Col. Sir Harwood (Eye)

  Mawby, Ray

  Scott-Hopkins, James

  Haselhurst, Alan

  Maxwell-Hyslop, R. J.

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

  Hastings, Stephen

  Meyer, Sir Anthony

  Shelton, William (Clapham)

  Havers, Sir Michael

  Mills, Peter (Torrington)

  Shersby, Michael

  Hawkins, Paul

  Miscampbell, Norman

  Sinclair, Sir George

  Hayhoe, Barney

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

  Skeet, T. H. H.

  Hicks, Robert

  Mitchell, David (Baslngstoke)

  Sorel, Harold

  Higgins, Terence L.

  Moate, Roger

  Speed, Keith

  Hiley, Joseph

  Money, Ernle

  Spence, John

  Hill, John E. B. (Norfolk, S.)

  Monks, Mrs. Connle

  Sproat, lain

  Hill, S. James A.(Southampton,Test)

  Monro, Hector

  Stainton, Keith

  Hornby, Richard

  Montgomery, Fergus

  Stewart-Smith, Geoffrey (Belper)

  Howe, Rt. Hn. Sir Geoffrey

  More, Jasper

  Stokes, John

  Kowell, David (Guillldford)

  Morgan, Geraint (Denbigh)

  Stuttaford, Dr. Tom

  Howell, Ralph (Norfolk, N.)

  Morrison, Charles

  Sutcliffe, John

  Hutchison, Michael Clark

  Murton, Oscar

  Tapsell, Peter

  Irvine, Bryant Godman (Rye)

  Nabarro, Sir Gerald

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

  James, David

  Neave, Airey

  Taylor, Frank (Moss Side)

  Jenkin, Patrick (Woodford)

  Normanton, Tom

  Taylor, Robert (Croydon, N.W.)

  Jessel, Toby

  Nott, John

  Tebbit, Norman

  Jopling, Michael

  Onslow, Cranley

  Thomas, John Stradling (Monmouth)

  Kaberry, Sir Donald

  Oppenheim, Mrs. Sally

  Thomas. Rt. Hn. Peter (Hendon, S.)

  Kellett-Bowman, Mrs. Elaine

  Owen, ldris (Stockport, N.)

  Thompson, Sir Richard (Croydon, S.)

  King, Evelyn (Dorset, S.)

  Page, Rt. Hn. Graham (Crosby)

  Trafford, Dr. Anthony

  Kinsev J. R.

  Parkinson, Cecil

  Trew, Peter

  Kitson, Timothy

  Pike, Miss Mervyn

  Tugendhat, Christopher

  Knight, Mrs. Jill

  Poounder, Rafton

  Turton, Rt. Hn. Sir Robin

  Lamont, Norman

  Powell, Rt. Hn. J. Enoch

  Waddington, David

  Lane, David

  Price, David (Eastlelgh)

  Walder, David (Clitheroe)

  Langford-Holt, Sir John

  Proudfoot, Wilfred

  Ward, Dame Irene

  Le Marchant, Spencer

  Pym, Rt. Hn. Francis

  White, Roger (Gravesend)

  Lewis, Kenneth (Rutland)

  Raison, Timothy

  wilkinson John

  Loveridge John

  Rawlinson, Rt. Hn.Sir Peter

  Woodhuse, Hn. Christopher

  Luce, R.N.

  Rees, Peter (Dover)

  McCrindle, R. A.

  Rees-Davles, W. R.

  TELLERS FOR THE NOES:

  McLaren, Martin

  Renton, Rt. Hn. Sir David

  Mr.Tim Fortescue and

  McNair-Wilson, Michael

  Rhys Williams, Sir Brandon

  Mr. Marcus Fox

  Mather, Carol

  Ridley. Hn. Nicholas

  Question accordingly negatived.

New Clause 9

  AMENDMENT OF S.21 OF ACT OF 1956
  'In section 21 of the Act of 1956, in paragraph (d) of subsection (1), before the word "fair" there shall be inserted the words" in conditions of substantial balance of bargaining power"'.—[Mr. Duffy.]
  Brought up, and read the First time.
  Mr. A. E. P. Duffy: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker (Sir Robert Grant-Ferris): With this, we are to take new Clause 12—Application to trade associations—standing in the name of the hon. Member for Glasgow, Craigton (Mr. Millan) and the names of his hon. Friends.
  Mr. Duffy: I remind the right hon. and learned Gentleman of my interest in this matter and in an organisation specially affected by the Restrictive Trade Practices Act 1956—the National Federation of Retail Newsagents. I have raised
  1602
  this matter before, both in the House and with the right hon. and learned Gentleman's Department. I do so not on the basis of casual interest but on the genuine basis of membership of the federation. But I raise the matter not mainly on behalf of the federation but on behalf of all trade associations, including the Co-operative movement—not merely on behalf of individual traders but also on behalf of small firms, of all small people in business who are unable to combine in face of powerful organisations and especially sources of supply.
  It has always been accepted that there are circumstances in which a number of such small firms need to combine in order to deal effectively with a large combine. This is why certain gateways were provided in the 1956 Act. Unfortunately, these gateways have been made nugatory by various court decisions taking a legalistic view of the words used instead of looking at the spirit and intention of the Act.
  The problem has been aggravated by the attitude adopted by the registrar, who has not been content merely to bring facts

  1603
  before the court but has adopted a forceful policy. It will be recalled that the gateways contained in Section 21 provide that an agreement may be justified if it is shown that the restriction is required in order to negotiate fair terms for the acquisition of goods from the preponderant supplier of that class of goods. The National Federation of Retail Newsagents has been precluded from ever being able to make effective use of this gateway by decisions of the courts which have tended to fall into three categories.
  The first category affects the classification of goods. The term "class of goods" has been interpreted as being so very wide as to include every newspaper or periodical. This ignores the purpose of the Act. Clearly, the gateway was intended to apply to circumstances in which the person requiring to obtain goods could not go elsewhere for them if he was unable to obtain satisfactory terms. In other words, the normal conditions of supply and demand competition were intended to allow bargaining to find its own level at a correct and fair price. In the case of the newspapers, this condition did not apply in that the Sun cannot be substituted by any stretch of imagination by, say, the Financial Times. Yet the courts think that it can. Thus, the purpose of the gateway has been in this instance frustrated.
  The second problem arises from the insistence of the courts that the federation's members can never combine in order to negotiate regarding the goods of one manufacturer because they do not acquire the goods directly from the manufacturers. This is true in that newsagents acquire their goods from wholesalers, but it ignores the underlying reality which is that the newspaper manufacturers dictate the terms. The wholesalers may conceivably negotiate on behalf of the retailers, but they have no such interest. They do not wish to negotiate on behalf of the retailers and do not do so.
  This leaves retailers with no negotiating voice as the result of the 1956 Act, for the newspaper proprietors flatly refuse even to enter into discussion with them or their representatives. The wholesalers merely wash their hands of the matter, saying that it is not their concern.
  I will not go into detail because the right hon. and learned Gentleman knows
  1604
  of the Daily Mirror case. I hope that he will bear in mind what my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) said in Committee—that it was not the outcome of that case that concerned us but rather that it could happen. He argued then that the attitude of the Daily Mirror was to the advantage of the newsagents. That is not our concern. The concern, rather, is that such a position could arise as the result of the Act—a position in which the Daily Mirror could reduce the terms, could in effect dictate them, and in which the agents, when they tried to take combined action, to do what they believed they could do and what they had always done, found that they were unable to do so because of the attitude of the courts.
  There is now at this stage no reason to suppose that the situation will alter unless the Act is amended. Thus, the retailers are without any sanction whatever—that is to say, against the manufacturers or against the wholesalers. This is due, in part only, to the practice whereby manufacturers dictate terms. It is also due, I acknowledge, to the system of distribution of newspapers in this country.
  I must not go into detail, but the right hon. and learned Gentleman knows what I am talking about. The country is divided between the wholesalers. Every district will have one wholesaler, or at most two. There is no competition between them. A newsagent is entirely at the mercy of the wholesaler—now and then, literally so. That is to say, if he falls out with his wholesaler, he is without supplies. That has happened. The wholesalers do not intrude on each other's territory.
  Therefore, a newsagent cannot look to the wholesaler next door for his supplies. It has happened that an agent when deprived of supplies has nevertheless sought them elsewhere but has had to travel a very long way to get them. He could not go next door for them. Therefore, in practice, the retailer cannot obtain alternative supplies. He has no redress in law because the local wholesaler is not a "preponderant supplier". The retailer has no one with whom he can effectively bargain without combining. He can make no compensatory arrangement under the gateway as drafted. Section 21(1)(d) of the 1956 Act has given

  1605
  rise to the third problem. It will be recalled that the Act provides that a restriction may be justified if it can be shown that its exercise is required, "to negotiate fair terms". The courts have held, in applying this section, that it must be shown that terms which have been offered are unfair. This, I submit, is an impossible burden of proof in real life.
  8.15 p.m.
  In any bargaining position it is extremely unlikely that the terms proposed by either party could be called unfair, though they may be completely unsatisfactory. For example, we could have a situation in which a 1½ per cent. increase is being sought and a 1 per cent. increase is offered. It may be difficult, or impossible, to show that 1½ per cent. is fair but 1 per cent. is unfair to the satisfaction of the court. It is clear that the intention of the gateway was to provide for a parity of bargaining position rather than that the court should concern itself with the actual terms to be negotiated. New Clause 9 is designed to this end.
  These problems could be settled fairly and justly without prejudicing the Government's policies by altering the gateway in Section 21(l)(d). At least a start could be made by accepting new Clause 9.
  I recognise and understand the Government's reluctance to open these gateways or to add to them for fear that it would make inroads into the 1956 Act. I hope that the Government will equally recognise and understand that the new clause and my general argument are intended purely to rectify matters which have gone wrong in the operation of the gateways in practice. The consequences of not doing so are serious. They amount to a frustration of what was Parliament's original intention, that is, to permit combination to overcome unfairness.
  Section 6(7) of the 1956 Act says that where recommendation is made the Act shall apply as if the trade association constitution contained an instruction to all members to comply. New Clause 12 says that a trade association shall have the right to apply to the court for relief where the provision of Section 6(7) would put trade association members at a disadvantage.
  I want briefly to offer a couple of illustrations of what I am getting at. A trade
  1606
  association such as, say, the Newsagents Federation, may have an order against it as a result of a group of members agreeing not to handle newspapers, say, at Christmas time. There is agitation on this matter again and again, so this is a live example that I am offering to the House. The effect of the general order applying to all members would mean that the monopoly suppliers can decide, if they wish, to publish newspapers on, say, Good Friday. The retailers are unable to resist collectively, while if they resist as individuals the supplier can deny them supplies for ever more.
  This is yet a further instance of the frustration of what was Parliament's original intention, to permit combination in order to overcome unfairness, whether in respect of small traders, small firms, or trade associations such as the National Federation of Retail Newsagents, or the Co-operative movement. My hon. Friends recognised this in the Committee proceedings and I want to pay them tribute. I sincerely hope that the Government will also recognise the seriousness of the position, even at this late stage.
  Mr. Millan: I fully support my hon. Friend the Member for Sheffield, Atter-cliffe (Mr. Duffy). He has presented the case so cogently and comprehensively that there is little for me to add. He is especially concerned with newsagents. Most of us look upon the restrictive practices legislation as being essentially for the protection of consumers, of people who are not in a strong bargaining position to combat practices which, comparatively speaking, more powerful individuals and companies might otherwise adopt against them. That is basically what the legislation is about.
  It does have some consequences which paradoxically have exactly the opposite effect. These have been graphically described by my hon. Friend. There are cases in which powerful economic interests, in this case the newspaper proprietor and publisher or the newspaper wholesaler, is by this legislation accorded an overwhelming degree of superiority over the small retail newsagent in circumstances in which any action on the part of that newsagent to place himself in a more equal position is frustrated by

  1607
  the legislation. This is highly unsatisfactory. Although it obviously must be technically difficult to rectify it without driving a coach and horses through the whole of the legislation, it is something which the Government must find a way of remedying.
  The new clauses would help the position considerably. I cannot see that there can be any objection to new Clause 9 because it seeks to make effective what the original gateway in Section 2l(l)(d) of the 1956 Act was intended to do. It does not introduce any new concept or principle. It seeks simply to define it in a way which makes it effective in practice. We know that, unfortunately, at present the legislation has not proved effective. If the Minister can give me some examples of circumstances in which this subsection has worked effectively, I shall be delighted. I am not aware of any. It certainly has not worked as most of us would like to see it working for the retail newsagents.
  New Clause 12 is in a sense in rather wider terms but is basically designed to give some kind of protection to the trade association in the circumstances with which we are dealing at least to argue its case in a way which it does not have open to it at present. If the case is a bad one and cannot be proved, if the complaint of the trade association is invalid, if it is trying to impose restrictive practices which are to the detriment of the consumer, then this new clause will not help because the case will not be accepted by the court. The new clause gives opportunities for the trade association at least to argue its case in a way it is not able to do at the moment.
  My hon. Friend has dealt with newsagents but these new clauses are not specifically directed towards one section of the economy. They have a wider application. We have had representations in the last few days by the NFU on exactly the same grounds as those raised by the newsagents. The argument of the farmers is that small fanners are not individually in a position to compete with more powerful economic interests and are prevented by the legislation from banding together in trade associations or co-operatives because such action would mean that they would fall foul of the Restrictive Trade Practices Act.
  1608
  I am not so familiar with the particular practices which the NFU feels are unfairly prevented by the existing legislation as I am with the particular practices that my hon. Friend the Member for Sheffield, Attercliffe mentioned in respect of retail newsagents, but I find that the arguments of the NFU in the document it has sent us in the last few days are in every respect, in principle and in much of the detail, exactly the same as the arguments my hon. Friend has just put to the House.
  During the Committee stage of the Bill the Minister said that for agriculture he could not promise to put anything in this Bill but that there were already provisions in certain agriculture Acts which helped the small farmer in this situation, and he promised that amendments would be introduced into further agricultural legislation. Without knowing what these amendments are or what their effect would be, I am not able to say whether I think they are sensible and reasonable amendments. Obviously, the NFU has no information about what they might be and is extremely apprehensive that they will not meet the kind of case it has been putting to the Minister.
  But I see no reason in principle why small farmers should be specially pro-tected through agricultural legislation while other people in exactly similar circumstances in other branches of the economy are not so protected. If there is a case for the small farmer—and I think the NFU puts up a very strong case indeed—it seems to me that that case ought to be met as far as possible within the restrictive trade practices legislation and that the legislation should be drafted in ways which will similarly protect other small business men in exactly the same position. It seems to me to be highly undesirable that the problem should be recognised in one area of the economy and the remedy provided for pieces of legislation which refer specifically to that area alone and do not bring the benefits of the legislation to other small traders who may be in exactly the same position. If the case for the fanners is to some extent accepted by the Government, the case for retail newsagents and other small business men ought to be included and the remedies provided in this Bill.
  The two clauses to which my hon. Friend has spoken seem to go a good deal

  1609
  of the way towards providing these remedies without vitiating the general purpose of the restrictive trade practices legislation. That is why I fully support them.
  8.30 p.m.
  Mr. S. C. Silkin: I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) on the case that he made. I find myself in a slightly delicate position because such knowledge as I have of the particular industry to which he refers arises out of professional knowledge in representing one of the parties. It is always a dangerous thing in such circumstances to take part in a debate. Perhaps it is even more dangerous if, as in this case, one has stepped into the shoes of the noble Lord, the Lord Chancellor, who previously represented them.
  I do not intend to deal with the particular case but merely to draw on knowledge I have acquired in relation to the general question. There at least I can say that, if I have spent perhaps two or three weeks on a matter against the registrar, which for all I know will go on almost for ever, I spent 46 days on one case on behalf of the registrar, so the balance is very much on the registrar's side.
  The difficulty seems to me to be—and this is where I feel that this legislation shows signs of creaking and breaking down—that the original purpose of the legislation was to do precisely what the wording of the amendment suggests—that is, to try to create conditions in which there is a reasonable balance of bargaining power between those who are dealing with one another in the commercial field. That is a laudable objective.
  In a situation where there are a few mammoth suppliers and a large number of small traders, irrespective of whether there is an intermediate stage of wholesalers, inevitably the facts of life dictate that the few mammoth suppliers will be in a powerful position compared with the large number of small traders unless those small traders are able effectively to combine. That is the whole basis of our trade union system. It is exactly why trade unions became necessary.
  When we translate that into commercial terms, there may be a reasonable balance in the ordinary course of events without
  1610
  legislation such as the 1956 and the 1968 legislation, or the combines may have it all their own way, or the sheer weight of numbers of the small traders may outbalance the power of a few large combines. I appreciate that the question of balance is extraordinarily difficult. I do not feel that we have solved it. The provisions of the 1956 Act have succeeded in tying the hands of the small trader to an extent that puts him at a disadvantage compared with the large combine. I know that it is difficult to prove these things, and that circumstances vary from one industry to another. Perhaps one should not generalise too much, but I am speaking only of what I have seen.
  I have no doubt that the right hon. and learned Gentleman must be sympathetic to the general propositions that I am putting forward. I know him of old, and I know the way his mind works. If we continue in a particular industry with a situation such as I have described, almost inevitably the small trader will come to an end and there will be a greater and greater degree of vertical organisation within that industry.
  Some people may say that that is a good thing. It is a question on which my wife and I may differ when we are dealing with the weekend shopping. Is it better to go to the big super store or to the little man around the corner? Many people want the little man around the corner to continue in business, but if the system is driving him gradually out of business, and if that is the consequence of trying to balance the power between the supplier and the retailer, something has gone wrong.
  I can understand a Government—I do not say necessarily this one—having the deliberate purpose of driving out the small trader on the ground that the large combine is more efficient. If that is not the purpose, and I do not think it is the purpose, of the 1956 Act or of this Government, then, if the system is not succeeding in keeping the small trader efficiently in business, or looks as though it may not, if one can see into the future and see that his hands are gradually being tied so that he will not be able to operate, then is the time that one ought to start looking at the system again.
  It is in that spirit, and that spirit only, that I invite the right hon. and learned Gentleman to give his attention to the

  1611
  problems which I have seen arise, not merely in the industry represented by my hon. Friend but in other similar industries.
  Sir G. Howe: The House will be grateful to each of the three hon. Members who have spoken to the amendment for the careful and moderate way in which they have argued what is undoubtedly a difficult case, and one which requires attention.
  As the hon. Member for Sheffield, Attercliffe (Mr. Duffy) appreciates—as do both the other hon. Members—this was a matter to which we gave attention in Committee, not only in the debate on this point at the suit of the newsagents' federation but in the other debate that we had on the new clause moved by the hon. Member for Bedford (Mr. Skeet), which is mirrored precisely in an amendment which has not been selected today, which is coupled with the name of my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton).
  This matter obviously gives rise to concern on both sides of the House. It is fair to say that Governments of both parties have found themselves confronted with this argument at different stages and have found it equally difficult to solve.
  One ought to say, first, that the registrar, whose function it is to administer this legislation, ought not to be criticised in this context. The hon. Member for Attercliffe referred to him, en passant, in a critical way because he is in the middle of the legislation. The legislation has raised so much anxiety that one perhaps ought to look there, and therefore to us, for the solution of it.
  The hon. Member for Glasgow, Craig-ton (Mr. Millan) reminds us of the object of the legislation, which is to produce a machinery for arriving at a balance between the weak and the strong. The hon. and learned Member for Dulwich (Mr. S. C. Silkin) elaborated on that. I am sure he would be the first to acknowledge that we are really dealing with concepts on which it is difficult to arrive at just conclusions, although the courts often have to deal with fairness in some senses. Fairness in these economic balancing contexts is, first of all, difficult for Parliament to formulate in the legislation and difficult for the courts to apply. Certainly there is a common case and a common thread running through not only
  1612
  the newsagents' representations but those of smaller businesses generally.
  In Committee we had a debate in the light of the Bolton Report, and in relation to the National Farmers Union problem. The hon. Member mentioned also the Co-op problem, but although the Coop question can arise in this field, to some extent it does raise problems of a different kind, which I have discussed with several of my hon. Friends and with which we are still hoping to be able to deal, although not at this stage.
  So there is a common thread here. It may well be—indeed, I think I acknowledged as much in Committee—that we have not got the answers absolutely right, as the hon. and learned Member for Dulwich put it. Certainly I would not wish the House or anybody else to have any doubt about the importance which I attach, and which the Government attach, to the continuing rôle of the independent trader, the individual retailer, and to the value of independence in this as in any other field.
  Having said all that, and having acknowledged the reality of the problem, let me say we have looked again at the solution now propounded by the hon. Member for Attercliffe, in the two new clauses to which he has spoken today. New Clause 12 is the less easy to respond to enthusiastically, partly because it is rather wide, as the hon. Member for Craigton, put it, and partly because I fancy that the formulation suggested in subsection (2) is less apt than most for defining a justiciable issue. The concept of
  "would be at a substantial disadvantage in bargaining power"
  is not easy to translate into practical application.
  I am not sure that the proposed new Clause 9 very much alters the substance of the test, because the concept of fairness is to be qualified by the phrase
  "in conditions of substantial balance of bargaining power".
  I am not sure how far it alters the position on the three points canvassed by the hon. Gentleman.
  If it does, one fear is that it invites the possibility of substantial loopholes, of enlarging the gateway into something larger than a gateway. The difficulty is that the kind of association to which the

  1613
  gateway, if enlarged, would apply need not be one consisting entirely of small firms. It could itself be one with powerful members, and any attempt to reformulate the balance which might be suitable for a collection of "tinies" as then to be judged to see whether it applies to a collection of tinies, middles and large ones.
  Mr. Millan: If it applied to large firms as well, it is unlikely that it would add anything, because in normal circumstances they must already be in a strong bargaining position. However wide it may appear on the surface, this would in fact protect only small traders, which is the object of the clause.
  Sir G. Howe: I see the force of the point. Again, this is a matter of balance. One also has to take into account the fact that if one opens the gateway too wide, even a collection of tinies can generate enormous strength and take collective action which could tip the balance artificially.
  When we considered this matter in Committee I said that we were willing to re-examine the situation, without implying that we would find it easy to put forward a different answer. We have re-examined it, and we do not think that this proposal represents an alternative answer. The quality of the case has been emphasised by this evening's debate. In other words, the diagnosis has been underlined, but I am not sure that the prescription has been any further clarified. I cannot, therefore, advise the House to accept the clause.
  Although the case is to a greater or lesser extent common, and although the representations made on behalf of the NFU have some of the same qualities, they are, as I said in Committee, being considered by my right hon. Friend the Minister of Agriculture, Fisheries and Food. It may be illogical to distinguish them, save that it has been possible to find some solutions there in relation to certain kinds of agricultural co-operation on a more or less tailor-made basis.
  Putting that on one side, and bearing in mind what the Bolton Committee said and my opinion on that point in Committee, the newsagents' federation seems
  1614
  to be the spearhead, both forensically and intellectually, of this grievance. If the federation—or, on its behalf, representatives steeped in a combination of legal learning, sense of justice and understanding of the case put forward—wishes to have discussions with any of my officials about this matter between now and the proceedings in another place, and if the federation thinks that it has something which looks like a new shot at a prescription—I know that it discussed this 12 months ago—I should be willing to arrange for such discussions to take place. I do not want to raise high hopes, because everyone who has grappled with this has found it as miasmic as it is attractive.
  I cannot commend this set of amendments, but I make that offer to the hon. Member, hoping that he will go on living in the hope, if not the expectation, that a solution may be found to an undoubted problem.
  8.45 p.m.
  Mr. Duffy: I am obliged to the right hon. and learned Gentleman. I note what he said about the quality of the argument and his judgment that this has contributed to the diagnosis of the problem. I also bear in mind his invitation to the federation to continue to search for an appropriate prescription. I am grateful that he expressed his willingness to await representations between this stage of the Bill and the occasion when the matter is again raised in another place. I beg to ask leave to withdraw the motion.
  Motion and clause, by leave, withdrawn.

Clause 1

  DIRECTOR GENERAL OF FAIR TRADING
  Sir G. Howe: I beg to move Amendment No. 1, in page 2, line 12, leave out 'officers and servants' and insert 'staff'.
  Mr. Deputy Speaker: With this amendment it will be convenient to discuss Gov-enrment Amendments Nos. 74, 75, 76, 78, 83, 84, 86, 87, and Government Amendments Nos. 91 to 97.
  Sir G. Howe: That is agreeable, Mr. Deputy Speaker. In Committee an amendment was moved by the hon. Member for Fife, West (Mr. William

  1615
  Hamilton) to replace "officers and servants" with the curious phrase "personnel", and the Opposition wanted to replace "officers and servants" by the phrase "staff". We responded to that suggestion, and therefore the phrase "officer and servants" is replaced by the word "staff". That is the pattern of all these amendments, and I hope that they will be accepted.
  Amendment agreed to.

Clause 2

  GENERAL FUNCTIONS OF DIRECTOR
  Sir G. Howe: I beg to move Amendment No. 2 in page 2, line 20, at end insert:
  'so far as appears to him to be practicable from time to time:

  (a) to keep under review the carrying on of commercial activities in the United Kingdom which relate to goods supplied to consumers in the United Kingdom or produced with a view to their being so supplied, or which relate to services supplied for consumers in the United Kingdom, and to collect information with respect to such activities, and the persons by whom they are carried on, with a view to his becoming aware of, and ascertaining the circumstances relating to, practices which may adversely affect the economic interests of consumers in the United Kingdom, and

  (b) to receive and collate evidence becoming available to him with respect to such activities as are mentioned in the preceding paragraph and which appears to him to be evidence of practices which may adversely affect the interests (whether they are economic interests or interests with respect to health, safety or other matters) of consumers in the United Kingdom.

  (2) It shall also be the duty of the Director, so far as appears to him to be practicable from time to time'.
  Mr. Deputy Speaker: It will be convenient to take with this amendment the following:
  Amendment (a) to Amendment No. 2, in line 9, leave out from first 'the' to end of line 15 and insert:
  'interests of consumers in the United Kingdom (whether they are economic interests or interests in respect to health, safety or other matters)'.
  New Clause 6—Dangerous Goods Unit.
  Government Amendment No. 3, Nos. 6 to 9, Nos. 13 and 14, No. 16, and Nos. 18 to 20.
  1616
  Amendment No. 22, in Clause 14, page 11, line 44, after 'economic', insert 'health and safety' and Government Amendments Nos. 72 and 73.
  Sir G. Howe: This is an important group of amendments, the central one being Amendment No. 2, which makes a substantial change in Clause 2.
  The effect of this group of amendments is to change and extend the rôle of the Director General to give him a wider sphere of responsibility so that not merely can he keep under review what used to be described as "consumer trade practices" in this clause so far as they affect the economic interests of consumers, but so as to place upon him a duty, although a discretionary one, to have regard to the consequence of trade practices which affect not only the economic interests of consumers but also matters of health and safety. That is the broad effect of the changes made by this important group of amendments.
  If I may now expound the way in which the amendments sit alongside each other, Amendment No. 2 replaces Clause 2(1)(a) as originally drawn with the longer formulation which I shall explain in more detail in a moment, and which is the operative provision amongst all these. Amendment No. 3 removes the old Clause 2(l)(a). Amendments Nos. 6 to 10 are drafting, consequential amendments. Amendment No. 6 removes the words "from time to time" to which, my recollection suggests, the hon. Member for Fife, West (Mr. William Hamilton) took exception.
  Amendment No. 13 makes a slightly different change in the provisions of Clause 4. That widens the qualifications for appointment to membership of the Consumer Protection Advisory Committee. Amendments Nos. 14 and 16 are consequential upon that.
  Amendments Nos. 18, 19 and 20 redefine the powers of direction contained in Clause 13 to take account of the disappearance of consumer trade practices from Part I. Amendments Nos. 72 and 73 amend the powers to publish information and advice also to take account of the disappearance of consumer trade practices as a concept from everywhere except Part II.

  1617
  It is in relation to that group of amendments that the Opposition table their Amendment (a), their new Clause 6 and their Amendment No. 22. The provisions of Amendment (a) and Amendment No. 22 are substantially the same in their intention, and I can focus the argument by looking at these alongside what the Government amendment does.
  By the main amendment in relation to Clause 2 we are removing Clause 2(l)(a) which as originally drafted placed upon the Director the duty to keep under review consumer trade practices with a view to his becoming aware of and ascertaining the extent to which they might adversely affect the economic interests of consumers in the United Kingdom—and no more. That is now replaced by a twin-headed, double-barrelled duty as contained in Amendment No. 2. From now on he will be able to keep under review the carrying on of commercial activities, which is a wider concept than consumer trade practices, in the United Kingdom with a view to his becoming aware of and ascertaining the circumstances relating to practices which may adversely affect the economic interests of consumers in the United Kingdom. It is his primary duty to keep under review, to look out for, to hunt, practices which can work adversely to the economic interests of consumers.
  What has been included as well is contained in paragraph (b) in Amendment No. 2: a duty, so far as appears to him to be practicable, to receive and collate evidence which comes his way with respect to commercial activities which appear to him to evidence practices which can affect interests other than economic; in other words, evidence which makes him aware of practices which, can adversely affect the interests of consumer whether in relation to health, safety or other matters.
  The substantial change urged upon the the Government in Committee was to broaden the remit within which the Director General can operate. That has been done. His duty to conduct active search for adverse effects will still be confined to effects upon economic interests, but he is now given the additional specific duty—again discretionary—of receiving and collating available evidence about commercial activities
  1618
  which show non-economic harm to consumers. That additional duty will encourage the submission to him of suitable evidence about those matters.
  Alongside that duty will continue his duty, under Clause 2(2), to give information and assistance and to make recommendations for action by the Government, but it is now widened to relate to all commercial activities, whether economic or non-economic, and their effects on consumers. For example, the Director General will now be able to make recommendations to the Secretary of State for Government action on health and safety and economic matters that were not previously covered. So there is a substantial widening of the areas within which he will be able to operate.
  I hope that in that sense the amendments will be regarded as implementing the undertakings that we gave in a series of debates in Committee.
  We must understand the limits of what is practicable. The Director General will have to use his resources sensibly and economically and concentrate first on those areas where he can act effectively without duplicating the work of others. His principal work will be to keep under review matters on which he will be able to initiate action generally by means of the Consumer Protection Advisory Committee. However, information will inevitably come his way about, for example, the availability of spares, the adequacy of servicing facilities, and non-economic matters relating purely to health and safety. He can react there by making suggestions and recommendations to other Government agencies and Ministers. This is what we undertook to enable him to do.
  To require the Director General to begin propounding specific proposals, to begin duplicating the functions of the highly specialised agencies which are available, for instance, to the Department of Health and Social Security or the Ministry of Agriculture, Fisheries and Food, would be to require him to take on an impossibly large task. However, he can react to matters which come to his attention. I think this is what hon. Members on both sides of the Committee wanted. If he sees a prima facie case for action outside the old consumer trade practice type of concept, he can draw the

  1619
  attention of the appropriate Minister to it and make sure that it lands on an appropriate ministerial plate where the expert advice will be better qualified, because of advisory committees and expert staff, than that which the Director General will have available to himself.
  The difference between that approach and the approach commended by the Opposition is that they would wish to give him mandatory duties of a wider and more specific kind relating not only to economic matters, but to health and safety. To do that would be to impose upon him an impossible duty.
  To accept Amendment No. 22, which seeks to extend the remit of the Consumer Protection Advisory Committee outside economic matters into health and safety, would be to place on that committee a wider range of responsibility than it would be equipped to handle and to place it in the position of duplicating the function of the many comparable specialist committees which advise the other Ministers to whom I have referred. We believe that we have the balance about in line with the balance of the argument as it developed in Committee.
  We believe that by making these changes we extend and enhance the responsibility and the rôle of the Director General. He will be there as an active and pursuing watchdog of the interests of the consumer on economic matters. He will also be there as a watchdog who keeps his eyes open in relation to matters of health and safety. If he sees a non-economic health and safety bone he should pursue that in relation to these matters. He will be able to put the bone in front of the kennel of an appropriate Government agency for another watchdog to deal with it, if that is not stretching the metaphor too far. I believe that the Government proposals represent that correct balance in the duties of this new and important public official.
  9.0 p.m.
  Mr. Arthur Davidson: I do not wish to be churlish. I accept that the right hon. and learned Gentleman has fulfilled substantially the undertaking which he gave in committee to extend the duties and powers of the Director General to investigate not only those activities affecting the economic interest of the consumer but also those affecting
  1620
  other interests, particularly health and safety interests.
  None the less, I am a little disappointed in the Minister's statement. I always suspect twin-headed and double-barrelled animals and the right hon. and learned Gentleman said that this clause was a twin-headed and double-barrelled animal. Perhaps I am a little dense tonight, but I cannot see why the Director General should have the power, in the phrase of the right hon. and learned Gentleman, to keep under review, look out for, hunt and actively search out activities which affect the economic interest of the consumer. Presumably the rôle is much more passive regarding those activities affecting merely the safety and the health of the consumer. On the one hand in amendment (a), which is the first of the twin-headed and double-barrelled animals, the Director General has the duty to keep under review the carrying on of commercial activities, whereas in the second twin-headed and double-barrelled animal, amendment (b), he receives and collates evidence which is becoming available to him.
  I do not see why there is any need for this twin-headed and double-barrelled animal at all or why the powers of investigation and searching out of malpractices which affect the safety and health of the consumer should be any less than the Director General's powers actively to look out for and to hunt those practices which affect the economic interest of the consumer. I am not being unnecessarily churlish, but I would like the right hon. and learned Gentleman to explain exactly why the powers in respect of health and safety should be even slightly less than the powers affecting the economic interest of the consumer.
  There have recently been two very disturbing reports of practices in this country affecting the economic health and safety of the public. First of all, we had the scandalous practice detailed in the AA report about the lack of safety of so-called safety harnesses. The report said that it was less safe to use one of these harnesses than not to use it at all. That is something that the Director General should be able not only to receive and collate information about but to hunt and actively search for.
  We also heard recently of the equally scandalous practice affecting the health

