Sitting of 13 June 1974

Preamble
The House met at half-past
Two o'clock

PRAYERS
[Mr. SPEAKER in the Chair]

H.R.H. THE DUKE OF GLOUCESTER (FUNERAL)
Mr. Speaker: I have to inform the House that I have been asked by Her Royal Highness the Duchess of Gloucester to attend the funeral of the Duke of Gloucester at Windsor at 11.30 a.m. tomorrow. I hope that the House will approve of my decision to accept and will grant leave of absence.
Hon. Members: Hear, hear.
Mr. Speaker: I thank the House.

PRIVATE BUSINESS

  BRITISH RAILWAYS BILL (By Order)
  Order for consideration, as amended, read.
  To he considered upon Tuesday next.

  FIFE COUNTY COUNCIL ORDER CONFIRMATION
  Mr. William Ross Mr. William Ross presented a Bill to confirm a Provisional Order under Section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Fife County Council; and the same was read the First time; and ordered to be considered upon Wednesday next and to be printed. [Bill 60.]
ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    £ Sterling (Value)
    Mr. Carterasked the Chancellor of the Exchequer what is the value of the £ sterling, to the latest date, compared to the French franc, Italian lira, deutsche-mark and United States dollar; and how this compares to the value on 28th February 1974.
    The Paymaster-General (Mr. Edmund
    Dell): With permission, I will circulate the figures in the OFFICIAL REPORT.
    Mr. Carter: Would my right hon. Friend accept that those figures will show that the pound has improved generally against the currency mentioned? Can he say why it is that, since Election Day, 28th February, although the pound has improved in this way, thus reflecting foreign confidence, the Conservative Party and its leader have proclaimed throughout the country how badly the economy is doing under the present Government?
    Mr. Dell: I am glad that there is foreign confidence in sterling. The figures available since 28th February confirm what my hon. Friend has said. There has been a slight depreciation compared with the deutschemark but in other cases there has been an appreciation.
    Mr. John More: Does the right hon. Gentleman accept that, quite contrary to the statement made by his hon. Friend, the Arab oil inflow in excess of £600 million is a key factor? Would he like to say whether he will pursue policies to lower interest rates and turn away such money, or does he intend to increase sterling guarantees?
    Mr. Dell: Arab oil has been a factor in this. As has been frequently pointed out, our policy of lowering interest rates is subject to the constraints imposed by the international situation. As for the sterling guarantees, the hon. Gentleman must wait and see.
    Following is the information:

    London middle market closing rate on

    28th February 1974

    4th June 1974

    11th June1974

    Currency

    (£1=)

    (£1=)

    (£1=)

    French franc

    11·146

    11·698

    11·78

    Italian lira

    1,492·5

    1,543·7

    1,562·7

    Deutschemark

    6·159

    6·034

    6·011

    U.S. dollar

    2·3050

    2·4003

    2·3950

    Value Added Tax
    Mr. Hal Millerasked the Chancellor of the Exchequer whether he will remove from the scope of VAT those items of medical equipment such as linear scanners supplied to hospitals from money raised by public subscription.
    The Financial Secretary to the Treasury (Dr. John Gilbert): I have noted the hon. Gentleman's suggestion.
    Mr. Miller: Will the hon. Gentleman please bear in mind that medical research and treatment is in some cases being delayed or prevented by an inability to procure this equipment, for which on occasion public funds have been raised? Will he please give speedy consideration to exempting such equipment from this tax and possibly also from import duty?
    Dr. Gilbert: The case to which I think the hon. Gentleman is referring is the purchase of a piece of equipment of this sort to be presented to the Worcester Royal Infirmary in memory of the late John Baker. If the hon. Gentleman has not yet heard the news, I am glad to be able to tell him that this equipment will be relieved from both import duty and VAT.
    Mr. George Gardinerasked the Chancellor of the Exchequer what consultations are being undertaken by the Inland Revenue on the feasibility of differential rates of VAT; and what options are under investigation.
    Dr. Gilbert: None, Sir. The Inland Revenue does not administer VAT. I would refer the hon. Member to the answer I gave yesterday to my hon. Friend the Member for Sheffield, Atter-cliffe (Mr. Duffy).
    Mr. Gardiner: May I ask the Minister whether, in considering any changes in
    1802
    the rates of VAT, he would agree that in the interests of the family budget it would be better if he began by removing the 5p VAT imposed on petrol in the Budget?
    Dr. Gilbert: My right hon. Friend had to make a decision about the amount of revenue he had to raise to lower the net borrowing requirement. Unfortunately one of the elements had necessarily to be petroleum products, in this case petrol. Through the operation of the VAT mechanism no element of that tax will fall on public transport fares.
    Mr. Denzil Davies: When my hon. Friend is considering the scope of VAT, will he make it clear that the Government have no intention of implementing the proposals of the European Commission to impose VAT on the sale of new houses as is proposed in the harmonisation directive?
    Dr. Gilbert: I will certainly take note of my hon. Friend's point. At the moment there are no requirements from the Commission for harmonisation as to either rate or rate structure.
    Mr. Fairgrieve: Will the Minister accept that the whole point of VAT is that it should be imposed at two rates, zero and one other rate, thus distinguishing it from purchase tax, which had a series of rates? Will he assure us that it will operate only at those two rates?
    Dr. Gilbert: Obviously I am not able to give the hon. Gentleman that assurance. That is why the consultations are taking place. I would point out that two countries already have four-rate structures and another has a five-rate structure.
    Mr. Higgins: Will the hon. Gentleman accept that the Opposition do not regard as obvious what he said about changes in rate structure? Is it true that traders have been told that if there is a change in rate or in rate structure they will be helped with the provision of calculating equipment?
    Dr. Gilbert: Not to my knowledge.

    Gold
    Mr. Adleyasked the Chancellor of the Exchequer if he will seek talks with

    1803
    the Finance Minister of South Africa on the question of gold as a reserve currency.
    Mr. Dell: No, Sir. There is agreement in the Committee of Twenty, in which South Africa is represented, that the SDR should become the principal reserve asset of the international monetary system and that the rôle of gold should be reduced.
    Mr. Adley: Following the announcement by the Group of Ten last night, is not there a need to do everything we can to improve relations between Her Majesty's Government and the Government of South Africa? Are not the producers of gold as important to us as are the producers of oil?
    Mr. Dell: I see no connection between what happened in Washington last night and Britain's relations with South Africa. There is a generally accepted policy, in which South Africa takes part, that the rôle of gold in the international monetary system should be reduced. Nothing that has happened in Washington has altered that fact.
    Mr. Sedgemore: Is my right hon. Friend aware that when Great Britain left the gold standard on 21st September 1931 there were 2,803,522 people unemployed in this country? Is he further aware that certain Powellites on the Opposition benches and the Editor of The Times seek to cure inflation by the creation of unemployment and wish to return to the gold standard as a means of inflicting the discipline of unemployment on the people of this country? Will my right hon. Friend utterly reject that philosophy?
    Mr. Dell: We have no intention of curing inflation by an increase in unemployment of the kind referred to by my hon. Friend.
    Mr. Hugh Fraser: Is it not time that the Treasury came off cloud 10 or cloud 20 and came down to reality? Value is in gold and not in baskets of bogus currency which is constantly being inflated.
    Mr. Dell: I know that that is the right hon. Gentleman's view. It is not the view of the Group of Ten or of the Committee of Twenty. A Private Notice Question has been tabled on what happened in
    1804
    Washington. Perhaps we should leave it until that is reached.

    Retail Prices
    Mr. Dixonasked the Chancellor of the Exchequer what were the percentage increases since October 1973 in the retail price index (January 1962 = 100) in March 1974 and April 1974, respectively; and what is his estimate of the contributions made to those increases by the price of oil imports.
    Mr. Dell: In March the General Index of Retail Prices was 6·1 per cent. higher than in October 1973, and in April it was 9·8 per cent. higher. By April the direct effect of oil import price increases had been to add about 1 per cent. to the index. Including indirect effects, it is estimated that the eventual effect of the increases will be to add about 3 per cent. to the index, but it is difficult to judge how much of this had come through by April.
    Mr. Dixon: Does the right hon. Gentleman agree that a major, if not the major, reason for the apparent failure of the previous Government's stage 3 policy was the Middle East developments? Does he agree that in his present position he is under the same difficulties as were experienced by the previous Government?
    Mr. Dell: Certainly the increase in oil prices has been a factor in inflation in this country and elsewhere. The effect of the increase in oil prices has not yet fully worked through into the retail price index. Fortunately there are signs of commodity prices generally stabilising, which of course would be a favourable factor.

    Tax Avoidance
    Mr. Skinnerasked the Chancellor of the Exchequer if he will introduce proposals to prevent the abuse of tax avoidance by the use of addresses in offshore islands.
    The Chief Secretary to the Treasury (Mr. Joel Barnett): An address outside the United Kingdom does not in itself provide a means of avoiding United Kingdom tax. But the question of tax avoidance is continuously under review and I shall bring forward any necessary proposals at a suitable time.
    Mr. Skinner: I want my hon. Friend to apply his sharp accounting mind to this problem—
    Hon. Members: Ask a question.
    Mr. Speaker: Order. This is not speech-making time; it is Question Time.
    Mr. Skinner: I said only half a dozen words. When my hon. Friend is considering this matter, will he bear in mind that there are millionaires, property dealers and others of that ilk who have an address in Jersey or similar places and who use private aeroplanes and private airfields to come back to this country to live each week, or perhaps each night? By doing that they avoid taxation, yet in my constituency there are pensioners who have paid taxes all their lives and have never once been to the coast.
    Mr. Barnett: I fully understand my hon. Friend's feelings on this matter, and the Treasury Bench agrees with him. He is talking not about avoidance but about evasion. The difference between the two is the thickness of a prison wall. We are looking closely into these matters and hope to make a statement in the future.
    Mr. Ian Lloyd: Does the Chief Secretary agree that if one compares the various illegitimate claims being made on the real resources of society the one referred to by the hon. Member for Bolsover (Mr. Skinner) pales into insignificance in scale by comparison with the one that is illustrated on all the main posters advertising London newspapers this afternoon?
    Mr. Barnett: I hope that the hon. Gentleman is not suggesting that we should do nothing about evasion, which is what my hon. Friend was talking about. That is what we intend to stamp out.

    Exchequer Receipts (Northern Ireland)
    Mr. Dalyellasked the Chancellor of the Exchequer if he is satisfied with the operation of the arrangements for balancing Exchequer receipts between Great Britain and Northern Ireland.
    Mr. Joel Barnett: Yes, Sir. Since 1st January 1974 these arrangements have been governed by Section 15 of the Northern Ireland Constitution Act 1973. That Act provides for payment from the United Kingdom to Northern Ireland of a sum equal to the Northern Ireland share of
    1806
    United Kingdom taxes. The amount of the share and the method of calculating it are determined by the Treasury.
    Mr. Dalyell: As many Ulstermen are not incurious about the topical subject of the precise extent to which they are beholden to us on this side of the water, will the Treasury mount an exercise to establish the truth? Secondly, will the Treasury reflect on a system of financial decision making that has resulted in under-carred motorways in Ulster and Protestant and Catholic slums in Belfast?
    Mr. Barnett: The truth of the essential facts of the matter is already known and the total payments have been announced recently by the Secretary of State, but I shall be happy to circulate a breakdown of the figures in the OFFICIAL REPORT. In reply to the second part of the supplementary question, this is a matter of priorities inside Northern Ireland within the concept of parity.
    Following are the figures:

    UNITED KINGDOM FINANCIAL SUPPORT TO NORTHERN IRELAND

    1973–74

    1974–75

    Actual

    Estimate

    £ million

    £ million

    Special payments for:

    Health Services(£15million)

    53

    Nil

    Social Services (£30 million)

    Regional Employment

    Premiums (£8 million)

    Great Britain National Insurance Fund contribution to Northern Ireland National Insurance Fund

    30

    30

    Grant-in-Aid

    175

    200

    Direct expenditure by*:

    NIO and PSA (includes cost of Law, Order and Protective
    Services from 1st January 1974)

    20

    81

    MAFF Agricultural support and, in 1974-75,Food Subsidies)

    30

    37

    MAFF Agricultural Remoteness Grant

    2

    2

    —

    —

    310

    350

    Loans from National Loans Fund

    66

    80

    —

    —

    TOTAL

    376

    430

    —

    —

    * Excluding Defence.