  1621
  of the consumer in regard to faulty tyres which were intended to be sold for agricultural use but which somehow or other found their way to the cars of consumers. The consumers not only could have suffered a health hazard but could well have been killed. That is a practice which the Director General should actively search out and make a recommendation about.
  If the public are to have complete confidence in the decisions of the Director Genera!—I am sure that they will have confidence in him—it seems unnecessarily legalistic to appear to downgrade the importance of health and safety as effecting the consumer and give the impression that his economic interests are more important.
  However, I am glad to see that the Director General will have wide powers to investigate those practices which affect the consumers' economic interests. I approve thoroughly of the Minister's approach in widening the economic approach to all commercial activities. That is a very important step. I am particularly glad to see that services are included, as they were in the original Bill. The vast majority of county court cases connected with consumers involve services. Most complaints are about central heating installation.
  The time might come when it will be necessary for the Director General or someone else to suggest that those who are offering services to the public should be registered as such. At the moment, the public suffer because, whereas most goods can be bought openly and tested, and one can shop around—if one does not like the goods one does not buy them—the same does not apply to services.
  Sir G. Howe: I do not want to disturb the hon. Member's line of argument, but I would point out that services and goods were both included in Clause 2 as it was originally.
  Mr. Davidson: I said that.
  Sir G. Howe: I thought that he was proceeding on the assumption that we had brought in services for the first time.
  Mr. Davidson: I specifically said that I accepted that services were included in
  1622
  the original Bill. I want to mention this point because of the investigations that I have made into the number of cases initiated in county courts in respect of consumer complaints. Almost all of them come in respect of services and not goods. Most people who want central heating installed or some building or plumbing work done get the details from the yellow pages. I am not criticising the yellow pages, which are a valuable service, but those who print them cannot check on the good workmanship or otherwise of the advertising firms.
  The time has come when those who offer services to the public should have to register with some central body. If, after a certain time, there has been a number of complaints to the fair trading officers, as now the weights and measures inspectors will be called, their names should be taken off the register. Through a period of probation they must then prove that they are fit to offer themselves as offering services to the public.
  I make that suggestion because the Director General will find that he will be getting very many complaints about services. At present there is no way of finding out whether the services are good or bad until they have been provided. The time has come when there should be some body which can officially substantiate the bona fides of the person offering those services.
  Nevertheless, I welcome very much the right hon. and learned Gentleman's statement and the new clause. It would have been better if economic and safety interests had been lumped together, but I do not want to object to it.
  Mrs. Sally Oppenheim: I address my remarks in support of the Government's drafting amendments to Clause 2 and the consequential amendments. Although I commend much of what was said by the hon. Member for Accrington (Mr. Arthur Davidson), I think that he is mistaken in his interpretation of the proposed new subsection 2(1)(b). If he is not mistaken, then I am. That will no doubt come out in the wash as I proceed.
  In Committee we were breaking a good deal of new ground, and naturally a great deal of discussion centred on the significance of Clause 2 and what used to be Clause 3 in the achievement of the full

  1623
  potential of the Bill. There was a great deal of community of interest on both sides of the Committee with this end in view. We had some wide-ranging and mainly constructive debates, with the exception of the odd tantrum about the possible shortcomings of Clause 2 and of the interdependence of subsequent clauses on the definitions contained in that clause.
  We got off to a rather bumpy and time-consuming start, in which it was finally established—once and for all, I hope—that prices are not a consumer protection issue, the edges of that issue having become slightly blurred by my right hon. and learned Friend wearing two caps simultaneously as Minister for Trade on the Floor of the House dealing with counter-inflation measures and as Minister for Consumer Affairs in Committee dealing with this legislation. I cannot resist saying that we specifically did not recommend this in a "Square Deal for Consumers." However, due to his ability, we were quickly in the air, as it were, and dealing with the central problem in Clause 2, which was concerned with the broadening of the remit of the Director General of Fair Trading.
  The two arguments which seemed to be advanced were those referred to by my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor) this afternoon in dealing with new Clause 3. Possibly we could have had a more constructive debate on that clause if we had been able to deal with the drafting amendments to Clause 2 previously. The main arguments were that, on the one hand, one could widen the definitions in Clause 2 so as to exclude by implication anything that was not specifically mentioned, or, on the other hand, one could narrow them and become so specific as to exclude, by over-specification, things which we would want the Director General to do. Those arguments, carried to a logical conclusion, are completely self-defeating.
  What we were really discussing then was how far the remit of the Director General should be broadened and how many of the matters which we would want him to investigate, to refer, to research and to make recommendations upon were possibly being excluded by the existing definitions in Clause 2. Because Clause 2 is the king-pin of the Bill, con-
  1624
  taining the background definitions on which interpretation of the function of the Director General in subsequent clauses depends, we had to have a wide-ranging debate on the breadth and scope which should be afforded to the Director-General. So inter-related are the subsequent clauses in their dependence on the definitions in Clause 2 that one could almost say that the clause alone is essential to the effectiveness of the Bill as a consumer measure.
  My right hon. and learned Friend the Minister listened very carefully to all the arguments that were advanced and he said that when he felt that valid points had been made he would seek to meet them in drafting amendments on Report. I believe that these amendments substantially meet all of the objections that were put forward from both sides of the Committee, that they improve the clause substantially and that as a result they improve the subsequent clauses which are dependent upon Clause 2.
  9.15 p.m.
  Much as I welcome the amendment, when my right hon. and learned Friend referred in an earlier debate to stitching and unstitching of the Bill, I cannot help feeling that some amendments are not so much concerned with unstitching or redrafting as in some cases with weaving and unweaving and even with darning. To be fair my right hon. and learned Friend had to steer a careful and balanced course so as not to widen the Director General's functions to such an extent as to place an impossible burden on him but at the same time to give him enough scope where necessary.
  The problem of redrafting need not have been so complicated if all the functions of the Director General dealing with consumer protection in the Bill and all the definitions concerning consumer protection could have been consolidated in one part of the Bill. Obviously as the Bill was drafted this was not possible but had it been the case it would have been easier to relate and clarify all the functions and duties of the Director General in consumer protection matters. However, I accept that a great deal of unstitching has gone on and that many of these aspects are now consolidated in Part I.
  However I entirely accept that the four main functions of the Director General are separate and should be treated as such.

  1625
  The first of the functions concerns those matters which he should keep under continuing review. The second concerns those about which he should have regard to and receive evidence and refer to the CPAC for research and report and finally refer to the Secretary of State with recommendations for legislation or for order making. Third come those matters on which he can take action in the Restrictive Practices Court, and fourth, the matters on which he has a duty to publish reports on his findings and to make recommendations and give advice.
  It is the first two of these functions which are principally and differently affected by the amendments. In the case of the proposed subsection (1)(b), which removes the qualifying limitation with regard to the economic interests of consumers in relation to the definition in the old Clause 3 of a "consumer trade practice", with regard to matters referred to in proposed Clause 2(1)(a). He has a duty to receive evidence, to refer it not necessarily to the CPAC but to the Secretary of State, if he feels that action is needed, and to collate evidence. After investigation of that evidence once again he will refer directly to the Secretary of State.
  I remember this point being raised in debate. My hon. Friend the Member for Merton and Morden (Miss Fookes) asked him to answer in one word—because he had lost his voice at that time—and the answer was "Yes". That was his specific undertaking on health and safety, and we withdrew our amendment on the undertaking that the Director General would be able to investigate and report directly to the Secretary of State. We thought that was an improvement on the necessity of always referring it to the CPAC first for investigation. On the whole I welcome the word "collate" in these redrafting amendments as much as anything else, because—and I now deal with the point which was made by the hon. Member for Accrington—we hope that there will be better co-ordination, which is lacking at the moment, on matters concerning the health and safety of consumer products. I hope that the present vacuum will be filled by the Director General's collating duties. I intend no criticisms of the Ministers concerned and no criticism of the servants of the Departments. I criticise the policy
  1626
  of successive Governments which has failed completely to co-ordinate matters concerning the health and safety of consumer products.
  The Home Office does not have quick enough access to figures relating to the health and safety of consumer products which are collated by the Department of Health and Social Security. I understand that the Department of Trade and Industry has access to either. This net extends as far as the Department of the Environment—namely, in the case of safety harnesses which the hon. Member for Accrington mentioned.
  There is considerable evidence of non-co-ordination on these very important matters. I hope that "collation" and reference to the Secretary of State will improve the situation. Co-ordination could be improved even further by deleting "Secretary of State" throughout the Bill and substituting "Minister for Trade and Consumer Affairs". I resisted the temptation to table such an amendment because of my right hon. and learned Friend's dual responsibilities. I felt that it would not be fair to him. On the other hand, I welcome the word "collate" in relation to the assurances that my right hon. and learned Friend gave in Committee during the debate on the amendment tabled by my hon. Friend the Member for Cathcart and me about setting up a network of consumer advice centres, that we might expect the establishment of such centres in the not-too-distant future. Naturally the evidence that would go to the Director General through the centres from the consumer in the High Street would be of the greatest value and would in that way constitute a form of co-ordination.
  Mr. Arthur Davidson: I am grateful to the hon. Lady for the tremendous effort she has made to try to explain these matters to me. However, she has not quite got it yet. If I may say so, I hope she gets the argument very soon. If the powers of the Director General are to collate information from various Government Departments or to remit that information to the various Government Departments, we are in danger of keeping the multiplicity of Departments which, in itself, is bad for the safety of the consumer. We should have one Department concerned with safety and not a

  1627
  myriad of Departments with many Departments not knowing what is going on in other Departments.
  Mrs. Oppenheim: I thought that I had met the hon. Gentleman's point by saying that there should be one co-ordinating Minister and not necessarily a Department. Proposed Clause 2(1)(a) keeps to the restriction of economic interests of consumers in relation to those matters which the Director General must keep under continuing review. It would be unrealistic and counter-productive to do otherwise. It would place a completely superhuman burden on the shoulders of the Director General.
  If there is a "poor relation" it is Clause 2(l)(a), not 2(l)(b) because the Director General has not quite such a direct approach to the Secretary of State under Clause 2(1)(a) as he has under Clause 2(1)(b). The importance of proposed Clause 2(1)(a), which was dealt with in new Clause 3, is the removal of the old and objectionable definition of consumer trade practice which is now deleted and replaced by a much broader definition. That meets the points which were made in Committee and in the debate on new Clause 3 that there is a proliferation of consumer practices, which could not accurately be described as consumer trade practices are now drawn within the ambit of the Director General, proposed in Clause 2(1)(a). I hope that that will be welcomed by all hon. Members.
  I am not sure, following the redrafting, restitching and redarning—perhaps my right hon. and learned Friend will tell me—whether Clause 2(3) will remain or whether, as he suggested in Committee, reported in col. 415, this is now deleted so as to give the Director General even wider scope. If that is so, I welcome it. I also welcome the fact that the Director General is given discretion for the first time in the amendments to exercise his judgment and ability in the interests of consumers, and that he is credited with the ability to do so.
  So I have no hesitation in commending the Government's amendments. They are the fruits of long and constructive debate in Committee. They bear witness to the patience and understanding of my right hon. and learned Friend and my hon. Friend the Under-Secretary of State. They vastly improve and extend the infra-
  1628
  structure of the machinery set up under the Bill for the protection of consumers and should be welcomed by the House and by consumers throughout the country.
  Mr. Leslie Huckfield: I cannot help feeling that the hon. Mmber for Gloucester (Mrs. Sally Oppenheim) has given some of the best arguments in favour of Amendment (a). That was certainly my impression.
  I did not serve on the Standing Committee, but no hon. Member can fail to take an interest in its proceedings. Those of us who have regular constituency surgeries and big post bags have to take account of all the complaints we receive, particularly under the general heading of "fair trading". I welcome the fact that the right hon. and learned Gentleman has gone some way to meet the points made by the Opposition in Committee, but I still think that he is doing a bit of buck-passing.
  Does the right hon. and learned Gentleman think that all health and safety matters can be dealt with by the agencies which already exist? My hon. Friend the Member for Accrington (Mr. Arthur Davidson) has already produced two examples—child seat safety harness and the "horse and buggy" tyres imported from France—which cannot be adequately coped with and dealt with by any existing agency. These examples and others are evidence that existing agencies and parts of the departments to which the right hon. and learned Gentleman wants to pass on complaints are not working effectively.
  The main burden of what I want to say concerns the garage trade and the motorist. I speak from no other interest than that of a motorist and as a Member who has received a steady stream of complaints about garages and garage servicing. The problem is very serious and I do not think that it is adequately dealt with by the Government's amendments. If they can deal adequately with some of the points I intend to raise, I shall be glad, but my reading of them is that they do not do so.
  In October 1970, Which, the journal of the Consumers Association, did a comprehensive survey of garages and concluded:
  "Your car is very probably being neglected by your garage. There must (we hope!) be

  1629
  better garages than we found, but out of the 47 we tested not one did a complete service."
  In a further experiment two years later, Which conducted exactly the same tests, but this time with even more advanced and sophisticated equipment. Reluctantly, it had to come to the same conclusion, and reported last October:
  "After publication of our 1970 report we hoped that the firm factual evidence in it of dangerously low garage servicing standards—and the MAA's acceptance of that evidence—-would provide impetus enough for the improvements that were needed. Our tests for this report have dashed those hopes."
  Criticism seems to be part of the way of life of the garage trade. Nothing I have heard emanating from the Bill or from the Government seems to be about to do anything serious about the situation. It is even more serious because, as I read it, the Supply of Goods (Implied Terms) Act will not help the situation much either. While the regulations that the hon. Gentleman is talking about, and while the economic interest of the consumer may certainly have a bearing on some of the health and safety aspects of work that garages do, I think that many of the complaints which will be raised by consumers about garages cannot be subsumed under the general heading of economic interests.
  The fact that the Director General has a duty only to collect information and not to carry out the kind of prodding rôle which he will have in the economic sphere leaves a severe defect in this legislation.
  We have a situation now in which if a motorist has bald tyres on his car, that is an offence. If a motorist has windscreen washers which do not work, that is an offence. If he has lights which do not work, even during the day, that is an offence. On the other hand there is still no legislation which prevents any Tom, Dick or Harry down at the local garage,—a completely unqualified and untrained man—being let loose on a car which will be carrying the lives and safety of an individual.
  We have here one of the most regulated industries in the country, fortunately for the consumer. But once he takes his car into a garage to be serviced, there is hardly any legislation. It could be claimed that Clause 3 defines trade practices and that Clause 17 defines the orders.
  1630
  What I am concerned about—and am still not happy with is that in the amendment which the right hon. and learned Gentleman has proposed—standards of service are not adequately covered. We shall not have the Director General being able to deal adequately with standards of service.
  I consider that adding the remit of health and safety—particularly safety—to the Director General's terms of reference would be the best way of somehow covering the garage industry. I do not think that it will be covered adequately in the Bill otherwise and I do not see it being covered adequately by the Supply of Goods (Implied Terms) Bill. Despite the fact that we have a very roundabout and buck-passing and "further consideration" approach in the Bill whereby the Director General, the Consumer Protection Advisory Committee and the Secretary of State all have to do something before orders are made, and despite the fact that we have a series of checks and balances right down the line, in the Bill which is quite weak in some ways. The Motor Agents Association is even calling it "Big Brother". If it is calling something like this "Big Brother", goodness knows what it would call really tough legislation.
  I suppose that it could be said that Clause 3 provides a fall-back when garages wantonly break contracts and wantonly go out of their way to offend. It could be said also that Clauses 3 and 17 provide some indirect remedy in that they may help to sort out some of the tangled relationships between garages and suppliers. But even if the complicated warranty arguments between garages and suppliers which affect the safety aspects to which I have referred, even if some of the warranty arguments between manufacturers and suppliers, which I am convinced are at the root of a great many complaints, could be dealt with by Clauses 3 and 17, I am still not satisfied that the garage trade would be covered adequately or that the motorist could feel encouraged by this piece of legislation.
  We now have a competitive situation between manufacturers, with the Japanese, the Germans and the French sometimes putting hefty pressures on their distributors. Under these kinds of pressure sufficient margins are often

  1631
  not provided for warranty work. I hope that the right hon. and learned Gentleman will say something about the warrants argument, and state whether this could be examined adequately by the Director General.
  The Motor Agents Association has nibbled around the problem. I will not say that individually it does not sincerely want to do something about it, but collectively the fact is that the association and the retail trade has not done much. It is now talking about a national Quality and Reliability Council which will be the successor to its so-called Fidelity Bond scheme, of which many of us as constituency Members have had experience.
  I am far from convinced that just by setting up an office with plush carpets, manned by a couple of dolly birds, to answer motorists' complaints will prod the garages—and they do need some prodding. What is needed is an extension of the kind of testing that Which has been doing, an extension of the kind of testing which the AA has just started doing. Why could not the Director General or even the right hon. and learned Gentleman, since he is responsible for consumer affairs, examine the possibility of the State-run garages extending their activities? For example, all of the passenger transport authorities created under the 1968 Transport Act have the power to extend garage services. Why does the right hon. and learned Gentleman not examine the possibility of the extension of the MOT testing scheme? That test does not mean much once a car has been through it.
  I would have thought that the right hon. and learned Gentleman had some pretty good weapons within the existing regulations if he wished to extend Government surveillance into the garage industry. This is what is needed. Why cannot he or the Director General examine the possibility of setting up a system of State-licensed machanics as they do in Australia? After all, if we have State Registered and State Enrolled nurses, and there may be a parallel in the dim and distant past, why cannot we have a system of State registered mechanics?
  Above all, why does the right hon. and learned Gentleman or the Director General not have a look at the pitifully poor wages paid in the garage trade?
  1632
  Fortunately my union—the Transport and General Workers Union—is still increasing its membership. But the situation has now been reached in which anyone who wants to become an apprentice mechanic in the garage industry is almost looked down upon by his fellow school-leavers. This is a serious situation and I welcome the fact that the right hon. and learned Gentleman in extending some of the Director General's powers has brought it a little bit more within the remit of this Bill.
  There is a long way to go before I am satisfied that the Director General, because he can only pass on health and safety matters, will be able to consider the situation adequately. Take, for example, the approach now being adopted by the AA in setting up vehicle inspecting stations at Basingstoke and West Brom-wich. I saw the one at West Bromwich last Friday and put my own car through it. I was impressed by the kind of pressure that this is now exerting on behalf of the consumer.
  What is happening now is that before people take their cars to a garage they are putting them through the AA scheme to see what is wrong and after the garage has allegedly done the repairs they are putting them through again just to make sure. The motorist has to be his own foreman and checker. That is perhaps the sort of thing that the Director General or the right hon. and learned Gentleman should encourage. We have had report after report lambasting the garage industry. Still the situation does not improve. It gets worse because the quality of the apprentices entering the industry is becoming poorer. The money is not good enough. The Minister cannot afford to ignore this. It is a serious complaint echoed by the 13 million licence holders in the country. That number will have increased greatly by 1980. It is not going to be tackled adequately by an expansion of the Automobile Association's "spanners" scheme. It is not going to be tackled adequately, I think, by the present Ministry of Transport vehicle inspection scheme.
  Why, for example, can we not have a look at the Swedish system, where the Government, the insurance companies and the garages jointly own a company and publish reports on the vehicles they have inspected?

  1633
  If we really want to get to the heart of the safety situation, if we really want to regulate this, I suggest to the right hon. and learned Gentleman that either he or the Director General ought to be thinking very seriously of an expansion of the surveillance and supervision of the State, either by the ownership of these services or at least by the licensing of those who provide these services. I am afraid that the garage industry, left to itself, just does not seem capable of doing all that much about the situation.
  If the right hon. and learned Gentleman cannot entirely convince me about some of the health and safety aspects I have raised tonight, can he at least convince me that there is sufficient power for the Director General to examine this very complicated warranty argument which exists between the manufacturers of cars and the distributors? I am convinced that that warranty argument is at the base of a great deal of the criticism which is levelled at the garages which service cars, especially new cars.
  Finally, if the right hon. and learned Gentleman can tell me tonight that in some way most of the complaints I have made are in fact encompassed by the rôle of the Director General, I for one shall be pleased. But as I see it, despite the expansion of the Director General's remit for collecting more information, I am still not satisfied that the Director General is yet the power I would like to see him be in prodding the garage trade and getting something done for the consumers.
  Mr. Skeet: It is apparent to me that the Director General is going to receive a welcome accretion of his powers. I hope he will serve the community and not unduly harass the industry. The appointment of the man in question will be of considerable interest to all. He must be a man of the highest calibre, fairness and impartiality to deal with all the matters which are now considered to be within his powers.
  The point I have in mind has been mentioned in the Economist for two or three weeks now. It is that the oil sheikhs in the Middle East and Saudi Arabia are collecting very considerable revenues and that by 1980 Saudi Arabia is likely to have capital reserves of $30 billion, far exceeding the reserves of
  1634
  Western Germany today. The Middle East States are interested in downstream activities and they could acquire a company of the size of Exxon Inc. or General Motors in one year.
  If this is going to apply to the United Kingdom, as it could, enormous companies could be taken over, companies which have a direct bearing on the interests of consumers. I dare say the Minister is following these events but I would like to ask him whether in his judgment, when the Director General is given powers to keep under review the carrying on of commercial activities in the United Kingdom which relate to goods supplied to consumers, if this did have a detrimental impact on the consumer it would come within the Director General's remit.
  If this is the case, these things should be seen well in advance. This is a danger to which we shall be exposed. The Economist has foreseen this and many people with vision have been able to indicate the danger involved. Therefore, would like to hear from my right hon. and learned Friend whether he considers that the acquisition of considerable investments in the United Kingdom which could lead to anomalies and trends which are detrimental to consumers can be considered to be within the Director General's powers.
  Finally, as there has been a re-jigging of Parts I and II and consumer trade practice is now dealt with in Part II, I hope that the Director General will be a man of considerable independence. He will need to be detached from politicians, from this House and from the Government to be able to do his job thoroughly, properly and impartially.
  9.45 p.m.
  Mr. Edward Lyons: In Committee the Opposition were keen on ensuring that it should be mandatory upon the Director General to do the job that the Bill sets him up to do. Clause 2 as it came from Committee contained the phrase:
  "… it shall be the duty of the Director … to keep under review …"
  In Committee great stress was laid on the fact that it should be his duty to keep trade practices under review and that he should have no discretion in that matter.

  1635
  The new clause, which was heralded as being a great extension of the Bill, entirely withdraws that duty—so far as I know without a word of explanation. The words now used are:
  "… so far as appears to him to be practicable from time to time … to keep under review …"
  The cardinal clause in the Bill no longer obliges the Director General to do anything which he does not wish to do. That is a sweeping alteration for the worse. The alteration is being made under the general guise of extending the Director General's powers to take into account health and safety practices. It is no wonder that the Government make great play of extending, in response to popular demand—in particular that of the Opposition—the Director General's powers when at the same time new Clause 2 empowers him to do nothing at all.
  Paragraph (b) of the amendment uses the words—
  "… to receive and collate evidence"
  —but those words are governed by—
  "so far as appears to him to be practicable from time to time".
  He is, therefore, entitled to refuse to receive evidence and to refuse to collate it. The Government are saying to the Director General," We have to placate our critics who say the Bill does not go far enough, but we leave it to you, old boy, to refuse to do anything you would rather not do."
  Originally under Clause 3 attempts to deliver goods or to provide services which were not ordered came within the definition of "consumer". That definition has now been deleted.
  Mrs. Sally Oppenheim Mrs. Sally Oppenheim indicated dissent.
  Mr. Lyons: In Section 3(2) "consumer" was defined——
  Mrs. Oppenheim: With respect, "consumer" is defined in Clause 125.
  Mr. Lyons: In the original Bill?
  Mrs. Oppenheim: As amended.
  Sir G. Howe: The amendment was made this afternoon before the hon. Gentleman arrived.
  Mr. Lyons: I apologise. I was misled by a letter which the Minister was so
  1636
  kind as to send me on 14th May, saying that rather than leave the definition of "consumer" subject to any ambiguity he would prefer to remove it. I have that letter before me, signed by his Undersecretary, saying that the definition of "consumer" should be removed.
  Sir G. Howe: I do not wish to be discourteous, but we dealt with that this afternoon. If the hon. Gentleman will look at the letter again—I was looking at it outside with him in the last hour—he will find that the letter said that rather than have any ambiguity I would remove it—namely the ambiguity. I said in my speech this afternoon that the alteration in the definition of "consumer", and its removal from old Clause 3 to Clause 125, specifically took account of the points he raised in Standing Committee. The hon. Member might find it useful to look at the amendment in the light of what I said earlier.
  Mr. Lyons: I accept that. I was misled by the wording of the letter sent to me by the Minister's hon. Friend, the Undersecretary, which appeared to me to indicate that the definition of "consumer" was being removed. It has certainly been removed from Clause 3. We can certainly say that. I understand that the reason for the alteration and the removal of the definition of "consumer" was that the existing definition of "consumer" included people who received goods and services, or the offer of goods and services, without ordering them—something which I pointed out in Committee.
  The fact is that when one looks at Clause 2, one sees that the opportunity has not been taken to enlarge Clause 2 to include that kind of practice. Although the Director General is given latitude under Clause 2, as amended, to refuse to take action whenever he wishes, the Government have not felt it proper to leave to his discretion the taking of action in cases where goods were not ordered but were none the less billed on a man in the course of business.
  The fact was that in the Bill, as it originally stood, where a man in the course of business ordered goods or services, that practice did not come within this Bill. But where he received, for example, an invoice for a directory trade entry which he had not ordered.

  1637
  that still came within the clause of this Bill, albeit inadvertently.
  Sir G. Howe: That is precisely the point met by Amendment No. 77. In explaining the amendment before the hon. Gentleman arrived, I acknowledged the part the hon. Gentleman had played and his argument in Standing Committee in bringing this about. We are most grateful to him, but we need not go over it again.
  Mr. Lyons: I was about to apologise to the right hon. and learned Gentleman that I had not been able to be present at the outset of his remarks on this amendment. I had the impression from his letter of 14th May that the Government were still wrestling with the problem of directory trade entries. Is the right hon. and learned Gentleman now saying that this Bill covers that situation? He is not saying that. Then my point stands. The opportunity has been lost in this Bill to cover that practice. There is no doubt that the practice is rampant. The Director of Public Prosecutions in most cases is refusing to prosecute on directory trade entries. The Bill, as originally drawn, inadvertently covered that practice. It no longer does. That is the point I am making.
  It seems to me regrettable, particularly in view of the latitude being allowed to the Director General, and the broad discretion being allowed to him to decide what he takes up and what he refuses to take up, that that opportunity has been lost.
  Mr. Eric S. Heffer: I do not intend to keep the House very long because it is getting late and I understand that the Government want to get this clause out of the way at the earliest moment.
  I have listened to this debate with great interest. Quite frankly, despite the defence of the Government by the hon. Lady the Member for Gloucester (Mrs. Sally Oppenheim), and the explanation that this is a great step forward—I am sure it is—I cannot see why the Government are not prepared to accept the suggested alteration to their amendment. I was not on the Committee, and I did not hear the whole of the debate. I popped in from time to time and it seemed to go on for ever. I wished I was on the
  1638
  Committee, and when I discovered how long it took to consider the Bill I was glad that I had not been selected for it.
  Paragraph (a) imposes upon the Director General the duty
  "to keep under review … commercial activities ",
  while paragraph (b) imposes the duty
  "to receive and collate evidence … with respect to health, safety or other matters ".
  I cannot understand why the Director General is required to collate evidence about safety, health and matters of consumer interest, but is not required to keep them under review.
  I cannot understand why the Government are not prepared to accept the amendment. It is not only the interests of the consumer that are important. It is important that the safety and health of the consumer are kept under review. We shall not vote on the amendment at this time of the night, but it would help to be told the reason for the difference.
  This is a reasonable amendment. Health and safety are of the greatest importance. Reference has been made to motor cars. Health and safety aspects of motor cars are of the greatest importance to the consumer. Those are things which the Director General ought to keep under review the whole time. I still think that our motor cars, compared with those in other countries, are not as safe as they should be. The safety and health aspects of motor cars ought to be kept under constant review.
  Perhaps like my hon. Friend the Member for Bradford, East (Mr. Edward Lyons) I, too, am a little dense, but I have listened carefully to the debate and I cannot understand why the Government are not prepared to accept the amendment. The hon. Lady the Member for Gloucester ought to be prepared to accept it, because throughout the debates on the Bill she has argued passionately on these matters. This is a question of common sense, and I hope that the Government will accept the amendment.
  Mr. Alan Williams: The most ingenious intervention that I have heard during the debate and, indeed, during the 26 sittings in Committee—when many ingenious devices were adopted—was that of the hon. Member for Bedford (Mr. Skeet), who managed to turn the discussion on the amendment into a semi-foreign affairs debate. I feel that I shall

  1639
  have to consult the hon. Gentleman in future when I wish to put forward small matters which I should like the House to consider but which have little relevance to the subject under consideration. I do not mean that in any unpleasant way, as I am sure the hon. Gentleman will appreciate.
  I welcome, so far as it goes, the Government's acceptance of our proposal in Committee that health and safety are as important—the hon. Member for Gloucester (Mrs. Sally Oppenheim) is looking a little puzzled. If she reads the Committee proceedings she will see that it was our amendment to delete the word "economic" from subsection (l)(a) that led to the debate on health and safety. If I recall events correctly, on a later occasion the hon. Lady—no doubt inadvertently—voted against her own amendment dealing with the same subject.
  Mrs. Sally Oppenheim: The hon. Gentleman is right, but it was in respect of the amendment tabled by my hon. Friend the Member for Merton and Morden (Miss Fookes) and myself that assurances were given in Committee.
  Mr. Williams: I am sorry that the hon. Lady is being so petulant about this. The point which arose was that we were promised a major redraft of Clause 2——
  It being Ten o'clock, the debate stood adjourned.
  Ordered,
  That the Fair Trading Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Jopling.]
  Question again proposed, That the amendment be made.
  Mr. Alan Williams: This major redraft was forced on the Government after the amendment that the Opposition moved. I give all credit to Government back benchers who joined my hon. Friends and me in pressing this point, as I give all credit to the Consumers Association, the Public Interest Research Centre and other groups who focused public attention upon this inadequacy.
  None the less, as we read the Bill there is a clear indication that the Government still do not regard health and safety as being as important as economic interests. As I pointed out in Committee, the
  1640
  Opposition regard a situation in which there can be the loss of a limb, of an eye or of a life, as being in many ways more important than the economic interests of the consumer.
  The fact that this amendment has been tabled at all justifies all the research that my hon. Friends did and all the time that they spent debating Clauses 2 and 3 which were the major stumbling blocks to our progress in Committee. However, I regret the reluctance of the conversion and the fact that it is only a partial one.
  I say that for several reasons. The first, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) correctly pointed out, is that there has been a marked down-grading of the duty imposed upon the Director General under Clause 2. In the clause as originally drafted it was stated categorically:
  "… it shall be the duty …".
  Now that duty exists
  "… so far as appears to him to be practicable from time to time …".
  That just about gives every outlet that a weak or indolent Director General could possibly want.
  While there has been a partial movement to include health and safety, we still say that it is not adequate. It is partial in another sense also. This answers my hon. Friend the Member for Bradford, East (Mr. Edward Lyons), who asked for a distinction between keeping under review and receiving and collating. As the Opposition see it, keeping under review the economic interests differs from merely receiving and collating information in relation to the health and safety interests of consumers. Reviewing is a positive rôle. It is a dynamic rôle. It means that the Director General may seek out information and search out abuses. Receiving and collating is essentially a passive rôle in relation to such important issues as health and safety.
  All that the Director General can do, according to this revised wording, is sit back and wait for someone else to bring matters to his attention. Let us suppose that he obtained information. Suppose that it was drawn to his attention but was not adequate. Would he then have to wait until further information came to him. It would be ultra vires for him to go out and look for information

  1641
  as the Bill now stands. If he got half a case he would have to wait for the other half to emerge. That does not sound like the aggressive, independent Director General whom both sides of the House—and, I believe, the right, hon. and learned Gentleman—probably want.
  The Minister has tried in many Government amendments legitimately to meet points which Opposition Members and his own supporters argued in Committee. In this case, he has not gone as far as he should. That is the reason for our Amendment (a)—to give exactly the same initiative and powers in respect of health and safety as exist in relation to the economic interests of consumers.
  Nor do I see why the advisory committee should be precluded from commenting on health and safety matters. It cannot be suggested that it is not fit to discuss these issues. Of course, the Minister said that if we extended the rôle of the committee it would be overloaded with too much work. But in Committee he and his hon. Friend made it clear that they regarded the committee at this stage as only a part-time body. So if there is an extra load of work for it, why not make it a full-time body or less part-time than is envisaged? This initative should be given to the committee and must be given to the Director General.
  I would demonstrate that in relation to one case. My hon. Friend the Member for Accrington (Mr. Arthur Davidson) and I, six weeks ago, having received the AA report on car safety harnesses for children, raised the matter at the first opportunity on the Supply of Goods (Implied Terms) Act. The AA had raised the issue, the Daily Mail ran a story, it was raised in this House in debate and in an Early Day Motion in my name and those of my hon. Friends.
  We drew attention to the risk involved in the fitting of children's harnesses as demonstrated in this issue of Drive, the AA magazine, which did not conform to the British standard. We pointed out that, as the report makes clear, many of those harnesses simply raise the child to the right level to go through the wind-sreen at speed. This does not mean at high speed. At 20 m.p.h., a child of 30 lb. has the weight of a quarter of a ton.
  1642
  We pointed out that parents are inadvertently breaking the law because they are being sold safety harnesses which do not conform to the British Standard. Traders are selling products unfit for the job they purport to do. In other words, they are falsely described. In a question to the Minister, I raised in connection with the problem of families, involved in accidents, whose children were in illegal seats and harnesses—the risk that insurance companies might insist on lower damages following the precedent of the non-wearing of safety belts.
  The Minister for Transport Industries told the hon. Member for Gloucester (Mrs. Sally Oppenheim) that he would undertake an investigation of the report. He undertook to investigate the question of insurance. It is now six weeks since the report was published, and Ministers have shown no sense of urgency, despite the fact that, as the report makes clear, over 70,000 of one model of seat are already in use in this country.
  This morning—six weeks later—I 'phoned the Minister for Transport Industries' private office and asked whether there had been any public statement or announcement. Up to lunch-hour today—I do not know what might have happened at Question Time because I was preparing my speeches for our earlier debates—nothing had emerged from the Ministry.
  Mrs. Sally Oppenheim: Does the hon. Gentleman agree that the main incongruity about the state of affairs regarding child safety harnesses is that one Department allows them to be sold and another Department does not allow them to be fitted?
  Mr. Williams: This is the absurd situation, as I pointed out in Committee. Apparently it is in order for traders to sell an illegal object, but it is absolutely out of order and illegal for purchasers to fit that illegal object in their cars.
  I put down a Written Question to the Secretary of State for Trade and Industry about insurance. In his Written Answer to me precisely a month ago, he told me, quite rightly, that safety was a matter for his right hon. and learned Friend the Secretary of State for the Environment. As to insurance, he said,
  "third party insurance for passengers is compulsory. Special insurance conditions in