    Incomes Restraint
    Mr. Stanleyasked the Chancellor of the Exchequer whether he proposes to end the statutory restraint of incomes at the expiry of phase 3.
    Mr. Dell: The Prices Bill contains provision for ending the statutory control of pay. We shall seek parliamentary approval for the exercise of these powers as soon as they are available to us.
    Mr. Stanley: In view of the Minister's confirmation that he wishes to abolish statutory control over incomes immediately, what steps will the Government take to moderate the huge new pay claims now in process of preparation which his right hon. Friend the Chancellor of the Exchequer has already stated publicly the nation cannot afford?
    Mr. Dell: It is of the utmost importance to moderate pay settlements. That is the object of entering into the social contract and of the discussions we are having with the Trades Union Congress.
    Mr. Loughlin: Although he accepts that it is essential to restrain wage claims, does not my right hon. Friend recognise that wages are only one factor in inflation? Is it not better to emphasise the insignificant effect of wages upon inflation compared with other factors? Does my right hon. Friend agree that Opposition Members, before talking about restraint, should think not only in terms of the incomes of industrial and commercial workers but also in terms of the incomes which they themselves enjoy?
    Mr. Dell: There are certainly other important factors in inflation, but that does not mean that it is not important to moderate income settlements.
    Mr. Robert Carr: May I take it that the right hon. Gentleman still agrees with the Prime Minister that one man's pay increase is another man's price increase?
    Mr. Dell: I certainly agree that wage settlements can be a factor in inflation. There are other factors. Inflation has to be brought under better control than was achieved by the Conservative Government.

    Borrowing
    Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what additions have been made to the net borrowing requirement since the Budget; and how it is proposed that such additions should be financed.
    Mr. Joel Barnett: It is not customary
    1 to give forecasts of the public sector borrowing requirement other than at Budget time. My right hon. Friend has made clear our intention to effect a large reduction in the borrowing requirement for the current year compared with 1973–74.
    Mr. Bruce-Gardyne: I am sure we all wish the right hon. Gentleman the best of British luck in that objective. Is it not the case, however, that since the Budget hardly a day goes by without fresh Government commitments to the financing of the social compact and that each of these commitments is being financed out of "hot" money? What I happens when the "hot" money starts going out again?
    Mr. Barnett: I do not agree with the hon. Gentleman. The only major event in this respect is the £500 million which we promised would go, if required, to the building societies. If the hon. Gentleman does not want to reduce mortgage payments—
    Mr. Bruce-Gardyne: I do not.
    Mr. Barnett: The hon. Gentleman may not want to reduce them, but I should like to hear what his hon. Friends have to say.
    Mr. Higgins: Is it not dangerous to have a Secretary of State for the Environment who is not clear which of his proposals will increase the borrowing requirement and which will not? Will the Chief Secretary hold a seminar for his right hon. Friend?
    Mr. Barnett: No, Sir.

    Wealth Tax
    Mr. Hurdasked the Chancellor of the Exchequer what recent representations he has received about the likely effect on agricultural production of the proposed wealth tax.
    Mr. Loveridgeasked the Chancellor of the Exchequer if, in introducing the proposed wealth tax, he will seek to ensure reliefs that will prevent the piecemeal sale of the assets of any business due to the accumulative effects of this tax when added to other taxation.
    Mr. Joel Barnett: I have received some representations on behalf of farmers. But the effects of the wealth tax on agriculture or on businesses are matters for later public discussion in the light of the Green Paper which my right hon. Friend will publish during the summer.
    Mr. Hurd: Will the hon. Gentleman accept that farmers who have expressed anxiety about this matter are not enjoying a lush standard of living but by and large are people who have seen the main tool of their trade—the land—rise sharply in value? Can he, in advance of the Green Paper, do something to restore confidence in the farming industry by giving an undertaking that he will not bring in any measure which would lead to the breaking-up of farms or do anything to upset a highly efficient farming industry?
    Mr. Barnett: I do not accept the assumption in the hon. Gentleman's question. The subject of farmers will be discussed when the Green Paper is published. It is known that there are many farmers and landowners who have been known to acquire substantial amounts of wealth, and they should pay their fair share in wealth tax.
    Mr. George Lawson: When considering the treatment given to farmers, will my hon. Friend bear in mind the great advantages which they enjoy in rate relief and which are not enjoyed by other people?
    Mr. Barnett: I am grateful to my hon. Friend for that comment, and I remind him that there are other reliefs as well. It is important to remember that there are some career farmers whom it might be necessary to help, and this matter will be discussed when the Green Paper is published.
    Mr. Awry: Is the hon. Gentleman aware that practically all the farmers in my constituency have all their money invested in their business? Does not the hon. Gentleman appreciate that if there is to be a further tax imposed upon them, they will have to sell part of their business to pay the tax? This would have a disastrous effect on agriculture in my constituency.
    Mr. Barnett: I doubt whether that is true of every farmer, although it may be
    1810
    the case in the hon. Gentleman's constituency. It will be a matter for discussion when the Green Paper is published.

    EEC Finance Ministers
    Mr. Blakerasked the Chancellor of the Exchequer when he next expects to meet the Finance Ministers of the EEC.
    Mr. Martenasked the Chancellor of the Exchequer when he will next be meeting Common Market Finance Ministers.
    Mr. Dell: My right hon. Friend attended a meeting of EEC Finance Ministers on 6th June. The next meeting will be held on 15th July.
    Mr. Blaker: In view of the present economic difficulties and uncertainties in Western Europe, and indeed throughout the world, is it not clear that close cooperation between the Chancellor of the Exchequer and his colleagues in the Committee of Finance Ministers will be important in the coming months?
    Mr. Dell: That is true. Indeed, general international monetary co-operation will be important in the coming months. This is why my hon. Friend is currently in Washington.
    Mr. Raphael Tuck: What about monetary union? Has any progress been made on that perilous road?
    Mr. Dell: My right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Foreign and Commonwealth Affairs have made clear the Government's view about economic and monetary union.
    Mr. Marten: When the Chancellor meets the Finance Ministers, will he remind them of the Conservative Party manifesto in 1970 in which we said that if we did not get into the Common Market we were confident that we could stand on our own feet outside it? Does the right hon. Gentleman agree that the oil bonanza since then will mean that we shall have a much greater opportunity to stand on our own feet outside the Community?
    Mr. Dell: The hon. Gentleman forgets that nobody is likely to believe anything in the Conservative manifesto any more.

    Corporate Liquidity
    Mr. Biffenasked the Chancellor of the Exchequer if he will make a statement on the present situation and future prospects for corporate liquidity.
    Mr. Dell: The gross liquid assets of industrial and commercial companies were at the high level of £10,000 million at the end of the fourth quarter of 1973. The strains of three-day working will since have eroded the position to some extent. The Government will continue to watch the situation and will ensure that investment is not hampered by a lack of finance.
    Mr. Biffen: When watching the situation will the right hon. Gentleman bear in mind that there is a malaise among British industrial and commercial managements, which amounts almost to a crisis of confidence? This derives partly from the belief that the Government are unaware of the serious cash difficulties in British industry and the belief that there is hostility to the profit motive among many Labour Members and appropriate anxiety about the intervening ambitions of the Secretary of State for Industry.
    Mr. Dell: I do not believe that there is reason for a lack of confidence on those grounds. The problem arises from the changing pattern of company finance. Companies are increasingly reliant on bank finance and, therefore, their net liquidity position shows a deficit. Nobody believes that money outstanding from them will be called in. They are as far as we can see generally speaking in a strong liquidity position and this should have a beneficial effect on investment.
    Mr. Kinnock: Is it not the case that the fears allegedly expressed by the business community about the activities of the Secretary of State for Industry are simply the latest in a long and old list of excuses for the useless and hopeless performance of large sectors of British privately-owned industry in past years?
    Mr. Dell: There are many reasons for the poor economic performance of this country. One may be our stop-go policies since the war. I do not wish to distribute the burden of responsibility for our poor performance unequally between Government and industry.

    Taxation Comparisons
    Mr. Ridleyasked the Chancellor of the Exchequer if he will publish a White Paper setting out the details of taxes on higher incomes, gifts, inheritance, death, and capital gains, in the United Kingdom and in the principal industrialised countries of the West, respectively.
    Dr. Gilbert: No, Sir. A comparative table of nominal tax rates would be of little value without a full examination of their social context and their practical effects. My right hon. Friend will be publishing in the forthcoming Green Paper some information about wealth taxes in other countries.
    Mr. Ridley: Is the hon. Gentleman aware that his reluctance to give the House this information must be due to the fact that it is well known that taxes of this kind on the Continent are infinitely lower than are those which operate in the United Kingdom? Since those continental countries have had a much more satisfactory economic performance than we have enjoyed, does he agree that the higher that taxes of this sort are levied the less likely we are to get a decent, sustained growth?
    Dr. Gilbert: I am sure the hon. Gentleman would agree that comparisons of relative tax burdens between different countries are notoriously difficult to make unless one takes into account the different physical structures, standards of living and income levels.
    Mr. Frank Allan: Is it not a fact that the earlier questions about impoverished farmers and the kind of questions we are now hearing from the Conservative benches are irrelevant when we consider that the starting point in such a tax would be at a level of £50,000? I hardly think that many of our constituents would consider themselves poor if they were enjoying a capital of over £50,000.
    Dr. Gilbert: I agree that very few of our constituents would attract wealth tax.
    Mr. Peyton: Before the hon. Gentleman resorts to the habitual pride of the Labour Party in a high level of taxation, he and his colleagues should look at the long list of writers, artists, composers, musicians and the rest who have been

    1813
    forced to go elsewhere. Does he think that this tyrannical system of tax ultimately will be to the benefit of our country?
    Dr. Gilbert: I would be surprised if the right hon. Gentleman was suggesting that the artistic spirit was so closely connected with financial matters.

    Age Exemption Limits
    Mr. Moateasked the Chancellor of the Exchequer what would be the approximate cost in a full year of raising the age exemption limits from the proposed £785 for a single person and £1,130 for married couples to £900 and £1,300, with corresponding marginal relief.
    Dr. Gilbert: The revised age exemption limits proposed for 1974–75 are £810 for a single person and £1,170 for a married couple. The cost of increasing these to £900 and £1,300 respectively, with the consequential adjustments in marginal age exemption relief, would be about £50 million in a full year.
    Mr. Moate: I recognise the value of the pension increase and the large exemption increases even since the Budget Statement but does not the Financial Secretary agree that pensioners with a small private pension over and above the State pension are particularly hard hit by rising prices? Does he not realise that big deductions from these modest incomes can cause great hardship and resentment, and does he not feel that higher priority should be given to raising the starting point on taxation for pensioners?
    Dr. Gilbert: I am grateful to the hon. Member for his remarks about the increase in the national insurance pension. Of course, we all recognise that there is genuine concern on both sides of the House about the position of pensioners at all income levels. I am sure, however, that the hon. Member will agree that the greatest need is on the part of those who do not have enough income even to attract the lower rate of income tax. My right hon. Friend provided in his Budget that any elderly person who was exempt from tax before by reason of the threshold will remain exempt thereafter.
    Mr. Robert Carr: If the Financial Secretary and his right hon. and hon. Friends are genuinely concerned with
    1814
    deeds and not merely with words concerning the problems of the retired, why are they increasing the taxation burden on such people?
    Dr. Gilbert: I am sure the right hon. Gentleman will recognise that even those pensioners who are fortunate enough to have an income that would attract the investment income surcharge will not have to pay the full rate. They will get relief additional to that afforded to other taxpayers.

    Widows (Tax Allowances)
    Mr. McCrindleasked the Chancellor of the Exchequer what representations he has received from women's organisations on the tax allowances of widows.
    Mr. Leslie Huckfieldasked the Chancellor of the Exchequer what further proposals he has for an improvement in the position of tax allowance for widows.
    Dr. Gilbert: My right hon. Friend and I have received a number of representations on this point, and I am meeting a deputation from the National Association of Widows later this month.
    Mr. McCrindle: Has any consideration been given to extending to widows, and perhaps even to divorced women, a tax allowance at the same rate as that enjoyed by a married man rather than that of a single woman, which is the prevailing situation? Will the Minister bear in mind that these women often have to go on meeting the same financial and family burdens after the loss of a husband for one reason or another?
    Dr. Gilbert: Again, I am sure there is common ground between both sides of the House on the need to do everything possible to help widows, particularly those with young families. I am sure the hon. Member recognises that women who are unfortunate enough to be in such a position will have their single person's allowance increased by £30 this year. They will also benefit by the increase in the child allowance by £40 for each child. A point to which the hon. Member did not allude is that the widow's pension will go up by a record amount and that those having care of children will attract an additional personal allowance.
    Mr. Huckfield: Does my hon. Friend accept that many of these widows, as the hon. Member for Brentwood and Ongar (Mr. McCrindle) pointed out, have to bear all the financial burdens of being a house owner and all the family burdens of their late husbands but that they do not have anything like the same income? Notwithstanding some of the proposals which I understand may be emanating from my right hon. Friend the Secretary of State for Social Services, does not my hon. Friend think we now have an opportunity to take a much more comprehensive look at this?
    Dr. Gilbert: I take my hon. Friend's point that there are certain unavoidable expenses attached to the running of a household, however modest it may be and regardless of whether it is run by a single individual or a married couple. It is for that reason that the single person's allowance has for a long time been much more that half of the married person's allowance.
    Mr. Rost: It not slightly dishonest for the Financial Secretary to claim that personal allowances have been increasing and will therefore help widows when the increases are less than the rate of inflation and household costs, particularly as a result of the Budget, have been increased substantially?
    Dr. Gilbert: I merely remind the hon. Member that the widow's pension has been increased by a record amount and that we have taken steps outside the Budget in terms of food subsidies to try to hold down the basic cost of living for those who are least well off.

    Property Companies
    Mr. Norman Lamontasked the Chancellor of the Exchequer what instructions he has given to the Bank of England about the rôle to be played by the banking system towards property companies in financial difficulty.
    Mr. Dell: None, Sir.
    Mr. Lamont: I appreciate the political sensitivity of the subject and the strong feelings which exist about speculation, but in any instructions that may be given will the Paymaster-General bear in mind the connection between the property industry and pension funds? Will he bear in mind that a complete collapse
    1816
    in the property industry would very much add to the considerable difficulties already facing many pension funds?
    Mr. Dell: I shall bear in mind the facts to which the hon. Member has referred. We are in close contact with the Governor of the Bank of England, who is keeping us informed of developments affecting the property companies and their possible implication.
    Mr. Ashton: Are not property companies absorbing an abnormal amount of money from pension funds, which should be going into building societies to help young couples to buy their own homes? Cannot my right hon. Friend introduce legislation to insist that pension funds and unit trusts devote a large proportion of their income to building societies so that young couples can get loans?
    Mr. Dell: There are regulations governing these funds and, of course, I am prepared to consider any proposal made to me.
    Mr. Robert Carr: Will the right hon. Gentleman bear in mind that, whatever ought or ought not to be the situation in the future, the present situation is that the pensions of many millions of people are heavily dependent on the point raised by my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont)?
    Mr. Dell: We are in close contact with this problem but we do not under existing law govern the investment decisions of pension funds. If people invest ill advisedly, it comes poorly from Conservative Members to recommend the Government to rescue those investors from the results of those decisions. However, this is an important problem and the fate of pension funds is of wide significance. We have that fact in mind.
    Mr. Molloy: Is my right hon. Friend prepared to consider other activities of so-called property companies? For example, how about those that indulge in asset stripping? They seem to get away with vast profits and to damage some aspects of British industry.
    Mr. Dell: I am always prepared to consider any matter that my hon. Friend brings before me.
    Sir John Hall: Will the right hon. Gentleman consider the suggestion of the

    1817
    hon. Member for Bassetlaw (Mr. Ashton) that he should encourage property companies to invest in building societies, and at the same time remove the fiscal disadvantage which those companies would suffer by so doing?
    Mr. Dell: If the hon. Member wishes to put a proposal before me I shall consider it.
    Mr. Loughlin: If we are to hear these pathetic pleas from investors in property companies, whether they be pension funds or anyone else, would it not be better if the Government were able to direct investment to social ends as well as to the highest rate of return and take over the insurance companies and pension funds?
    Mr. Dell: I hope my hon. Friend will bear in mind that one of the things we have done is to bring down the rate of interest to assist building societies to help channel money into the buying of houses. All this is of great social importance.
    Mr. Higgins: Is the right hon. Gentleman aware that one of my hon. Friends has made a proposition? It appears on the Order Paper and will be debated later today.
    Mr. Dell: We look forward to his speech during the debate.

    National Savings
    Mr. Pardoeasked the Chancellor of the Exchequer if he will make a statement about the Government's policy towards the indexation of national savings to protect savers against inflation.
    Sir David Rentonasked the Chancellor of the Exchequer if he has yet reached a decision on action to implement the recommendations of the Page Report on National Savings.
    Mr. Dell: We are considering the report of the Page Committee, including its recommendation for the experimental issue of an index-linked bond for the small saver. We will announce our decisions as soon as we can.
    Mr. Pardoe: I thank the Paymaster-General for that slightly encouraging reply. Referring back to the previous Question, is the right hon. Gentleman aware that the most ill-advised invest-
    1818
    ment anyone in this country could make is not in property companies but in the Government? Will he admit that the Government are actively encouraging people to invest their money at a loss? Will he take immediate steps either to ensure that small savers get at least a positive return on their money in national savings, or to stop all advertising of this fraudulent practice?
    Mr. Dell: The hon. Gentleman will know that we have improved the terms for national savings securities. The improved terms recently came into operation and we shall see how attractive they are to the public. Index linking is a question which we have under serious consideration. The House must realise that there are substantial difficulties. If index linking can be achieved there will be advantages, especially for the small savers. It is for that reason that we have the matter under serious consideration. I cannot give any promises or make any statement now.
    Sir David Renton: Is any significance to be attached to the fact that this afternoon the Page Report is not available in the Vote Office? Will the right hon. Gentleman draw the attention of the Chancellor of the Exchequer regarding savings to the need for both a policy and an example in fighting inflation and improving investment?
    Mr. Dell: I did not know that the Page Report was not available in the Vote Office. I am sure that it should be. It may be that during the time of the previous Government the people in the Vote Office became tired over a period of 12 months of waiting for a decision from them on what to do about the report. As for creating an example, my right hon. Friend, the Chancellor has given an example by substantially improving the terms of national savings securities.

    Local Rates
    Mr. Teddy Taylorasked the Chancellor of the Exchequer what was the total sum raised in local rates in the most recent annual period for which figures are available; and if he will express this total as a percentage of the total sum raised in national taxation and revenue duties during the same period.
    Mr. Joel Barnett: The total sum raised in local rates in 1973-74 is estimated in

    1819
    the Financial Statement and Budget Report at £2,716 million, or 15·7 per cent. of total taxation.
    Mr. Taylor: Does the hon. Gentleman agree that the recent savage increases in local rates in some areas have demonstrated clearly that local rates represent about the most unfair and unjust form of taxation which has ever been invented? Will the Government say clearly whether they are investigating or considering a fundamental review of this iniquitous form of taxation?
    Mr. Barnett: The hon. Gentleman will know that his own Government instituted a review of sorts and issued a Green Paper in which they outlined the problems of various alternatives and indicated why they could not be adopted. We are now considering the whole problem.
    Mr. Marks: Is my hon. Friend aware that the previous Government gave quite insufficient time, during the passage of the Local Government Bill, for proper discussion of the alternatives to rating? Will he urge his right hon. Friend the Lord President of the Council to set up a Select Committee to examine the alternatives?
    Mr. Barnett: We are now considering the whole problem. I shall bear in mind what my hon. Friend says.

    Building Societies
    Mr. Walter Johnsonasked the Chancellor of the Exchequer if he will make it a condition of any loans to the building societies that they apply the whole of the loan to the assistance of house purchasers.
    Mr. Dell: The purpose of the loans is to help house purchasers, and the Government are satisfied that the terms under which they have been offered will result in a higher level of mortgage commitments and advances than would otherwise have been the case.
    Mr. Johnson: Is my right hon. Friend aware that it is reliably reported that by reinvestment the building societies are making a profit each month of £150,000 from the Government's loans which were made for the purpose of keeping down interest rates? Is not that a gross misuse of public funds? What will right hon. Friend do about it?
    Mr. Dell: My hon. Friend should remember that the building societies have to hold some of their funds in authorised liquid assets and that their yield reflects short-term market conditions. He should also remember that the societies are nonprofit-making and that ultimately all their receipts will go to increase the societies' capacity to lend to house purchasers. As I said in my original answer, we are confident that the loans that have been offered will result in a higher level of mortgage commitments and advances than would otherwise have been the case.
    Mr. Dykes: Will the right hon. Gentleman now enjoin the building societies to reduce their reserve ratios to provide more money for house building?
    Mr. Dell: We believe that the steps we have taken are enabling the societies to allow more money for house building without their taking action on their reserves.

    Nationalised Industry Pension Schemes
    Mr. Palmerasked the Chancellor of the Exchequer if he will introduce legislation to bring under stricter public supervision the investment policies of the nationalised industries pension schemes.
    Mr. Joel Barnett: No. It is already the legal duty of trustees of pension funds in both public and private sectors to safeguard the interests of actual and potential beneficiaries.
    Mr. Palmer: Is my hon. Friend aware, however, of the considerable disquiet that is felt by the employees of nationalised industries about the uncertain nature of many investments in property companies? As it is 25 years since the statutory considerations governing the operation of nationalised industry pension schemes were drawn up, is it not about time that they were considered again?
    Mr. Barnett: I have no reason to believe that the trustees of nationalised industry pension funds are any better or any worse advised than those of other pension funds. Generally they are advised by the same people.
    Mr. Tom Boardman: I am not asking the Chief Secretary to supervise these funds in any way, but does he not agree

    1821
    that the policies of the Government of which he is a member have knocked tens of millions of pounds off the value of the pension funds of the nationalised industries?
    Mr. Barnett: It was the policies of the previous Government in their competition and credit control that did that.