  1643
  respect of car safety seats which are fitted to cars and which are not approved by the British Standards Institution are a matter for the insurance companies and, in the event of accidents, for the courts to decide. I am, however, investigating all the issues that arise on the hon. Member's Question."—[OFFICIAL REPORT, 16th April 1973; Vol. 855, c. 5–6.]
  That was a month ago. This morning I phoned the British Insurance Association and asked whether the Department of Trade and Industry had had any consultations with it about the insurance aspect of these unsafe car harnesses. The person to whom I spoke checked round the office to see whether anyone had had any consultation with the Department. No one had heard of such consultation. To the best of its knowledge, the Association had not been approached by the Department of Trade and Industry during this period.
  When I put the point that lower damages might be paid as a result of fitting unsafe or illegal harnesses, I was told that this was so, but that the companies would in general honour their obligations. I accept that. I am not criticising the British Insurance Association—it has been very helpful to me in providing information—but it admitted that it could not be 100 per cent. certain that insurance claims would not be challenged on the ground that these harnesses were illegal, and many of them unsafe. I was also told that it was the job of a barrister representing such a company in any case to do his best for his client.
  There would seem to have been no consultation. Here we are, weeks ahead, and there has been little or no progress. If the right hon. and learned Gentleman announces anything tonight, we can still ask why it has taken six weeks to make any progress. It would seem that, in a situation where two Departments confronted with a report as potentially horrifying as this have achieved so little in that time, there is need for another agency. We believe that the Director General should have full powers in this respect.
  I again remind the right hon. and learned Gentleman of the magnitude of the problem. It is not just a matter of one or two accidents being considered. "Care", the publication of the Royal Society for the Prevention of Accidents, has come out strongly in favour of banning these unsafe harnesses. Under the
  1644
  heading, "Restrain your child!", it gives a report of a leaflet being produced by the Transport and Road Research Laboratory and makes the point:
  "About 75 per cent. of serious injuries in an accident study involving 113 child car occupants could have been prevented if child restraints had been worn and correctly fitted."
  It goes on to give the horrible statistic that
  "every year about 2,400 children under 13 are killed or seriously injured in cars and a further 7,000 slightly injured."
  We are talking of 10,000 children per year injured in cars. How many of those were travelling safely, as their parents thought, in these unsafe illegal harnesses which should be banned? Why have the Government done nothing about it? Why are they making sure that the Director General will be unable to do anything positive about it even if information had in some way, not of his volition, come to his attention?
  Our basic argument is that it is imperative to ensure that Departments are doing their job adequately, but the Director General should have a power in relation to health and safety interests of consumers equal to the power given in relation to economic interests. For that reason, we regard the Government amendment as inadequate and we commend to the House our amendment.
  As for our new Clause 6, I shall be brief, because we debated this matter in Committee. The right hon. and learned Gentleman is opposed to it, but he should reconsider it. The new clause concerns the setting-up in the directorate of a dangerous goods unit on similar lines to that which is operating in Canada. It could test existing goods—even before they come on to the market, if manufacturers wish. This would be a helpful adjunct. It would also serve another useful purpose. The use of a special department within the directorate would ensure from the outset that adequate priority was given to the health and safety aspect of a wide range of the Director General's responsibilities. In addition to questions of health and safety, which are written into the Bill as it stands, the Director General has an economic interest in terms of restrictive practices, mergers and monopolies, and so on. He has all those things to consider. It seems highly desirable to ensure that health and safety

  1645
  are adequately protected and given proper priority by the establishment of a dangerous goods unit.
  This requirement will be seen particularly during the first year or possibly two years of office when the Director General no matter how good he is, will be dealing not only with the problems which emerge during his period of office but with those which have accumulated but have not been dealt with over the years. Therefore, although we shall not be allowed to vote on new Clause 6, we still commend to the Government the recommendation for a dangerous goods unit. We shall deal with this matter in another place, and unless the Government accept our amendment we shall seek in another place to further strengthen the concession that we have in getting some recognition of the importance of health and safety.
  10.15 p.m.
  Sir G. Howe: From time to time the hon. Member for Swansea, West (Mr. Alan Williams) tries to restrain himself, but in the end he finds it irresistible to overstate a case and to make it unattractive to any independent observer. What he has sought to assert tonight, which I wish to repudiate completely, is that the Government draw a distinction in terms of importance between consumer protection in relation to economic matters and protection in relation to matters affecting health and safety. All those matters are equally important. Indeed, if either of them is to be selected as being more important than the other, it is the matter of health and safety.
  For many years successive Governments have been accumulating and building important provisions specifically designed to promote health and safety. The function of this measure is to introduce additional provisions in relation to economic fairness and unfairness—a field that has been very largely untouched. Hence, this Bill is primarily designed to deal with that which has not been touched at all so far, namely, economic matters, as opposed to questions of health and safety.
  The only matter for discussion is how far the agencies which will have a primarily economic rôle in connection with fair trading can be sensibly used to play an additional part in relation to health and safety matters with which other
  1646
  agencies deal already. But to believe in or support the kind of argument which the hon. Gentleman has advanced—to suggest that the Government are careless of health and safety—is to stand the argument on its head. When the hon. Gentleman raised the question of the safety of children's harnesses and children's seats for motor cars, he sought to suggest that this could be more vigorously and effectively tackled by a restructuring of the Director General's rôle and an alteration of that office.
  That cannot be the case. When this matter was first raised the hon. Member and the publication Drive immediately brought it to the attention of the Ministers responsible for considering such matters. As the hon. Member knows from the questions he has posed, different parts are the responsibility of different Ministers. The problem cannot be solved as easily as the hon. Member was seeking to imply because it arises from the fact that seats and harnesses of two different kinds are sold for two different purposes. Some of the seats which are sold—I do not know whether they are called seats or harnesses, but let us call them child-holding devices—are not designed or purported to be designed to provide safety of the kind that a safety belt will provide for an adult in a car. They are designed to stop a child fidgeting and floating around a car. That is their function.
  On the other hand, child safety harnesses comparable to a safety belt are also available.
  Mr. Alan Williams: Will the right hon. and learned Gentleman bear in mind that it is illegal to carry a child in any seat or harness which is not BSI approved? The illegality is to have a child in such a seat regardless of the original intention and regardless whether the parents installed it as a safety harness or merely as a restraint.
  Sir G. Howe: The regulations require child restraints that are designed to provide safety to be marked to show that they comply with the British Standard. The point is a straightforward one. One can deal with the existence of harnesses which are not designed to provide safety by proscribing them and by saying that devices to shop children fidgeting and moving around shall be proscribed. That

  1647
  might be the consistent thing to do if a move were made to provide that the wearing of seat belts was compulsory. Unless one moves in that direction it is necessary to take a different approach, and it is that different approach which my right hon. Friend the Minister for Transport Industries is now pursuing—the possibility of establishing, in conjunction with the manufacturers and importers and in conjunction with the Institute of Trading Standards Administration, that steps should be taken to ensure that every child seat other than one approved by the BSI should be sold with a disclaimer to the effect that the seat cannot be expected to provide safety. In other words, it would seek to make clear precisely what kind of harness or seat was being sold.
  Mr. Williams: There may be some misunderstanding here, but Regulation 8 of the Motor Vehicles (Construction and Use) Regulations 1973 provides that
  "each seat belt provided for any person in any vehicle"
  shall be BSI approved and Regulation 9 lays down that a seat belt in this context includes in the case of a restraining device for a young person any special chair. Therefore, the law is absolutely clear. If a seat is provided in the car to restrain a child regardless of what its* purpose is, it must be BSI approved.
  Sir G. Howe: As I understand it the 1973 regulations require only child restraints designed to provide safety in a road accident to be marked to show compliance with the British standard. At all events there is still a problem which must be resolved. My right hon. Friend is looking into it, because we must establish that people are not misled as a result of the wrong harness being provided.
  To suggest that the problem would be any differently approached or solved by a change in the nature of the Director General's functions misses the point completely. The way in which the Director General's functions are designed was accurately described by my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim). The reason why, in relation to economic matters, his duty is differently formulated from the way in which it is formulated in relation to matters of health and safety is that this is
  1648
  the establishment of a new institution in relation to economic matters. The Director General has a primary or lead rôle, and in that rôle his duties have been widened to cover commercial matters generally stated. He is placed under the duty to keep those matters under review. It is unnecessary—I refer to a matter which was raised by the hon. Member for Accrington (Mr. Arthur Davidson) and the hon. Member for Liverpool, Walton (Mr. Heffer)—to place upon the Director General the duty to seek out and collect information on commercial activities which may affect health, safety and other interests of a non-economic kind. To do that would be to duplicate the specific work of existing Government Departments and their advisory committees and specialist staff, who are already charged with responsibility for reviewing practices in those areas.
  The Director General will become a focal point for the reception of useful information in matters of health and safety. He will be well placed to pass on that information, if a pima facie case is established, to the appropriate Minister through the Secretary of State. The Director General will become a primary economic agency and will fulfil an additional rôle in relation to matters of health and safety.
  I shall not detain the House long in dealing with the rest of the debate, but I must say something in reply to the hon. Member for Nuneaton (Mr. Leslie Huck-field). The standard of services provided in garages is a matter of importance to many motorists and vehicle users. I only wish that the problem could be solved as readily as the hon. Member identified it. Unusually for him, there was a degree of condescension about the way he suggested, as he swept into our debate, that a quick and easy solution could be found. He was strong on diagnosis and short on prescription. That is a characteristic of many commentators on consumer affairs. It is easy to identify a problem and to say that somebody should do something about it, but it is difficult to say exactly what should be done.
  I have studied a number of solutions which have been put forward in North America and some suggestions that have been adopted in Scandinavia. I find it difficult to identify in any country a method of raising the standards of garage

  1649
  servicing that can be relied upon. The hon. Gentleman said that he was far from convinced that the provisions of the Bill will solve the problem of garage servicing. So am I. I am far from convinced that any country in the world has arrived at a solution that goes anywhere near to raising to standards of perfect-tion the performance of garages and service stations.
  I am not suggesting that we have solved the problem. However, I suggest that the Bill is making new headway. Quite apart from the extent to which the Supply of Goods (Implied Terms) Act will bring into the open and solve the problem of warranties—the garage owner will be primarily liable to the car owner and will be placed in the position of requiring indemnity from the motor car supplier—Part HI of the Bill introduces, outside the provisions of Part I and Part II, a powerful new weapon in relation to the standards of service.
  Under Part III as the House will remember, the Director General is able to bring proceedings against traders of any kind who persistently fail to perform their contractual duties, and their duties in accordance with the law. The garage trader, or any other trader who persists in the provision of bad service will expose himself to the attention of the Director General under Part III. The Director General will be concerned with breaches of contract and breaches of duty in relation to health and safety, as well as with economic matters.
  That is a new weapon for helping to raise standards not only in garages but in other directions. I do not begin to assert that it will solve all those problems. However, I assert that it is an important part of the Bill. The Bill is an important measure, designed to deal with the improvement of consumer standards relating not only to economic matters but to matters of health and safety. It aims to do all those things in a sensible and balanced way without duplicating the functions of other governmental agencies. It is on that basis that I commend the amendment to the House.
  10.30 p.m.
  Mr. Edward Lyons: Why has the wording been changed from
  1650
  "… it shall be the duty of the Director …"
  to
  "… so far as appears to him to be practical from time to time …"?
  The right hon. and learned Gentleman keeps talking about why the duties of the Director General were the same in relation to paragraphs (a) and (b) in Amendment No. 2, but surely no duties are now imposed on him.
  Sir G. Howe: There are duties. Perhaps the hon. Gentleman was not present in Committee when we dealt with this point. I explained then that if the duties of the Director General were to be extended so widely as to embrace the whole range of consumer activities, and if it is his duty to receive and collate evidence on health and safety, it would be right to give him some discretion as to how he discharged that duty.
  That is the effect of the amendments. They are in line with what was said in Committee. To imply that the Director General has no duty is to misunderstand the provision. He is under a duty in relation to both these matters, but a duty in the exercise of which he has discretion as to the way in which he discharges it.
  Amendment agreed to.
  Amendments made: No. 3, in page 2, line 21, leave out from beginning to 'to' in line 29.
  No. 6, in page 2, line 32, leave out 'from time to time'.
  No. 7, in page 2, line 40, leave out 'mentioned in the preceding subsection' and insert:
  'in respect of which the Director has any' duties under subsections (1) and (2) of this section'.
  No. 8, in page 2, line 43, leave out from 'to' to first 'to' in line 44 and insert:
  'recommendations under that Part of this Act'.
  No. 9, in page 3, line 3, leave out' mentioned in that subsection 'and insert:
  'in respect of which the Director has any such duties'.
  No. 10, in page 3, line 16, leave out Clause 3.—[Mr. Emery.]

Clause 4

  CONSUMER PROTECTION ADVISORY COMMITTEE
  Mr. John Pardoe: I beg to move Amendment No. 12, in page 4, line 24, leave out subsection (5) and insert—
  '(5) The Advisory Committee shall consist of persons nominated by organisations established for the protection of consumers'.
  Mr. Speaker: With this we are to take Amendment No. 15, in page 4, line 36 leave out 'one or more' and insert 'a majority of' standing in the name of the hon. Member for Swansea, West (Mr. Alan Williams) and the names of his hon. Friends.
  Mr. Pardoe: I expressed my reservations about the consumer protection parts of the Bill on Second Reading. Perhaps I may remind the right hon. and learned Gentleman of the major point I made then—that the advisory committee should be representative of consumers and representative only of consumers.
  I quoted a report, published in 1962, by the Liberal Party Consumer Panel—years ahead of its time, as usual—in which it described a similar body in these words:
  "It should be a representative body, not a Government-controlled one or a Government Department, although it must clearly be established and financed by Parliament. Administratively, its model should be the Arts Council. By a representative body we mean a body representing the consumer and the consumer only".
  I went on to point out that in our view a body which tried to represent all interests—or all the interests contained in this clause—would be unlikely to end up with anything other than a disease which one might loosely call "committee-itis".
  The committee will be made up of three broad categories, set out in subsection (5). The first is:
  "… persons appearing to him to be qualified to advise on consumer trade practices by virtue of their knowledge of or experience in the supply of goods or services. …"
  That gives the Director General a pretty free hand to consult all the people who have been expert in cornering the market
  1652
  or raising prices through the retail trade or wherever. The second category is
  "… persons appearing' to him to be qualified to advise on consumer trade practices by virtue of their knowledge of or experience in the enforcement of the Weights and Measures Act …"
  That at least is more of a step in the right direction. The third category is:
  "… persons appearing to him to be qualified to advise on consumer trade practices by virtue of their knowledge of or experience in organisations established, or activities carried on, for the protection of consumers".
  The point I made was that a committee which contained all these three disparate forces would be unlikely to reach a conclusion which was specifically in the interests of the consumer. Since then we have had the Committee stage, in which I regret I was not able to take part—or at least not called upon by the powers that be to take part. During those proceedings the Minister dealt with a rather similar amendment tabled by the Opposition. It was Amendment No. 115 which called for a majority of what the Minister was pleased to call "consumerists" on the Committee. It did not go as far as my amendment but it went some of the way.
  In replying to that Amendment the Minister said that a committee which contained a majority of "consumerists" would "go too far." I find this extraordinary. Here we have a committee which purports to have teeth, acting on behalf of the consumer, representing consumer interests in the continual battle with those businesmen of whom Adam Smith said, "Never are two or three businessmen gathered together but they conspire to rob the public." It will be the job of this committee to tackle these people. Yet the Minister says it would be wrong to have a majority of "consumerists" on the committee.
  I accept immediately his later qualification that it is extremely difficult to elect an active and effective committee of this sort by reference to other committees—simply asking them to send in a representative's name and then appointing him to some Government commission or other. This is the worst possible way of selecting an effective body and I am not suggesting that. I should like the Minister to draw the members of the

  1653
  committee exclusively from names put up to him by those bodies specifically dealing with consumer activities, defined in the Bill as:
  "organisations established or activities carried on, for the protection of consumers."
  I should have thought it possible to call on these bodies to put up a list of names and for the Minister to make up his committes from that list. It does not mean that the final body will consist of exactly the names that have been put up, but it will be drawn from it. I am totally unconvinced by the arguments advanced by the right hon. and learned Gentleman in Committee. I do not see that the Government have given any reason for preferring a kind of mongrel body which will be drawn from a wide and disparate range of experiences and which, frankly, is likely at the end of the day to end up arguing for doing precisely nothing.
  If the Government are not prepared to accept the amendment—and we must not hope for the impossible—let us have some further reasons why they feel that this body should not be a "consumerist" body.
  Mr. Edward Taylor: The hon. Member for Cornwall, North (Mr. Pardoe) has put his case forcibly and briefly. I will try to follow him at least by being brief. I hope that the House will hesitate before accepting the amendment in its present form. The first question we have to ask is, are consumer organisations necessarily totally representative of consumers? I have had the pleasure of serving on the Committee and I have had approaches, and a good, deal of written material, from a whole range of consumer organisations. Some are obviously knowledgeable and qualified, but consumer organisations which by and large consist of a small number of enthusiastic people are not necessarily representative of the best interests of consumers.
  Secondly, we must ask how many consumer organisations there are. There are a vast number. Some are responsible and have a large budget and some consist of one or two enthusiasts. It is difficult to accept the amendment without having some idea how many consumer organisations there are.
  1654
  I hope that the Consumer Protection Advisory Committee will be a worthwhile, workable organisation with teeth. Nothing would be worse than an: organisation which consisted of a small band of enthusiasts without technical knowledge, without experience of implementing the Trade, Descriptions Act and more important, without the advantage of discussing their views and interests with people who have a detailed knowledge of the retail trade and business generally. A band of enthusiasts may have a grand idea. If those enthusiasts have the opportunity to discuss that grand idea with people who have experience of business and the retail trade, a far more effective answer will emerge.
  I hope that the organisation will not be dominated by business. That would be a tragedy. On the other hand the committee will not be effective if it consists of a band of enthusiasts who have no knowledge of the workings of trade, industry and commerce and no practical experience of implementing the Trade Descriptions Act and, the weights and measures legislation. While I hope that the consumer will be represented on the committee, it would be a tragedy if the committee did not include one or two people with detailed knowledge of business and commerce who could put enthusiastic ideas into practical plans to help the consumer.
  Mr. Alan Williams: The hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) said that it would be a tragedy for the committee to be dominated by business. I am surprised that he did not support in Committee our amendment to the effect. that the majority of the members should be chosen from the consumer side. The amendment did not preclude members who had business experience and weights and measures experience. The Government opposed that amendment—
  Mr. Taylor: I think the hon. Gentleman will accept that we were not reluctant to support him, but we did not blindly follow his line. He will equally agree that if there had been any suggestion from the Government that the majority should come from business we would have joined him in opposing it.
  Mr. Williams: The Bill contains nothing to ensure that business interests will

  1655
  not be in the majority. I therefore assume that the hon. Gentleman is prepared to support Amendment No. 15.
  Will the Minister listen to the pleas of some bodies which are involved in consumer protection? The National Council of Women of Great Britain in a report of its conference on consumer representation stated:
  "We are all agreed that a representational body is needed. … All were agreed that this body should have powers and adequate resources, i.e. teeth and money."
  The Women's Advisory Committee of the British Standards Institution states in its 21st Annual Report:
  "… it must work with all sectors of the community, it should stimulate and co-ordinate the existing consumer organisations, undertake research where the need for this was apparent. …"
  The Public Interest Research Centre said on 11th December 1972:
  "Even when the Consumer Protection Advisory Committee is required to report, on a budget of £10,000 a year it will hardly be equipped to conduct original investigations of its own. We believe that there is a clear danger that this small, predominantly part-time body, meeting occasionally and without adequate resources, will fail to make the impact it was set up to achieve however talented its individual members. It is certainly no alternative to wider consumer representation."
  10.45 p.m.
  The Consumers' Association, in one of its early briefs on the Bill, said:
  "The Consumers' Association is very unhappy with the constitution and the role of the Consumer Protection Advisory Committee, as laid down in the Bill … the Bill should expressly provide that the majority of the CPAC should represent consumer interests."
  It is clear that what is felt is needed is a body that will bring together the existing, unorganised consumer protection interests so that they combine to speak with a stronger voice, and also that they should be represented at the centre in a way in which they can counterbalance the lobbying power of the big industrial interests.
  The basic requirement is that the majority on a consumer protection committee should be from the consumer protection interests. I accept that technical expertise may be needed, but that could be made available on an ad hoc basis. It does not have to be permanently available. I am not opposed to the idea that people experienced in manufacturing and distribution should be on the committee,
  1656
  but they must not be in the majority. Essentially, there must be a majority for the consumer, because what there is now is a Director General in the middle of a structure with, on the one side, a not very strong advisory committee, and, on the other, the industrial sponsoring department.
  It does not matter whether the Minister for Trade and Consumer Affairs is a member of that department. The Department of Trade and Industry is the main industrial sponsoring department. The Director General will be pushed from two sides, and there is no doubt where the weight will lie. It will lie with the industrial sponsoring department. If there is no attempt to co-ordinate consumer voices, and if there is no certainty of its having a majority on the advisory committee, then I shall regard it very much as a puppet body.
  What has emerged is what one can expect from a Government who killed off the Consumer Council in the first place and then, as an act of political contrition, had to put another structure in its place. The Government want to keep control of this body. They do not want the consumer voice to be too strong, or too articulate. They are therefore not giving the advisory committee the responsibility of co-ordinating consumer voices. The Government are preventing the committee from fulfilling the useful role of strengthening the presentation of the consumer case at Whitehall.
  There remains for those on the committee the threat of ministerial patronage being switched off. The Minister can put members on the committee, and he can take people off it. No one is there as of right. This is where on Second Reading the hon. Member for Cornwall, North and I were at one, because I made the point from this Box at the outset that it was imperative that people be there as of right and not merely as nominees of the Government.
  It is the product that one would expect from the sponsoring department. It vindicates my attack, again on Second Reading, that the Minister for Trade and Consumer Affairs should be in a separate Ministry of his own and not in an industrial department.
  The case for the majority on the committee to be associated with consumer

  1657
  protection is overwhelming and unanswerable. We shall pursue this issue in another place if the Government refuse to make any real concession tonight. There is scope for looking again for a formula to enable members from the consumer protection side to be on the committee as of right. I am not sure that this formula has yet been adequately propounded. For that reason, I suggest to the hon. Member for Cornwall, North that perhaps this might be looked at again in another place with a view to seeing whether it is possible to force the Government to back down from their present position. At the moment, clearly the Government want a weak and relatively inarticulate body.
  Mr. Emery: At the outset, it is important for the House to realise the main functions of the advisory committee. The hon. Member for Cornwall, North (Mr. Pardoe) has not been here for most of this Report stage, and I appreciate that he may not fully understand—indeed, may not even have seen—the description of the committee's work which was given by my right hon. and learned Friend in Committee.
  I refer the hon. Gentleman to columns 437 and 438 of the proceedings in Committee. There, my right hon. and learned Friend said clearly that the activities of the CPAC were narrow because the existence of the committee arose solely from the proposed establishment of a new power to make orders under Part II. He said that it was because the power under Part II was so wide ranging that the committee was established in a real rôle My right hon. and learned Friend went on to say that in its intermediate rôle the committee would listen to what was said about proposals made by the Director General, and assess the significance of what was said. It would conclude then whether it agreed with the Director General's proposals. From then on the committee would pass advice to the Secretary of State about whether proposals should go forward, should be rejected, or should be amended.
  What hon. Members have assumed, incorrectly, is that the CPAC is the watchdog for the consumer. That is not the case. It is the Director General who is the consumer watchdog. The committee exists primarily to act as an assessor
  1658
  of references made to it under Clause 14, especially those which lead to the use of the order-making power. Therefore it must be a balanced body to reach intelligent conclusions about the desirability and practicability of proposals put to it.
  Here the argument comes down specifically to why it is not right that the advisory committee should just be an appointed body composed of members sponsored or nominated by consumer protection interests. Hon. Members should realise that every one of us is a consumer. It is not just someone appointed by a consumer protection body who can understand the problems. Much the same argument applies to the request for an assurance that there will not be a majority of business men on the committee. The officers of consumer protection bodies with knowledge of these matters are frequently businessmen themselves.
  I do not believe that there is a massive dividing line establishing that business does not want anything to do with consumer protection and that consumer protection bodies are always attacking or are not in alliance with business and commerce. Obviously that would be misleading. This also applies to the three categories nominated by the Government. In the second category are people who have spent much of their working lives dealing with the Trade Descriptions Act, with weights and measures matters, and the enforcement of factors for the protection of the consumer. Therefore, it is obvious that we expect these people to have detailed knowledge of marketing, distribution and retailing, as my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor) emphasised. In the carrying through of the orders we want to make sure that the proposals make sense and are as watertight as possible, so who better to give advice than experts in those spheres? Therefore, in considering the primary task of the CPAC, we believe that we have got it about right.
  The hon. Member for Swansea, West (Mr. Alan Williams) said that he wanted to see the vindication of the attack that he led on Second Reading with the appointment of a separate Minister because he felt that the Minister for Trade and Consumer Affairs would be dominated by the industrial sponsoring factor in his department. I suggest that that is

  1659
  balderdash. It can be described by no other term. If that were the position, should we have a Bill of this nature, a third of which is devoted to doing the kind of things that the hon. Gentleman was implying the industrial sponsoring side would try to do away with? That is not to face the situation outlined in the Bill. The hon. Gentleman is not even giving the credit that he knows is due.
  We wish to see the Director General work for the protection of the consumer. We wish to see the CPAC appointed to assist him in that work. We wish to ensure the independence of the consumer watchdog, the Director General, as a man of outstanding ability who is able to carry through the specifications that have been debated many times in Committee.
  Therefore, I urge my hon. Friends to keep the Bill as it is without the inclusion of this amendment.
  11.0 p.m.
  Mr. Pardoe:The hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) talked patronisingly about enthusiasts in the consumer field, I thought it was patronising because I ask why should not consumers know just as much about the problems of industry and of the weights and measures departments as people working in that field?
  The Minister made what he could of the fact that I was not a member of the Standing Committee. That is no fault of mine, but the result of the electoral system which ensures that although my party has a large vote in the country it has a small representation in the House and we are therefore not entitled to a place on the Standing Committee. I note the Minister's offer that he will place a Member of my party on every Committee in future and I am delighted to accept that invitation.
  The Minister is a typical example of that British animal with two different interests, able to compartmentalise each but having to take a taxi ride between the two. He has two hats but always has both on and carries no lingering resemblance to the only example I can recall—Thomas a Becket.
  When the Minister talks of the limited duties of this committee he speaks of
  1660
  it as an assessor of references. Nevertheless, he admitted that it is giving advice to the Secretary of State about the suggestions made to him by the Director General. One hopes that it will be powerful advice.
  On this side, we want this committee to be a counter-Civil Service. The Secretary of State will have plenty of advice within the Department as to why he should not follow the recommendations of the Director General. No doubt the Department will be able to put up, in their professional manner, a problem for every solution he puts. We want a counter-Civil Service which has an interest in speaking to the consumer and identifying with the consumer and which is pre-pared to tell the Minister to do what the Director General wants.
  I do not accept the argument against the committee being "consumerised" or against a majority of it being "consumerised".
  Amendment negatived.
  Amendments made: No. 13 in page 4, line 28, leave out from 'on' to end of line 30 and insert
  'practices relating to goods supplied to consumers in the United Kingdom or produced with a view to their being so supplied, or relating to services supplied for consumers in the United Kingdom, by virtue of their knowledge of or experience in the supply (whether to consumers or not) of such goods or by virtue of their knowledge of or experience in the supply of such services'.
  No. 14, in line 32, leave out 'consumer trade practices' and insert
  'such practices as are mentioned in the preceding paragraph'.
  No. 16, in line 37, leave out 'consumer trade' and insert 'such'.—[Mr. Emery.]

Clause 5

  THE MONOPOLIES AND MERGERS COMMISSION
  Mr. Millan: I beg to move Amendment No. 17, in line 15, at end insert—
  '(2A) At least half the regular members of the Commission, including the chairman of the Commission, shall be full-time members'.
  This amendment would ensure that at least half of the regular members of the commission, including the chairman, were full-time members. In Committee a point was made from the

  1661
  Opposition on a number of occasions that one of the important requirements, if the monopolies and mergers legislation were to be effective, was a strengthening of the membership of the commission. As we have it at present, the commission has a full-time chairman and all other members are part time.
  It is implicit in the Bill that the Monopolies and Mergers Commission is intended to be more active in future. The reduction of the monopolies criterion from one-third to one-quarter by itself means potentially a much larger number of references to the commission. The Minister for Trade and Consumer Affairs, the other day in a parliamentary Answer, said that the Government had in mind a number of monopoly references to be made in the near future. Indeed, we have been assured on a number of occasions—until some of us as rather sceptical of what it means in practice—that the Government are following a more active policy of references of mergers.
  The report of the National Institute for Economic and Social Research, published recently, identified a number of areas where it thinks there should be fairly urgent references by the Government to the Monopolies and Mergers Commission. That makes the point that if all the areas identified were referred and the commission operated on the time scale to which we have been accustomed over the last few years, it would take 30 years for all reports to be prepared. If we are to have an active policy we should strengthen the membership of the commission. The amendment would provide for a majority of full-time members.
  I do not want to criticise the present membership of the commission. I said one or two rather harsh things about them in Committee but they have redeemed themselves to some extent with the Roche Report. That reassured me that the commission could produce the kind of vigorous and tough report that I would like to see produced more often. But the criticisms of length of time taken to produce the report and a number of other criticisms that I have made but will not repeat now still
  1662
  remain. If we are to put an added burden on the commission we should equip it to do the job adequately. That means having more full-time members.
  Mr. Emery: I do not believe that the Government's intentions differ from these of the Opposition. We want to see references, once made to the commission, examined as fully and ably as possible and the reports made in a manner which brings them, so far as, is humanly possible, above criticism. After all, the great strength of the commission has been that its reports have been of a calibre which has been admired by all except the few who have been criticised.
  Mr. Fletcher-Cooke: Is it not a fact that they are admired not only in this country but, increasingly, overseas? It is as a result of the reports of the commission, particularly in the example that the hon. Gentleman gave, that we have taken the lead in this field.
  Mr. Emery: My hon. and learned Friend has stolen my next-but-one sentence. Only two weeks ago, from this very Box, I was dealing with the Roche case.
  There is therefore a great deal of agreement between the two sides of the House. The amendment provides for the appointment of full-time as well as part-time members. There must be an advantage in having some flexibility and not tying the Secretary of State's hands over the detail of the commission's composition. I am not suggesting that the amendment does that absolutely but it does it in a small way.
  Part-time membership has the great advantage of making a much wider range of people available for service on the commission. It enables people to remain in touch with their own businesses and occupations. People from the academic world and the unions and people who are still active in business can often serve on the commission and have given remarkable service. On one occasion1 there was a full-time member other than the chairman. The possibilities of having additional full-time members or a full-time deputy chairman are by no means ruled out by me or my right hon. and learned Friend. I made that clear in

  1663
  Committee and I willingly repeat it on the Floor of the House.
  It is hoped to announce shortly some new appointments and re-appointments. Consideration will be given at that time to the question whether it is desirable to increase the number of full-time members of the commission. That is what the amendment tries to elicit from the Government. I could not, however, accept the idea that half of the members of the commission should be full-time members, especially when one considers the problems of obtaining the background information for the reports. Much of the work is of a clerical nature at certain times, when the information is being sought. There are periods of inactivity after a reference while information is being compiled. I cannot accept the concept of having full-time members doing nothing at such times. We need men who can give a considerable part of their time when the information is available in order that the reports can quickly be brought forward when the background, the presentation work and the cross-examination has been carried through.
  The Opposition and the Government are closely in alignment about what we wish to achieve, but I cannot accept that there should be a majority of full-time members on the commission.
  Mr. Millan: I agree with the Minister at least to the extent that the amendment would impose rather greater rigidity in the Bill than I should like. I am glad to have the further assurance that the Government have it in mind to strengthen the commission and that the question of full-time membership will be seriously considered.
  My approach is simply that we decide what kind of jobs we want to give to the commission and then see that it is adequately equipped to perform them and has the number of full-time members which is required.
  On the strength of the Minister's assurance, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.

Clause 13

  POWERS OF SECRETARY OF STATE IN RELATION TO FUNCTIONS OF DIRECTOR
  Amendments made: No. 18, in page 11, line 8, leave out from beginning to 'or' in line 12 and insert—
  '(a) matters are to be brought under review in the performance of his duty under section 2(l)(a) of this Act'.
  No. 19, in page 11, line 20, leave out from 'a' to end of line 25 and insert:
  'practice may adversely affect the interests of consumers in the United Kingdom, he should have particular regard in determining whether to'.
  No. 20, in page 11, line 27, at end insert—
  '(aa) considerations to which, in cases where it appears to the Director that a consumer trade practice may adversely affect the economic interests of consumers in the United Kingdom, he should have particular regard in determining whether to make a reference to the Advisory Committee under Part II of this Act, or '.—[Mr. Emery.]

Clause 14

  GENERAL PROVISIONS AS TO REFERENCES TO ADVISORY COMMITTEE
  Mr. Emery: I beg to move Amendment No. 23, in page 11, line 44, at end insert—
  '(2) The Secretary of State or any other Minister by whom a reference is made under this section shall transmit a copy of the reference to the Director'.
  Mr. Speaker: With this amendment we are to take Government Amendments Nos. 26 and 36, and the following Amendment:
  No. 25, page 12, line 20, leave out
  'to a person other than the Secretary of State'.
  Mr. Emery: Amendment No. 23 would require the Secretary of State and any other Minister making a reference under Clause 14 to the Consumer Protection Advisory Committee to send a copy of the reference to the Director General. The second Government amendment would require the CPAC to send to the Director General a copy of all reports

  1665
  made to the Minister. The third Government amendment follows that up. The amendments meet an undertaking given by the Government in Committee.
  Amendment agreed to.
  Amendment made: No. 26, in page 12, line 20, at end insert:
  'and shall transmit to the Director a copy of every report which is made by them under this section to a person other than the Director.'—[Mr. Emery.]
  Further consideration of the Bill, as amended, adjourned.—[Mr. Emery.]
  Bill, as amended (in the Standing Committee), to be further considered tomorrow.

  ADJOURNMENT
  Motion made, and Question proposed. That this House do now adjourn.—[Mr. Fox.]

  FEEDINGSTUFFS (SINGLE-CELL PROTEINS)
  11.14 p.m.
  Mrs. Joyce Butler: Protein is so vital to health that any source of protein is obviously tremendously important, and if completely new forms can be developed which are completely safe and palatable they can make a valuable contribution to world health problems and to food problems. However, I am not happy about the bracketing together of all new forms of protein under the heading "novel protein" because to me there is a fundamental difference in the traditional vegetable proteins and the completely new proteins which are derived from growths on petroleum oil or methane gas.
  Vegetable proteins such as the soya bean are traditionally a main source of protein in the countries where they are produced and they have been extensively used by vegetarians and welcomed by nutritionists in Western countries for a long time. Their safety is not in question. But with proteins derived from hydrocarbon oils there are inevitably
  1666
  questions which need to be asked and which are now in the public mind.
  In an answer to a Question which I asked in the House the Parliamentary Secretary said,
  "The development of protein from an oil base is still in the research and development stage in this and other countries, including France. Testing of the product for safety on animals was initiated in laboratories some years ago and, in the light of the results, experimental trials as an animal feedingstuff are taking place."—[OFFICIAL REPORT, 5th April, 1973; Vol. 854, c. 605.]
  So far so good, but I was disturbed when I received a letter from her dated 16th April. The statement she made in it is important. She said,
  "Although production capacity for these new forms of proteins is very limited in this country at present and was designed to try out production technology on a pilot scale and to provide enough material for research, I may have given you to believe that none of the products could be used, or was being used, in any way other than for research. In fact there is currently a small quantity available of one of the new forms of protein (BP's Toprina) which is surplus to current research requirements and which is being used by feedingstuff manufacturers as one form of protein which, with others, and many different non-protein products, form the ingredients for compound feedingstuffs. This particular protein is the most advanced in development—the protein is developed on a base of liquid paraffin which is itself of the level of purity required for pharmaceutical use in this country. Work started nine years ago and more than £1 million has been spent on testing—mainly in independent laboratories and on experimental farms in the Netherlands—with the result that the safety of the product as an animal feeding-stuff is fully supported by the available evidence."
  I was disturbed when I saw the letter because I was not aware, and I am sure that the general public is not aware that petroleum protein-fed animals are coming into the meat market and are being sold for human consumption.
  My concern is threefold. In the first place I am concerned because the protein is based on hydrocarbon oil and the danger of contamination from that is well known. We have the necessary regulations to prevent any such contamination. I accept that these proteins are only based on petroleum and that the danger of contamination is minimal for that reason. But if there is no danger of contamination, I wonder why there is emphasis on the fact that the only protein so far in

  1667
  use in this country for animal feeding-stuffs of this kind is based on liquid paraffin of pharmaceutical purity.
  While it is obviously important that the base should be right and as pure as possible, it seems that there may be some doubt in the minds of the producers how the base may contaminate the protein. It seems that the stress on the purity of the base may have something like that behind it. I should be glad if the hon. Lady will comment on that.
  Secondly, I realise that it is legally permissible to introduce this type of protein for feedingstuffs because the regulations permit it, but it is wrong that it should be done without the public being fully aware of what is happening. Was any public notice given before the protein was introduced for feedingstuffs and have any attempts been made to assess the public reaction to it or the reaction of responsible consumer associations? I should be glad if at the same time the hon. Lady will give some indication as to what are the other petroleum bases of the experimental proteins which are still not in general use. That would be helpful.
  Further, will there be some public announcement before the other petroleum based proteins are brought into use as feedingstuffs or will they just be introduced in the same way as that which we already have? At the very least it seems rather important that the public should know when they are buying meat, which meat on sale at the butchers has been produced in this way. Shoppers are entitled to know that, so that they can choose, if they want to do so, whether to buy this meat. It is also important that the meat should be readily identifiable if something goes wrong.
  My third worry about this type of protein is that this process of food production is so new that a number of experts take the view that completely new test procedures may have to be evolved adequately to assess its safety. Nine years research and £1 million spent on testing may not mean very much unless we can be sure that the right tests have been applied. The hon. Lady will know that many products which we once thought safe are now considered suspect in the light of new research. With any-
  1668
  thing as novel as these proteins we need to be completely clear in our minds about their safety. We are very much in the hands of the producers to introduce the right test procedures. I should be grateful if the hon. Lady would give any information or assurance on that matter.
  Although these proteins are at the moment being used only for animal feed, there will undoubtedly be considerable pressure before long to use them for feeding people. I was relieved that the hon. Lady gave the assurance in her letter that a decision regarding the use of the new proteins in food for human consumption will not be taken for some time. I think that that is right. Will she also give an assurance that public consultation will take place before any step of that kind is taken?
  The hon. Lady will know that in Japan, which has had tragic experience of mineral contamination of food, particularly from mercury, two companies have pulled out from the protein-from-oil business because of public protests. Those companies are taking no further action in production until public consent has been obtained. Will the Ministry attempt to seek that kind of public consent before these novel proteins are introduced for human consumption?
  I have put a number of questions to the hon. Lady and I hope that she will be able to answer some of them. I am sure she will agree that her Ministry is the watchdog of public health and of the public interest in these matters. People are much concerned not only about the food which they eat but from where it comes, how it is produced and what effect it will have on their health.
  11.25 p.m.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I am grateful to the hon. Lady the Member for Wood Green (Mrs. Joyce Butler) for selecting for discussion, for what I believe is the first time in the House, the important and potentially extremely valuable developments which are taking place in new forms of protein. All of us with responsibility for these matters, who, like the hon. Lady, have a real concern for the wellbeing of consumers, have a duty to approach these developments rationally and calmly and to reach decisions

  1669
  in the light of the best scientific, medical and economic evidence and advice. I should like to think—certainly, it appeared so in her comments—that the hon. Lady accepts that this is the approach which is needed.
  The hon. Lady referred to the letter which I sent to her. I should greatly regret making any comment which might have been misleading in this respect. When I saw the OFFICIAL REPORT, I recognised that I had failed to get over in the way I intended a point which seemed directly relevant, namely, that there are currently no plants for the production of protein in this country designed to provide a commercially viable scale of operation. The plants are pilot plants only, designed to try out the technology and to provide protein for testing. I may, however, have given the impression—indeed, it seems clear that I did—that none of this output from production plants was reaching commercial feedingstuffs manufacturers, which in one case was incorrect. I wrote at once to the hon. Lady to explain the position.
  One of the difficulties in discussing this subject is that expressions such as "novel proteins" have come into use to describe, as the hon. Lady said, different products with different end uses. We must start by distinguishing clearly the protein foods which are based on vegetable materials and which are now being marketed in this country as meat analogues. There is nothing particularly new about this kind of protein, which in forms such as soya flour have been extensively used in food for some time. The novelty lies in the new technology which is allowing such food to be given a texture and appearance closely resembling meat in various forms.
  As the hon. Lady said, there is no new problem of safety for the consumer in this development, but it is important to make sure that these new products are marketed under descriptions and with labelling which give consumers all the information they want and avoid any form of confusion or deception. This subject is under close study by the Food Standards Committee at the present time, and I am looking forward to receiving its recommendations.
  1670
  However, the hon. Lady has been concerned tonight mainly about the different line of development in which protein is not derived from vegetables but produced in a single-cell microbial form. Expressed in these terms, the product may be represented as a revolutionary innovation which should be viewed with grave suspicion or described by terms such as "synthetic". The point which I wish to emphasise is that human beings have been using microbiai single-cell proteins in their food for several thousand years. We have described these proteins as yeast. Without it, products as familiar as cheese, bread, wine and beer would not exist. Nor are these proteins "synthetic". The product is organic and natural.
  What is novel and important about recent developments is not, therefore, the basic nature of the protein being produced, but the fact that, after intensive research, methods have been discovered by which the protein can be produced economically by the development of the yeast on various bases, of which some of the most successful to date involve oil in various forms, including liquid paraffin.
  The hon. Lady asked about this process. If the oil base is less pure than liquid paraffin, as in some processes used abroad, the protein is purified after production. That is the difference.
  The protein content of these yeasts is about 60 to 70 per cent., the material being produced by a fermentation process in which the micro-organisms are grown under carefully controlled conditions. There would be two possible uses for such yeast, one as a direct ingredient in food for human consumption, and the other as one of the many forms of protein which are an ingredient in animal feeding-stuffs.
  I can state categorically tonight that there is no immediate issue or problem over the use of these single-cell microbial proteins as a direct ingredient in food. While it is likely that any Delphic group of distinguished scientists, doctors and economists would, by a large majority, forecast that, by some time in the 1980s, such products would be accepted as safe and economically useful as a direct ingredient in food, all this lies in the long term. There is no intention on the part of those producing these proteins

  1671
  in this country to seek to enter the human food market in the near future.
  There is no production capacity available or likely to be available for many years which would make it necessary or sensible to seek such markets. Regulations in this country would in any case rule out such use, whether the proteins were produced in this country or overseas. We shall, therefore, have very adequate time, measured in years, to satisfy ourselves, in the light of the best advice available and the fullest possible evidence, that these proteins are safe for direct consumption before any question of their use will arise.
  The immediate issue, and the one on which I would wish to concentrate tonight, is the market for single-cell protein as an animal feedingstuff. This is an extremely important market. The United Kingdom alone uses 18·5 million tons of material for animal feeding annually, of which some two million tons is high-protein material. A high proportion of feedingstuffs is imported. The annual cost to our balance of payments is considerable—up to £200 million annually.
  Throughout the world, pressure on the world supplies of feedingstuffs is very severe and, bearing in mind that, on the present levels of meat production in the world, some 4½ million tons of fishmeal are being used annually to feed animals, it is easy to see why some alternative source of protein could be most valuable.
  Various forms of new protein are in different stages of development, but the one which is currently being offered in small quantities for commercial use has been subjected to extremely intensive testing and research over a very long period, both to establish the nutritional value of the product and also to make quite certain that it is safe both for the animals and for the humans who consume the meat from the animals.
  This particular product, a yeast grown on a liquid paraffin itself of pharmaceutical standards of purity, which is the only one yet being offered commercially in small quantity—less than ·01 per cent. of our total feed requirements—has been tested at two independent research establishments in the Netherlands, both of which enjoy a high international reputation for the quality and integrity of their
  1672
  work. At one, CIVO at Zeist, tests, of the kind accepted internationally, have been made since 1964 on animals. The results show nothing to suggest a hazard to health.
  Although international standards usually accept three generation studies as valid for materials to be used in human food, the protein has been fed to 15 generations of rats and 25 generations of quail without any ill-effects emerging. At the other establishment, ILOB at Wageningen, in farm rather than laboratory conditions, poultry, calves and pigs have been tested in a programme which has already been in progress for five years. Nutritional results have been encouraging. As regards safety the animals have shown no ill-effects.
  The meat from these animals has been subjected to most detailed research and no signs of any effect arising from the protein used in the feed has been detected. There would seem, therefore, no evidence of any possible hazard to human beings. Indeed, I understand that the director of the research farm and his family have been eating this meat with enjoyment and without ill effect for some years.
  I do not understand on what scientific or other basis the hon. Member thinks that these periods of testing of 13 years for certain tests and five years for others are too short. The scientific advice available to me is that these periods are not merely adequate but exceptional and that it is difficult to think of any other ingredient in feedingstuffs—or indeed in food—which has been tested so thoroughly for so long. I believe this is a matter where the advice of scientists can be more useful than picking a figure out of the air.
  As regards the hon. Member's suggestion that meat from animals which have been fed on new forms of yeast should be specially labelled, this is, I recognise, consistent with her general advocacy of fuller and more informative labelling of food to help consumers. She knows that I support this advocacy in general and I believe that over the years she has contributed to a situation in which we have better labelling now than we had many years ago. We would both agree that there is scope for further improvement. But two basic criteria must be satisfied.

  1673
  The information must be meaningful and it must be practicable to provide it. Neither could be satisfied in the case of labelling meat.
  Even meat from animals fed on diets containing a much higher proportion of the new protein yeasts than in practice would ever be present on an ordinary farm is not to be differentiated in its composition from all other meat from animals fed on diets without such proteins. Depending on the precise content of any diet, for example the amount and kind of fish meal used, marginally distinct analytical results can already be found in meat but these are of no significance for safety or nutrition. It is difficult to see therefore how the consumer could be helped, even if it were possible to do so, by providing information about the animals' diet.
  It is quite a different situation from one in which a colourant or preservative is present in one variety of a feed and not in others where, in the laboratory, there is some difference, however small, in composition of the products. But in any case, on grounds of practicality, it is clearly impossible for a butcher to identify a particular cut of meat as originating from any particular animal fed on any particular diet. Indeed an animal may well be fed on different diets at different times and a compound feeding-stuff containing new protein yeast might have been part of the diet for no more than a week or two in the life of the animal.
  I hope to visit the Wageningen research establishment in the Netherlands with the Ministry's scientific advisers later this summer. If the hon. Lady or any other hon. Member concerned in the agricultural, scientific or consumer aspects of this development, would be interested to accompany the group, I am sure that arrangements can be made.
  All the evidence indicates therefore that the decision to start marketing this product and the decision by commercial feedingstuff manufacturers to incorporate the protein with other forms of protein in their products was fully justified by the evidence and was consistent with responsibilities placed on the companies concerned by the general provisions of the Fertilisers and Feedingstuffs Act.
  1674
  These developments in this country must be seen as part of wider European developments in which this country is contributing valuably to the know-how and technology but where production is proceeding in France and seems likely to start soon in Italy, where there are plans to erect the first commercial scale plant in the United Kingdom in Scotland at Grangemouth. The United Kingdom is certainly not alone in allowing the use of new single-cell proteins in feedingstuffs as some new protein yeast is permitted in animal feed in France, Germany, Holland, Italy, Belgium and Denmark.
  The hon. Lady referred to recent Japanese decisions. Naturally we keep ourselves fully informed of developments of this kind all over the world. But we must not allow ourselves to panic and to follow slavishly decisions reached in other countries.
  I believe that within the nine countries of the EEC we have scientific and medical expertise of a quality to reach our own decisions rather than to rely on Japanese views. In any case the Japanese Government have not banned the Japanese form of new protein yeasts. All the tests so far have shown no risk to health but further tests at independent research stations are being carried out. Tests of the length and independence of those made in the Netherlands are what the Japanese Government are waiting for before approving the proteins.
  The Government are satisfied with the way in which these developments are proceeding at present in this country. They believe that the companies concerned are to be congratulated both on their initiative and in investing in the substantial costs of research needed to develop plant to provide yeast proteins at an economic cost. We believe that developed in a European context these new products can make a small but useful contribution to our total requirements of protein for feedingstuffs, achieve a useful saving in our import bill and at the same time earn us royalties when other countries use production processes which have been tried out successfully in this country.
  Looking, however, to the longer term, the Government are reviewing with the aid of the Food Additives and Contaminants Committee the whole system of control over products which are based

  1675
  in some way on mineral hydrocarbons. It may well be that the present combination of provisions relating to the sale of feedingstuffs in the Fertilisers and Feed-ingstuffs Act and Regulations and those in the Mineral Hydro-Carbons in Food Regulations in relation to food needs to be supplemented by other controls. While the few companies which are at present operating in the development of new forms of protein for feedingstuffs are acting with great responsibility and keeping us fully informed, we must make certain that the public would be protected from any future developments especially if they were in less responsible hands.
  Our present laws already provide protection for the purchaser of animal feedingstuffs and in particular lay down that any material sold as a feedingstuff should not be deleterious to the animals. We shall shortly be strengthening these laws by bringing into force Part IV of the
  1676
  Agriculture Act 1970 and by making new regulations which will, amongst other things, implement the EEC Directive on Additives in Feedingstuffs.
  As I have already indicated, these new protein feedingstuffs are being made and used in other EEC countries and we shall be considering with them and with the EEC Commission whether any special rules about description, labelling or safety of feedingstuffs are required.
  The new proteins will, as I have said, not be used in food for a period which I hope even the hon. Lady will find adequately long.
  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 sixteen minutes to Twelve o'clock.

ENVIRONMENT
  Council Housing
  Council Housing
  Housing (London)
  Housing (London)
  Tinsley Viaduct
  Tinsley Viaduct
  Rate Demands (Waltham Forest)
  Rate Demands (Waltham Forest)
  London Motorway Plan
  London Motorway Plan
  Defence Land
  Defence Land
  Ringway 3
  Ringway 3
  Maplin
  Maplin
  Al, Skellow—Scotch Comer
  Al, Skellow—Scotch Comer
  Operation Eyesore
  Operation Eyesore
  Heavy Goods Vehicle Drivers (Hours of Work)
  Heavy Goods Vehicle Drivers (Hours of Work)
  Land Prices
  Land Prices
  Judges' Lodgings
  Judges' Lodgings
  Drivers (EEC Requirements)
  Drivers (EEC Requirements)
  Planning Applications
  Planning Applications
  Motor Vehicles (Petrol Replacement)
  Motor Vehicles (Petrol Replacement)
  Retired Persons' Bungalows (Doncaster)
  Retired Persons' Bungalows (Doncaster)
  Railways Policy
  Railways Policy
  Itinerant Tinkers (Bushey)
  Itinerant Tinkers (Bushey)
  Residential Caravan Sites
  Residential Caravan Sites
  Squatters
  Squatters
  Thermal Insulation
  Thermal Insulation
  A19, Billingham
  A19, Billingham
  Motor Vehicles (Separation Distances)
  Motor Vehicles (Separation Distances)
  A102(M)-A2(M) Link
  A102(M)-A2(M) Link
  Urban Areas (Studies)
  Urban Areas (Studies)
  Derelict Cars (Disposal)
  Derelict Cars (Disposal)
  "Learn to Swim" Campaign
  "Learn to Swim" Campaign
  World Oil Shortage (Transport Policy)
  World Oil Shortage (Transport Policy)
  Driving Tests (EEC Regulations)
  Driving Tests (EEC Regulations)
  Channel Bridge
  Channel Bridge
  Rail Freight Services
  Rail Freight Services
  Traffic Signals (Computerisation)
  Traffic Signals (Computerisation)
  Provisional Driving Licences
  Provisional Driving Licences
  Mobile Weighbridges
  Mobile Weighbridges
  Channel Tunnel
  Channel Tunnel
  Housing Yardsticks
  Housing Yardsticks
  Ports (Roll-on/Roll-off Traffic)
  Ports (Roll-on/Roll-off Traffic)
  Driving Licence Application (Delay)
  Driving Licence Application (Delay)
SCOTLAND
  Electricity Supplies (Remote Areas)
  Electricity Supplies (Remote Areas)
  Schools (Unruly Behaviour)
  Schools (Unruly Behaviour)
  North Sea Oil
  North Sea Oil
  Road Accidents (Injuries)
  Road Accidents (Injuries)
  Water Scheme Engineers
  Water Scheme Engineers
NATIONAL FINANCE
  Tax Avoidance
  Tax Avoidance
  State Corporations
  State Corporations
  Rating (Valuation Appeals)
  Rating (Valuation Appeals)
  Pension Contributions
  Pension Contributions
  Balance of Payments
  Balance of Payments
AGRICULTURE, FISHERIES AND FOOD
  Food Prices
  Food Prices
  COURT OF PROTECTION (MENTAL PATIENTS)
  COURT OF PROTECTION (MENTAL PATIENTS)
  INDICTMENTS AND TRIALS (NORTHERN IRELAND)
  INDICTMENTS AND TRIALS (NORTHERN IRELAND)
CIVIL SERVICE
  Cost
  Cost
  Management Consultants
  Management Consultants
EDUCATION AND SCIENCE
  Special Schools
  Special Schools
  Welfare Officers
  Welfare Officers
  European Educational Research Trust
  European Educational Research Trust
EMPLOYMENT
  Disabled Persons (Easington)
  Disabled Persons (Easington)
HOME DEPARTMENT
  Rhodesian Citizens
  Rhodesian Citizens
  Mr. Peter Niesewand
  Mr. Peter Niesewand
  Dangerous Driving Convictions
  Dangerous Driving Convictions
  Metropolitan Police (Rent Allowance)
  Metropolitan Police (Rent Allowance)
  Security Companies (Uniforms)
  Security Companies (Uniforms)
  Police (Northern Ireland Service)
  Police (Northern Ireland Service)
FOREIGN AND COMMONWEALTH AFFAIRS
  Rhodesia (British Journalists)
  Rhodesia (British Journalists)
  Gibraltar
  Gibraltar
NORTHERN IRELAND
  House Prices
  House Prices
  Capital Murder
  Capital Murder
  Medical Graduates (Emigration)
  Medical Graduates (Emigration)
  Police Officers (Temporary Engagements)
  Police Officers (Temporary Engagements)
  Crown Links
  Crown Links
POSTS AND TELECOMMUNICATIONS
  BBC Television Programmes (Republic of Ireland)
  BBC Television Programmes (Republic of Ireland)
SOCIAL SERVICES
  Saccharin
  Saccharin
  Mental Hospital Patients
  Mental Hospital Patients
  Social Security Headquarters, Longbenton
  Social Security Headquarters, Longbenton
  London Ambulance Service
  London Ambulance Service
TRADE AND INDUSTRY
  Computers Systems and Electronics Requirements Board
  Computers Systems and Electronics Requirements Board
  Energy Policy (Coal)
  Energy Policy (Coal)
  Shipping Services (Europe)
  Shipping Services (Europe)
  Shipbuilding (Booz-Allen Report)
  Shipbuilding (Booz-Allen Report)
  "Royston Grange" (Liberian Inquiry)
  "Royston Grange" (Liberian Inquiry)
WALES
  Council Housing (Costs)
  Council Housing (Costs)

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

MOTORWAY FENCING PAYMENT DISPUTE
LORD INGLEWOOD: 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 why they are holding up payments due to the Home Grown Timber Marketing Corporation for fencing material supplied in 1969 for the Hawley/Basingstoke section of the M.3 motorway and whether they will make a Statement.
LORD MOWBRAY AND STOURTON: My Lords, I understand that all payments to which the contractor is entitled have been made.
LORD INGLEWOOD: My Lords, is my noble friend aware that his information differs somewhat from mine, and that there is still owing a sum of something over £1,000, without calculating interest on the money, which has been outstanding so long on account of the curious and uncommercial ways of the Department.
LORD MOWBRAY AND STOURTON: My Lords, I am aware that the corporation concerned claims that it has not been paid in full. The fact remains that the Department has made every effort to get a meeting with the corporation, which has refused to meet any officials from the Department until its letters are answered (what it calls) "satisfactorily".
LORD INGLEWOOD: My Lords, is my noble friend also aware that that last reply he has given me is extremely unfair; that when the Department queried
810
some of the accounts the Home Grown Timber Marketing Corporation, which is a highly respectable body, said that if the Department gave it reasons why it queried the accounts there would then be some purpose in having a conference, but that there was no purpose as long as the Department maintained silence about its opinion? Will he in fact reply to this correspondence which has been outstanding so long?—and then perhaps if a conference could be called some satisfactory result might emerge.
LORD MOWBRAY AND STOURTON: My Lords, the reasons are perfectly well known. I could, if it was required, bore the House with them, but as it might turn into a matter of law I should prefer not to. We in the Department are still hoping that our officials will have a chance of meeting the corporation and discussing the matter in a reasonable manner.
LORD HUGHES: My Lords, the noble Lord, Lord Inglewood, said "without taking account of interest". Do the Government in fact pay interest on these outstanding balances when they are settled?
LORD MOWBRAY AND STOURTON: My Lords, my advice is that that matter is dealt with in accordance with the conditions of contract.
LORD SLATER: My Lords, would the Minister inform the House why it is necessary for Ministers to stand at that Box and say that "the officials of the Department would be prepared to meet them"? What is the matter with the Minister? Why cannot be meet them? Here is a major company in dispute and surely someone must be arbiter or able to finalise the position. It is not something new for Ministers to be brought in to deal with an unsatisfactory situation when their agents have been working on behalf of the Ministry. Surely the Minister ought to give this matter further consideration.
LORD MOWBRAY AND STOURTON: My Lords, this is a perfectly ordinary mercantile agreement. We have paid what we think we should have paid. This firm is saying that we should have paid more. We say we have not paid the very, very small balance outstanding

811
because certain obligations in the contract were not observed; in other words, the other side were in default regarding certain amounts of money which have therefore been withheld. We cannot bring Ministers into such small, petty matters.

NAMIBIA: LABOUR CONDITIONS AND WAGES
2.40 p.m.
LORD BROCKWAY: 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 (a) propose to the United Nations Security Council that a minimum living wage and humane accommodation for African workers be required in Namibia (South-West Africa), and (b) bring pressure on British companies to end the sub-human conditions under which their Ovambo workers are employed.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, labour conditions in South-West Africa and the practices of foreign firms operating in the Territory were the subject of two of the operative paragraphs of Resolution No. 310 adopted by the Security Council on February 4, 1972. As we have often said, the Government hope that British firms will recognise their long-term interest in establishing a reputation as good employers.
LORD BROCKWAY: But, my Lords, is it enough just to express a hope? Has the noble Baroness read the article by Adam Raphael in the Guardian of May 5, in which he said that British companies in Namibia are paying lower wages and operating under worse conditions than exist even in the Republic of South Africa which he recently exposed? Is she aware that he said that British companies in Winhoek are compelled to send their African employees to a compound—wire fences around it, concrete bunkers, 20 crowded into a room, food prepared with spades and pitchforks, and the smell
812
of urine everywhere? Is it not necessary for the Government to make some protest for the reputation of Britain in Namibia?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, yes, I did read the article. I cannot comment on the specific allegations, but I can say that the conditions of employment are in the first place a matter for individual firms. It is for that reason that the Department of Trade and Industry, as the noble Lord will know, circulated a pamphlet which pointed out that it was perfectly open for British firms to give wages which were above the minimum.
LORD BROCKWAY: My Lords, is the noble Baroness aware that Mr. Raphael gave a list of British companies which are paying less than the minimum level which was decided by the Winhoek Non-European Affairs Department? Is she aware that among these is the British Steel Corporation, which has a minority of shares in one of these companies? As this is a national company, surely it is the duty of Her Majesty's Government to bring pressure to bear upon it to see that living wages are paid to the employees of its subsidiary in Namibia?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the number of British firms engaged mainly in mining, banking and insurance is only about 25, and the publicity given to this question will no doubt make British firms consider their employment conditions.

RAILWAYS: POLICY REVIEW
THE EARL OF KINNOULL: 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 can now make a Statement on the proposals made by British Railways for further electrification; and whether they will name the lines proposed for closure as part of the same overall plan.
LORD MOWBRAY AND STOURTON: My Lords, I do not know what projects the noble Lord has in mind. The question of electrification, and the separate question of the future size of the rail

813
system, are at present under consideration as part of the rail policy review. My right honourable friend the Minister for Transport Industries will report to Parliament as soon as the review is complete.
THE EARL OF KINNOULL: My Lords, I am grateful to my noble friend for that Answer. I admit that I do not know exactly what the Railways Board had in mind, except that they made proposals in January for electrification. Is my noble friend aware that many enthusiasts of railways hold the view that further electrification of railways is quite vital to their competitiveness in the future? Can the noble Lord also say whether in future local authorities will be consulted before, rather than after, the publication of the line closure proposal, in view of the damaging effect it often has in a locality?
LORD MOWBRAY AND STOURTON: My Lords, I thank my noble friend Lord Kinnoull for his remarks. I accept—and I think it is generally accepted—that electrification is more efficient, but equally it bears a heavy capital cost and before undertaking further electrification one has to be certain that the demand will be sufficient to justify it. That is what the policy review will consider. With regard to local authorities being consulted, I will report what my noble friend has said to my right honourable friend and I will endeavour to ensure that his wishes are met.
LORD POPPLEWELL: My Lords, will the Minister be a little more forthright as to when he expects to report to the House upon the proposals that have been under consideration by the Ministry for very many months? Would he not agree that the electrification already undertaken in the North-West Region has increased traffic by 150 per cent.? Will he also agree that the proposal of the Railways Board for further electrification in the G.N. section of rails coming into London will provide an estimated saving of £19 million? Is it not a matter of urgency that the nation should know the reaction of the Government to that proposal? Furthermore, is not the noble Lord also aware that electric locomotives cost only two-thirds in maintenance charges compared with diesel locomotion? Are these not matters with which the Government
814
should deal with great urgency in the interests of the nation?
LORD MOWBRAY AND STOURTON: My Lords, I appreciate the anxiety expressed by the noble Lord, Lord Popplewell, and I know his interest in this subject and his great concern for the welfare of the men employed on the railways. For over two years the Department has been considering intensive studies on this subject and I am certain that the noble Lord will be the first to wish that when this policy review is submitted to Parliament the answer will be right. There have been too many policies of "Stop-Go" on the railways. I accept what the noble Lord has said about electrification being more efficient and cheaper than diesel locomotion in regard to maintenance costs, but the initial cost is very high. However, these points are being looked at.
BARONESS STOCKS: My Lords, are Her Majesty's Government cognisant of the general policy outlined by Mr. Rippon, and reported in The Times to-day, in favour of a traffic policy which aims at reducing car use and encouraging the use of public transport? If the Government are cognisant of that policy is it not foolish to spend large sums of money on electrifying an inter-city service, such as London to Bristol or London to Manchester, and at the same time building extremely expensive motorways to encourage the use of cars?
LORD MOWBRAY AND STOURTON: My Lords, the noble Baroness, Lady Stocks, makes the case for the reason for the Department of the Environment. It is a Department to co-ordinate various Ministries and various interests in the general interests of the nation.
THE EARL OF KINNOULL: My Lords, I sense that my noble friend is friendly to this Question, perhaps unlike the first Question, so may I ask what is the latest estimated date for the publication of the review?
LORD MOWBRAY AND STOURTON: My Lords, I am sorry, but I cannot give any date at this moment.
LORD HURCOMB: My Lords, May I ask the noble Lord whether he realises that if the old railway companies in the early 1930s had only spent the capital sum necessary to electrify the railways then,

815
the whole future of the railways would have been different and the capital costs would just have been forgotten.
LORD MOWERAY AND STOURTON: My Lords, I accept that: and if all Governments could govern with hindsight they would all be very clever.

TECHNICAL EDUCATION COUNCIL: MEMBERSHIP
2.50 p.m.
LORD WELLS-PESTELL: 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 why no member of the trade union movement was appointed to the Technical Education Council.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF EDUCATION AND SCIENCE (LORD BELSTEAD): My Lords, my right honourable friend, in establishing the Technician Education Council on the advice of the Committee on Technician Courses and Examinations, accepted the Committee's recommendation that members of the Council should be appointed in a personal capacity. Therefore no member was appointed as representative of a particular interest. The intention was that, collectively, members should contribute as wide a range of experience as possible from the relevant fields and among the members is one who holds office within a trade union. There will therefore be practical experience available to the Council from this important field.
LORD WELLS-PESTELL: My Lords, I am obliged to the noble Lord the Minister for his reply, but may I ask him whether, in setting out the terms of reference of this Council, which are:
"will be concerned in the development of policies for a scheme of technical education for persons of all levels, of technician operations in industry and elsewhere,"
it would not have been advisable to have somebody from one of the trade unions in which there has been considerable study, undertaken over a number of
816
years, particularly in the field of technical education? The member to whom the noble Lord the Minister refers may well be a member of a trade union, although I should have thought that it was much more of a professional association than a trade union. The trade union movement has a great amount of expertise and knowledge to offer in this particular field. May I ask the noble Lord whether, having regard to the fact that matters like wage structures will eventually arise, it would not have been advisable to have somebody officially representing the appropriate trade union?
LORD BELSTEAD: My Lords, I accept what the noble Lord says about the expertise which the trade unions can bring to this work. My right honourable friend consulted very widely, and among the bodies whom she consulted was in fact the Trades Union Congress. As regards the future, it would be fair to say that the Council will proceed with the close involvement and co-operation of industry, professional bodies and the education service, both centrally and at local and regional level, and it will be for the discretion of the Council as to what contacts it has with the trade unions from now on.
LORD PARGITER: My Lords, would the noble Lord not agree, in the circumstances, that having regard to the importance of the trade union movement and their particular interest in this problem of technical education—many unions are interested in this question, both directly and indirectly—although the appointment may well have been a personal one, is it not often the practice for the Minister to consult various organisations before making appointments, and to appoint people who will easily fill the Bill from the Minister's point of view and also from the trade union point of view?
LORD BELSTEAD: My Lords, yes, that is what my right honourable friend did, and I expanded on that aspect a moment or two ago in my reply to the noble Lord, Lords Wells-Pestell.
BARONESS BACON: My Lords, while appreciating what the noble Lord said about choosing people as individuals rather than as representatives, is he aware that the Trades Union Congress has a very strong sub-committee dealing with

817
the whole question of further and technical education, and that when the previous Government were considering all these matters this sub-committee gave me the greatest help? It seems a pity that nobody who has had experience on that sub-committee is on this Council.
LORD BELSTEAD: My Lords, my right honourable friend made the appointments in a personal capacity because that was the recommendation of the Haslegrave Report. That is why it was done in that way. But may I repeat that my right honourable friend indulged in the very widest consultations, and these included the T.U.C. It was in the light of those consultations that my right honourable friend finally made her appointments.
BARONESS BACON: My Lords, I think that the noble Lord has misunderstood my question. I said that I appreciated the point he made about the appointments being made in an individual capacity and not as representatives. But is it not also rather curious that in their individual capacity nobody connected with the T.U.C. and their very important subcommittee has been chosen in an individual capacity to sit on this Council?
LORD BELSTEAD: My Lords, my right honourable friend accepted the main recommendations of the Haslegrave Report. It would have been strange if my right honourable friend had extracted that one particular recommendation, that appointments should be made in a personal capacity, and said that she did not agree with that. As regards a representative of the trade union movement, in my original reply I made it clear that there is such a representative although not sitting in a representative capacity on the new Council.
LORD WYNNE-JONES: My Lords, does not the noble Lord find it very strange that when this Council was set up, with I think some twenty members, they could find only one suitable trade unionist; that that trade unionist—I believe I am right in saying—represents the electronics and radio side, and that the whole of the rest of the technical field has been ignored? And is the noble Lord aware that throughout the technicians' unions there is now an elaborate grading system, in which the
818
positions that technicians attain, and the salaries they are paid, depend upon the qualifications they have? And does he think it right and suitable that such people are ignored in a Council which is concerned with laying down the conditions for these technical qualifications?
LORD BELSTEAD: My Lords, there is no question of ignoring anybody; and for the Record may I say that the noble Lord was not correct when he suggested that there was a representative of a particular trade. If I may remind the noble Lord, the recommendation in the Report was that probably two-thirds would be representatives of educational interests and one-third of the Council probably should be representatives of what the Report calls "other interests". In fact, if noble Lords look at the list of representatives who are now on the Council it will be found that the balance is rather more evenly divided than that.