  ITALIAN PRIME MINISTER
  Mr. Blakerasked the Prime Minister whether he will invite the Italian Prime Minister to pay an official visit to the United Kingdom.
  The Prime Minister (Mr. Harold Wilson): I have at present no plans to do so, Sir.
  Mr. Blaker: As the Government have made it clear that they are negotiating with a view to staying in the EEC, will the right hon. Gentleman take the opportunity to make clear whether he still takes the view that was expressed in the Anglo-Italian declaration of April 1969, when he was Prime Minister, that the Community remains the basis for European unity, that the common interests of our Continent demand union and that the Community should be supported by an elected Parliament?
  The Prime Minister: The Question is about the visit of the Italian Prime Minister. The hon. Gentleman may know that there are certain technical difficulties about the visit which we hope will be quickly resolved. Our general negotiations on the Market were fully debated in the House last Tuesday. Given the right conditions, which depend on the terms, we are prepared to discuss all future questions about the organisation of the Community.
  Mr. Ronald Atkins: When my right hon. Friend eventually meets the Italian Prime Minister will he ask him, in the interests of informed debate in this Chamber, to list all the advantages which Italy has derived from its long membership of the Common Market?
  The Prime Minister: I think that this is a matter for the Italian Government and for the Italian Parliament when they have resolved their present difficulties, with which all of us have great sympathy
  1822
  and which all of us, in the common interests of the wider world economic community, hope will be quickly resolved.

  NORTHERN IRELAND
  Mr. Dalyellasked the Prime Minister when he next hopes to make an official visit to Northern Ireland.
  The Prime Minister: I have at present no plans to do so, Sir.
  Mr. Dalyell: Is not the unpalatable reality that in Long Kesh and in the nineteenth-century girls' prison in Armagh we are breeding a loathing of English politicians among the next generation in Ulster? Is my right hon. Friend aware that some of his hon. Friends were shaken to witness with our own eyes the drilling of squads and the Conditz-like atmosphere in Long Kasha? As Ireland is becoming our Algeria, is there not a case for my right hon. Friend going to Ireland and making the kind of speech that Harold Macmillan made in Africa on the "wind of change", and spelling out the end of internment without trial?
  The Prime Minister: The loathing felt at the parading of Para-military forces of both extremes in Northern Ireland is something that is felt by all of us, whether the marching is in Belfast, in this country or elsewhere.
  My hon. Friend referred to Long Kesh. It has been said that Long Kesh is becoming a university of disruption and subversion. At Long Kesh there are now detainees from both extremes. I do not think I would accept my hon. Friend's conclusions. I believe that the future dangers arising from hatred for this country are inculcated not only in Long Kesh but, as I said in a speech in this House as long ago as 1971, by the activities of young children on both sides as accomplices in murder, as well as by the throwing of stones and bottles, and that we are already seeing the training of the terrorists of the 1980s and 1990s. That is what we must now worry about. I do not agree with my hon. Friend's conclusions. I think that the views I have expressed are the fairly general views of the House which were indicated during the two-day debate last week.
  Rear-Admiral Morgan-Giles: Without waiting to visit Northern Ireland, will the Prime Minister consider again the work of the Army, which is carrying the can for us month in, month out? Will he consider whether a piddling allowance of 50p a day is the right rate for the job?
  The Prime Minister: Without commenting on the hon. and gallant Gentleman's language—[Interruption.] It sounded a bit repetitive. I discussed the matter seriously with the GOC and others in Northern Ireland, and because of that the decision was taken—not by the Government but on the advice of the advisory panel which goes into these matters —and I believe that it was much welcomed.

  EALING
  Mr. Molloyasked the Prime Minister if he will now pay an official visit to the London borough of Ealing.
  The Prime Minister: I have at present no plans to do so, Sir.
  Mr. Molloy: When my right hon. Friend does visit the borough, will he go to the northern part, where he will see the derelict site of Rock ware Glass, which made a valuable contribution to the British glass industry and is now a monument to the callousness of private industry and an example of the inefficiency of the previous Government? A good factory was closed by asset strippers and 900 British craftsmen lost their jobs.
  The Prime Minister: As I recall that case, it happened under blackmail because the owners of the factory, who were doing an important job in Ealing, feared that not only the Ealing factory but the whole of their group would be taken over by asset strippers. That was already in danger of happening. They feared that asset strippers would take over the whole firm and use the site for asset stripping. In the circumstances we all very much regret what happened. The group then owning the factory decided to close it to avoid that happening. I think that was the sort of thing the Leader of the Opposition meant by his phrase "the unacceptable face of capitalism", although he never did anything about it.
  Mr. Peyton: I hope that the Prime Minister will reconsider his original answer to this important Question. Does he not agree that the London borough of Ealing, neither too far from nor too near to this place, could offer him a superb opportunity and forum to clear up some of the mysteries that surround his Government's policies? In particular he might take the opportunity to explain the difference between what was a solemn and binding undertaking in 1969 and what is today described as a social compact
  The Prime Minister: I have been to Ealing a number of times and I shall be glad to go there again. There is certainly a great deal I could learn from it. For example, there is the fact that when there was a Labour administration in Ealing 2,900 dwellings were put out to tender, whereas the Conservative administration put out a total of 30 dwellings to tender in 1969–70. Since the return of a Labour council in 1971 more than 2,100 dwellings have been put out to tender.
  With regard to the right hon. Gentleman's question, which does not seem to have anything to do with Ealing, and with regard to the point he labored so hard to present to the House, the solemn and binding agreement referred to the matter of industrial disputes, where our record before and after that was four times better than that of the Government of which the right hon. Gentleman was a member. As for the social contract, one might have thought that the right hon. Gentleman, with his well-known fairness in these matters, would welcome the fact that the TUC yesterday agreed on a voluntary policy, which his Government tried for two years to get but which they did not get because they would not will the means in terms of prices and other matters.

  NATIONAL ECONOMIC DEVELOPMENT COUNCIL
  Mr. Skinnerasked the Prime Minister what further plans he has for taking the chair at the NEDC.
  The Prime Minister: I would refer my hon. Friend to the reply which I gave on 9th May to the hon. Member for Kingston-upon-Thames (Mr. Lamont).— [Vol. 873, c. 579.]
  Mr. Skinner: Is my right hon. Friend aware that most of us on this side of the House appreciate that he is a terribly busy man and we would not want him to chair the NEDC unnecessarily? Will he consider sending my right hon. Friend the Secretary of State for Industry to chair the next meeting? Perhaps my right hon. Friend could then spell out to the well-heeled industrialists represented there that they have been receiving upwards of £4 million a day from the taxpayer's pocket and the housewife's purse—[An HON. MEMBER: "Rubbish."]—and he could remind them of that well-known Tory slogan "No taxation without representation".
  The Prime Minister: As my hon. Friend knows, the chair is usually taken by my right hon. Friend the Chancellor of the Exchequer, as was the practice under the previous Government, but from time to time the Prime Minister takes it, as I did many times between 1964 and 1970. My right hon. Friend the Secretary of State for Industry almost invariably attends the meetings, but I think it is right that the Chancellor and occasionally the Prime Minister should take the chair. I do not think my right hon. Friend the Secretary of Stale for Industry needs the platform provided by the chair of the NEDC to make clear the position that my hon. Friend wanted brought to the attention of industry.
  Mr. Robert Carr: Will the Prime Minister make sure that if his right hon. Friend goes to the NEDC for any such purpose he will also make clear how many millions of pounds a day industry pays into the national Exchequer by means of taxation, and assure the country that that is many times more than it takes out?
  The Prime Minister: I did not think that my right hon. Friend the Chancellor was trying to make a case that industry did not pay taxation, but I thought that some of the figures produced recently suggested that over a period of years rather more went out than came in.

  PRESS (ROYAL COMMISSION)
  Mr. George Gardinerasked the Prime Minister whether he will recommend the inclusion of a parliamentary
  1826
  lobby correspondent among the members of the Royal Commission on the Press.
  The Prime Minister: I hope to announce the membership of the Royal Commission soon. While I am certainly prepared to consider the inclusion of a working journalist on the commission, I cannot undertake that he will be a member of the Lobby.
  Mr. Gardiner: In view of the commission's concern with editorial standards, would it not be useful to have on it a member with some experience of the duplicity of Governments, or indeed of Oppositions? To that end, will the right hon. Gentleman consider appointing Mr. Noyes Thomas, the political correspondent who reported that Mrs. Marcia Williams was to receive a peerage, only for the right hon. Gentleman's own staff to say officially that that was totally untrue and an absurd suggestion?
  The Prime Minister: The hon. Gentleman wants to know about the Lobby. I want to make it quite clear that if I do not appoint a member of the Lobby it is not because of any animus against the Lobby. We have all found that the Lobby is a much cleaner place than it was three months ago.
  Hon.Members: Cheap.
  Mr. Raphael Tuck: True.
  The Prime Minister: If anyone had any doubt about that, which is inconceivable, it has been proved again this afternoon. The statements made by, about and on behalf of a very distinguished Lobby correspondent, who should not be dragged down by the hon. Gentleman to his own level, are no more true than was the statement in the News of the World,last Sunday, which was immediately denied by the Metropolitan Police.
  Mr. Ferny Hough: If my right hon. Friend does appoint a Lobby correspondent, will he make sure that that correspondent has written no scurrilous articles about any Members of the House to the extent that the newspaper for which he wrote them had to pay damages to the Members he libeled?
  The Prime Minister: I know of no present member of the Lobby of whom that is true.

  USSR
  Mr. Michael Lathamasked the Prime Minister whether he has yet fixed a date for an official visit to the USSR.
  Mr. Kenneth Lewisasked the Prime Minister if he will seek to pay an official visit to the USSR in the month of October.
  The Prime Minister: I have accepted in principle an invitation from the Soviet Government to pay an official visit to Moscow but the date for the visit has not yet been fixed.
  Mr. Latham: When the Prime Minister visits Moscow, will he make it clear to the Soviet leaders that there can be no progress towards further detente in Europe until the Russians put forward specific proposals for a greater liberalisation of ideas and for emigration from the Soviet Union of Soviet Jews?
  The Prime Minister: As the hon. Gentleman will know, those matters are currently being discussed in the Geneva conference which has followed up the meeting of Foreign Ministers in this country during the period of the previous Government. We hope that sufficient progress will be made on all outstanding issues, including that to which the hon. Gentleman has referred, to be able to go forward in a really constructive way to the proposal which has been made for a meeting of Heads of Government before too long. I hope that it will be quick.
  This is certainly an important point that has been raised by the hon. Gentleman. As he will know, over some period I have been very much concerned myself with individual cases of release. Indeed the Panov case, which has been pressed by very many right hon. and hon. Members, was raised by me with the Soviet Deputy Prime Minister three weeks before the decision. I am sure that it was the combined view of all those who had pressed this point that led to that conclusion.
  Mr. Whitehead: We all welcome progress towards detente, but will my right hon. Friend make it clear to the Soviet authorities in whatever talks take place that civil liberties in the Soviet Union concern us greatly, and not merely the matter of emigration of Jews? Will he
  1828
  particularly refer to disgusting practices such as the incarceration of political dissidents in mental homes?
  The Prime Minister: I know the anxiety on these matters. While it is right that there should be further pressure, I think it better that I should not say too much about this question because, as my predecessor knows, these cases can sometimes be dealt with better in private discussions than in public declaration.
  Mr. Lewis: Is the Prime Minister aware that this must be the first time that my hon. Friend the Member for Melton (Mr. Latham) and I have tabled Questions together, and that arising out of those Questions having been tabled— they were tabled a week or two ago— he has now had an invitation to go to Russia? Will he ask the Secretary of State for Industry to tell us where he would like to go? As far as possible, we will put that on the Order Paper and hope that he is sent there.
  The Prime Minister: The hon. Gentleman's question has almost reached his top level of intelligence and accuracy. I announced in the House several weeks ago that I had had this invitation to go to the Soviet Union. But if the hon. Gentleman is anxious that my right hon. Friend, who has been very much concerned—as were the previous Government—in improving relations on technology and trade, should go to the Soviet Union, he could always go to China and see how they do it there.