ICELANDIC FISHERIES DISPUTE
2.56 p.m.
LORD HOY: My Lords, I beg leave to ask the Question of which I have given Private Notice—namely:
Whether Her Majesty's Government will make a Statement regarding the latest incidents in the Icelandic fisheries dispute when the Icelandic gunboat "Tyr" fired three live shells at the Hull trawler "Macbeth", and made a boarding attempt upon the trawler "Lord Alexander".
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the incidents to which the noble Lord refers occurred between 2100 and 2200 G.M.T. on Monday, May 14. According to the information we have received, two Icelandic coastguard vessels, the "Thor" and the "Tyr", approached a group of 24 British trawlers off the North East coast of Iceland. The "Thor's" guns were manned before reaching the trawlers. Her cutting gear was streamed. The "Tyr" ordered the trawler "Lord Alexander" to stop or she would fire: and said sho intended to board. The trawler "Macbeth" then interposed herself between the "Tyr" and the "Lord Alexander", thereby frustrating "Tyr's"

819
attempts to board the latter. At this point "Tyr" fired a shot which fell close to the "Macbeth". Later, "Tyr" fired another shot in the general direction of the main group of British trawlers. At no time did any British vessel attempt to ram any Icelandic vessel.
On May 7 my right honourable friend the Foreign and Commonwealth Secretary said in another place that if there were an armed attack on a trawler which could not be repelled by the means we have there now, there would be no alternative but to send in the Navy. In this case, an Icelandic attempt to arrest a British trawler has been successfully repelled: and the two shots fired seem to have been warning shots, not an armed attack. It was therefore not necessary to use the Royal Navy and the fishing industry as a whole has not yet requested naval protection. If the Icelandic Government continue such actions on the fishing ground, they will damage, perhaps irrevocably, the prospects of reaching an interim agreement. Her Majesty's Government's policy remains that of reaching a solution that is fair and satisfactory to both countries.
LORD HOY: My Lords, we are grateful to the noble Baroness for her Answer, although in certain parts I find it a little difficult to understand. If in fact the "Thor's" guns were manned, as the Statement says, before reaching the trawlers, and two shots were fired—and the noble Baroness admits that one was very near—what would have been the position supposing it had hit the trawler? Would that have been regarded as an attack, or would it have been excused from being an attack simply because it was only a near-miss? If all these things happened, what is going to constitute the protection for the fleet; or what is going to be regarded as provocation? The noble Baroness said that,
"It was therefore not necessary to use the Royal Navy as the fishing industry as a whole has not yet requested naval protection."
I should like her to explain what she means by "as a whole". Does she mean the fishing industry as represented by the trawler owners? Is the position that those who sail in the trawlers have in fact asked for protection while it is the remaining part of the industry that has not asked for protection? Secondly, I am
820
grateful to the noble Baroness for saying how the fleet has behaved in such a considerate manner in face of this latest provocation from the Icelandic Government.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I understand that many of the Icelandic gunboats do have their guns manned. It is not at all clear, from the reports we have had, that the two shots which were fired were more than warning shots. So far as the request for naval protection is concerned, as I understand it the skippers would like naval protection; the owners and the deckhands, those who sail in the trawlers, do not at present want such protection. It is therefore not the considered view of the industry as a whole that they would like naval protection now. I can only say that when we left them, the Icelandic Government said that they would consider our proposals carefully. We do not think that these actions are in any way a good prelude to further negotiations.
LORD HOY: My Lords, may I ask the noble Baroness one further question? If in fact protection is required by the British, fishing fleet, in the event of Icelandic gunboats shelling our fishing Peet, is the Navy in a position to be called upon to act very quickly indeed?
BARONESS TWEEDSMUIR OF BELHELVIE: Yes, my Lords.
LORD SHINWELL: My Lords, may I ask the noble Baroness whether she is aware that from some quarters has come a suggestion that the reason for the Government's reluctance to take drastic action is because we have not got a spare frigate to send? Is there any truth in those allegations?
BARONESS TWEEDSMUIR OF BELHELVIE: No, my Lords.
LORD SHINWELL: My Lords, if the noble Baroness says No, would she be kind enough to explain this negative reply? Is there a frigate available to send?
BARONESS TWEEDSMUIR OF BELHELVIE: Yes, my Lords more than one frigate.
LORD BLYTON: My Lords, is the Minister aware that we all appreciate the tolerance with which she has conducted negotiations with the Icelandic

821
Government? Is she further aware that those of us who live among the trawler people who go to Iceland to fish know that they are far from happy about the hazardous way in which they have to earn their living in the Icelandic waters? As we have the International Court behind us, is it not time that we said to Iceland: "We have been kicked around long enough. It has now got to stop."?
BARONESS TWEEDSMUIR or BELHELVIE: My Lords, this is what we have said, both before and during negotiations, and now. We think that it is extraordinary that two old allies, two members of NATO, cannot reach agreement. We believe that we have leaned over backwards in putting forward proposals which could be acceptable to the Icelanders; and the Icelanders, I regret to say, have not moved an inch.
LORD BLYTON: My Lords, would not the noble Baroness think that in the present circumstances, after months and months of tolerance, if we put two frigates there—forget the tugs; they are not much use—we could negotiate far better from strength than from weakness?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I would not say that the tugs are of no use. I understand that the trawlermen themselves, and all concerned, have paid tribute to the very good seamanship and support and protection of the tugs. But, as I said, if there is an armed attack, the Navy is ready.
LORD SHEPHERD: My Lords, the noble Baroness's Statement does not refer to any official protest by Her Majesty's Government to the Government of Iceland as a consequence of the incident yesterday. Can she say whether official representations are being made? Does the noble Baroness also appreciate, taking the warning made by the Foreign Secretary and also the noble Baroness's Statements here, that if an incident of this sort occurs which could, if a shot had been accurate, cause damage and possible loss of life, and one does not react forcefully or introduce a more clear presence of British naval forces, the Government of Iceland may well feel that Her Majesty's Government do not intend to fulfil their pledge to the fishing fleet?
822
Can the noble Baroness make clear that she has made official representations to the Government of Iceland, and also make it quite clear that we are not prepared to stomach this state of affairs any longer, and that if another incident of this nature should arise then the British Navy will be put in?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, it always takes time to find out the exact facts, which, of course, are disputed in some respects by the Icelandic Government. Our Ambassador in Iceland has been instructed to register a very firm protest on this matter. I think the difficulty in all these incidents is to find out whether it is a warning shot or a real shot. I think I should like to leave it in the way it was described by my right honourable friend the Secretary of State in another place?
LORD PARGITER: My Lords, apart from the reference to the International Court, would it not be advisable to ask the United Nations to get a mediation team to act in this matter between the two countries?
BARONESS TWEEDSMUIR or BELHELVIE: My Lords, I do not think so. We are still, happily, in consultation with each other.
LORD PARGITER: Happily?
THE EARL OF BALFOUR: My Lords, may I ask my noble friend one question? Is it true that our trawlers were fishing in a conservation area?
BARONESS TWEEDSMUIR OF BELHELVIE: No, my Lords, it is not so. This particular area was designated by Iceland, when she purported to increase to 50 miles her conservation area. But the North-East Atlantic Fisheries Commission has twice refused Icelandic requests to declare this area a conservation area, and its refusal has been on scientific advice. Therefore, our trawlers have an absolue right to fish there.
LORD SEGAL: My Lords, since both the Icelandic gunboats and the British trawlers now appear to be acting in groups, would it not be advisable for some shadowing presence, short of active intervention, to be exercised in the background by the British Navy?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we have frigates outside the 50-mile limit. They have an absolute right to sail within the 50-mile limit, but in order to try to reduce tension in the area they have not yet done so. We have in fact got three tugs, which are very successful, on the grounds; and another one, a more powerful one, is to join the fleet in the middle of June.

BRITISH TRANSPORT DOCKS BILL
Read 2a;, and committed to the Committee on Unopposed Bills.
LONDON TRANSPORT BILL
Read 2a;, and committed to the Committee on Unopposed Bills.

GOLD PRICES AND THE MONETARY SYSTEM
3.8 p.m.
LORD BOOTHBY LORD BOOTHBY rose to call attention to the increasing disparity between the official price of monetary gold, and the price of gold bullion on the free market; and to move for Papers. The noble Lord said; My Lords, I rise to move the Motion standing in my name on the Order Paper. I am going to be very brief, and as simple as I can, in the circumstances, because it is not altogether a simple subject. As I read to my horror this morning, I have already inflicted upon your Lordships half a dozen speeches on the subject of gold, and everything I have said in those speeches has now come true. I am on the record. I should like to say, to begin with, that as a very young Member of another place I was opposed to our return to the Gold Standard in 1925, at the pre-war parity of exchange. I entirely agree with what the noble Lord, Lord Citrine, said the other day: that that return to the Gold Standard at the wrong parity was responsible primarily for the General Strike of 1926, and then for massive unemployment for a period of very nearly 15 years.
The return to the gold standard at the pre-war parity of exchange was recommended, I regret to say, by an uncle of mine, the late Lord Cunliffe. He was
824
an irascible old man and I was a very impertinent young one. I remember dining alone with him one night, and we had the usual argument about the fatality of our going back to the gold standard in 1925 at the wrong parity of exchange. Then he suddenly turned round to me and said, "I have a problem on my hands". I asked, "What is that?", and he replied, "During the war"—this was immediately after the war—when I was Governor of the Bank, I had as a director of the Bank a brilliant man with a commanding personality and his name was Montagu Norman. He had a nervous breakdown and he went to Switzerland to consult a psychiatrist whose name, I think, was Jung. I do not believe in psychiatrists, and I did not believe that that was the answer to Montagu Norman's career, which could be a brilliant one; so I ordered him to come back from Switzerland and become assistant to the Deputy Governor of the Bank of England. But my problem remains". I asked, "What is that?", and he replied, "If he ever does become Governor of the Bank of England—and he must do in this situation—he will never give it up; and that must lead to the nationalisation, inevitably, of the Bank of England, of which I should strongly disapprove". That, of course, is exactly what happened.
I opposed in another place Norman's policy of deflation during the 'twenties and 'thirties which led to the massive unemployment, and which was originally caused by our return to the gold standard at the wrong parity. But then, in 1934, President Roosevelt raised the price of gold to 34 dollars an ounce, and that began the haul out of the deflationary process and led to an increase in employment, both in the United States and in this country. The only other point I want to make about the background is that I moved the rejection of the Bretton Woods Agreement in another place in 1945, on the ground that it fixed the price of gold at a ludicrously low level—the 1934 level, in fact and also exchange rates in a world of chaos. The Bretton Woods agreement is now in ashes.
The truth is that two-thirds of the world believe in gold and no one believes in anything else, least of all in the dollar. People do not believe in S.D.R.s either, which they think are phoney gold—which is what they are. The fact is that we

825
have at present no working international monetary system. At intervals, the central bankers go to Basle like agitated hens and come back with nothing. Why? Because of the insensate refusal of the Americans to raise the price of monetary gold, and their persistent attempts to demonetise gold altogether.
I suggest to your Lordships that it is time, and high time, that we told the United States where they get off. They are not in very good shape now, and it might be a convenient moment to do so. We should certainly have strong European support. Mr. Rueff has never changed his view that gold must be the basis of our monetary system, and he was supported throughout by General de Gaulle. At this moment, the monetary price of gold is fixed by the United States at about 40 dollars an ounce. The price of gold bullion on the free market is well over 100 dollars. I submit to your Lordships that this is a ludicrous situation. Gold will go on from strength to strength, and will come back to form a key part of the international monetary system; and the sooner the better, it is argued by the anti-gold lobby in the Congress of the United States that this would be of great benefit to South Africa and to the Soviet Union. It would be of some benefit, but not so much as we think. Costs and wages are rising in both of those countries, industrial demand for gold is increasing, and they can always sell it on the free market. So I do not think that raising the price of monetary gold will be of very much benefit, either to South Africa or to the Soviet Union. And if so, why not? The South African Government would mellow under the influence of prosperity. And the Soviet Union would find it easier to buy American corn.
What am I asking for? I am asking that the price of monetary gold should be raised to a realistic level; and that the leading currencies of the world should be made convertible, with more flexible exchange rates—wider margins. This would bring us two great advantages: first of all, an automatic curb on the raging inflation which at present affects us all; and, secondly, adequate liquid reserves, if wisely handled by the central banks, to finance the increasing volume of world production and trade which undoubtedly confronts us during the next
826
decade. In short, my assertion is that the amount of liquid reserves in the free world is totally inadequate for our requirements over the next ten years.
Some years ago I made a speech, either in this House or in another place, on the subject of goods versus gold. I came down in favour of goods. because the true measure of a country's wealth is the gross national product, much of which in our case has to be exported. But I went on to say, as Keynes did, that there must be a stable measuring rod of value, at the right price. Gold, my Lords, is that measuring rod. It is the one and only firm point of reference so far as value is concerned, and there is no other. Therefore, I say that we must face up to the realities of the present situation, recognise the true value of gold, and make it the true measuring rod of value. Until we do that, we shall go on and on in the chaos in which we now find ourselves. My Lords, I beg to move for Papers.
3.20 p.m.
THE EARL OF DUNDEE: My Lords, I merely wish briefly to inquire from my noble friend the Leader of the House, who is to reply to this debate, whether the Government are hoping for, or trying to bring about, a substantial or significant increase in the total amount of international currencies which can be used for settling trade balances as between one country and another; and I strongly agree with the noble Lord, Lord Boothby, when he says, as he did just now, that the total of our liquid reserves is quite inadequate. That is at the bottom of many of the greatest world economic problems. Of course, there are many ways in which you can achieve the object of increasing your liquid reserves. One of them, as the noble Lord, Lord Boothby, has just argued in his most interesting speech, would be by raising the monetary price of gold to a level equal to its price as an ordinary commercial commodity. I would gladly welcome that, if I thought we were likely to get enough international agreement, but I doubt whether raising the price of gold would do enough in itself to solve the problem. My noble friend Lord Jellicoe will correct me if I am wrong, but I think that he told us not long ago, in reply to a Parliamentary Question from Lord

827
Boothby, that the Treasury did not consider this was a good thing to do in present circumstances.
Of course, this has not always been so. I remember that in 1960–61, when I was a member of the then Conservative Government, some of our Treasury advisers were strongly in favour of raising the price of gold, but they were stymied by a public declaration by President Kennedy in the United States, who solemnly promised that the monetary value of gold would never be raised in relation to the dollar, which I think was a very great pity. The noble Lord, Lord Boothby, has referred to this, and he suggested that, in spite of American opposition, we should go ahead. I do not want to make any comment of my own about that, but I should be interested to hear from my noble friend how much international agreement he thinks would be necessary if we were to proceed on those lines.
But, of course, there are other ways of reforming the basis of our international currency and of increasing its quantity. I do not think the noble Lord, Lord Boothby, has ever been accustomed to express loud admiration of Her Majesty's Treasury—
LORD BOOTHBY: Terrible !
THE EARL OF DUNDEE:—but he will remember that during the war Sir Richard Hopkins, who was then the Permanent Head of the Treasury, acquired a great admiration for the late Lord Keynes, and Lord Keynes was sent as the chief British representative to Bretton Woods, with the full hacking of Sir Winston Churchill's Coalition Government and of the British Treasury for his proposal to create, I think it was, 25,000 million dollars' worth of new international money, created out of nothing, in units to which he proposed to give the rather unlyrical name of Bancor.
LORD BOOTHBY: My Lords, may I interrupt the noble Earl for just one moment to say that Lord Keynes was hopelessly defeated at Bretton Woods by Mr. Vinson and Mr. Harry Dexter White.
THE EARL OF DUNDEE: That I know only too well, my Lords. I think it is worth first saying that in my own view,
828
and I think very likely in that of Lord Boothby, if this proposal, sponsored by the British Government at Bretton Woods and conceived by Lord Keynes, had been agreed to by our Allies at Bretton Woods, then the economic progress of the free world since the war, and particularly of the undeveloped countries, would have been very much faster than it has been. But, of course, our proposals were not agreed to. Lord Keynes was, I think, prevailed upon to accept a very poor compromise, which I think he persuaded him, self might be just good enough to work. It is a thing we all often do when we find that nearly everybody else is against us and when we are very anxious to find some kind of working compromise. Anyhow, he agreed to the substitution for his proposed "Clearing Union" of the present International Monetary Fund which subsequently turned out to be much tighter in the supp;y of money than Keynes thought it was going to be. Lord Boothby was one of the few people who, when this proposal was presented to Parliament, opposed it, and I am bound to say that I think the noble Lord was right. As for Lord Keynes, in the opinion of at least one of his biographers Keyne's bitter disappointment after the war, when he found that this compromise which he had been prevailed upon to agree with was not going to work as he had hoped it would, was one of the causes which led to his untimely death in 1946.
My Lords, since that time there has been very considerable economic progress in the Free World, particularly among the more highly developed countries; but that progress has been continually retarded and sometimes frustrated by balance-of-payments difficulties which, in my submission, have been entirely unnecessary. These balance-of-payments difficulties were not caused, in the main, either by incompetence or by extravagance, or even by industrial strife, although industrial strife sometimes did aggravate them a little. The inconvenience and the damage was caused simply by this continuing severe shortage of international currency, which had the effect of making what should have been a small, almost a negligible, temporary deficit in the balance-of-payments, which must happen every now and then, into a really serious matter. That was entirely due to the tightness of the monetary

829
organisation under which we had been living.
There have been two attempts to ameliorate it, both of which were fairly trivial. When Reggie Maudling was Chancellor we had the general agreement to borrow; and then, a few years later, when the Labour Party was in office, after the discussions at Rio and Stockholm, we had the special drawing rights, which I think, and probably the Government would agree, are upon much too small a scale. They do a little good, but not nearly enough. But, my Lords, having got the principle of these special drawing rights established, I wonder whether that might not be the best line to work on. In discussing these matters with our friends in the Common Market or in the O.E.E.C., we should no longer have to argue with them about the principle of special drawing rights, because that has been established. All we should need to do is to say, "You have agreed to this in principle; let us do it on a very much bigger scale". I may be quite wrong, but that would seem to me perhaps the most hopeful way of getting the international agreement which we shall need.
There is one other consideration which I would mention to my noble friend. We in Britain are now entering upon what appears to be both a trade boom and an industrial production boom—the signs are apparent. But, my Lords, supposing that, let us say, the United States, who for the last 25 years have been doing far more than their share in the defence of the Free World and in giving aid to under-developed countries, were to have a really serious balance-of payments crisis which, in their view, compelled them to adopt drastic measures to protect their currency, might not this have the effect of putting our British industrial boom, on which we have set so many hopes, into reverse and spoiling its progress? That is one more reason why the Government should treat with urgency the objective of reforming and increasing the quantity of our international currency.
3.31 p.m.
LORD FRASER OF LONSDALE: My Lords, I congratulate my noble friend Lord Boothby on his good luck in winning the ballot and his good judgment in choosing the subject, and also upon his speech. I agree with almost all of
830
it. I do not intend to look backwards or to discuss what should have been done by X, Y or Z, but shall rather affirm what in my opinion should be done now: to-day and tomorrow are important; yesterday can take care of itself. It is my opinion, and I submit it for what it is worth, that international currencies should all be free to buy and sell, should all be floated and should remain floated. I will give one or two very brief reasons.
It is my opinion that gold should be free to buy and sell at the market price. I affirm that currencies and gold are commodities in the sense that men buy and sell them for their private purposes or for their business purposes, and that the most reliable price in the long run for currencies and for gold is the market price rather than any other fixed price or adventitious price. And now my right honourable friend the Prime Minister, in a speech in the country only a day or two ago, said that he thought a settlement must be reached or will be reached in Europe amongst the bankers and financiers whereby currencies would be fixed but would be movable over wider limits than hitherto. Perhaps that is the only thing he can do with general agreement. I am sure he knows better than I do and I may have to submit to his judgment, but it is my belief that if possible Britain should try to persuade the other nations of the world to float all currencies, to expect to continue to float them, and to float gold and let it rise to whatever price the market thinks is the right price. That will probably be the market price rather than the monetary price, but whatever it is let there be one price.
My Lords, I have often told the House that I am interested in South Africa, and I want to deal with two prejudices which my noble friend Lord Boothby touched upon: one, the American prejudice that if you recognise gold you diminish the status of the dollar—"the dollar is as good as gold", and all that. Well, history has answered them; they were wrong and history has proved them wrong. The dollar is not as good as gold, but that prejudice held the world back from a sensible arrangement for ten or twenty years. I mention these prejudices because I think in this matter we must try to rid ourselves of prejudice—difficult as I know that to be. Then it is said by the Americans and by some

831
of us that if we raise the price of gold we benefit the Russians. Why on earth should not we benefit the Russians if thereby we can benefit the world? The idea that you must withhold a benefit from somebody lest it should offend your susceptibilities to your predilection or the bee in your bonnet is too ridiculous for words. We want to trade as freely as we can, wherever we can and to make as much money as we can for Britain; and all the good that Britain can do in the world will be enhanced if she herself does well in the world. The idea that we must hesitate to do anything, to raise the price of gold, for example, because it will benefit the Russians, to my mind is quite ridiculous. There might be some sense in stopping trading with the Russians, as is advocated with South Africa, in order to teach them, like Rhodesia is being taught, how to behave but there is no sense, if we are going to recognise Russia and trade with them, in saying that we will not raise the price of gold lest we benefit them. If to do so is going to benefit us and the world, we should do it.
Turning to South Africa, there might be some sense—although I do not say it—in ostracising South Africa, putting it "in Coventry", shutting it up like Rhodesia and saying that we will not trade with South Africa or do anything because of this or that. There is no sense in that, not even from the point of view of helping the black men. There is no sense that I can see in refusing to do a thing that should be done for the world's benefit simply because it may benefit South Africa. All the better if it does—it will benefit all of us as well. So can we try to get rid of these prejudices, because they are stultifying reason?
My Lords, another prejudice which has been believed for a long time and which was probably stated at Bretton Woods, and by Keynes before that, is that stability in currencies would arise out of fixed currencies. This is the only observation about the past that I am going to allow myself—history has proved that to be wrong. I think four or five times since Bretton Woods we have had currency crises, and every time Ministers, including Sir Stafford Cripps whom I greatly admired, have had to come down to the
832
House and indulge in terminological inexactitudes to try to mislead the Front Bench on both sides of the House, and the country and especially foreign people and speculators. Of course he failed. They always fail, and in the end they devalue under great pressure with an enormous upset to everybody. That is the main argument for floating because the thing moves up and down gently, a cent at a time or whatever it may be, and you do not get the crisis, the tension, the pressure. So the prejudice in favour of fixed exchanges because of the stability that they will bring to the subject has proved to be a broken reed. In a sense my right honourable friend the Prime Minister is going back to a kind of Bretton Woods with just a little bit of easement—Bretton Woods, plus the movement up and down. I hope he will find that that is not necessary or that he and the Chancellor of the Exchequer will be able to prevail and do what I recommended earlier in my speech.
My Lords, my last comment is this. Of all the unreliable people in the world, I think that the politicians are probably the most unreliable. The reason is that they are subject to the pressures of the electors, the voters, the great British public which is very ignorant indeed of many matters—naturally—and is swayed by sensational stories in the media which are often devoted to sensation and circulation rather than to a sincere judgment and appraisal of the facts and the consequences. In so far as we can take control of the world currencies out of the hands of the politicians, and in so far as we can avoid them being tempted to use the currency rate as a political lever, or as a political tool in their own Parliamentary situations or their own electoral situations, so much the better. That is perhaps the main reason for establishing a float of both the currencies and also of gold—and I would repeat that—so that these things take care of themselves and are to the largest possible extent not subject to the whims and fancies and political gambits of the politicians.
3.41 p.m.
LORD BARNBY: My Lords, amidst all the arguments about the cause and cure of inflation there seems to be little realisation that in a world of universal

833
paper money issued by monetary authorities we should be wise to assume that continuous inflation seems to be here to stay. I would suggest that inflation means an economic situation when the prices of everything in daily demand—food, consumer goods, property, land, et cetera—rise proportionately. But controls of any kind do not dispose of or cure inflationary conditions; they produce only a temporary appearance of stability. Those are the introductory thoughts which generate the few remarks I wish to make. I am grateful to the noble Lord, Lord Boothby, for bringing up this very timely subject for discussion. The noble Lord, as I know, has consistently advocated that gold should hold a proper price in the monetary arrangments of the world. I share that view. I recall that he and I sat in another place together, and I remember now his consistency. Well, my Lords, we have had recent crises, as the noble Lord said. The Bretton Woods Agreement has broken down. Inflation is with us, whether the money supply is adequate or inadequate. Some may think it was inadequate before, but it certainly appears to be adequate now. But there are widespread doubts about whether an incomes policy, which would mean and does mean bureaucratic direction, properly replaces independent, individual initiative.
The I.M.F. procedure at the Smithsonian discussions urged strongly the case for S.D.R.s. My noble friend Lord Dundee expressed his strong support for them. Undoubtedly there is a useful place for them. At that time, at the Smithsonian discussions, there was an appearance that gold was to be removed from its former position, but of course the absurdity of the suggestion is apparent. As my noble friend pointed out, to have two prices, so wide apart is in itself ridiculous. To try to hold down the price of gold when every other commodity in the world is rising and has risen, likewise the purchasing power and standard of living of the world, establishes a greater demand for the manufactured products of gold.
The dollar, a previous anchor for comparison of values, is now made inconvertible. There has been historical opposition in the United States to devaluation of the dollar; likewise opposition to an increase in the price of gold. Then came the devaluation of the dollar in 1973.
834
Well, my Lords, in having doubts about supplementary things like S.D.R.s, I am going to presume to follow the example of my noble friend Lord Boothby and, with the indulgence of the House, give a personal experience of danger of impolitic change. In 1925, the year to which the noble Lord referred, it happened that I was President of the then Federation of British Industries. That was the time when we went back on to gold at its pre-World War I values, raising the value of our currency by some 13 per cent. There was a vehement denunciation of it by the F.B.I.
I remember being sent for to the Treasury by Sir Winston Churchill, who was then Chancellor of the Exchequer. He had with him Sir Philip Cunliffe-Lister then President of the Board of Trade. We were given a very severe dressing-down for presuming to differ from the then official view that we should return to the gold standard, which crucified the main exporting industries, coal, steel, iron, textiles and shipbuilding. How could you raise the value of the currency by 13 per cent. at one stroke and expect not to have unemployment? My noble friend Lord Fraser of Lonsdale inferred two things. He rather believed in a general float of all currencies. That may be all right if there exists adequate exchange rate cover. But he also referred to South Africa. There the South African Minister of Finance, Mr. Diederichs, has consistently opposed the Smithsonian Agreement and all other Agreements which disregard the dominant place that gold ought to have. I sometimes wonder whether it was not owing to the general slant of disapproval of South Africa that the world failed to realise the stupidity of disregarding the appeal he rightly made. Surely, in view of the commercial demand this was a false assessment of gold.
In all this situation the influence of Britain must be great. At present many people have misgivings about the high expenditure in the public sector. Certainly it has involved "printing money"; that is, putting more money into circulation. That must necessarily lift the price of all commodities in relationship to money, and therefore inflation follows. There can be no surprise that inflation is with us. This high expenditure in the public sector is, I believe, expected to

835
reach £4,000 million more than the taxation intake. That, of course contributes to our inflation. It all means more Treasury Bills, and that in turn puts more money into circulation. That brings with it high interest rates. The Chancellor hopes to fund these by selling this debt to the public sector. I congratulate him on the success of his first tranche. Some £400 million worth was readily taken up by the public. Let us hope that the next offer of £600 million worth will be as readily accepted. But high interest rates puts a heavy burden on posterity. I would urge in this connection—and I hope that my noble friend the Leader of the House will again give thought to this point—the procedure that public bodies will finance by direct application to the market and not by relying upon the Consolidated Fund.
Naturally the terms of trade must move against us. The era of cheap food is past. Our adverse balance of payments rises, as it must. In spite of what my noble friend Lord Fraser said of the hope of a universal floating of currencies, historically there has been a misgiving that it might well contribute to high interest rates. Government credit of over 10 per cent. seems alarming. How is it possible for long to have buoyant trade in these circumstances unless it is contemplated that progressive inflation will cause such erosion that by the time the debt matures the actual rate will have been appreciably reduced.
I am going to make a suggestion which I hope my noble friend who is to reply will consider. It is to draw attention to the suggestion of the eminent banker, Sir George Bolton, that, somewhat on the lines of what the French Government did some time ago when they tried to issue a gold clause, we should now consider tying national obligations to some flexible and moving formula such as "the wholesale price level" or "the cost of living index".
My Lords, may I turn again to the U.S.A.? The 80 million Eurodollars which are reported in circulation must be having a demoralising effect among overseas owners of movable balances. But I recollect that when, 18 months ago, there was strong pressure on the dollar, there was a demand from the world that they should do something to correct their balance of payments and they threatened to
836
put on a surcharge. How unfair is this criticism of the U.S.A.! Their balance of payments position was so bad largely because of their defence posts all over the world, securing the free world and their vast expenditure on troop maintenance together with a gigantic outpouring of overseas aid (a lot of it squandered) but I feel the United States was unfairly criticised for what produced this adverse balance of payments.
My Lords, I want to conclude with one thought. Recently we have read much about the energy crisis in the world. We realise that the Arab countries of the world are sitting on vast reserves of oil. I am told that Germany, for instance, draws over 50 per cent. of her total oil requirements from Tripoli and that in the case of Japan the proportion is perhaps even greater. We know that oil supply from the Middle East plays an important part in our world political strategy. But whatever may be the thinking as to the extent by which the consumer countries should increase payment for oil to the oil-producing countries, one thing is certain: that all energy demands for the world are going to continue to expand and demand for oil likewise. The wealth of those Arab countries will progressively accumulate. We recently had an example where the swing in one direction to the deutschmark of vast free funds in the world added intensely to the currency crisis in which we ourselves were sufferers. Your Lordships will have read of the tremendous sums which, by the end of the 1980s, it is considered will have been accumulated by these oil rich countries. So however these sums are used S.D.R.s will not be freely accepted and their demand will in addition to other tangibles be for gold.
4.1 p.m.
LORD WIGG: My Lords, I had not intended to put my name down to speak to-day, but I was astonished to find that there were so few speakers. When I saw the list, I surmised some of the things that would be said and I thought the House would bear with me for a few moments if I expressed my views on this subject. I was most interested to hear Lord Boothby's opening speech and, like other noble Lords, I express my gratitude to him for putting down the Motion. He drew on his memory: he reminded your Lordships that all the years he has been

837
in politics he has been an opponent of the return to the gold standard and an opponent of Bretton Woods, and that his position to-day is a logical outcome of that situation. I was not a Member of the House of Commons at that time; I was not in public life. I was, however, a victim of the return to the gold standard, and a victim, as were millions of others, of the policy of the Conservative Party. I find it slightly hypocritical (I wish the noble Lord, Lord Boothby, were present to hear my words) for him to make a meal of his opposition to a return to the gold standard without facing up to what was involved.
The return to the gold standard in the early 'twenties was a political decision by a reactionary Conservative Government to return to the conditions—and they believed that they could succeed—that appertained in 1913. They wanted another world of friendly country houses. They did, but I did not: because for me the world of my youth was a world of poverty, of stunted opportunity; a world of war, which had not been fought in my interests or the interests of those for whom my strength was drawn. I am glad that I delayed what I wanted to say to the noble Lord, Lord Boothby. He was a supporter of the Conservative Party. Therefore the fact that he opposed a return to the gold standard in the 'twenties and in 1931 does not absolve him from the responsibility of the logical outcome of Mr. Churchill's decision—a political decision by the Conservative Party for which they must take full responsibility.
For the noble Lord, Lord Boothby, it was a very pleasant decision: it was a world of country houses, a world of plenty. But in 1931, when a National Government were formed, in order, your Lordships should note, to save gold, to keep us on the gold standard, they were forced off by the actions of some sailors in Invergordon, and would have found themselves, as would the present Administration, out on their backsides but for an involuntary act which they could not escape. They came off the gold standard in 1931, and this Government a year ago was forced to devalue. But what did it mean to me? It did not mean dinner with the Governor of the Bank of England. I was a sergeant, and my pay was 9s. a day. I had 10 per cent. Knocked
838
off immediately. My marriage allowance was 7s. a week: I had 10 per cent. of that knocked off. The noble Lord, Lord Boothby, stayed in the Conservative Party; all the years he sat in the House of Commons—and when the war was over I helped to get rid of them.
LORD BARNBY: My Lords, I should like to remind the noble Lord that Sir Winston Churchill often publicly said that the return to the gold standard at that moment was one of the greatest political mistakes of his life.
LORD WIGG: My Lords, I admit that it was a political mistake of the first magnitude. I agree with what the noble Lord, Lord Boothby, said. It forced the General Strike; it led to the shade of events which brought Hitler; it may have been one of the causes of the Second World War.
LORD BOOTHBY: My Lords, perhaps I might interrupt the noble Lord for a moment. I was a Member of Parliament in the other place for 34 years. I was a Conservative. I attacked the Conservative Party for 34 years without a moment's pause or hesitation: and that is why I held my constituency.
LORD WIGG: My Lords, it is not enough to have done that. The noble Lord was a Member of the Conservative Party. He must therefore, by his membership, accept responsibility for it.
LORD BOOTHBY: No.
LORD WIGG: I am sorry, but there is no escape from it.
LORD BOOTHBY: I had no responsibility.
LORD WIGG: My Lords, I will read out where it led. This is a fact that is constantly overlooked. This is what Sir Winston Churchill says in his volume on the Second World War; and he is writing of events in November, 1940:
"The President sent a warship to Cape Town to carry away all the gold we had gathered there. The great British business of Courtaulds in Amercia was sold by us at the request of the United States Government at a comparatively low figure and then resold through the markets at a much higher price from which we did not benefit. I had a feeling that these steps were taken to emphasise the hardship of our position…".
Those are the facts. What is the good of noble Lords coming down to the

839
House to-day and saying that we have a position of great influence in the world? What piffling nonsense! We have no influence in the world—none whatever. What is happening about the dollar at the present time is a decision for the United States, and our views do not matter. They were whittled away by a Conservative Government before the war, which led to our gold reserves being taken away in an American cruiser, and our great assets being sold at a lower price than they should have been, and then subsequently taken on the market and some American making a profit.
LORD SHINWELL: My Lords, if I may interrupt my noble friend, I am afraid he is not following the noble Lord, Lord Boothby, very closely, because, as I understood Lord Boothby's speech, put shortly, it was this. What he is suggesting to your Lordships' House is that the monetary price of gold should be related to the bullion price of gold. Quite frankly, although that means that we might be on the gold standard, we are not necessarily on the gold standard for the purposes of trade and commerce. Nevertheless, I cannot see anything radically wrong with relating the monetary price of gold to the bullion price of gold.
LORD WIGG: My Lords, my noble friend, in the truest sense of the word, must join one of my seminars on economics and I will explain to him privately why he has been misled by this propaganda—because propaganda it is. It would have justification only if some one was a bull in the gold market, because it has no basis in fact at all.
At the present moment, the Americans have what gold they have buried away in the Fort: they are not going to release it, and they are not going to alter its price. At the present moment—and the noble Lord, Lord Boothby, is fortunate in having this debate at this time, when the price of gold is going roaring up—
LORD BOOTHBY: It is all going my way.
LORD WIGG: I think it is. This is the difference between us. I think the price will go to 150 dollars.
LORD BOOTHBY: So do I.
LORD WIGG: The Americans do not mind it going to that price. The interesting thing is why? It could be the result of pure speculation. That I do not believe. It could be the result of the action of the Americans in South Africa. I do not believe that. I believe that this is due to the oil sheikhs, who no longer trust America. They cannot get into deutschmarks; they cannot get into yen. What can they do with their money? They are buying gold and they are buying it as fast as they can go. It is equal nonsense to imagine that there is any possibility of getting a parity with gold. We cannot do that, because every currency in the world (and not least our own) is bogged down with debt. We talk about inflation as if it is something in a bottle or something that, if we pray hard enough for the workers to accept a 10 per cent. cut in their standard of living or accept Phase 3, will go away. But of course it will not. We have got a rip-roaring consumer purchasing spree in this country, and it expresses itself not only in terms of increased wages but also in terms of increased credit facilities. Your Barclaycard, your Access card, your extended credit—every single one of these is a way of increasing purchasing power. The Government, with all their might and main, back their Press friends and campaigns on TV. The cry is, "Buy, buy, buy!" This stokes up the fires of inflation.
We are in a very bad position, but the Americans are in a much worse one—or better, according to the point of view. What has happened in America? I spent some time there this year, not in the plushy hotels but getting around among ordinary people, and there the inducement to buy is present during all one's waking hours. The young man and woman who get married start off by buying a house. They have a couple of cars, a refrigerator, a deep-freeze, power machines to clean their teeth and to mow the lawn; they have holidays abroad—and all this is done on credit. The man has to work and the woman has to work; he has to get a second job and so has she. There are only 168 hours in the week, and so inflation gets to the point when it starts to express itself nationally, and there is a water shortage and a fuel shortage. There is pollution to an indescribable degree, with millions of cars choking up thousands of miles

841
of road. This is what has happened in the United States. They have hit on a noble operation. It is a logical extension of what Roosevelt did in 1940. They are exporting their inflation. Now you can get all the dollars you want. The Japs have all the dollars they want—
LORD BOOTHBY: More!
LORD WIGG: They have more than they want. They have more than enough, and so have the Germans. So have we—if we had any sense. But we have a deficit of £4,400 million which we are going to finance with Eurodollars. I say in passing that I was a pioneer in this field, because when I was Chairman of the Levy Board I am pleased to say that I managed to build up Sandown Park and I did it with deutschmarks. I borrowed the deutschmarks, and then I got out of them before it was too late. But in fact industry in this country and all over Europe—and indeed all over the world—is being mopped up now by dollars exported from the United States. The United States is in a dominant position. I had thought, following the President's re-election with a mammoth majority, that the market would break in June of this year because I thought he was bound to deflate. Now the President's political position is so appallingly weak that he cannot deflate. So I am frightened about the future. I see it like an avalanche hanging over a village: some time it is going to come down. It may happen because somebody speaks with more than a soft voice, or it may be set off artificially. But the world stands poised; and this country, not wholly but very largely due to the mistaken policies of Conservative Administrations and their City friends, is in an overwhelmingly weak position. This is because the Americans will not alter the price of gold. They want to demonetise the price of gold. They will leave it where it stands because as long as it stays where it is they can come in here, they can smash Rolls-Royce or they can buy it for a song.
The only people standing out against this situation are the French, and the French have adopted an exactly opposite policy. My French is not very good but I read an article in the issue of Paris-Match for April 21 which I would commend to the French scholars in this
842
House. The magazine produced an abridged version of the Hudson Institute Survey for the Common Market. Its forecast for Britain was extremely pleasant, because they forecast Britain's position in the late '80's as being—and I quote—"the red lamp area" of the Common Market. That is a very pleasant prospect! In my judgment we are moving to the position where we need the good will and understanding of all elements of our society, because the danger is very great. There is an overall danger in the international field.
I think that the Kaiser—and later Hitler—misread the situation so far as we were concerned. They misread the strength of a democracy when it faces a challenge. It may be that the Russians could be induced, by looking at the economic and political disarray in the West, to undertake adventurous policies which they would not undertake were it not for these fundamental weaknesses. There can be only one answer for a democracy, and that is what saved us in 1940. The great mass of our countrymen do not understand what it is all about. They need to be told the truth, by the Government and by the Opposition. Let me say at once—I have to say this—I am not in favour of Coalitions. They do not work; or, if they do, they work only for a limited period. I do not believe in Coalitions but I do believe in Governments taking responsibility for their actions and that it is the duty both of the Government and of the Opposition to tell their fellow countrymen the truth about this country's economic position in international affairs, so that in due time out of political discussion can come sound policies which are understood and can be applied.
I do not believe, as some other speakers do, that the dollar, has been (in the phrase which I believe was used) "bested by gold". Nothing of the kind. At the present time the American dollar stands absolutely supreme.
LORD BOOTHBY: Nonsense!
LORD WIGG: It stands absolutely supreme, not in terms of prestige but in its ability to lap up all the major assets the Americans want. The industries of all the countries in the West have been penetrated by American money. When the truth is understood, as it was in

843
Australia, the position is reversed; but generally it is too late. By the time the Americans want their repayment and the interest on the capital they have invested, there is talk about the influx of capital into that country. This has been talked about in France. Here, I regret to say, the Government seem to think it a welcome sign of strength that the dollar has come here. The dollar has come here because the Americans go wherever they can go, and surely it is far better for the dollar to come in and get a slice of one of our major industries than for the dollar to try to enter Germany or Japan, or even to stay deposited in a bank in New York.
I am grateful to the noble Lord, Lord Boothby, for raising this debate because he has quite rightly put on the Record the things that he has said in the past. I want to put on the Record the things I believe in, and have believed in all my life; and I believe in them still more at the present time. The days of uncontrolled capitalism, the days of laissez faire as it was once supposed to exist, have gone for ever. We are not going to put things right, or even attempt to put them right, unless there is an effective diagnosis and an understanding of what it is all about.
4.20 p.m.
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, on the last occasion we debated this matter in your Lordships' House it happened to be on a Motion tabled by Lord Boothby. The noble Lord concluded his speech with these prophetic words:
"…and one day, my Lords, you will listen to me on the subject of the price of gold.".
This great day has dawned, and the noble Lord told us that it was for the fifth time during his membership of your Lordships' House. We have all listened with great interest to his golden words. Perhaps there was, a certain familiar ring about them. My noble friend Lord Barnby referred to Lord Boothby's consistency in this matter. Not only is his eloquence undiminished, but his convictions—powerfully held, pungently expressed—are unaltered. My Lords, we all know the great causes which the noble Lord so persistently advocates. Europe, the herring and gold. His championship of the cause of European unity is well
844
known. And the outcome is emerging for all of us to see. His advocacy of raising the monetary price of gold is equally well known. I must say I have reason to doubt—but let the noble Lord have his opinion—whether his glittering vision will in this area see the light of day; but we shall see.
I should like to make it clear in any event that the underlying objectives which I discern the noble Lord has in mind in making his proposals are ones which we can all endorse. He wishes to see an expansion of trade. He wishes to see a rational monetary system, an end to monetary crises and a curb to world inflation. He looks for a system that will promote the flow of resources from developed to developing countries. These are the objectives the Committee of Twenty has also set itself in tackling the task of reform. They are the objectives of the European Community. They are likewise the objectives of Her Majesty's Government.
But, my Lords, the basis for reform must be equitable if it is to endure. It must be concerned not only with the provision of liquidity but with the control of liquidity. It must be concerned not only with the convertibility of currencies but with the means to sustain that convertibility. Above all, the working of an orderly and stable system must ultimately rest upon the continuing co-operation of the international community—on a real consensus of international opinion if this can be obtained.
I am not sure that I detect all those elements in the noble Lord's prescription. It is bold, simple and direct—like the noble Lord. I grant therefore that it has a certain appeal. I will explain in a moment why I personally do not favour it. Before I do so however it might be helpful if, briefly, I were to recall the background to the reform of the monetary system to which the Committee of Twenty has set its hand. The noble Lord, with other noble Lords, has suggested that the Bretton Woods system has broken down. Well, so be it. I think that it is important to remember that the arrangements and institutions established at Bretton Woods, for all their imperfections, did not serve us too badly until recent years. The post-war period has witnessed an unprecedented expansion in the history of world trade. Between 1950 and 1970

845
world exports increased five-fold in value from 60 billion dollars to roughly 300 billion dollars. During the past 12 years they have been growing at an average annual rate of 10 per cent. Indeed it is this same expansion, the growth and the increase in prosperity that has in large part led to the pressures on the system to which we are subject at the present time. For these years have seen profound changes in the structure of international relationships and shifts of balance of economic strength within the free world.
Like my noble friend Lord Fraser of Lonsdale, I do not wish to job back unduly. I shall not seek to express an opinion as between my noble friend Lord Boothby and the noble Lord, Lord Wigg, as to the precise question of the noble Lord's political accountability over the 34 years in which he was a Member of another place. But the facts of the matter are plain to all of us. The United States economy is no longer overwhelmingly pre-eminent in the world today. Within the Free World we have seen the emergence of the European Economic Community and of an immensely powerful Japan. All this, and much else, has created a situation for which Bretton Woods has not adequately provided. It did not answer in sufficiently clear terms the criteria by which balance-of-payments adjustments should take place, or to what extent these should be a matter of domestic fiscal and monetary policies or exchange rate change. And assuming equilibrium could be achieved, the system did not satisfactorily provide the liquidity to finance the growth in world trade which we have witnessed since the war. We all know that the pressures have become intolerable. There was the monetary crisis on August 15, 1971. I remember it vividly; I happened to be on holiday in Bermuda at the time. I suppose that island is as sensitive a barometer of the international monetary climate as one can find anywhere in the world.
The Smithsonian Agreement of December, 1971, represented a move towards more realistic exchange rates. But pressures built up again in the exchange markets, and the further adjustments which we saw in the early months of this year proved necessary. These pressures did not derive primarily from a shortage of liquidity—and here I part somewhat from the point of view taken by my noble
846
friend Lord Dundee. If anything, the reverse happens to be the case. The extent of the movement of funds, this swilling around of funds in the monetary system, reflected, if anything, an excess of reserves, but reserves held in a currency that had come under fire. The events earlier this year therefore emphasise what has been evident for some time: that we are facing not a single problem, a liquidity problem, but also an adjustment problem. Each problem has a number of aspects, and the two are closely interrelated.
Let me now turn to the recipe proposed by the noble Lord, Lord Boothby, a recipe which was attractively packaged; namely, a substantial increase in the official price of gold. He referred to the vast increase in international liquidity that such an increase in the official gold price would create. This would indeed be the case. At the present official price, there is some 43 billion dollars worth of gold in international reserves. If the official price were to be increased to the 100 dollars per fine ounce (I use "100 dollars"; I know that it has gone past that at the present time, but it is an easy calculation) reached in the free market for the first time this week (and I am not quite sure what the market price might be a year from now on; I notice the bet which the noble Lord, Lord Wigg, has placed with himself), this would increase the value of gold in world reserves by about 60 billion dollars. If the value of Special Drawing Rights and Reserve Positions in the Fund were also to be increased in line with the increase in the gold price, this would add another 25 billion dollars to international liquidity. The question we must ask ourselves in considering the proposition of the noble Lord, Lord Boothby, is whether an increase in international liquidity of 85 billion dollars at one stroke (to use the immortal phrase) would be helpful, or whether it might not be damaging.
The noble Lord has argued that the post-war period has been characterised (I think this underlay his argument) by a real shortage of international liquidity and this has restricted the growth of world trade and world incomes. I am not absolutely certain whether I accept this proposition, at least as stated baldly. In the last few years—and this underlay the remarks of the noble Lord, Lord

847
Wigg—the United States' deficit has added 40 billion dollars to world reserves. The ratio between world trade and world monetary reserves is also becoming more stabilised. It is a matter which I noticed, in preparing myself for this intricate subject, my noble friend Lord Dundee referred to in his speech in your Lordships' House in 1969. In 1967 world reserves stood at something near 74·3 billion dollars and world exports at 190 billion dollars. Since then world reserves have increased to over 150 billion dollars—156·7 billion dollars—and this has more than kept pace with the growth of world trade. Indeed, I think there are many who would argue that the increase of world liquidity during this period has contributed to the pressures of world demand, to the pressures on available productive capacity, and to the world inflation which we are now experiencing. In fact, it is usually those who see grave danger in this expansion of international liquidity who call for a return to the gold standard (to use shorthand).
The noble Lord, Lord Boothby, almost in the same breath has referred to the discipline a gold standard would impose. I would suggest it is a little difficult to have it both ways. Is he saying that our problem is one of excesive international liquidity which has led to too high a level of world demand and contributed to the inflation which he deplores, as we all deplore it, or has there been a shortage of liquidity which has restricted the growth of world trade and, as he might say, forced us to deny much needed aid to lesser developed countries? In any event, my Lords, Her Majesty's Government believe that the answer lies neither in the massive increase in liquidity—the really massive increase in liquidity—at one stroke, that the increase in the gold price that the noble Lord proposes would create, nor in the severe and, we believe, unnecessarily disruptive discipline of a return to a commodity standard.
We learned I think from Lord Keynes (we always speak of Lord Keynes when we debate these matters) how to manage the domestic economy when we are on form so as to match the demand for goods and services to our capacity to produce them. Now we must seek to match the growth of international
848
liquidity more closely to the needs of world trade. Lord Keynes gave us the benefit of his wisdom on this. I should like to quote, if I may, the words which the noble Earl, Lord Dundee, quoted four years ago to your Lordships, because I think they are worth requoting. In his plan for a Clearing Union which provided part of the foundation of the present I.M.F., Lord Keynes said:
"We need a quantum of international currency, which is neither determined in an unpredictable and irrelevant manner, as, for example, by the technical progress of the gold industry, nor subject to large variations depending on the gold reserve policies of individual currencies, but which is governed by the actual current requirements of world commerce and is also capable of deliberate expansion and contraction to off-set deflationary and inflationary tendencies in effective world demand."
My Lords, I believe that that is the basic task confronting us and confronting the world to-day; and I am glad that we are moving towards a new and truly international reserve asset, the Special Drawing Right, which the noble Lord, Lord Boothby, does not like. I think we can look forward to this developing into the world currency which Lord Keynes has in mind—here I am absolutely at one with my noble friend Lord Dundee—and the International Monetary Fund developing into a sort of World Central Bank, of which the noble Lord has in the past been a champion. I am very glad that we as a nation under successive Governments, successive Chancellors of successive Governments, have played a very large part in getting this system into operation.
There are other technical difficulties which the adoption of the proposition of the noble Lord, Lord Boothby, would entail. I will touch on them briefly. For example, what price would the noble Lord choose which would prevent us again from being faced with a new disparity between the official and the free market price? This is a very fickle market, as events this week—and I congratulate the noble Lord, Lord Boothby, on his skill in the ballot, his timing—are demonstrating. I believe that the behaviour of the market this week has shown how impossible the task would be to set an official price that would remain for any length of time in line with the market price. Four years ago the noble Lord proposed 70 dollars an

849
ounce. If the official price had been increased then, would the noble Lord again be calling our attention to the increasing disparity between the two prices to-day?
LORD BOOTHBY: Yes, my Lords, I should.
LORD FRASER OF LONSDALE: My Lords, would my noble friend forgive me if I asked him to comment upon my suggestion that the price of gold be the market price—one price, not two, and it takes care of itself?
EARL JELLICOE: Yes, my Lords, I think I should. I think this is an ingenious suggestion. Again, it has the merit of outward simplicity, but to me—and I speak here very much as an amateur in these deep professional monetary waters—it seems to have two basic disadvantages. First, it has the disadvantage, which I have already touched on, that it would create a vast increase in international liquidity with the implications for inflation which that would carry with it at one stroke—the same disadvantage as the proposition of the noble Lord, Lord Boothby, would carry with it. Also, I believe that, as it were, pegging the official price to the market price would import an inherent instability, as I see it, into the whole system. I think the technical inconveniences of this—and I speak here with all diffidence and subject to every form of reserve and qualification of my personal inadequacy in these deep seas—would be very great indeed.
My Lords, this brings me to a further disadvantage which I see in the approach suggested by the noble Lord. This is the uneven and inequitable distribution of the benefits that would result from an increase in the gold price. I am not going to point fingers across the "Iron Curtain" (or whatever we now call it: the Soviet Union) or southwards to South Africa in this matter. I would only say that of the official reserves of gold in the world to-day, 91 per cent. of the total are held by 25 developed countries, and 90 developing countries hold the remaining 9 per cent. I should have thought it would hardly be consistent with the noble Lord's desire, which I share, to improve the position of the poorer countries for the benefit of any increase in international liquidity to fall so largely into the lap of the developed world. Also
850
I do not think we can rely on being able to redistribute these benefits, as it were, after the event. I believe it is much easier and much better to attempt to do this in a way in which the creation of new reserves is firmly under international control.
Finally, an increase in the price of gold on the lines suggested by the noble Lord would appear (at least to me) to jeopardise the opportunity, which I believe could be within our grasp, of moving fairly quickly towards a more rational monetary system. It is to the objectives of those discussions which are now in train that I should like to turn in my concluding remarks. The basis for a solution was first conceived, I think, by the I.M.F. as long ago as 1967, at the Rio Conference, and this alternative mechanism for increasing international liquidity was instituted formally by the creation of S.D.R.s in 1969. The Committee of Twenty, representing all members of the I.M.F., has been considering all aspects of the international monetary system, and I should like to refer briefly to the communiqué which the Ministers issued at the end of March, after their meeting on March 26 and 27, setting out the position which they had then reached and the further work which they were putting in hand.
In brief, a general consensus was reached that we must strive towards a better working of the adjustment process, in which adequate methods to assure timely and effective balance of payments adjustment by both surplus and deficit countries would be assisted by much improved procedures for international consultation within the orbit of the fund. It was also agreed that the exchange rate régime should remain based on stable but adjustable par values, but that floating rates could provide a useful technique in particular situations. In addition it was agreed that there should be a better international management of global liquidity, that the role of reserve currencies should be reduced and the S.D.R. should become the principal reserve asset of the reformed system.
In addition, the Deputies were asked to study further the conditions for a resumption of general convertibility, including questions relating to the consolidation of existing reserve currency balances and

851
to methods of settlement. They were also asked to study the means of dealing with the problems of speculative capital flows—problems which are not inconsiderable at the present time.
Finally, the Committee recognised the interests of the developing countries, and affirmed the desirability on the occasion of the reform of promoting economic development and the flow of real resources from developed to developing countries. The Deputies are meeting in Washington next week to carry forward what I think, even in the bald terms in which I have stated this, your Lordships will agree is a very wide-ranging programme, and their objective will be to submit a report to the Ministers of the Twenty later in the summer.
This is not the occasion—indeed, it would be quite wrong—for me to try to develop the detailed issues that remain for consideration in the forum of the Twenty and which are now being considered within this framework. But I am myself clear—and I say this with conviction—that it would be neither wise nor desirable to jeopardise progress towards a lasting and equitable arrangement for the conduct of international monetary affairs by reverting to a system based on gold.
I have thought it right to-day to recall some of the background to the requirement for reform of the monetary system and to say something, however cursorily, of the objectives and work of the Committee of Twenty. I do not for one second underestimate the technical complexity of the task the Committee is undertaking or the political determination that its resolution will require. But I believe that an important degree of consensus on the approach to these questions has already been achieved.
I have tried to make clear why the solution advocated so eloquently and so consistently by my noble friend Lord Boothby would not, in my view, be satisfactory. As I see it, the technical objections are overwhelming. Somehow, I very much doubt whether I have convinced the noble Lord of this. But I am clear that his solution would be quite inconsistent with the approach taken by
852
my right honourable friend the Chancellor of the Exchequer to these questions, and the approach which in general has been endorsed by the Committee of Twenty. Perhaps I might refer to the speech which Mr. Schultz, the Secretary to the American Treasury, made to the I.M.F. last September. I will quote part of that speech:
"The rigidities of a gold-based system, subject to the uncertainties of gold production, speculation and demand for industrial uses, cannot meet the needs of today."
The noble Lord, Lord Boothby, disagrees. He may, just conceivably, be right—sometimes he is. I believe, and the Government believe, that he is wrong. And I have adduced a number of technical reasons to support that belief. Even granted that he were right, and granted that he could convince Her Majesty's Government that he was right, it is clear to me, looking at this matter as one of practical politics, that the view which he advocates would have no chance of prevailing in the counsels of the Twenty. In sum, I do not believe that the noble Lord's proposals, advocated though they be with all his skill and consistency and humour, are those which I can commend to your Lordships' House.
4.48 p.m.
LORD BOOTHBY: My Lords, I should like to thank my noble friend the Leader of the House for his extremely interesting and courteous reply. This has been a useful debate. I think I am right, and Mr. Shultz is wrong, and the Treasury is wrong. I have believed them to be wrong for the last fifty years. They have never done anything right yet that I am aware of, and I do not think they are doing anything right now. The noble Earl has not dented my conviction that gold is the essential basis of a satisfactory working international monetary system; that gold will come into its own; that it will go on from strength to strength, as it is doing now, and that one day (I hope before I die) I shall be able to say to the noble Earl, "I was right and you were wrong". My Lords, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

INVISIBLE EXPORTS
4.49 p.m.
LORD SELSDON LORD SELSDON rose to call attention to the significance of invisible exports to the United Kingdom, particularly within the enlarged European Economic Community; and to move for Papers. The noble Lord said: My Lords, I beg leave to move the Motion for Papers standing in my name on the Order Paper. It was rather a bit of luck to-day for the noble Lord, Lord Boothby, that gold should have gone soaring through the roof; it is also a bit of luck for me that to-day at 12 o'clock, when the trade figures came out, it was demonstrated that invisibles have taken us into the black. I should have liked to speak on the Motion moved by the noble Lord, Lord Boothby, but all I can do is to quote Kipling:
"Gold is for the mistress,
Silver for the maid?
Copper for the craftsman,
Cunning in his trade.
'Good', said the Baron,
Sitting in his hall
'But iron, cold iron,
Is master of them all'."
My Lords, I dare to hope that this debate will not in any way be classed as political. It raises, I feel, at a most appropriate time in the history of our economy, a matter which is of some significance: the significance to this country of invisible exports. But before attempting to ramble for the next 20 minutes over this wide-ranging subject, I feel that I have to declare an interest. When I first put this Motion down on the Order Paper I did not have an interest but now I work for the British Merchant Bank, Singer and Friedlander, which is part of the Bowring Group, and we are one of the largest invisible exporters in the country. I hope that your Lordships will recognise that I speak to-day as an individual and I shall seek to ignore Party politics and to be both critical and, I hope, constructive.
It is an economic axiom as old as the hills that goods and services can be paid for only with goods and services. So said Albert Jay Nock. But even he would have have been surprised, some 25 years after his death, that this country should continue to fail to balance—with the odd exception—the cost of goods imported with the revenue from goods exported. Goods are classed as visible trade, and
854
only twice since 1957 has the United Kingdom managed to show a visible trade surplus. Over the past 18 years the combined deficit on visible trade has been over £3,600 million, an average deficit of some £200 million a year. I submit that, despite the encouraging visible trade figures to-day, we have very little hope of improving our visible balance position in the short term, though I submit, and many noble Lords will agree with me, that over the next few years, for a number of reasons, our deficit on visibles will show a steady and perhaps even dramatic increase. It would not be beyond the bounds of possibility to have a visible deficit of £1,000 million. But within a period of two or three years one hopes that the position on visible trade will improve.
The reasons why one forecasts a deficit are connected first, with the E.E.C. entry. We have an increasing demand in this country, and very dramatically increasing exports; but we also have a very sharp rise in commodity prices: the prices of the raw materials that must be imported to feed our industry and to fund our exports. We also have the fact that British companies are expanding abroad at a remarkable rate, and establishing themselves overseas, and that this may not be offset in the current year by foreign industry setting up over here and so becoming an indigenous manufacturer rather than an exporter to the United Kingdom. I do not want to paint an over-gloomy picture; I hope that it is only a short-term position. But I have commented on visible trade because it is only against that background that I believe one can recognise the true significance of our invisibles. It would not be an overstatement to point out that it is our invisibles which have saved us, and I believe will continue to save us, from balance-of-payments disaster.
I am afraid that here again I must mention a few figures. Over the same 18-year period our invisibles—excluding Government expenditure abroad, and I will touch on this peculiar form of camouflage in a moment—have shown a combined surplus of over £14,600 million against the deficit on visible trade of £3,600 million.
LORD JACQUES: My Lords, would not the noble Lord agree that one can take any part of our exports and say, "This has saved us"?
LORD SELSDON: It is difficult when one is commenting on trade figures. I only wish that God had not declared that there were 12 months in a year. I have taken these 18 years since it was from the moment I left school and hoped in some modest way that I should be contributing to the economy. I take the noble Lord's point. It is difficult and one can play with figures; but I am using these figures to demonstrate a point. I have taken an 18-year period, which covers all Governments, so it can be said that one is taking into account the advantages and disadvantages of each. Invisibles may take credit for the way in which they have saved the Government of the day—whichever Government it may have been—from disaster, and the Government of that day may take credit for having encouraged and not killed invisibles. As an invisible earner we rank second in the world with an 11 per cent. share of all invisibles. That is about half that of the United States. But if our invisible earnings were to fall to the level of those of that economic wonder, West Germany, they would have to halve to do so, and we would then have a severe economic crisis on our hands and almost certainly a major devaluation. I have been trying to use figures to demonstrate the importance of invisibles and their significance to our balance of payments. But what are they? Here again, my Lords, there is much misunderstanding. Only last week, according to Punch, a professional man had actually sighted an invisible. He said:
"… it passed at tremendous speed through the sky heading out over the Channel to the French and German markets. It was shaped like a hotel chain and smelled vaguely of boiled potatoes. I am convinced it was an invisible export, it wasn't in the least like the normal shipment of machine tools."
My Lords, so that there is no misunderstanding, I should point out that invisible earnings are essentially the earnings of our service industries and our professions plus the interest, profits and dividends on our overseas investments. In this sector one includes our banks, merchant banks, insurance brokers, insurance companies, stockbrokers, the commodity exchange, shipping, travel and tourism, civil aviation, the film industry, lawyers, accountants, civil engineers, management consultants, advertising, the Arts, and numerous other service industries. I submit that in most of those sectors the
856
United Kingdom leads Europe and perhaps the world. I submit, too, that perhaps for the first time since the war, despite our previous economic record, we are one of the most respected and trusted nations upon earth. That is not only because of the success of our recent foreign policy—and one must pay tribute to my right honourable friend the Foreign Secretary—but also because of the worldwide influence of our service industries and professions who together make up "invisibles". We must not forget the inestimable value of this reputation, based perhaps on the past. It would be wrong to throw it away in the same way as we destroyed our reputation as a manufacturing nation and are now struggling to rebuild it.
I and others are concerned. We are concerned first lest the Government should unwittingly discourage our invisible sector. Secondly, we are concerned that without a few positive steps of encouragement this sector may show a decline at a time when its contribution to the country will be most needed. It is reasonable to point out that in 1972 our invisibles showed a slight fall, the first decline since 1964. Perhaps we can look on this as a warning. Thus in covering different areas I shall put forward certain proposals and I know, too, that other noble Lords who are speaking today will also have their own constructive ideas. We are all extremely happy that it is my noble friend Lord Limerick who is to reply for the Government because of the steadfast support he has always shown for the invisible sector.
Before taking a brief look at some of the sectors, I must return to an area of general concern which has a direct bearing on the future of our invisible earnings and upon the future of our economy as a whole, and that is the question of confidence. Despite the optimistic noises which come from the wizards of Whitehall and Westminster, confidence in the economy and future success following the current boom is confined only to an informed few. Perhaps commerce is misinformed, or perhaps the communication gap between Government and commerce is wider than it has ever been. A recent stockbroker's report began with the observation:
"If you can keep your head when all about you are losing theirs then perhaps you just do not understand the situation."

857
It went on, as others have done, to talk about the Government's gamble for growth and pointed out that 1973 would be the most inflationary year on record.
My Lords, Phase 1 and Phase 2 have given us a pause and I think most of your Lordships will agree—some perhaps reluctantly—that the Government's policy has been much more successful than they dared to hope. But Phase 3 must be rigorous and tough if any form of on-going confidence is to be restored to sterling and to our economy. If it is not tough and if it fails, as has Phase 3 in the United States, then our economy will take a real bashing and our invisible earnings will suffer. It is right, too, to stress the damage which the continuous erosion of the pound has done to our reputation and consequently to our potential for invisible earnings.
But our economic policy has a chance to succeed. It is the kind of chance that has some appeal to the British. It is a chance that confidence can turn into a reality. May I urge the Government to speak out and discuss their problems with honesty, candour and frankness. At a time when politicians are being discredited throughout the world that could do them and our country nothing but good.
As your Lordships might expect, I now move to where I came from this morning, the City of London, which has a right to claim its place as one of the major financial centres of the world and as a major invisible earner, achieving, net, well over £500 million a year. The City has succeeded because of the expertise, freedom, flexibility and speed with which it operates. It will continue to succeed provided that it is not subjected to bureaucracy and restrictions arising from our entry into the E.E.C. Too rigid restriction in the interests of harmonisation could handicap us, and since the hulk of the City's invisible earnings comes from outside Europe any serious restrictions could be against the interests of the European economy as a whole. In seeking freedom from restriction, might I suggest that the Government pay heed to Tennyson:
"And statesmen at her council met Who knew the seasons when to take Occasion by the hand and make The bounds of freedom wider yet."
858
My Lords, insurance is the major invisible earner of the City, and its foreign earnings exceeded £330 million in 1971. The industry comprises Lloyd's, which contributes about 50 per cent. of this amount, our insurance companies, contributing some 36 per cent., and our brokers the rest. Naturally they are concerned lest restrictions should be introduced as a result of our entry into the E.E.C. that might handicap their future potential to earn foreign earnings. I think it would be fair to point out that the industry is in general most encouraged by the degree of Government co-operation it has received at a national and at a European level.
Next I turn to banking. The net invisible earnings for banking have shown a decline in the past year or so, but, hopefully, as we offer banking services in competitive terms to foreign industry expanding both nationally and internationally, these foreign earnings will show a marked increase. We have to consider the importance of the foreign banks in London. More and more have been coining over here in the past few years; these certainly contribute to our economy, and it would give cause for concern if restrictions, taxation, high cost and lack of efficient communication made London overall less attractive than other financial centres. I know that the noble Lord, Lord Mais, will comment on some aspects of this, and may I say how happy we all are that he should make history this year by being the first Lord Mayor from your Lordships' House, and how happy, too, I am that he should have chosen this occasion to make his first speech while in office.
My Lords, when looking at the importance of London as a capital market, obviously we must look at the importance of the Stock Exchange. It is naturally important that the Stock Exchange should expand its European role. It has the size and the respect. Its market capitalisation is more than the rest of the stock exchanges of Europe put together. Its turnover is more than twice. It has twice the number of listed companies. But it has one major disadvantage: it is more expensive to deal upon. If it is to develop a truly international role it must no longer be burdened with stamp duty. Equally, it must encourage the listing of foreign companies and create

859
a market in England for their shares. It must not be restricted by the investment dollar premium. I suggest the Government give consideration to all these areas, particularly to removing the premium on foreign companies which have a listing in London. There are other aspects of the dollar premium, in particular the pernicious 25 per cent. surrender requirement, and I know that the noble Lord, Lord Terrington, will go into this matter in some detail.
I do not want to get bogged down with the subject of tax, but there are two taxation areas which could have an adverse effect upon our invisible earnings. The first is the withholding tax. This is a peculiar anomaly. Where withholding tax is deducted from loan interest received abroad, relief from United Kingdom taxation is not obtained until the inspector has agreed to the tax computation for the relevant year. Because of the delay, the quoted rate of interest on loans made by United Kingdom banks needs to be approximately¼ per cent. higher than the required net rate of return. There is no doubt that our competitive position would be improved if future tax treaties provided for gross payment, or if the United Kingdom authorities would give early repayment, for instance, by offsetting against advance corporation tax.
Secondly, I move to another major area, the question of the United Kingdom imputation system of corporation tax. That is a complicated subject, and it has a direct bearing on profit and dividends on foreign investments, which is one of the major sectors of invisible earnings. The total net invisible earnings of this sector are £580 million a year, and part of these are derived from multi-national companies, both service and manufacturing, which are located in England. Those which are foreign in particular suffer a double disadvantage under the imputation system. I will not go into details here—I have written to my noble friend Lord Limerick—but suffice it to say that the disadvantages of the system are such that it could well encourage some of those companies to move elsewhere, with consequential detrimental effect on our invisible earnings.
My Lords, the field broadens even further. I will not cover every sector in
860
detail but just take one or two points to try to illustrate to your Lordships the breadth of the field of invisibles. First there is shipping, which we would not dispute makes a major contribution to our economy. But it is spread across the board, and when one looks at invisible earnings one sees a net deficit against shipping. That is, of course, a slightly false picture, but it is a difficult one to correct, because shipping is carried across the whole field and its contribution appears in other people's earnings. Civil aviation is the next area, and here there are a couple of points I should like to make. The first is the way in which imports of new aircraft are shown as a debit of a lump sum when nine times out of ten they are paid for in borrowed currency and these payments are spread over time. Another point under this heading is the current civil aviation policy, which could adversely affect our invisible earnings in civil aviation this year. For example, foreign airlines will take away from United Kingdom airlines this year a large part of the charter business, and this will have an adverse effect upon invisibles.
The film industry, at present enjoying itself at Cannes, is another major invisible earner, and some of our companies earn substantial amounts of money. But the future of this sector will depend upon the level of production of British films the rights of which are sold abroad, whether they are produced by British companies or by American companies located here. Our commodity exchange, too, particularly this year with the high rate of growth in commodities, plays a vital European role, and I think it is important that we should encourage it to increase its European activities. Perhaps this year it could earn as much as £100 million in invisibles and develop, as it ought to, to being the major commodity centre of Europe. Export houses are another sector which bring in £40 million to £50 million in invisible earnings. But the creation of invisible earnings is hampered by the lack of facilities for credit insurance through E.C.G.D. I know the Government will look into this point, but there is another area connected with this which they should also look into; that is, the effect of existing high rates of interest for short-term export finance in sterling. This is very inhibiting when the