  INTERNATIONAL LOANS (GOLD)
  Mr. Robert Carr (by Private Notice)asked the Chancellor of the Exchequer whether he will make a statement on reports that an agreement has been made to allow official gold reserves to be used at free market price as backing for international loans.
  The Paymaster-General (Mr. Edmund
  Dell): The Ministers of the Group of Ten agreed in Washington last night, in informal discussion, that gold might be used as collateral for loans between monetary authorities. The valuation of the gold pledged would be a matter for

  1829
  agreement between the parties and could be related to the market price. The case of Italy was naturally in mind. Minor technical points remain to be settled.
  Mr. Carr: I thank the right hon. Gentleman for that reply. I realise that it would be unreasonable to expect him to give details about this matter. But may I ask him three brief questions, of which perhaps the last will be the most important?
  First, has an assessment been made, and, if so, can he give any idea of it, in general terms, of the effect of this decision on the interests of this country? Secondly, would it not be better in principle to help countries in special need by international co-operation on specific problems rather than by making a basic change in the international system in order to meet a special case, however difficult and urgent?
  My third question I particularly want to press upon the right hon. Gentleman. Will he give an assurance that the Chancellor of the Exchequer will make a statement to the House on his return about the outcome of the conference and on the policy line taken by Her Majesty's Government at the conference?
  Mr. Dell: The right hon. Gentleman will realise, I think, that I am dependent in my answers on a cable from Washington about what happened there at dinner last night. I am sure that my right hon. Friend will wish to make a statement on his return.
  As for the right hon. Gentleman's questions, I see no reason why this agreement should affect the interests of this country, and I would not regard this as a basic change in the international monetary system. The right hon. Gentleman will remember that there was a discussion at Zest on whether there should be a system under which gold could be exchanged between monetary authorities voluntarily, if they wished, at prices related to the market price. There was discussion of that proposition with the United States. What last night's agreement appears to amount to is that these gold resources can be pledged against borrowing from monetary authorities rather than sold between monetary authorities. In other words, it appears to be a compromise between what was suggested at Zest and the well-known
  1830
  American position. I do not think that it represents a basic change in the international monetary system.
  Mr. Norman Lamont: Is the Paymaster-General aware that, although the United States Treasury has indicated that this is to be interpreted as a move towards the phasing out of gold, it will also be very much welcomed by those who believe that it is only realistic that gold should have an important part to play in the world system? Does not the Paymaster-General agree that once one has moved to the stage of allowing gold to be used as collateral for loans and once the gold might actually be transferred to the people who are lending the money, it is now only logical that central banks should be allowed to buy gold on the free market?
  Mr. Dell: The general intention of the Committee of Twenty and the Group of Ten, as I have said, is to reduce the rôle of gold gradually to phase it out of the monetary system. There has never been any intention that the gold that exists in the reserves of member countries should not be available in some form in appropriate cases. Here is a particular case in which an agreement has been made which assists a particular country in difficulties.
  Mr. Duffy: As this is obviously an end to the policy of demonetisation of gold, may I push a stage further the question posed by the hon. Member for Kingston-upon-Thames (Mr. Lamont) and ask my right hon. Friend whether any instructions have been given to the Bank of England about gold purchases?
  Mr. Dell: No, that does not arise out of this Question.
  Mr. Tugendhat: Is the right hon. Gentleman aware that his statement will look most extraordinary when read in the cool light of day? What has happened is that this decision about gold is in many ways a historic decision. It may seem only a transient matter, but it is a reversal of a long trend towards the demonetisation of gold and is obviously a major step forward. One recognises that the right hon. Gentleman cannot make a definitive statement at this stage, but to talk of minor technical points needing to be ironed out shows, it would appear, a total misunderstanding of the importance

  1831
  of what has happened. Can the right hon. Gentleman give any indication to the House of what the present Government's attitude might be towards setting a value on gold should it be used to any great extent? Does he not also agree that, in the light of the persistent policy of British Governments to run down our own gold holdings, to say that this decision has no effect—or words to that effect—on this country really is a misrepresentation?
  Mr. Dell: This arrangement in no way introduces an official price for gold. As I have said, there has never been any idea that those countries which have gold reserves should not be able to use them in some way in appropriate cases as part of their own liquidity. Here was a case where it was necessary to make a decision in order to help a particular country. I hope that it will achieve that objective. That is the significance of the decision.
  Mr. English: Does my right hon. Friend realise that when he uses the phrase "the official price of gold" all that he means is that any of us may sell something to anyone else at less than its market price? Does he recall the great arguments which went on originally before a free market in gold was created about the assistance that raising the price of gold would give the economies of Russia and South Africa? What is his view on this step in the light of those arguments?
  Mr. Dell: One of the problems about gold is precisely that it is unequally distributed throughout the world. The developing countries have taken the view that to raise the price of gold would simply enrich the rich countries. One of the troubles is that no one knows what the free market price of gold would be if the central banks were selling it. It might be well below the current market price.
  Mr. Hordern: Does the right hon. Gentleman accept that many of us feel that the place of gold has now been realistically assessed and will be found to be restored to a value which will become more widely accepted? Will the right hon. Gentleman also draw the attention of his right hon. Friend the Chancellor of the Exchequer, when he returns, to the need for an authoritative statement soon
  1832
  on some form of institutionalised and international control of the growth of the Eurodollar market itself?
  Mr. Dell: I shall draw that point to my right hon. Friend's attention.
  Mr. George Cunningham: Whether or not we agree with this decision, ought we not to congratulate the Government of France on one further victory along their consistent path over the past few years? Can my right hon. Friend say which of the members of the European Community will have the nominal and effective value of their total reserves most upgraded by this decision?
  Mr. Dell: I think that the amount of gold in the reserves of different countries is fairly well known.
  Mr. Heath: Is the right hon. Gentleman aware that we cannot accept that this is merely a small technical matter which was decided over dinner? It is a matter of considerable importance. Can he say what is the precise, logical difference between gold as collateral at market prices against international loans and revaluing all reserves, including gold, at market prices? Once gold is used as collateral at market prices, there is no reason why gold in reserves should not be revalued at market prices, which would be a major change in the international monetary system.
  Mr. Dell: The value of gold as collateral will have to be discussed between the borrower and the lender. In this case, that will have to be the position as well. It is not possible for me to say what that value will be. All that I can say is that this decision does not mean that there is now a new official price for gold.

BUSINESS OF THE HOUSE
Mr. Heath: May I ask the Leader of the House to state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): Yes, Sir.
The business for next week will be as follows:
MONDAY 17TH JUNE—Second Reading of the Consumer Credit Bill [Lords] and of the Control of Pollution Bill [Lords.]
TUESDAY 18TH JUNE—Remaining stages of the Health and Safety at Work Etc. Bill.
Second Reading of the Ministers of the Crown Bill.
WEDNESDAY 19TH JUNE—Progress in Committee on the Finance Bill.
The Chairman of Ways and Means has named Opposed Private Business for consideration.
THURSDAY 20TH JUNE—Supply (8th Allotted Day): Until seven o'clock, debate on an Opposition Motion on Labour's Plans for Industry, and afterwards, also on an Opposition Motion, increased tariffs for night storage heating.
Remaining stages of the Ministers of the Crown Bill.
Second Reading of the Pakistan Bill.
FRIDAY 21ST JUNE—Consideration of Private Member's Bills.
MONDAY 24TH JUNE—Second Reading of the Railways Bill, and of the Policing of Airports Bill.
Mr. Heath: Perhaps I might ask the Leader of the House three questions. Five weeks ago the Secretary of State for Social Services made her statement that she wished to abandon the larger part of the 1973 Act by an order which was not debatable in this House. The right lion. Gentleman undertook to arrange a debate about it. May we have some indication of when that will be?
My second question relates to reports that the Government have now reached conclusions about the nuclear reactor programme. If that is the position, when are we likely to have a full statement about it?
My third question relates to Thursday's debate on Labour's plans for industry. May we be told what special parliamentary arrangements are being made to enable the debate to be answered either by the General Secretary of the Labour Party or by the General Secretary of the TUC?
Mr. Short: Dealing with the first of the right hon. Gentleman's questions, he is right that I promised a debate on this matter. I hope that it will be possible to arrange this in the week after next. I hope so, anyhow.
1834
The right hon. Gentleman's second question was about nuclear reactors. My right hon. Friend the Secretary of State for Energy will be making a statement within the next two or three weeks.
Mr. Lipton: May we have a progress report at an early date on the car park in New Palace Yard, which is now many months' delayed in its completion and is costing many thousands of pounds more than the original estimate?
Mr. Short: I cannot give a report on the car park. But on the landscaping of New Palace Yard we have had a Report from the Services Committee, and I hope to find time to debate this before the recess.
Mr. Tom King: The Leader of the House will recall that before the recess I raised with him the possibility of a statement being made by the Secretary of State for Industry on proposed plans for the nationalisation of further sections of industry. We have still not had a statement in the House. Are we to take it that now that the Prime Minister has assumed responsibility for these matters he will be making a statement before the debate?
Mr. Short: The Opposition have put down this subject for a half-day debate next week. I have no doubt that the hon. Gentleman and his right hon. and hon. Friends will deploy their arguments then.
Mr. Cryer: Can my right hon. Friend find time to debate the proposed French nuclear tests? In view of the dangerous amount of atmospheric pollution which may be released, can he assure us that our membership of the EEC does not impinge upon our right to criticise those tests? In view of the fact that India has also made a nuclear explosion, is not the non-proliferation of nuclear weapons an urgent matter for a debate in this House?
Mr. Short: I cannot find time to debate the tests before the recess, but my hon. Friend will be pleased to know that my right hon. Friend the Foreign and Commonwealth Secretary sent for the French Ambassador last night and made representations and protests to him.
Mr. John Mr. John Davies: The right hon. Gentleman will be aware of the First