861
customer looks to the United Kingdom for finance and finds that the rates are far higher than he could obtain in other countries of Europe.
There is so much that one could say about the professions. I think it is not so much their net earnings, which may not be substantial in relation to the whole invisible sector; it is more their international influence and reputation, which is second to none, and they have the highest standards and codes of practice. It is impossible to estimate the value of our professions in building the prestige of this country.
My Lords, I said I should be just over twenty minutes, and I have tried to keep within that time. I apologise if I have rambled a little too broadly over this field. I have tried to give your Lordships a feeling of its breadth and the opportunities which exist, and to point to a few problems which are there whose removal could make the opportunities even greater. What I have sought to do is to give a feeling of the potential of our service industries. We have in this country an asset which is perhaps invisible: it is the skill, determination, flexibility and entrepreneurial drive of our British people. This is magnificently harnessed in our service industries and our professions. If we bear in mind the size of their earnings in relation to our G.N.P. we can claim to be the most advanced country in the world in this sector. Our invisibles to-day are even more critical to our economy than they have been in the past. They will help us over the next few years as far as the visible side in concerned. But they have a right and the opportunity to show further dramatic growth themselves.
I end on the question of confidence. It needs so little to tip the scales and to get commerce and industry totally behind, instead of partially behind, the Government. It is their wholehearted support and understanding which will give our economic policy a real chance of success. Let the Government go out and obtain that confidence. My Lords, I beg to move for Papers.
5.10 p.m.
LORD TERRINGTON: My Lords, I should like to express my thanks to the noble Lord, Lord Selsdon, for introducing this short debate to-day. At the
862
same time, I ought to declare my special interest as a partner in a City firm with a growing overseas operation. It is now over four years since we discussed invisible exports on a Motion of the noble Lord, Lord Aldington, and on that occasion I raised a number of points concerning overseas portfolio management. I hope, therefore, that I may be forgiven if I return to some of these points briefly this afternoon.
First of all, I should like to refer to the continued existence of what is commonly called the 25 per cent. surrender rule. This is a rule which requires a seller of foreign currency securities to sell investment currency equivalent to 25 per cent. of the net proceeds to an authorised dealer. I specialise in overseas portfolios, and my experience tells me that this temporary measure, which was introduced in 1965, definitely inhibits efficient management. I said so during our debate in 1968, and I still say so, because of the artificial restraint it places on the changing of investments. I must, of course, acknowledge that the present level of the dollar premium reduces this restraint, and I realise that many of the major institutions now invest overseas through hard currency loans. But I am really concerned with the position of privately owned portfolios which do not have the advantage of these hard currency loans; and, as we all know, the dollar premium can be subject to very wide fluctuations. In my view, all these overseas portfolios are a national asset to be managed to the country's best advantage, and it makes no difference whether they are in the hands of institutions or in the hands of private individuals. On these grounds, therefore, I believe that there is a very strong case for total abolition of the 25 per cent. surrender rule, to which the noble Lord, Lord Selsdon, has already made reference. Furthermore, I believe that eight years is quite long enough for a temporary expedient.
May I now turn briefly to a different matter which concerns foreign investment in United Kingdom securities? This is something to which I also referred during our 1968 debate, and it relates to the 1 per cent. stamp duty payable on registered securities. From the information available to me, I am fully satisfied that this is a significant deterrent to

863
foreign buyers of United Kingdom securities, more particularly as there is no comparable duty in other European countries, except possibly in France where the rate is minimal. I would also mention here the 3 per cent. stamp duty which is payable on bearer securities issued in the United Kingdom. I fear that this levy may also prove a deterrent to overseas companies raising capital in this country. May I therefore suggest that, in both instances, the present position is now reconsidered?
So far as cost is concerned, I do not think that a concession to foreign investors would prove a very serious matter. From available statistics, it would appear that the total yield from stamp duties in the fiscal year 1970–71 amounted to only about £117·4 million, and of this modest total it would seem from an examination of Stock Exchange turnover, which has been carried out during the same period, that a figure of only about £47 million emerges. I suggest that this figure is not really important, compared with the potential benefit which could accrue to invisible exports. I have probably spoken long enough on these two points, and perhaps I may conclude by saying this. I have an idea that the noble Earl who is to reply for the Government is not unsympathetic to my views on the surrender rule, and I think I may say that I am hoping to have some words of encouragement later on this evening.
5.15 p.m.
VISCOUNT DE L'ISLE: My Lords, I should like to support the noble Lord, Lord Terrington, in his complimentary remarks to the noble Lord, Lord Selsdon, on having put down this Motion for debate tonight. I think we are all grateful to him for having done so. The most striking fact about our trade figures and our balance of payments figures is that in only eight of the years between 1805 and 1971 have we had a positive surplus on our physical trade; that is, we managed to export in value more goods than we imported. It is a truism that bad news makes the headlines, so that in 158 out of those 166 years the organs of publicity for the time being have had useful material for making their headlines, and they are still making them. It seldom occurs to anyone to
864
ask how the people in these crowded islands have managed to live, and to live quite well, during the last century and three quarters. Of course, the simple answer is that we have made up our trade deficit by our overall surplus on invisible exports, and we have done so rather consistently for a very long time. It is, of course, true that we have had overall balance of payments deficits, but taking one year with another we have over the years managed to achieve so effective a surplus that we have been able to invest overseas.
It is most important to see these matters in historical perspective, because a great deal of what has been written and spoken has been uttered under a mistaken fact. I think the significant year is 1853. Economists have long noticed that in that year we appeared to change from a nation with a steady positive balance of trade to a nation with a continuing deficit. Various reasons were advanced for this supposed decline in our economic strength, but only in 1958 was the true reason revealed by an American professor, Professor Imlah. His researches led him to the discovery that, in 1853, the basis on which the statistics of our foreign trade was recorded by the Board of Trade was changed. On reworking the figures, he revealed that in fact our trade had been in deficit certainly since the beginning of the 19th century. Our trade records were maintained on an entirely artificial basis. Imports and re-exports were valued at "official values" which were recorded in a set of Government estimates based on the prices of goods in trade, for the most part dating back to 1694. The result was an underestimation of imports by something like one-half. The results Of the professor's researches were confirmed three or four years later by two English economists, Messrs. Dean and Cole. The 19th century was indeed the hey-day of British economic power. We were able to export capital to many underdeveloped parts of the world not, as is now clear, out of our positive balance of trade, but out of our surplus in the balance of payments, which depended in turn upon a surplus of invisible exports.
It may well be asked: what is the relevance of all this to our present situation? After all, we are dealing with current problems; we are not longer an Imperial

865
Power; we are now part of the European Community. What does it matter if the Board of Trade kept inaccurate figures 120 years ago? I think the significance is that, despite the discoveries which I have described, we still live mentally with the results of these miscalculations. Memtally and morally we are attuned to pursuing what is, I believe, a hopeless quest, the achievement of a steady and permanent trade surplus—and this at the expense of a number of very desirable goals. We overestimate the part which the export of goods plays in our international trade and underestimate the value of our whole invisible exports complex. Instead of taking a pride in the fact that, by means of a large invisible export surplus, we are able to retain within the economy for the benefit of our whole population a greater proportion of our imports than would otherwise be possible, we constantly reproach ourselves on this account. We feel that there is something almost impure about our apparent inability to compete with Germany and Japan in the export markets of the world.
I agree that we should, and I believe that we could, improve our export performance. But I also believe that our main object must be to improve the general standard of living in this country and our economic power as a nation. It should not be our aim to reduce the proportion of retained imports in pursuit of a positive balance of trade when we could benefit our population and offer them a wider and more plentiful choice by paying for a higher proportion of real imports through an increase in our invisible exports. On the whole, I take the view that an economy such as ours, which is capable of providing in the field of international trade and commerce both goods and services, is a more sophisticated and better mix than those which are totally dependent on a positive balance of trade.
Necessity, my Lords, is proverbially the mother of invention. I am sure that the fact that in our whole economic, history we have had only five basic raw materials to dispose of has quickened our wits and heightened our abilities in the field of financial services—banking, insurance, foreign exchange and commodity markets. We have had only wool, iron ore, coal and natural gas; and now there is the prospect of North Sea
866
oil. For many decades we have been a net importer of food as well as of raw materials. On the other hand, the United States is one of the world's biggest producers of grain, meat, oil, timber, coal and textiles. She produces a surplus of food, and she is the leading producer of 24 out of the 51 basic metals in the world; and she has the advantages of space and population. But we, out of veritably slight means, have created over the centuries a powerful and resilient economy; and we ought not to apologise for it: we ought to be proud of it. But it is vital for our future that we should not mis-read the past.
I believe that the role of our invisible exports is going to be of increasing importance now that we have become a part of Europe. We ought to urge upon the Government that they give full recognition to the value which we offer to the world, to Europe and to our own domestic economy through our highly sophisticated system of financial and other services. I do not accuse this or any preceding Government of being deliberately obstructive, but I doubt whether our fiscal policies are sufficiently directed towards maximising our surplus on invisible account. The noble Lord, Lord Terrington, has given an example of the 25 per cent. tax, as it were, on overseas portfolios; and I. like him, must declare my interest, because I am chairman of a composite insurance company. I believe this is a mistake and, like him, I think that "temporary" ought to mean temporary. Moreover, the new corporation tax system makes the earning of overseas profits less attractive than earning profits in the United Kingdom. Surely, in our situation, this must be a mistake.
One way to tilt the balance in favour of overseas profits, which are so vital to our economy, would be by enlarging the scope of double taxation relief under the imputation system. I believe that, gradually, our systems of taxation and our monetary policies, as well as the legal systems which control and guide trade and commerce, must be assimilated to those of our European partners. If we are to play a successful role in Europe and deploy there our full economic potential, we must contribute to the European economy out of a positive balance of payments. It is therefore of the highest

867
importance that we should see that our own house is in order, and re-emphasise by our domestic policies the advantages which our economy and our people derive from the skill, efficiency and enterprise of our financial and trading community. These, my Lords, are qualities which contribute so disproportionately to the success of Britain's overseas trade, and I ask Her Majesty's Government to see that they are encouraged.
5.26 p.m.
LORD HARVEY OF PRESTBURY: My Lords, like noble Lords who have preceded me, I should like to thank my noble friend Lord Selsdon, and I think the firm of Singer & Friedlander are to be congratulated on getting his services into their firm. Personally, I have never been more optimistic about the future of our country than I am at the present time. I have lived in different parts of the world. I spent five years in China before the war trying to sell aeroplanes to Chinese Governments during the slump period. I sold something like a hundred, and they were not all that expensive in those days. Nevertheless, we sold a great deal of equipment with them and set up a mission. But in this country to-day, having paid off the Empire—it is still expensive in some respects, liquidating an Empire, but that burden has almost gone, though not entirely—we now see great developments, such as North Sea oil and gas, and great technology. My business interests over the years have been mainly with Switzerland, a country whose every bag of coal has to come up the Rhine on a barge. They have no materials whatever except what they achieve by hard work. If we can settle our labour problems—and I am hopeful that we cart—and get this country on its feet, I believe we can be a leading nation of the world; and raising the standard of living of all our people is something which we want to see. I am more than hopeful that we can go in that direction.
My Lords, during the last few days we have been reading headlines in the Press about one company, and some rather tainted, unsavoury news. I hope this will not be exaggerated or taken out of proportion so far as the City of London is concerned, because in my travels and in my dealings I have found that the
868
reputation of the City of London throughout Europe and the world is second to none; and its success is because of its integrity and its honesty. Of course, in every walk of life there will be the odd black sheep who will put up a bad show in some direction. It is bound to happen; but I ask that we do not exaggerate our own problems, because every nation has them and ours are really very small.
Britain's balance of payments is assisted enormously by invisible exports. This fact is not generally appreciated by the public at large. I am sure it is not. I have noticed over the years that even some politicians in another place belittle the efforts of the City of London, and I regret that very much. Because we can obtain foreign currency by brains instead of materials, that is not a thing to be belittled. After all, the days are now gone when industry and commerce was run by the so-called upper classes. Today, there is the opportunity for every man, from the grammar school to the university, to go into industry, banking or whatever it may and get to the top. There is nothing to stop him. When one reads to-day—and the figures at lunch-time were really magnificent—that the invisible exports left a favourable balance last month of £56 million in one month, they really are to be congratulated on this achievement. As I said, my Lords, the more the country can live by its brains the better. This saves the import of materials and utilises the minimum of labour. But these earnings have become of crucial importance to Britain's balance of payments.
Now we are in the Common Market, what is the future? Noble Lords have referred to it generally with some optimism, I think. I personally think Britain will benefit by our entry provided that the policies do not lead to discrimination by third countries and that the United Kingdom entry promotes growth in the United Kingdom and in world trade. That is why I admire the policy of the Government to-day in expanding trade in all directions. Even the boom at home is good; it is far better than having a million unemployed. People want to know what they are to do.
Britain's insurance business has been referred to. Perhaps I may give notice that I was some years ago on the London Board of the Royal Insurance. That has

869
now been dissolved so I have no connection. But in California to-day the name of the Royal Insurance really means something. It is highly respected because, in 1906, after the earthquake in California only, I think, two insurance companies met the claims. One of them was the Royal. That fact is remembered to-day, and if you travel around California you will be told that. That is a great reputation to have. But the insurance business has already encountered difficulties in negotiating with the European sector which is more nationally orientated and subject to closer official control. Nevertheless, I believe that the know-how in our insurance business is capable of dealing with the rest of the world and is more than capable of holding its own.
British banks were successful in obtaining an important part of the Euro dollar business while the United Kingdom was outside the E.E.C. The net earnings have expanded from £32 million to £97 million between 1965 and 1969. Therefore in the immediate future our entry into Europe is unlikely to improve our position so far as banking is concerned because British banks were already in quite a strong position. Regarding invisibles, it is important that restrictions and national preferences should not hold back development. In that matter the role of our leaders in Brussels is to try to get flexibility and the minimum of controls in an area where resistence to a powerful United Kingdom sector is all too possible and where an important part of United Kingdom invisible trade is carried on outside the Six.
Now we are in the E.E.C. The United Kingdom should gain by our entry, for tourism, which I do not think has been referred to in detail to-day, undoubtedly is expanding. Those of us who live in London see tourists right through the twelve months of the year. They used to be here from about Easter onwards, but now they come throughout the year. I only wish some of the buses blocking the roads in the vicinity of Westminster throughout the busy hours of traffic could be put to a more convenient parking place than on the way up to Constitution Hill. Tourism is expanding. We have many good hotels in London and Greater London. I hope we are not going to out-price ourselves by building grand hotels
870
for which the average tourist is not able to pay. I should like to be told what arrangements are being made for the young people coming to Britain from other parts of the world. It is important that they are able to come here and have access to reasonable amenities at a reasonable price. I do not think we have sufficient suitable accommodation for the younger people, who now come to this country in increasing numbers.
My travels around Europe indicate that although we have had a bad period of inflation it has certainly been held in recents months. Cur prices compare very favourably with those in most of the European countries. We do not want to talk of Britain being one of the most expensive places in the world in which to live, because I do not think it is. I meet a number of women in Switzerland, the wives of co-directors there who come over here to buy clothes from—if I may name one firm—Marks and Spencer, where the quality is so excellent that there is nothing to touch it in Europe. I am sure that that should be a favourable attraction to tourists coming to Britain.
Shipping has been referred to. Here, of course, the situation is improving. The charter rates have been low in recent times, particularly in the tanker earnings: but the situation in that respect should improve. Of course, so far as oil is concerned the increased cost of production has brought about higher rates to the producer. We have to pay more for oil; but this situation should improve in time as we develop our own supplies from the North Sea and around our coastline. But what I find very frightening is that the Sheiks, or some of them, may well hold other nations to ransom. This is a rather frightening picture and one which should be brought into the open and discussed more freely.
Air transport has been referred to. Perhaps I ought here to declare a very small interest—I am a director of an air freight company. We do not carry passengers—Tradewinds Aviation at Gatwick have five large aeroplanes which carry 26 tons of freight in one fuselage. We fly all over the world, as far as Hong Kong, Japan, South America. We are a relatively small company earning foreign currency for the United Kingdom. I should like to see, I do not say direct assistance, but perhaps some consideration

871
given to competition with some of the European firms who are cutting the freight cost with direct and indirect subsidies from their own Governments. After all, the air freighter to-day is only what the coaster or the small cargo boat trading between the ports was a few years ago. From 1964 to 1968 Britain's share of global invisible receipts fell from 14·6 to 12 per cent. The major fall took place in investment income where Britain's proportion dropped from 20 to 15 per cent. Fortunately, freedom for investment has now improved this situation.
I should like to congratulate the Committee on Invisible Exports; they put in a tremendous amount of work and were very far-sighted in their views on what they advised and what they have done. They did a magnificent job of work. The Committee is generally optimistic for the future but has some reservations. One of the long-standing restrictions is exchange control. Last year the Budget improved this but there is still much to be done to liberalise capital movements. My Lords, for 200 years there has been a surplus on Britain's private invisible account. During the last five years that surplus increased by 65 per cent., accounting for 37 per cent. of our export earnings in 1971.
When my noble friend replies I should like to be told the position regarding royalties, because royalties can again earn a great deal for this country by the use of the brains of our scientists and others. I should like to know where the Italians stand in this respect, because I understand they have very little respect for royalties and patents, and in fact at present they take very little notice of them. Perhaps we could be told, now that we are in the Common Market, what the form is. My Lords, I am confident for the future, and I believe that the Government are looking at our economic problems in the right way, and provided we keep our heads and we all work hard and give the right lead our country can go on from success to success.
5.38 p.m.
LORD GORE-BOOTH: My Lords, I should like to congratulate and thank the noble Lord, Lord Selsdon, in a rather special way. It seems to me that apart from the merit of having introduced this
872
discussion, he succeeded in introducing a very technical and what could be a very dry subject not only with expertise but also with charm and even poetry. I cannot cap any of his quotations, but perhaps if I may scandalously bowdlerise my towering namesake, St. Paul, I would say that after his speech many of the invisible things are now become visible. I should perhaps at this point declare an interest in this debate as I am a director of a bank which is operating in international affairs.
A NOBLE LORD: Is it in the Cayman Islands?
LORD GORE-BOOTH: Not yet. I should like at this point to explain that I took a risk on this subject, in this sense: that when I knew that the noble Lord was going to introduce this short debate I decided to take a risk on his explaining the matter with great clarity and in great detail and to try myself, as coming much later in the debate, to refer to one or two of the more human, psychological and historic points which go into making up our invisible exports. The noble Lord was probably wise to say that he was going to leave out politics altogether, but I think we must remember that, while we debate this subject with great reasonableness in this Chamber, we are overhung in a sense by a cloud of politics and that the business of invisible trade, like the rest of trade, must necessarily be carried on within the political atmosphere of the country at the time. I shall come back to that point in a moment.
Before getting on to these aspects I should like to start with one figure. As I understand it the gross annual earnings from invisible exports during the last two years have been very near £1,400 million. During that time Government expenditure abroad has run at about £700 million. This gives the arresting figure that in these two years invisible exports have paid twice for the total of Government expenditure abroad. That, perhaps more than tables of figures, gives an impression of the volume and value of these invisible exports. It may be said that in a country whose visible trade goes in the direction of (shall we say?) £20 billion, £1·4 billion is not very great. None the less, this kind of illustration shows how crucial it can be. I have no

873
doubt that with the development of Government policy—and I am neither praising nor criticising it—we are going to need substantial earnings in the years immediately to come, and we shall be grateful for every pound that we get out of invisible exports.
I am not going to deal specifically with Europe, although it is referred to in the words of the Motion, but one thing I would say. I hope that in the Government negotiations with Europe in this whole field they may feel that they are speaking from real strength. After all, other countries, others of our partners, have spoken from positions of industrial strength like Germany; or from agricultural strength, or agricultural interests, like France. We stand high in the world in most of the things which go to make up our invisible exports. I think that we should speak as from that reputation and be asking for things with a certain authority, since they are the things that we ourselves do well.
May I for a moment go back to the psychological or historical side of invisible exports? We enjoyed a century, or rather more, of Imperial, relative tranquility. During that period the talents of the people who live in this country could carry this country along with its weaknesses, and we could make ends meet. Even when that period drew to a close we could live in some degree on capital. But this is no longer the case. As a country we now, rather belatedly, find that we must use our talents to the full where it is appropriate while we try to jack up with great speed the whole standard of our performance. That is a very tough task to undertake; but it means that those who have the talent for earning money for this country should be given every facility and every encouragement to do so. It is a very peculiar talent, in the sense that many of the operations which earn us the greatest amount are operations carried out by people who have training, perhaps training on the job; who have information. But on top of that they must exercise two very special things. One is instinct; the other is speed. It is that combination, it is people who have this particular talent, that we need to encourage to persist in well-doing as far as the national balance of payments is concerned.
874
To my mind—and here I get on to the politics of the matter—the exercise in relative freedom of this talent imposes a double and interdependent obligation. I want to stress the word "double" because though I present one obligation first it is indissolubly linked with the other. I have tried to find a phrase that would describe the points raised by the noble Lord, Lord Selsdon, and the noble Lord, Lord Torrington, who referred to the way in which the exercise of invisible exports may be impeded by fiscal or other Governmental action. There is an obligation on the Government, I would say, to see that people engaged in this trade (without their being made into different people) should be so far as possible free from fiscal harassment. I realise, as does anybody who has dealt with Revenue matters, that it is the duty of Revenue to harass us and especially so in the years to come, when the Government are going to need a great deal of money. None the less, there is a margin where drawing a simple conclusion or hacking away at harassing details are alternatives and where the latter can cause an infinite amount of labour and anguish to people who ought to be contributing to the prosperity of the country. It should be the policy of Governments to avoid fiscal harassment when people are engaged in fortifying our balance of payments in this way.
An obligation on Government like this, of whichever Party, which is responsible to public opinion carries with it an obligation on the other side. A number of speakers mentioned the confidence held in British dealings in matters financial, banking, commercial and so on. This is a fact. However—and I am not going to mention names or particular events—things which are vulnerable to criticism are going on, and they fill a great many newspapers. I have no doubt that people engaged in what I will call, for economy's sake, "the City" have an obligation to demonstrate that there is in existence, and in practice, the faculty of self-discipline. I am sure that in the present state of public opinion this is extremely important. I have no doubt that it exists but it is most important that it be shown to exist. If I might go a little further, if there is any relaxation of this faculty then there will be ruthless onslaughts on the whole performance by

875
people who believe that all business is bad business and that all profits are gained for evil purposes. This is nonsense; because in the world of invisible exports if there are no profits there would be no accretion to the strength of our balance of payments. None the less, there is a great deal of talk of this kind behind all the personality cults and adjectives indulged in by the media. I should like to emphasise that this feature of self-discipline is an immensely important ingredient in what we can do in invisible exports. It is particularly important because the alternative to the present method of operation would inevitably involve the loss of precisely those qualities which I have sought to define.
I have said that successful operation in many of these fields, notably insurance, depends on instinct and speed. I am a great admirer of the Government machine, which I have seen at very close hand; but that is not its method, it cannot be and should not be. It is a different kind of method of operation and it is important in the interests of this country's earnings that it should be preserved.
I personally have learned a great deal from this debate and I should like to express in small detail support for some of the particular items mentioned by noble Lords, notably the 25 per cent. return of premium currency, the return rule; also I would hope that at some early stage the Government would have another look at the defects in the imputation system of corporation tax. But I prefer to keep my conclusion to the general one, upon which I am sure that your Lordships are all agreed, that invisible exports are a crucial element in the successful conduct of our economic affairs and it should be the duty of any Government in power to cherish that economic weapon and see that it flourishes.
5.50 p.m.
LORD BRABAZON OF TARA: My Lords, when I saw that my noble friend Lord Selsdon had put down this Motion for discussion I thought to myself, "This is just where you can contribute something" Unfortunately, practically everything I was going to contribute has already been contributed. Nevertheless,
876
I think I must start, as other noble Lords have, by declaring my personal interest. Most of my working life has been spent as a Member of the London Stock Exchange—I am sorry, my Lords, it is now "The Stock Exchange" because we are amalgamated, and it is no longer the London Stock Exchange.
The question of overseas investment has been mentioned by several speakers and I thought it might be worth while to trace the history of our overseas investments and to consider how useful they have been to us in times of crisis. Before the First World War we had huge overseas investments. During that war we still had very considerable investments, but some of them were not readily realisable. I do not think that I am the only Member of your Lordships' House who, from time to time, although having something in the background, has been short of "the ready": and of course we had to realise a number of securities during the First World War to help pay the bills. Nevertheless, after the war we still had reduced, but substantial, overseas investments and no currency regulations were required. One could invest anywhere one liked between the two wars. During the Second World War it was much more difficult. It was more expensive, I imagine, and we had not so many investments to sell. We had to realise a sizeable number, mostly United States Securities. Do not forget, my Lords, that if you want to realise securities you can sell them only where there is a market, and there was a market in America. So many of our securities had to go. Later we sold the Argentine railways—frankly, to pay the butcher's bill that was inevitable.
After the Second World War it was inevitable that a restriction on overseas investments, capital movement, had to be imposed. And this mysterious dollar premium which arose was owing largely to the fact that there were certain securities which were widely held in the United Kingdom but where the market was in London—International Nickel, American Celanese and Canadian banks. After the war we could exchange these shares, as it were, between ourselves. We could not buy new ones from America or from Canada but we could make exchanges among ourselves. If somebody took a very favourable view of the prospects of

877
a particular company he would be prepared to say to a fellow citizen, "I will pay you 25 per cent. above the actual price in Canada"—or America or wherever it was. That is how the dollar premium started up. You could sell one security and buy another one, provided it was from a fellow citizen, so to speak, without attracting, as it were, an individual premium. It became a general premium on overseas securities. That is how the dollar pool built up.
Some very skilful investment went on in this country, particularly among the Scottish investment trusts. They gradually rebuilt their dollar portfolios and did very well for their shareholders. But, and more important I think, they did very well for their country, in that they increased our overseas assets. It may be—I hope that it will not be for the same reason—that these assets will be required some time in the future. Therefore it is particularly important, in my opinion, not to impede the activities of investors in this country, either private investors or companies. I should like to support what was said about this by the noble Lord, Lord Terrington. You can not ask a person to invest successfully and then tie his hands. If it is wrong to hold overseas investments, all right; take them away. But do not put people half in irons when they are doing the best they can with their investments.
The dollar premium varies from nil to nearly 50 per cent. If you take 25 per cent. as the average (it is lower than that now) and invest £125, you have lost £6¼ instantly, not counting commission. The surrender of a quarter of the premium was an emergency measure. I think it was wrong of the previous Government to do it, and it was equally wrong of the present Government not to undo it. Perhaps that will be dealt with in due course. What seems to me so particularly stupid is that now we have a pool in, for instance, Australian and South African securities, where one may have to pay a premium but does not have to surrender any of it on selling the particular share. My Lords, everything else I wanted to say has been covered by other speakers. All I would ask the Government to do is to remove the surrender part of the premium on selling foreign securities.
5.58 p.m.
LORD MAIS: My Lords, may I commence by offering an apology to your Lordships for not being the most active Member of your Lordships' House for the past few months. I am, in fact, absenting myself from official duties this evening in order to be here and to speak in what I consider to be one of the most vital debates, albeit a short one, which your Lordships' House has conducted for a very long time. I would thank the noble Lord, Lord Selsdon, first for making it possible for us to debate this matter, and, secondly, for managing to extricate me from another place to be here this evening. I am not sure whether I have to declare an interest. I have no banking interests in the Cayman Islands; I do have banking interests in Scotland, but I do not think they fall within the category of "invisibles". Previous speakers have dealt with our invisibles in considerable detail, but I would invite your Lordships to look at this problem from a rather different angle. Only twice since the Battle of Waterloo, so far as I can find out, has this country had a surplus of visible exports over visible imports. The whole of our financial stability, the whole of the growth of this country and the standard of living which we have achieved, has virtually come about because of the very considerable surplus we have achieved in invisibles. Therefore it does not need me to remind your Lordships that nothing should be allowed to interfere with the continuation and expansion of those vital invisible earnings.
To my mind, my Lords, we are at the moment facing a problem which could have very serious effects upon the future of invisibles. For many years now it has been the policy to move companies out of London into the Provinces, and every encouragement has been given to achieve this. I am all in favour of that. There are scores of companies, in particular lines of business, that can operate just as well from provincial cities as they can from London. But there are many which cannot. Those which operate in London in connection with invisible earnings could not possibly afford to operate, nor could they operate efficiently, outside the City or in the close peripheral areas of the City. Other speakers have said that invisibles largely come from banking,

879
insurance and shipping. For those engaged in these activities it is necessary not only that they should be reasonably near each other, but also that they should be near the great institutions with which they deal; namely, the Stock Exchange, Lloyd's, the Baltic, and the Chamber of Shipping. It is becoming increasingly difficult to achieve this.
My Lords, there has over the past years been a resistance to providing accommodation within the City. When I speak of "the City", before anyone jumps up let me say that I am not pushing an area with which I have a particular interest for a short time, because when I talk about the City I talk about the peripheral boroughs of Tower Hamlets, Southwark and Hackney, which really are still within the area in which those engaged in invisibles can operate, and where there are sites available. It has always been a yardstick, or was until about 15 years ago, that for successful operation in the invisible market, you needed to be within four or five minutes' walk of one of those major institutions with which you were dealing. Whether people have decided that they can walk farther or faster, or just cannot afford to pay, I do not know, but now it is generally accepted that ten or twelve minutes' walk is reasonable. Again, that brings in the peripheral areas of the boroughs just on the boundary of the City. But we have one great stumbling block, and that is that the present policy with regard to the issuing of office development permits is to have as a prerequisite a ready-made tenant. That means that it is far easier to get an office development permit for possibly 250,000 square feet of offices for one occupant—which, frankly, is not what we need in the City—than it is to get a permit to put up a block of offices for letting in smaller tenancies. Let us be clear on this point. By far the greater majority of those employed in what contributes to our invisible earnings do not require vast areas of office space. I put it at probably an average of 20,000 square feet: at lunch to-day I was told that it could even be less.
It is essential, to my mind, that for survival, let alone expansion, we require a cushion of office accommodation to which companies wishing to come into London—and they are wishing to come
880
in at the moment in considerable numbers—or companies wishing to expand, can do so fairly rapidly, and not have to wait five to seven years while they go through the motions of permits, planning and building: because time is running out. We are facing to-day a very different proposition from that which we faced probably three, four or five years ago. We tried to move firms out then, and it did not work. It never will work so far as companies principally involved in the invisible contribution to our earnings are concerned.
The French are at this moment preparing a considerable area of boroughs to which they are already referring as the financial centre of Europe. Undoubtedly there will be attractive propositions put forward for people to go there. Brussels has a very large spare capacity for offices. I know of two firms which have already moved their headquarters, one to Brussels and one to Frankfurt. We must have a market place that is available. You cannot sell groceries without a counter to serve them over. You cannot sell your invisibles without offices to work from. It is therefore necessary that we should look into this question, and look into it as a matter of considerable urgency. For it is no longer a choice between London and Manchester, if there ever was one; it is, I believe, a choice between London and the Continent. Every firm, every company, that moves out to the Continent or fails to come here is a nasty cut into our invisible earnings.
A few months ago I went to the opening of one of the largest German banks. They had not been here since 1914, when we dispossessed them and closed their doors. I suggested that perhaps it was as well because we might have done it again 25 years later. I asked them why they had come back after sixty years. The answer I received was that they had had a special team studying where the financial centre of Europe, and possibly of the world, was likely to be. It had been a strong team, and they had taken nearly six years. They had decided that undoubtedly the financial centre for Europe was London; that it was a fair bet that London could be the financial centre of the world, and therefore they have come here. They were somewhat appalled at the difficulty of finding suitable accommodation, and equally appalled at what they had to pay for it.