1835
Report of the Committee considering secondary European legislation. When are we likely to debate the issue which that Committee found to be of such importance that it warranted a debate on the Floor of the House?
Mr. Short: The scrutiny committee, of which the right hon. Gentleman is chairman, has sent three orders to the House for debate. The first of them is of very great importance. I understand that the Council of Ministers will not discuss this again until mid-July, but I undertake that we shall have a debate on it before then.
Mr. Arthur Latham: Does my right hon. Friend see any prospect of our discussing Early-Day Motion No. 153 on the renegotiation of the terms of membership of the EEC, which has already been signed by some 89 members?
[That this House recalling and reaffirming the Resolution of the Labour Party on Common Market membership as follows:
'The Labour Party opposes British membership of the European Communities on the terms negotiated by the Conservative Government,
'We have said that we are ready to re-negotiate, and in preparing to renegotiate the entry terms, our main objectives are these:
'Major changes in the Common Agricultural Policy, so that it ceases to be a threat to world trade in food products, and so that low-cost producers outside Europe can continue to have access to the British food market;
'New and fairer methods of financing the Community Budget. Neither the taxes that form the so-called "own resources" of the Communities, nor the purposes, mainly agricultural support, on which the funds are mainly to be spent, are acceptable to us. We would be ready to contribute to Community finances only such sums as were fair in relation to what is paid and what is received by other member countries;
'As stated earlier, we would reject any kind of international agreement which compelled us to accept increased unemployment for the sake of maintaining a fixed parity, as is required by
1836
current proposals for a European Economic and Monetary Union. We believe that the monetary problems of the European countries can be resolved only in a world-wide framework;
'The retention by Parliament of those powers over the British economy needed to pursue effective regional, industrial and fiscal policies. Equally we need an agreement on capital movements which protects our balance of payments and full employment policies. The economic interests of the Commonwealth and the Developing Countries must be better safeguarded. This involves securing continued access to the British market and, more generally, the adoption by an enlarged Community of trade and aid policies designed to benefit not just "associated overseas territories" in Africa, but developing countries throughout the world;
'No harmonisation of Value Added Tax which would require us to tax necessities;
'If renegotiations are successful, it is the policy of the Labour Party that, in view of the unique importance of the decision, the people should have the right to decide the issue through a General Election or a Consultative Referendum. If these two tests are passed, a successful renegotiation and the expressed approval of the majority of the British people, then we shall be ready to play our full part in developing a new and wider Europe.
'If renegotiations do not succeed, we shall not regard the Treaty obligations as binding upon us. We shall then put to the British people the reasons why we find the new terms unacceptable, and consult them on the advisability of negotiating our withdrawal from the Communities'.
'An incoming Labour Government will immediately set in train the procedures designed to achieve an early result and whilst the negotiations proceed and until the British people have voted, we shall stop further processes of integration, particularly as they affect food taxes. The Government will be free to take decisions, subject to the authority of Parliament, in cases where decisions of the Common Market prejudge the negotiations. Thus, the right to decide the final issue of British entry

1837
into the Market will be restored to the British people'.
would regret any diminution of these terms in the course of the renegotiations.]
My right hon. Friend will recall that last Tuesday there was no vote because of the ineptitude of one section of the Opposition and the incontinence of the rest. Does my right hon. Friend agree that it is desirable that at some early stage, beyond debating the issue of Europe, this new House of Commons should go on record indicating the terms of renegotiation which it wants to see aimed for?
Mr. Short: We have had a whole day's debate on this subject this week. I cannot find any other time for a debate before the debates which will arise as a result of the Foster Report. I have made a statement to the House on that and I have just promised the right hon. Gentleman a debate on the first of the three instruments which the scrutiny committee recommended to the House for discussion.
Mr. MacGregor: In view of the unprecedented revolt among ratepayers in rural areas this year, and bearing in mind the hardship and distress which will be caused to many of them, as well as the close interest which hon. Members are taking in the subject, will the right hon. Gentleman consult the Secretary of State for the Environment with a view to having an early debate on changes in the rate support grant formula for next year —certainly before decisions are taken on the formula?
Mr. Short: I share the hon. Gentleman's concern about rate rises. I shall pass on what he says to my right hon. Friend, but I am afraid that there is little time before the Summer Recess and I cannot promise a debate before then.
Mr. Bates: Has my right hon. Friend seen Early-Day Motion 125 calling for a public inquiry into the James Hanratty case? This early-day motion is supported on both sides of the House. Is my right hon. Friend aware of the concern not merely in the House but in the country at large, and will he arrange either for an early debate, so that my right hon. Friend the Home Secretary can be made aware of the feeling of
1838
hon. Members, or alternatively for the Home Secretary to make a statement on the subject?
[That, in view of the widespread and serious public doubts about the verdict in the Hanratty case and in view of new evidence which is now available, this House calls upon the Secretary of State for the Home Department to set up a public inquiry to review the case.]
Mr. Short: I am afraid that I cannot promise either a debate or a statement but will certainly refer to my right hon. Friend the Home Secretary what my hon. Friend has said.
Mr. Rost: When are the Government to find time to debate, or at least make a statement on, the social compact or contract, which vast sections of the country do not understand, particularly those people who have so far been on the receiving end of it?
Mr. Short: My right hon. Friend the Secretary of State for Employment wishes to ensure a smooth transition from a statutory to a voluntary system, and before the Summer Recess he will be publishing his plans to do so.
Mr. Hugh D. Brown: Is my right hon. Friend aware that the people of Scotland are waiting with some impatience, though confidence, for a statement from the Minister for the Civil Service about dispersal of civil servants? Is this statement likely to be made next week?
Mr. Short: I am afraid that cannot be next week, but I am hopeful that there will be a statement before the Summer Recess which will satisfy my hon. Friend.
Mr. Madel: Will the right hon. Gentleman ask the Secretary of State for Employment to come to the House tomorrow morning and make a statement about the dispute in the provincial newspaper industry? If it goes on, there will be consequences which will be as serious in Newcastle as in South Bedfordshire.
Mr. Short: Meetings are being held on this matter today, as the hon. Gentleman knows, and I think it better to await the outcome of these meetings.
Mr. Faulds: Are there any representations to ensure prompt delivery of my mail, including letters from my constituents, that my right hon. Friend could

1839
usefully make about the appalling postal deliveries in Central London? Further, can he take any action about the telephone service in the House, which is slipping badly due to staff shortages in the Post Office here?
Mr. Short: I shall pass on what my hon. Friend has said to my right hon. Friend the Secretary of State for Industry.
Mr. Hurd: Can the right hon. Gentleman clear up two points about the announcement on the handling of European Questions which his right hon. Friend made on Tuesday? Can we take it that when Questions are tabled on European aspects which are the work of a particular Department it will still be the case that the Minister concerned at the head of that Department will answer the Questions and that they will not be transferred to the Foreign Office? Has the right hon. Gentleman noticed that half the Questions tabled to the Foreign Secretary are on Europe? If they have to be taken out, separated and penned together in the last 20 minutes of Foreign Office Questions, might we not have less opportunity to ask Questions about Europe than we had before?
Mr. Short: With regard to the second part of the hon. Gentleman's question, I shall look into that. Regarding the first part, I refer him to my statement about the Foster Report.
Mr. Harry Ewing: In view of the publication of the document "Devolution in the United Kingdom", and the Government's decision to seek views over as wide a range as possible, does my right hon. Friend intend to arrange a debate on the document before proposals are formulated? If that is the intention, will my right hon. Friend consult the Scottish National Party, which appears to have gone on strike against the Scottish electorate and ensure that this matter is not shunted off to the Scottish Grand Com-mite but is discussed on the Floor of the House?
Mr. Short: I cannot promise a debate on this before the recess. But the consultative document has been published, and consultations will start in Wales and Scotland in the first week of July and will be completed before the end of July.
Mr. Fletcher-Cooke: In answer to a previous question the right hon. Gentleman said that there was little time before the Summer Recess. That implies both that the recess is imminent and that the right hon. Gentleman knows when it is to begin. When will it begin?
Mr. Short: It all depends on how we get on with our business.
Mr. Ferny Hough: Can my right hon. Friend say that when the statement on the dispersal of civil servants is made the news which it contains will be as gratifying to my ears as it will be to the ears of Scottish Members?
Mr. Short: Knowing my right hon. Friend's concern for all the areas and regions of Britain, I am sure that the statement will be as gratifying to his ears as it will be to the ears of others.
Mr. Bruce-Gardyne: Can the right hon. Gentleman give any indication when he expects to give an opportunity for the House to debate the O'Brien Report? He must be aware that it seems very hard to many of our constituents that they have to face imports of subsidised beef and are not allowed to resume a trade which the committee found to be perfectly within the public interest. Can the right hon. Gentleman give an assurance that we shall be able at least to debate the report and that a decision will be made before the Summer Recess?
Mr. Short: I am afraid I cannot give that undertaking. I shall try to arrange to hold a debate as soon as possible, but I cannot give a firm promise that it will be before the Summer Recess. The undertaking which I have already given stands, that the trade will not be resumed before the House has an opportunity to debate it.
Mr. Dalyell: Since, like it or not, the problems of Ireland are ever present and may require many hours of parliamentary time before the next four months are up, can my right hon. Friend outline his plans regarding consideration of matters and legislation affecting Ireland?
Mr. Short: I am afraid that I cannot outline the plans, but if legislation is necessary it will be brought before the House as soon as possible.
Mr. Teddy Taylor: In view of the operation of threshold agreements, will

1841
the right hon. Gentleman urge the Secretary of State for Employment to make an early statement on the studies being made on the introduction of the Scottish cost of living index, as it is unfair to Scottish employees if their threshold is based on costs which do not apply to them?
Mr. Short: I shall pass on the hon. Gentleman's comments to my right hon. Friend.
Mr. English: One gathers that the Boyle Committee has now met. When will it report?
Mr. Short: I hope that it will report in the near future. Lord Boyle hopes to conclude his study by the end of this month, and it is hoped to report to the House before the recess.
Mr. Michael Latham: Do the Government intend to introduce legislation before the Summer Recess relating to the Misselbrook Report concerning labour-only sub-contracting?
Mr. Short: I am afraid that that will not be before the Summer Recess.

ORDERS OF THE DAY

  FINANCE BILL
  (Clauses 5, 6, 1, 9, 10, 11, 13, 14 and 19 and new Clauses relating to the matters referred to in the Order of the House [9th May].
  Considered in Committee. [Progress 10th June.]
  [Mr. GEORGE THOMAS in the Chair]
  The Chairman: Before I call the first amendment I should inform the Committee that the preliminary motion in the name of the Chancellor of the Exchequer has reappeared on the Order Paper by error. It has, of course, already been agreed to.

  FINANCE BILL
    Clause 14

      CASES I AND II OF SCHEDULE E
      4.0 p.m.
      Mr. Michael Shaw: I beg to move Amendment No. 68, in, page 11, line 21, at end insert:
      ' and subject to an exception for the years 1974–75 and 1975–76 where the emoluments are foreign emoluments'.
      I am grateful for the explanation that you have just given, Mr. Thomas.
      We are now moving in our consideration of the Finance Bill to a stage where we shall be dealing with Clauses 14 to 18. Admittedly, we are here concerned only with Clause 14. But the whole group together with Schedule 2 are concerned with the new arrangements for taxing foreign income as promised by the Chancellor of the Exchequer in his Budget speech at col. 315.
      The right hon. Gentleman said:
      "My predecessor informed the House that a review of the whole subject was being undertaken by the Inland Revenue and that he would take account of the result of this in his 1974 Budget. This task now falls to me."—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 315.]
      The amendment is concerned not so much with the actual changes set out in the clauses but with delaying them. My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) set a good

      1843
      example when Chancellor in giving time for the House and the country to assess the value of legislation before it was passed, so that prior comment could be full and informed. This is why I am particularly anxious that that good example should be followed in this case.
      The changes in Clause 14 affect two types of person. The first is someone living and working in this country who goes abroad and is paid abroad for work that he does there. Up to date he has paid United Kingdom tax only on sums remitted to this country and not on the whole salary. If the clause is not amended, he will, subject to special allowances contained in Schedule 2, have from now on to pay United Kingdom tax on the whole salary, whether or not it is remitted. Of course, he will also have to pay the appropriate tax in the country in which the income arises. The other type of person concerned is someone domiciled abroad but living here and working for a foreign company. Here again, up to now the liability to United Kingdom tax has arisen only on that part of the salary remitted to this country.
      The law relating to taxation of foreign earnings by United Kingdom residents has existed for a long time. As with all taxation law, over the years this law has at times, been used in a way which was not originally intended, but there was good reason in the first place for taxing foreign earnings differently, and those reasons are probably stronger today than ever. They take into account the different rates of tax here and in many other countries.
      The people most concerned with this type of income are in management. Whatever the Labour Party may say, the high rates of tax suffered by our management classes are a deterrent not only to the managers here but to those seeking to come here to work. I therefore want to make sure that the changes in the clause come about after plenty of time for public discussion, so that we can be as certain as possible that they will not seriously damage this country by discouraging enterprise, by discouraging new businesses from coming here from abroad and possibly by encouraging management here to think about emigrating.
      That is not idle speculation. On 12th June, in a report headlined "Foreign 1844
      company deterred by new UK tax rule", the Daily Telegraph said:
      "At least one major investment project by a foreign company has been cancelled so far as a result of the Government decision to tax foreigners working in Britain."
      It went on:
      "It is believed the investment was planned by a major electronics group in Wales, but the tax change is said to have tipped the balance against a new plant being located in the United Kingdom."
      This is the sort of thing that can damage our economy and our expansion prospects. I want to guard against it by delaying the implementation of the clause.
      Of necessity, both the clause and the amendment are very technical. One has to consider whether a person is "resident", whether he is "ordinarily resident" and whether he is "domiciled" in this country. Several distinctly puzzled people have asked me in the last few days what these strange terms mean. They have often puzzled legal luminaries with far greater knowledge of the law than ourselves, but I will venture on a short explanation.
      A person is resident in this country, for example, if he is physically in this country for six months or more, if he shows by the pattern of his living that he visits the country year after year or if he has accommodation here which he visits during the tax year—although there are exceptions to that last category. Each case has to be looked at on its merits, and these are only examples of cases which have arisen. One can be resident in more than one country at the same time. As for "ordinarily resident", I can only say that ordinary residence denotes a greater permanence and that perhaps one could regard an ordinary residence as being the place in which one has habitual presence.
      A learned judge has said that this matter of residence is a matter of common sense. Perhaps I need say no more. Any lawyer will confirm that anything that depends on common sense involves great complications. Someone has said that this country is ruled not by logic but by Acts of Parliament; nowhere is that more true than in dealing with the subject of residence.

      1845
      The matter is made the more complicated and confused by a Ways and Means motion which we shall consider later, under which "residence" in certain circumstances will be the same as "domicile". Under another proposal the phrase "ordinary residence" can be amended so that the word 'ordinary' is omitted. Domicile can be regarded as one's permanent home even if one does not live there. This too has been described by tax pundits as being a very difficult subject.
      My amendment is limited. I fully accept that if it is accepted other amendments would have to follow in its train. I seek not to alter the proposal but a delay of two years in implementing the tax changes in respect of foreign emoluments. Let us suppose that a United States company employs an American citizen to run its European operations from London or to run its British branch in the United Kingdom. Up to now that United States citizen living here would only have had to pay United Kingdom tax on that part of his remuneration which has been remitted to him here. He would have had to pay United States tax, with certain allowances given to people living abroad.
      During 1974–75 and onwards, under the clause as it stands, that remuneration, subject to the Schedule 2 allowance, will be subject to United Kingdom tax. Since the allowance is 50 per cent., it means that 50 per cent. of that remuneration, whether or not remitted to this country, will suffer United Kingdom tax. Without any period of grace, the person is faced with what could be a substantial change in his tax circumstances.
      If his contract of service and his commitments in respect of housing, education, etc., were all taken in good faith in the light of the existing tax law, which was known at the time he made his arrangements, he could well have assumed that our tax law was designed to encourage this United States company to set up its establishment in this country and its employees to live and work here. My amendment seeks to give a two-year period of grace so that he would have a chance of re-assessing the position. This provision would not then apply to him until the year 1976–77.
      Not only would this be much fairer to those foreigners such as this American,
      1846
      who may have been attracted to working and living in this country by the existing law, but it would also put the taxing of foreign emoluments on a par with the taxing of foreign investment income of similar persons; that is to say, persons who are ordinarily resident but not domiciled in this country. Under Clause 18 such people will continue to be taxed only on the income received in the United Kingdom until 1976–77, at which date they will become subject to the nine-year residence tax.
      It appears unjust that the changed law should be operated immediately in the case of the foreigner receiving pay or pension from abroad, whereas if his income from abroad takes the form of investment income the change of law will operate only after two years, and then only if he has been here for nine years. It seems particularly unjust since an employed person is under instruction and is not an entirely free agent as to where he works and therefore lives. A man living on his investment income presumably is free to live where he likes.
      I hope I have put this amendment moderately. These clauses involve a review of a difficult field of tax law. The Chancellor has already felt it right to alter this taxation in one respect; for instance, under Clause 18.
      4.15 p.m.
      We tax management far too heavily in this country. Tax tends to deter management from coming here. I have given an example of the effects it is likely to have. It tends to encourage management to leave the United Kingdom. Do not let us act too hastily in changing this law. In two years' time we shall have a much truer picture of the consequences of this action. The two-year delay in implementation proposed by this amendment will be in the national interest.
      I ask the Government to accept this amendment in the spirit in which I have moved it even if they cannot accept the exact wording.
      Mr. Terence Higgins: The Committee will be grateful to my hon. Friend the Member for Scarborough (Mr. Shaw) for the extremely lucid way in which he has explained a number of technical aspects of the clause which we are now debating. It is important that

      1847
      one should clarify the considerable obscurity of the clause as it is drafted.
      There was a remarkable situation where for the earlier part of my hon. Friend's speech—given that we were told by the Government that this is a matter of great political importance—there was not one person on the Government side of the Chamber other than those sitting on the Front Bench. It is true that one or more have now come in. None the less, that is a very remarkable fact. Even the hon. Member for West Lothian (Mr. Dalyell) was not here. That shows a lack of enthusiasm on the part of the Government back benches. The hon. Member has returned now and we are glad to see him.
      My hon. Friend has pointed out that the clause is divided into two parts, the Case I part, which is concerned with the United Kingdom resident who is operating abroad, and the Case 2 part of it, which is concerned with the non-United Kingdom resident who is operating in this country. The way in which the Government have widened the scope of the problem, which was already under debate, is extraordinary—that is to say, the question of whether there was some abuse of the provisions for the taxation of people from this country who were working abroad—because in the Chancellor's Budget Statement he, almost as an afterthought, threw in this suggestion:
      "My hon. Friend the Chief Secretary will later announce somewhat similar proposals applying to foreigners temporarily working in Britain whose employer is resident abroad. Obviously, they are not in quite the same position as persons who live here on a permanent basis and they will be assessed to tax on half of their earnings."—[OFFICIAL REVORT, 26th March 1974; Vol. 871, c. 316.]
      It is quite extraordinary that, having isolated a particular form of abuse, the Chancellor should, by way of afterthought, include this other category of people. But the reality of the situation, while we on this side of the Committee accept that there have been abuses in both cases, is that there are very grave dangers if one adopts what the present Government have frequently adopted—a shotgun approach to this kind of problem.
      Our balance of payments gains very considerably from the earnings of people from this country who work abroad for varying periods. We gain considerably
      1848
      from those people from overseas who work here, who not infrequently bring with them considerable financial resources and investment to this country and help to encourage the situation that London is indeed the financial centre of the world.
      The amendment is concerned with the first of these categories—the position of the United Kingdom resident working abroad. I want to concentrate now upon that category and we shall turn to the second case later. It is remarkable that the two should have been put in together almost, it appears, as an afterthought of the Chancellor of the Exchequer.
      I should make clear another point at this early stage. The amendment seeks to delay implementation of a particular part of the clause. There was also an amendment—No. 71—which would have sought to have delayed the operation of the whole clause. But amendments of that kind are not normally selected because they tend to be out of order. Even a series of amendments designed to delay different parts of the clause are also likely to be out of order. Nevertheless, my hon. Friend has made the general point, which is very important, that this legislation has been produced in considerable haste to cover both the cases I have mentioned.
      This is in marked contrast with the view which my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) and the Conservative Government always took—that if we were to make changes in the fiscal system, particularly those which could have dangerous effects on the overall position of the country, the sensible way to do it was to have thorough consultation to ensure that those who had interests and a case to put were enabled to do so before the House of Commons was asked to legislate. That is why the hallmark of our tax reform proposals was the Green Paper approach. It would thereby have been possible to deal with some of these problems without the kind of extensive shotgun approach the Government have adopted. If the Government had wanted to do anything like this, it should have been subjected to the most careful public debate before legislation.
      This is the essence of my hon. Friend's remarks, and it is unfortunate in many ways that his is not a general delaying

      1849
      amendment. But that was not technically possible. I hope that those who take an interest in these matters outside will realise that it is only for technical reasons that we are not suggesting that the clause as a whole should have more careful scrutiny before we are asked to make a decision on it.
      The reality of the situation in relation to abuses which may take place in both cases is not simply that the Chancellor of the Exchequer is effectively throwing out the baby with the bathwater but that he is drowning the baby before he throws it out. He is rushing into this legislation in a way which the CBI, for example, has suggested is very wrong. It takes the view that the right approach would be to discuss the matter more fully before action is taken. This is not to say that we do not recognise that there may be abuses in both cases covered by the clause. But the danger in taking hasty action is that it has serious effects on the economy and the standard of living of the country as a whole.
      The other point one should make is that, given the haste with which this provision has been introduced, the extent of the representations which we have had on the effect of the clause is quite remarkable. My experience in the House goes back for 10 years, and I do not recall such a weight of representation as I have had on this occasion from those who feel that their legitimate interests will be affected by the Chancellor's proposals.
      For example—and no doubt my hon. Friends will wish to elaborate and enumerate others—we have the case of those who go overseas on behalf of mining interests. A great many of them go for a comparatively short period—we shall return to the question of the 365-day rule and so on later—because of necessity their firms have to send experts abroad. These people will be caught by the clause. As a result, firms will find it difficult to get their experts to go abroad because the tax disadvantages in doing so will be considerable compared with the existing situation. Yet such operations may well bring very considerable advantage to the United Kingdom balance of payments. They are entirely legitimate but necessitate experts going
      1850
      abroad for a short time, returning to base, then going abroad again, and so on.
      A second group—and again no doubt my hon. Friends will produce other examples—is consultants generally— consultants in economics or management, or those engaged in particular scientific operations of one kind or another. The same situation applies to them.
      A third group about which we have had representations is that of academics going abroad for a sabbatical year. I have always taken the view that the exchange of academics across international frontiers is of great advantage to this and other countries. I want to quote a letter from someone working at a university. It says:
      "I now have a letter from my accountant which says that, in his opinion, 90 per cent. of the income I receive for working as a professor …"
      at an American university—
      "which I do two or three months a year and intend to do for 5 or 6 months after I retire, will be taxable as English income with no allowance at all for expenses. This means that I cannot even charge my air fare … and get no allowance at all for the cost of living there. Clearly any conceivable trip under these circumstances would show a large loss. If this goes further I really don't feel that I shall be able to stay in this country."
      That brings out the shotgun approach which the Government have engaged in. In seeking to catch some particular abuse, they are considerably inhibiting and perhaps totally frustrating a number of legitimate operations from which everyone in the country in general is likely to gain.
      A number of cases arising from this complex of clauses have been brought to my attention—for example, that of Professor Harry Johnson, of the London School of Economics, for whom I, like many others, have the highest respect as an academic of the very first rank and from whom academic life, particularly of economists, in this country, has gained over the years. Now we hear with regret that, if this legislation goes through as it is, he will not feel it possible to maintain what has been a very fruitful occupation both in this country and overseas, in the United States and elsewhere.
      I quote this as an example of the way in which introducing rushed legislation of this kind is likely to have such effect. The real danger is that rushed legislation very