881
My Lords, this is not a problem that can be solved overnight. We ought to have started solving it about five years ago. We are going to be hard put to it, I think, to provide the facilities in the City which other cities are already providing elsewhere. I am going to be very provocative now. In my view, it will be four years before there can be provided a cushion of the type that we want; that is, adequate accommodation for the smaller units engaged in invisible trade.
VISCOUNT AMORY: My Lords, perhaps I may interrupt the noble Lord for a moment. I think he is making a powerful case, but if the course of action that he advocates were followed, would it not have one more advantage; that is, to ensure that the rents of existing accommodation in the City are kept at reasonable levels?
LORD MAIS: My Lords, I thank the noble Lord for raising that point. I was going to raise it myself, in any event. The reason why the rents are so high is because of the question of supply and demand. I am not particularly worried about Centre Point, because it is too far away (this is the provocative point) but there is a large building standing at London Bridge. It is within walking distance of all the institutions that I have mentioned. It has lain empty for, I believe, five years. That could easily be acquired. It could be made available, or made conditionally available, for small lettings not exceeding, say, 20,000 to 25,000 square feet. There is a lot of space there and it would provide a bridge, at any rate for a short time, while we do what the noble Viscount has mentioned: get some more office accommodation up, which will inevitably bring the rents down. Mind you, my Lords, rents are not going to come down too easily, because the recent revaluation of property in the City will involve us in an increase of at least 50 per cent. to 55 per cent. in rates alone. That, on top of the rent, is not going to encourage a reduction. But I appreciate the noble Viscount's point that rents are far too high—and they are too high because there is not enough space available.
I believe that at the moment we are at the crossroads. I believe that our invisible exports will tend to slow down: indeed, there is every evidence that their
882
growth is now slowing down. I should like to quote from that excellent document produced by the Committee on Invisible Exports. First, it says this:
"In the long run, we have the strong impression that British invisible earnings will benefit from entry to Europe. Among the sectors which would gain are shipping, insurance and banking."
That we know, my Lords. They certainly will, provided that we give the City the facilities with which to operate. Secondly, the Report goes on to say:
"All the indications are that invisible earnings may not grow as fast in the future while our invisible payments will almost certainly continue to rise, and so it is obvious we cannot lean too heavily upon our invisibles in the year ahead or the immediate years ahead."
Lastly, and most importantly, in the Chairman's statement is the following comment:
"If, therefore, this glimpse at the possible future of invisible earnings is correct, it makes a strong case for the utmost official encouragement of British invisible exports."
That encouragement is something which I do not think has been given in the past as much as it should have been. In fact only a few weeks ago, as I said, we were faced with this revaluation in the City properties. I do not doubt for a moment that we shall get over it. Like other speakers, I am very optimistic about the future. I believe that this country is poised on the edge of probably one of the biggest surges forward in prosperity and trade that we have ever known. But I would issue a word of warning: if you are poised on the edge of something you need to be careful that you do not either overbalance or lose your nerve. I do not think this country will do either, but I believe that we must take a very urgent look at the services and facilities required by the invisible exports of this country. It is no good leaving them entirely to their own devices. There is a limit to what they can do, and there is a place where they can trade—and literally there is nowhere else they can trade.
My Lords, I thank you for listening to me with patience, and I hope that before long I shall be able to return and be a little more active. May I once again thank the noble Lord, Lord Selsdon, for his kindly references to my presence—and perhaps it is of some slight historical interest. I should also like to thank your Lordships for the very generous letter

883
which you so kindly sent to me on my election. It was much appreciated and, may I say, also typical of your Lordships' House.
6.14 p.m.
LORD CULLEN OF ASHBOURNE: My Lords, I consider myself very fortunate to be the first to congratulate the noble Lord, Lord Mais, on his extremely interesting and authoritative speech. I hope he will frequently be able to escape from his other duties and that we shall be able to hear from him again soon. I greatly welcome the fact that my noble friend Lord Selsdon has initiated this debate to-day on a subject that is very important to the financial health of this country. At the risk of repeating figures with which some of your Lordships will already be familiar, I should like to try very briefly to put into perspective the significance of our invisible earnings. These amount to the remarkable figure of nearly 40 per cent. of our total foreign income from all sources, and they cover more than half the total cost of our imports. They have produced an annual surplus for 180 years, during which time our visible transactions have nearly always been in deficit. The invisible surplus in 1971 was over £500 million.
It always seems to me, considering the part which is being and has been played by our invisible earnings for so long, that remarkably little attention is paid to them in Parliament. It seems to me that these surpluses are more or less taken for granted. Now that we are members of the E.E.C., it is vital that the Government should ensure that the service industries, which provide our invisible earnings are, first, not hampered by any unnecessary obstacles of our own making and, secondly, that they receive every encouragement and support.
Some of us in the City—and here should declare a personal interest as a member of the Stock Exchange—feel that Governments include few people with more than a limited understanding of the City's problems. This feeling was strengthened by the ban on City building eight years ago, from which have stemmed the colossal increases in property values referred to by the noble Lord, Lord Mais. The City is at times criticised for being gloomy about the economy when the
884
Government take a highly optimistic view; but the City is always looking, and must always look, quite a long time ahead. It is accustomed to "Go" being followed by "Stop". I do not need to remind your Lordships of the 1964 or the 1967–68 "Stops". 'What the City would like to hear from the Minister is why the present situation of "Go" (in capital letters) will not be followed by a "Stop" of equal proportions. In recent years on each occasion that our annual growth rate has exceeded 3 per cent. we have had to impose a stop. Everybody in the City hopes against hope—or hopes against experience—that things will be different this time. But until they are convinced, confidence will not be established. The greatly improved trade figures announced to-day are, of course, very encouraging, and I sincerely hope that the Minister, when he comes to reply, will be able to dispel any fears that these will prove to be "one month's figures".
I do not propose to deal with the obstacles of our own making to which I have referred—stamp duty, the dollar premium, and so on—which have been extremely fully covered. However, there is one point I should like to mention and that is telecommunications, When dialling Continental centres direct during business hours, it is very usual to find that all the lines are engaged. When operators are asked to make the connection, though they do their utmost to help, considerable delays frequently occur. Paris is especially difficult, and I know of a delay of four hours having been experienced. This is obviously hopelessly damaging to international financial business, so much of which is transacted on the telephone.
If there was insufficient shipping for exporting visible goods I am sure the Government would leave no stone unturned to see the matter was rectified. Not all of us are sure of the wisdom of spending many hundreds of millions of pounds on the Channel Tunnel; but the expenditure of a fraction of that sum in increasing telephone links with the Continent would surely be worth while. It is of the greatest importance to the City that speedy and effective action is taken. There will be many problems with which to grapple together with our partners in the E.E.C., but I urge the Government to do everything in their power to foster our invisible earnings.
6.20 p.m.
LORD WINTERBOTTOM: My Lords, I am certain that your Lordships will wish to congratulate the noble Lord, Lord Selsdon, on his initiative in sponsoring this important debate, and on the distinguished list of speakers who have responded to his invitation and have taken part in your Lordships' discussion. The noble Lord, Lord Selsdon, at the beginning of his speech, touched upon a point which I intend to raise later: he expressed a fear that the Government might by inadvertence damage the important volume of invisible exports that we are now achieving. I believe they might damage it by indecision.
The noble Lord, like other speakers, underlined the great importance of our invisible exports to our balance-of-payments position. The interesting fact is that if one looks at the visible trade of this country one can only be filled with gloom, since it seems to have been in balance for only about two years in 150. The interesting fact is that we are still the second largest trader in the invisible field after the United States, with 11½ per cent. of the world trade in invisibles taking place from this small country. If we take the more limited field of consultancies, I learned to-day that we have come second to France in the area of the United Nations development programme in providing consultancy for the developing world. Last year we were the front runner.
One of the reasons why Britain plays such an important role in this area—and I will touch on this briefly and not, I hope, priggishly—is in the main because of the integrity of the various individuals concerned with our invisible trade. The honesty of the individual in dealing in this area, and his firm, is of the first importance, as the noble Lord, Lord Harvey of Prestbury, pointed out in mentioning the Royal Insurance dealings in California after the great earthquake of 1906.
One of the reasons why the importance of this area of our commercial activities is undervalued is due to the fact that the statistics are presented to the public in such a peculiar way. The noble Viscount, Lord de L'Isle, mentioned the obfuscation of facts by statistics. Noble Lords will have noticed that when we
886
present statistics on our balance of payments each month, the exact figures of imports and exports are given to the public, but only the balance of the invisibles is given which makes us think that the figure is only in the region of something like £50 million. I suggest to your Lordships, and to the Government, that the actual statistics should be presented in another way. Let us take the United Kingdom balance of payments publication from the Government Statistical Service. Take the year 1971. We see that our exports were £8,790 million. The same figure of invisibles in the same year was, if we take what they call "credits", £5,430,000. This is a figure of the same order as our visible exports, but this hard fact is obscured by the fact that we only hear each month about the balance and not about the absolute sum of money that is moving over the Exchanges. I suggest to the Government that a better presentation of the statistics of invisible exports would help the British public to understand the importance of this area of our commerce.
Now may I come to the point which I mentioned at the beginning of my speech about the danger of indecision. We are all indebted to the Committee on Invisible Exports which so far as I can see is about the only true window into what is happening. I should like to quote from the Chairman's introduction to the annual report for 1971–72. This was written by the Chairman, Sir Cyril Kleinwort. Under the heading "New Appeal", he says:
"In conclusion, I should like to refer to the matter of the Committee's finances. Since it came into being in 1968, the Committee has financed its activities through an appeal to firms and other institutions in the private sector. This appeal has hitherto been conducted jointly with the British National Export Council—the present Committee having grown out of an earlier organisation set up principally to raise funds in the City for B.N.E.C. Now that the export promotion work of the B.N.E.C. has been assumed by the new British Overseas Trade Board, the former has decided to terminate its activities and it is no longer appropriate for the Committee to raise funds on its behalf."
Then he says that the Committee are setting out to raise more money and he continues:
"We hope that all companies will be prepared to give generously so that we may continue our work of encouraging the development of invisible exports and representing the interests of invisible exporters."

887
It strikes me as very peculiar indeed that the Government should not be strongly supporting this Committee. I should like to ask the noble Earl, Lord Limerick, whether it is the intention that the Committee on Invisible Exports should continue to stand on its own feet by providing its own finances, or whether it can expect help from the Government for its most important work.
May I now turn to the work of the British Consultants Bureau which became known to me in the days when I was Parliamentary Secretary at the Ministry of Public Building and Works? We used to have, I think, half-yearly conferences on various forms of consultancy to see how they could help the British export industry and the construction field. May I touch upon how consultants work—or perhaps I should say how British consultants work? The British consultant provides a professional service to his client. His role is to make certain that the client obtains the best advice on the technical feasibility of the project he has in mind, the best advice regarding the contractors who carry out that work, and the best advice on the equipment that should be installed in the project. This advice is given on a purely impartial basis. If (shall we say?) a British consultancy firm is advising the Libyan Government on a port, it may well be that they advise the Libyan Government that a Yugoslav contractor is the best, or that a British crane or a German crane is the best. It is the British consultant's function and role to give the client the best professional advice available.
But since this country is not totally incompetent, as some people would have us think, on many occasions a British contractor or piece of equipment is specified as being in the consultant's view the most suitable. It is perhaps significant that the last year appearing in the statistical return shows that the British construction industry sold exports to the value of £87 million overseas. I am afraid this is where we go back to integrity; other Governments—I will not name them—work very differently. The role of many foreign consultants is to sell the products of the country from which they come. For this reason the British consultant is not able to compete on equal terms. The foreign Govern-
888
ment in fact very often provides concealed incentives to the consultant of its own nationality, paying some of the fees, subsidising the tenders, and so on. It is this particular aspect of the problem facing British consultants that must not be forgotten. The fact that their integrity is seldom questioned is an advantage and they are able to hold their own to a remarkable degree. Nevertheless, their role should not be forgotten by the Government.
So far as the British Consultants' Bureau is concerned, if my recollection is right the period of review of its role is now coming up. I was in contact with it approximately six years ago. I believe it is a general principle of the Government that a 50 per cent. support of costs is provided for seven years and at the end of that time a decision is reached as to whether or not the Government will continue to support an organisation such as the B.C.B. with funds. May I say that I believe that the Government should continue to support the B.C.B. in this area and, what is most important, they should be seen to be supporting it, because when one is dealing with overseas Governments and countries the fact that the organisation is recognised by the British Government is an important factor in the negotiations. Again, I should like to ask the noble Earl, Lord Limerick, what the Government are proposing to do in this area.
Reverting for one moment more to the Committee on Invisible Exports, I commend to your Lordships (it has already been quoted from) this excellent publication, How Entry Into the Common Market may affect Britain's Invisible Earnings. I do not intend boring your Lordships by reading large chunks of it; many of you, I am certain, have read it already. The actual message we get is encouraging. Other things being equal, the Committee believe that our entry into Europe can be only beneficial; but what is also clear is that it is not automatically beneficial and the Government could in fact damage our prospects, our very good prospects, by clumsy handling; and they strike a note of warning. What I believe is an important point which they make is that the dynamic effect, in which I believe, of our entry into Europe must spill over into the whole area of invisibles—tourism, shipping, insurance, banking,

889
everything. Some people question the dynamic effect, but I believe in it. I believe that, although it has not been said, British Leyland would not have started on this massive reinvestment programme if in fact we were outside Europe. What I know is that on the day Norway opted out of entering Europe one of the major aluminium smelters was closed as a deliberate act of policy because Norway could not see her way forward in this area.
There is one other point on which I would touch and that is the question of monetary union. The noble Lord, Lord Gore-Booth, mentioned the heavy apparent bleeding of funds brought about by British Government investments overseas and expenditure overseas. I do not criticise the need for it; the defence of Europe in my view is of prime importance; but it in fact produces a heavy debit in our invisible picture. When of course we get monetary union the effect of having troops in Germany or troops in Britain is the same, and this again is going to be of benefit to the picture presented statistically because it will no longer affect sterling but will be part of the inner European economy and will make life that much easier for us. The figures we spend in Germany are very surprising in terms of absolute sums.
My Lords, that is the only contribution that I have to make to-day. Once again, may I express my personal gratitude to the noble Lord, Lord Selsdon, for initiating this debate. I hope that the Government will pay note to the points made by other speakers and in particular to the two points I have raised about removing uncertainty from the Committee on Invisible Exports and the British Consultants' Bureau.
LORD GORE-BOOTH: My Lords, before he sits down, would the noble Lord permit me one comment, even if it is unusual? It is that I have had a great deal of experience of the British Consultants and I would endorse everything that the noble Lord said.
6.35 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK): My Lords, I feel I face a daunting task. I start by adding to the congratulations already
890
offered to the noble Lord, Lord Selsdon, for initiating this timely debate on a subject of great current interest. I believe it shows the House of Lords at its best. We have a number of Members with great expertise, great experience, in fields which they come to share with us on occasions of this kind. This adds to my own trepidation, because I remember only too clearly the occasion in December, 1968, when I made my own maiden speech on the subject of invisible exports. This was on the Motion of my noble friend Lord Aldington. My trepidation is increased—if I may be allowed to refer to one sentence—when I see that I referred to some advice from my father, that those with no special knowledge of a subject, whether or not they be seen, were better not heard. And I added:
"For as long as I may have the privilege of a voice in your Lordships' House, I propose to adhere to this precept. Consequently I shall not often, or for long, detain your Lordships."—[OFFICIAL REPORT, 11/12/68; col. 542.]
I never thought when I uttered those words that I should find myself answering the next debate on this subject from this Box. I feel almost that I am entitled to some indulgence.
We have had some extremely interesting contributions. I shall return and refer to them later in my remarks, but on the subject of speakers I cannot refrain from commenting on the precedent that we have: the privilege of being addressed for the first time in history by a Lord Mayor of London while he is the Lord Mayor of London. We feel a sense of occasion, particularly when the present Lord Mayor is so eminently well qualified to speak to us on this cause which he has made peculiarly his own during his year of office. The Lord Mayor is something of a man for making precedents. As recently as 12 days ago he and I, in company with some other distinguished people, were metaphorically holding hands at 50,000 feet, close to the coast of Spain, travelling at twice the speed of sound. I am convinced that, whatever other barriers he may break, he is the first Lord Mayor in history to fly at twice the speed of sound.
In a debate of this kind a number of detailed points are raised which would very properly be, and will be, attended to with the attention they deserve. I hope that the noble Lords who have

891
raised them will forgive me if I do not always follow them in detail. It is often preferable to study what has been said and to give a reasoned answer later on. What I should like to do is to share in the recognition this afternoon that we are dealing with a subject of considerable, indeed of vital, importance to our continuing national prosperity. I should like to give you my own analysis, not I hope at too great length, and make one or two modest predictions, and then return to the subject matter of the other speeches.
We have heard a number of variations on the theme of how many times we have had a visible surplus. By my own calculation, this has occurred on four occasions since the war and on only nine occasions since the 18th century. This difference in calculation may have something to do with the change in statistics to which my noble friend Lord de L'Isle referred earlier. It is also interesting to comment that we have heard a lot about our trade with Japan recently, and our visible trade with Japan has recently moved into deficit, but this is more than balanced by our surplus on invisible trading with Japan. So, given the importance of the external balance of payments in our macro-economic policies and the depressing frequency with which it has been the balance of payments which has placed a constraint on our growth, the importance of invisibles can hardly be over-emphasised. Since we last debated this matter—and a number of us made this point—it has been in one way recognised by including invisible exporters among those available for the Queen's Award, and the Award has been made to a number of them.
Looking ahead, I think there can be little doubt that invisibles will play an even greater role in the pattern of our international exchanges, also that the pattern of invisibles will itself be subject to change. As trade increasingly follows investment and as the developing nations demand a greater domestic stake in industry and commerce and in the provision of associated ancillary services, such as transport and insurance, so must we rely on seeking out new opportunities for selling our know-how and expertise in all their infinite variety. This in turn demands a constant effort to keep a step
892
ahead of our customers, and at least alongside our competitors, just in order to maintain our place in the world stakes, let alone to improve it. I make this point, not merely to repeat a truism but because this is actually happening.
I do not believe it was a coincidence that the first major deal which marked our come-back in the Brazilian market some three years ago (to give one example) related to the sale of some £20 million worth of components and know-how for the local building of ships. The second deal concerned the building of the £30 million bridge seven miles across Guanabara Bay—not, I regret to say, to a British design, but Britain is providing the steel for the centre spans and helping to finance the Brazilian work on the rest of the bridge, both by direct financing of local costs and by generating counterpart funds in Brazil through the sale of a variety of British capital equipment. Altogether this is one of the most ingenious export packages of its type ever put together within the City.
I do not want to weary your Lordships with a recital of statistics. These have been much quoted this afternoon and those of your Lordships who are interested in detailed figures may find it worth looking at an article in the issue of Trade and Industry dated March 22 this year. However, in order to put the invisible account into perspective, I think it is worth drawing your attention to these main points which emerge from a study of trends over the ten years from 1962 to 1972. Between 1962 and 1966 the invisible surplus declined by about £70 million but between 1966 and 1971 it increased by nearly £600 million. Receipts outstripped payments and the surplus increased nearly fivefold, decisively reversing the previous decline. The improvement was particularly marked until 1969; growth then began to slow down, and last year, for the first time since 1966, the surplus fell.
Comparing the main categories of transactions in the middle period of rapid growth, it is clear that, while most of them moved in the United Kingdom's favour, by far the greater part of the turn round was accounted for by the surplus earned on private services. The improvement of nearly £550 million between 1966 and 1971 was unprecedented. This is greatly to the credit of

893
everyone concerned with the private sector side of the account, but I should like to draw to your Lordships' attention the very significant role of the public sector which, as far as the published figures go, appear simply to be a drag on our performance. Of course this is just one of the ways in which statistics may mislead. A substantial part of the public sector outflow is accounted for by two headings. The first is defence, which creates stability for our trade; the second is aid of one kind or another to the tune of well over £100 million in those years on the current account and larger amounts of capital transfers. A great deal of the private sector exporting, both visible and invisible, is linked to these payments, either directly or indirectly, while the activities of our Posts abroad—which cost a further £75 million across the exchanges—are of course vital to the whole business of export intelligence and to the servicing of British businessmen abroad.
The private sector improvement was concentrated in the travel account, which went up by about £130 million, and in "other private services", which improved by as much as £450 million. Almost two-thirds of the increase for "other private services" was accounted for by financial and allied services. This radical improvement is sometimes attributed almost exclusively to the devaluation of sterling in November, 1967. Devaluation, however, although undoubtedly important, was responsible for only perhaps one quarter of the total movement. Private services were already improving at that time, and some forms of invisible earnings which are believed to be fairly insensitive to price changes, notably insurance, grew rapidly, not only immediately afterwards but also for several more years. The main reasons for the transformation of the private services account within so short a space of time were the growing popularity of the United Kingdom with foreign visitors at a time when the expenditure of British travellers abroad was constrained; a dramatic change in the fortunes of the insurance industry; the faster development of London as an international banking centre; and the development of new, or comparatively new, sources of earnings such as consultancy, management and agency services, and telecommnications services.
894
Quite a large part of the invisible account cannot be analysed by country or area in very great detail, but it is still possible to get a broad idea and to draw some tentative conclusions about the future. It is clear that the growing share of the non-sterling countries is mainly accounted for by travel and "other private services". The decline in the sterling area share of the invisible trade is linked with a decline in the developing countries' share which seems more likely to speed up than to slow down. To compensate for this, however, opportunities will arise of increasing invisible exports to, and investments in, commercially more stable areas such as the European Community. There is certainly room for improvement, in that transactions with the original members of the Community have been growing relatively slowly in recent years and in absolute terms do not amount to more than a fairly small part of the total. But although these opportunities clearly exist there will be no easy pickings, and I know that will be something that is clearly understood in the City. The Government will play their part in ensuring that the Community ground rules provide fair opportunities, but even so there will be tough competition from the well-established institutions, not only on their home ground but also, no doubt, endeavouring to get into our market. Looking a few years ahead, therefore, I believe the growth of the United Kingdom's invisible earnings may well be stimulated if the shift in the territorial pattern towards the industrialised countries becomes more pronounced.
This country, as has been remarked, is second only to the United States of America in the size of its invisible earnings, and it is some way ahead of its nearest European rival. Moreover, again as we have noted, invisible earnings are more important for the United Kingdom than for most other countries, because the maintenance of a sizeable invisible surplus has enabled the country to sustain deficits which are a normal feature, rather than an abnormal one, of its external trade in goods. So it is a matter of some concern that, despite the rapid growth in invisible earnings over the last 10 years, our share of world invisible receipts has fallen rather faster than our share of world trade in manufactured goods. In 1960,

895
our share of invisibles was just over 17½ per cent.; by 1969, the last year for which completed figures are available, this had fallen to little more than 11½ per cent. The comparable figures for our shares of the trade in manufactured goods by the main industrial countries were 16½ per cent. and 11½ per cent?
Last year, for the first time since 1966, this surplus fell. But looking a year or two ahead we see some grounds for optimism, but the pointers are mixed. We can see almost as many grounds for pessimism. Government expenditure will go on rising, because the effects of the depreciation of sterling since June 1972, and of recent world inflation, will continue to be apparent. The profits of foreign-owned companies in this country are also likely to continue to rise, which in another sense must be good news. Moreover, interest payments in total to overseas holders of sterling are bound to reflect current high interest rates.
But when we study the other side of the coin, it shows that world economic activity is forecast to increase. That should improve the picture for the oil companies; it will boost income from other direct investment abroad, and it will benefit the shipping account. Meanwhile, and this is one of the quick effects of a change in parities, it automatically increases the sterling value of foreign currency receipts; earnings from financial services are likely to continue growing, though perhaps more modestly, and some of the newer, faster-growing categories, notably earnings from construction work carried out overseas, should remain buoyant.
So what should be the balance? The favourable factors—and this is the point, I believe—are, in the aggregate, probably stronger, so the invisible surplus should pick up a little over the next year or two, even though the exceptional rate of growth experienced after 1966 seems unlikely to be regained. It would be quite wrong to be euphoric; it will mean hard work and searching for opportunities, but overall I see no reason for pessimism. Thus, if the optimism can be no more than modest, if only because we have been losing our share of world invisible trade at a faster rate than our share of visible trade, nevertheless it remains there.
896
That brings me to the special role of the City of London. In 1971 the estimated total net earnings of the City through insurance, banking, merchanting, trust funds, the Baltic, Lloyd's Register, the Stock Exchange, and other avenues known to your Lordships, totalled £580 million. That places the City at the top of the list of export earners. Of course invisible exporters are not the only exporters, but we can here make a direct comparison with cars and chassis which, for example, earned £369 million, finished steel was £350 million; and whisky and other spirits were £240 million. Then, if we allow for the import content of industrial exports, the City's lead must be even greater. In fact the rate of increase in the City's earnings is greater than the rate of increase of total invisibles, which in turn is greater than the rate of increase of visible exports.
Insurance forms by far the biggest single item in the City's overseas earnings. In making the massive contribution which it does to our invisible earnings, the great advantage enjoyed by our insurance industry is the flexibility of the service which it offers its customers because of its long years of experience and the high quality of its management. Over 50 per cent. of the industry's premium income comes from overseas. There are three larger insurance industries in the world. That of the United States of America is bigger than all the rest combined, and in terms of premium income the Japanese and German markets are both bigger than ours; but none of them approaches our percentage of income derived from exports.
On the financial side also we must seek an environment which will enable our institutions to maximise the benefits from their pre-eminent skills as capital becomes increasingly mobile, both within the European Community and to compete more widely with other international centres. Serving the needs of multi-national investors and manufacturers will be an increasingly important aspect of future developments in this sector. London succeeded in attracting more than 40 per cent. of the Eurodollar market, but the City needs to be on its toes to retain that market or whatever variation may replace it. This business will not be handed to us on a plate. There will be strong competition for it.

897
The multi-national theme brings me on to the question of consultancy services. This is one aspect that has been mentioned by two speakers this afternoon. Invisible earnings from contracts overseas, including the fees of consulting engineers, architects and quantity surveyors, have been increasing steadily, and in 1972 British firms were carrying out work in 108 different countries. In all of that work the international reputation of our consultants of all kinds for impartiality and probity is a vital factor. Here I should like to endorse the tribute that was paid by the noble Lord, Lord Winter-bottom, to the work of the British Consultants' Bureau, which is indeed appreciated and valued. He referred to its grant. I cannot give him a detailed answer on that point, but I can say that its work is acknowledged and valued and I will of course find out what the situation there may be.
On the financial side, in addition to financing the costs of the initial studies for consultancy, packages of finance are required to provide the credit for the hardware, possibly in the various countries of origin in a variety of currencies, to meet the down-payments and to look after expenses during construction, including local costs in the host country, and eventually possibly running through to financing the working capital for output sales. The mobilisation of the necessary financial security for payment at all stages of the deal is also a professional subject in its own right. The City is ideally placed to put together financial packages for this kind of business, and I know that many of the merchant banks are very active in this field. I may have spent rather a long time, almost too long, on the multinational aspect of our future invisible earnings. But I make no apology for that because it is my firm belief that these multi-national considerations will be having a profound impact on the organisation of our own institutions and on their ability to compete effectively in those areas of activity which are likely to show considerable expansion.
I should like to turn now to a number of the points that have been raised. Many of these points deal with taxation and, lest I may seem to appear, from the Record or otherwise, in the role of a poacher turned gamekeeper, I should hasten to say that these are not matters
898
for which I have any direct Departmental responsibility. If some of the replies I shall be giving have a familiar ring I should like to assure noble Lords who have contributed to-day that whatever they have said will certainly not go unremarked but will be taken seriously into consideration as these subjects are again discussed.
My noble friend Lord Selsdon, apart from the precise thought that went into his speech and the literary gems which enlivened it, made a number of points in his most valuable contribution. He asked the Government to speak out with candour. I was under the impression that we have been using a good deal of candour recently. I am always personally ready for a dialogue on such subjects as we have been discussing. I have developed a dialogue with many of my old acquaintances in the City of London, and in the process have made many new friends there. If we are thought to be lacking in candour or in readiness to engage in dialogue, I hope this will be brought to my attention.
Then we came to what seems to me to be the burden of the complaint of many of our speakers, which concerns the rules governing investment, particularly the dollar premium and the 25 per cent. surrender. I am not sure that I shall be able to respond quite as the noble Lord, Lord Terrington, would wish, or as others might wish, but if I cannot do more I can remind the House of the time-scale which governs our transitional arrangements. It is this, in accordance with our treaty undertakings: that by the end of 1974 there will be an end to the premium on direct investment; by the middle of 1975 there will be an end to it as regards personal capital movements; and by the end of 1977 there will be an end to it in regard to portfolio investment. These dates are final dates; it does not follow that they cannot be anticipated. The question was also raised as to why this temporary measure introduced in 1965 is still with us. I can only say, in the words of my right honourable friend the Chancellor of the Exchequer:
"I know that other relaxations have also been suggested, but I cannot go further this year. These particular changes have been selected with due regard both to prudence and a right sense of priorities."
It will, I am sure, be evident that the requirement of the 25 per cent. surrender

899
will disappear to the same time scale as the dollar premium in those areas to which I referred. Although these measures were not taken this year, there were other measures taken, including the abolition of the voluntary programme in relation to Australia, New Zealand, South Africa and Ireland, the admissibility of official exchange for direct investment in the E.E.C. up to £1 million per project per year, and allowing sterling borrowing for direct investment from the E.E.C. So steps are being taken. I appreciate that they are not being taken as fast as speakers this afternoon would wish, but their words certainly are noted.
My noble friend Lord Selsdon referred also to the question of films. I refer to this particularly because there seems to be a little misunderstanding about what is happening. There is a great deal of activity in this field. The number of films has increased, and the contribution made to production of cinema films has been maintained at a high level over the years. In 1971 our receipts on that account were £22·8 million against expenditure of £5·1 million. There is a pointer perhaps here: for instance, in France more than 12 British films were advertised recently as forthcoming attractions in a French film journal, and by contrast there were only seven British films licensed for exhibition in France in the whole of the last quarter of 1972.
My noble friend referred also to the position of the finance houses, and I acknowledge the valuable contribution which they make. This matter of admissibility checks, which I think he had in mind, is under discussion with the body concerned as a result of the recommendations made in the Scholey Report. He referred also to the role of the professions, and here I would echo his words. I think that we have in this country professions which are second to none. As a member of one of them myself, as a chartered accountant, and having spent fifteen years in banking, I yield to no one in my admiration for the standards of our professions; and I would add that in considering the harmonisation which is called for under the various draft Directives in the European scene we have established a close working relationship with the professions, the professional associations, as may be appropriate. To
900
my knowledge, there is not one of them we are not on close terms with, to exchange information and to work together to achieve what we see to be in the best interests of the country as we approach the question of harmonisation with Europe. My noble friend raised many other points which I should like an opportunity to talk to him about in the near future.
The noble Lord, Lord Terrington, also made a strong case on the 25 per cent. surrender to which I have already referred, and he mentioned stamp duty. The point is well made. Our stamp duty ad valorem is higher than anywhere in Europe. We have also to consider the fact that we work with registered securities whereas bearer stocks are in use in many countries. Here I can only say that the revenue from this tax is very substantial, and there would certainly at this stage be difficulty in finding it from elsewhere. This, I appreciate, is not a conclusive argument or one that will stand for all time, but I know that this matter is very much in the minds of my friends in the Treasury.
The noble Viscount, Lord de L'Isle, gave us a most interesting analysis of our trading account over a period of time and drew attention to an historical anachronism in our method of reporting. He referred also to enlarging the scope for double taxation agreements and to using our fiscal policies so as to maximise the return which may be derived from the invisible sector. These are points which are very much in mind, and I should like to study further what he said and what other noble Lords have said in contributing to this debate, notably the noble Lord, Lord Gore-Booth, who made a plea that those engaged in this trade should be free from fiscal harassment. I do not think we are indulging in any fiscal harassment. If we are, it will be quickly brought to our attention and we shall react. It is indeed our policy to use these fiscal weapons in a way to encourage and not discourage, and if there are points further to consider here I should be very glad to do so.
The noble Lord, Lord Harvey of Prestbury, referred to two matters which were close to my heart, a plea for some optimism, and a statement of the reputation of those who engage in our invisible

901
exporting. From my own experience I would endorse what he said, and I think that the City looked at from outside gives the same impression. But such admiration and friendship does not have to be uncritical. It is this sort of benign but critical examination which we should apply to some of our practices, and this will be helped by the debate that we have had.
My noble friend also referred to the question of tourism and to the need for hotels for young people. I am sure that what he said will be noted in the appropriate quarter. I would make one small comment; that there has been some pressure for loan finance for small hotels, and the Government have recently increased the funds available to the English, Scottish and Welsh Tourist Boards to enable them to give financial assistance to tourist projects in the development areas. The total available for this purpose in the current financial year is £2·3 million, and hotels are not precluded from seeking assistance under this scheme, which is also open to other types of tourist project. This may be of some help. My noble friend also referred to the question of royalties. These contribute substantially. I have no particular knowledge of the situation in Italy, where he suggested there is a certain disregard for the rules, but on that point I should like to write to him.
The noble Lord, Lord Gore-Booth, gave us a most interesting analysis and, as I have already said, in our approach to harmonisation we shall have great regard to the needs and the strength of our professions. Then, the noble Lord, Lord Brabazon of Tara, again made a strong plea for the abolition of the 25 per cent. premium to which I have referred. I take his point about 1965, but I cannot believe that he really means that if it is wrong to hold these securities then they should be taken away, because the managers of those securities have done very well for us all. I have already referred to the speech of the noble Lord, Lord Mais, but I should like to add that we have an enormous admiration for what he is achieving during his year of office. Who better to speak for the City? The question of office development permits is one which we have at the front of our minds, and my right honourable friend the Secretary of State for the
902
Environment has undertaken to consider the findings of the Committee which recently recommended their abolition. He mentioned the time scale, which again is extremely important. I would only add that he, as the first citizen of the City of London, will recognise that it must be a tolerable place in which to work. There is a balance to be found. But he has raised some most valuable and serious points which my right honourable friend will be looking at. I have referred to the points made by my noble friend Lord Cullen, with the exception of his point about telephone equipment. That will be looked at by my honourable friend Sir John Eden.
The noble Lord, Lord Winterbottom, made a number of good points. In order to leave two minutes for my noble friend Lord Selsdon, I should like to get in touch with him on his points about statistics and about finance for the Committee on Invisible Exports. Their work is highly valued, and of course I echo most warmly the tributes which have been paid to my former chairman, Sir Cyril Kleinwort. To my knowledge, at the present time we have had no request from them for finance, but if it is required I am certain that he will not be slow in letting us know. I have already taken as much time as I am entitled to, and it is right that I should leave a moment or two to my noble friend Lord Selsdon, whom I once again thank. I also thank all those other noble Lords who have taken part in this debate for their most interesting contributions.
7.15 p.m.
LORD SELSDON: My Lords, it goes without saying that I am extremely grateful to all those who have taken part in this debate to-day. There is a lot more underneath the surface than would appear from these two hours spent on "invisibles", and I hope your Lordships will not feel that that has been too much time. I have undertaken to write to my noble friend Lord Limerick with a wodge of papers and recommendations, which I think he, as a poacher turned gamekeeper, will find very hard to resist. He will learn something of the gentle Continental art in Latin-blooded countries of arm-twisting in the national interest. His argument that we must wait, that everything has a plan and a time, cut no ice at all. He pointed out that our share

903
of world invisibles has declined. I should not like this debate to end on a pessimistic note. It may have declined, but during the time span he mentioned it more than doubled. If we go on declining and doubling, I myself shall be quite happy.
My noble friend has spoken about different people's speeches. I am extremely grateful to the noble Lord, Lord Mais—or should one call him the noble Lord, the Lord Mayor?—for speaking to-day. He is the busiest man in the United Kingdom, and probably in Europe. That he himself should have taken time to prepare for this debate, to speak here to-day and to stay throughout it all indicates the seriousness of this matter. He made some telling points, and I would ask: if you cannot believe the Lord Mayor, whom can you believe? I come to my final point. We have a reputation in this country. We are probably the yardstick for the world of integrity in our service businesses. There is one point that one would like to force through: we should like people to want to do business with the British, because they are British. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

LAND COMPENSATION BILL
Returned from the Commons with certain of the Amendments agreed to with Amendments; with certain other Amendments disagreed to and an Amendment proposed in lieu thereof; and with the remaining Amendments agreed to: the said Commons Amendments and the said Amendment in lieu to be printed.
  E.E.C.: CIVIL SERVANTS AND BRUSSELS MEETINGS
  E.E.C.: CIVIL SERVANTS AND BRUSSELS MEETINGS
  NATIONAL HEALTH SERVICE REORGANISATION BILL
  NATIONAL HEALTH SERVICE REORGANISATION BILL