      1851
      often produces rushed reactions. A number of us will have heard of people who, even in advance of legislation, have said "If this is the kind of attitude that the Government are going to adopt to people in our position, we will have none of it and will go anywhere because we do not know where we stand."
      Many of these arrangements—not the short-term arrangements of visiting professors and so on—may well be on a long-term contract basis. Later we shall discuss the effect on groups of people who have made long-term contracts. Such people have taken long-term decisions which at this stage they can unscramble only with considerable personal loss and perhaps complete disruption of their family life. This is the kind of thing that is likely to happen as a result of this provision. We therefore do not feel that this rapid legislation, designed to tackle particular abuses—we do not say they should not be tackled—is the right way of going about things. We do not favour this broad shotgun approach.
      Naturally, we shall seek later to ameliorate the overall effect of this provision, but my hon. Friend was right to propose this amendment. I hope that the Chief Secretary will feel that a moratorium of this sort would be appropriate. The damage which could be done to the economy is considerable in both Cases covered by the clause. I hope that we shall manage to persuade the Government that they ought to have second thoughts about this and rethink the overall approach.
      4.30 p.m.
      Mr. Tam Dalyell: As one who shares an equal affection for Professor Johnson and who was also, like the hon. Member for Worthing (Mr. Higgins), supervised by him, I must say that I do not think that his is the happiest of examples. The hon. Gentleman knows, and I know, that this is Professor Johnson at his most provocative. He was trailing his coat. If this example is to be used, certain other questions have to be asked. Should we shed many tears for Professor Johnson when we compare his problems with those faced by millions of others in our society?
      When Professor Johnson writes that he cannot keep going, these are just his peculiar standards, not the standards,
      1852
      of most of us. It is a rather unfortunate example. I am curious to know why The Times thought it of sufficient importance and general application to put in on the front page.
      I, too, have had a number of letters about this subject. On a factual point, is it true, as some of our correspondents claim, that they will not get tax relief on the various genuine expenses they incur, such as travel? Secondly, will the man who goes abroad for nine to six months be disadvantaged as against a man who goes for two years?
      Mr. Hugh Fraser: I congratulate my hon. Friend the Member for Scarborough (Mr. Shaw) upon the extremely temperate way in which he has moved his amendment in an attempt to get the Government off a considerable hook. Many of us admire Professor Harry Johnson. Both Front Benches would have done much better today if they had received a few lessons about the gold standard from him. We had instead a lamentable display by a total ignoramus who, I think, is called the Paymaster-General. Whatever the wretched creature was called, he made a complete fool of himself for a quarter of an hour this afternoon.
      If the Treasury had listened a bit more to Harry Johnson this country would have had more gold in its reserves today. This mismanagement will cost the country hundreds of millions of pounds.
      The Chairman: Order. Perhaps the right hon. Gentleman will confine himself to the amendment.
      Mr. Fraser: I accept your rebuke, Mr. Thomas. I come back to this question of Professor Harry Johnson and say that it would have been of great value to both Front Benches had they paid more attention to his advice. It is a cause for genuine sorrow that he should now be departing.
      Perhaps the Chief Secretary could look carefully at a few other comparisons. This does not just affect the academic world, for which we know some back benchers opposite have a terrible contempt. They regard people in that world as being overpaid. We have the usual phoney stuff which comes from those who are fortunately absent this afternoon. The hon. Gentleman must realise that a good part

      1853
      of our exports depend upon follow-up services. He ought to consider some of the tax advantages afforded to American, French or Dutch engineers and technicians working for their national interests overseas. In all of these cases he will find that the British engineer or technician is at a great disadvantage. This must affect our export chances because so much of our export sales, especially in engineering, depends upon follow-up services. I hope that the hon. Gentleman will cogitate with his advisers about this.
      The wider point can be expressed in a simple way, by asking whether this will be investment advantageous to this country and what will this tax bring in. The collection is a purely voluntary one because those who find this tax intolerable will leave, like Professor Johnson. We shall create a Euro-engineer pool or a world engineer pool in the same way as we have, through the stupidity of various Governments, created a Eurodollar, which is under no Government control at all. We shall get precisely the same thing with human beings. They will have no loyalty to Labour Members, least of all to the Chancellor, who cannot make up his mind whether he is a Socialist or a Communist.
      The right hon. Gentleman is a strange Jekyll and Hyde creature who talks occasionally about screwing the rich and then about the great advantage of the patriotic endeavors of industrialists who support his measures. Leaving aside the psychiatric treatment which will one day come to the Chancellor, there will be; considerable dangers in the creation of this pool of people who have no attachment to this country and who will fare much better when employed outside it.
      I hope that the Chief Secretary will give us some ideas about what this tax will bring in and will make some calculation of the damage it can do to investment and of how it will cause us to lose experts on whose training we have expended thousands of pounds. The national investment in a technician can be £50,000 to £60,000. If such a person leaves, that is the loss we suffer. I hope that the Government will show a little more sense and will not pay quite so much attention to the Chancellor in his "Hydish" mood or to Labour back benchers in their more raucous moods saying "Squeeze the rich till they
      1854
      squeak". I hope he will apply his mind to a more rational approach to the taxation of technical, better-trained, people.
      Mr. Peter Hordern: I am happy to support my hon. Friend the Member for Scarborough (Mr. Shaw). This is an important amendment because of its effect on all those citizens from other countries who have been in this country for some time and are probably at the height of their powers and are certainly of great benefit to our economy. Under the Bill those who have been here eight years are enabled to make a deduction of 50 per cent. of their foreign emoluments before they pay tax. Should they remain here for over nine years they will become liable to what can only be described as the most penal conditions of this Bill. The amendment delays the impact of the proposals until those who are affected have had further time to consider them.
      Let us take, for example, the case of the American executive who has lived in this country for eight years. I understand that he will be liable—
      The Chief Secretary to the Treasury (Mr. Joel Barnett): The hon. Gentleman is talking about Clause 18. We are talking about something rather narrower in Clause 14.
      Mr. Hordern: I do not quite follow the Chief Secretary. The argument has proceeded widely and I distinctly heard my hon. Friend speak eloquently about these very matters. I am talking about the impact of the proposals as a whole which are summarised in Schedule 2, which is the schedule to this clause.
      The impact is due to occur in the year 1974–75. The amendment proposes that the impact should occur later. My hon. Friend the Member for Worthing (Mr. Higgins) suggested that there must be further time for considering the impact of the proposals. The impact is large on executives of important overseas companies based in this country. I can think of many overseas companies which operate management advisory services of considerable benefit to our economy. McKinsey and Company, Inc. advised numerous companies in this country and, indeed, the Government and overseas Governments. American citizens with McKinsey have been over here for many

      1855
      years and regard this country as the centre of their working operations. It is only reasonable that they should have time to adjust their affairs. If the proposals in the Bill are implemented those people will have to consider whether they can remain in this country at all.
      The same is true of important American organisations concerned with finance for industry and invisibles. These concerns, many of which are American, have come here recently to participate in the growing Eurodollar market. Whatever one's apprehensions about the growth of the Eurodollar market—and I share the apprehensions of my right hon. Friend the Member for Stafford and Stone (Mr. Fraser)—the market is growing rapidly because of the large increase in the supply of money which is to be made available to pay for Arab oil. These banks have come here recently, they participate in the Eurodollar market and often represent considerable invisible earnings to our country.
      I have met the chairmen and managing directors of some American banks, and they have told me that unless the Finance Bill is amended satisfactorily they will be forced to return home and their operations will have to be carried out by United Kingdom subjects who will not necessarily be versed in the way in which American banks operate.
      Mr. John Horam: The amendment deals only with the first of the two Cases mentioned by the hon. Member for Worthing (Mr. Higgins); that is to say, British people working abroad and remitting money back here. It does not deal with American citizens living over here.
      The Chairman: The hon. Member for Gates head, West (Mr. Horam) may leave it to me. I shall have to work very hard to do so, but if I find that the hon. Member for Horsham and Crawley (Mr. Hordern) is straying I shall pull him up.
      Mr. Hordern: I am grateful to you, Mr. Thomas. I trust your judgment absolutely. Furthermore, I am certain that you have a great deal more knowledge of this subject than has the hon. Gentleman.
      The Bill affects not only the people who are here increasing our invisible
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      earnings, but large American companies which have invested in our country and are continuing to do so on a massive scale. They will be forced to think again if they are not allowed to extend consideration of their affairs for a longer period, as suggested by the amendment.
      4.45 p.m.
      American industry in this country has habitually invested far more here than have British companies of a similar size. There are 1,000 American companies operating here, of which 270 employ 481,000 United Kingdom subjects, of whom 125,000 work in the development areas. Some international companies can select the area in which they operate. They have no obligation to operate from the United Kingdom. They can equally well operate from Belgium, Holland, France or West Germany. The selection they make is based largely on trade and communications, but it is also based on their ability to attract outstanding executives, perhaps from their own country, to carry out their programmes. That selection is bound to be affected by considerations of taxation.
      The proposal for the 50 per cent. deduction puts them in a worse position than do the taxation arrangements available in Belgium and France. If they are here for longer than nine years, and if they have no time to make adjustments to their affairs they will consider carefully whether to make any fresh investment in this country. They have to take account of their net remuneration after tax and of the effect of the Bill on their investment income. If the provisions of the Bill are implemented, their investment income in the United States will be liable to the full United Kingdom tax at the top rate.
      In the United Kingdom the top rate of tax on investment income is 98 per cent., starting at £21,000. In the United States the top rate of tax is 75 per cent., and it is not reached until the level of income is £170,000. It is clear that unless the provisions in the Bill are put back for two or three years so that American citizens have more time to adjust their affairs, many of them, and many other foreign nationals, will decide not to operate here because of the effect on their investment income in their own countries.

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      What is to prevent them from being subject not only to taxation on their investment income but to the wealth tax which the Labour Party has threatened? The amendment would allow them further time to arrange their affairs.
      I will refer briefly to the position of the United Kingdom citizen who works abroad for part of the time. Some people work for companies and some are partners in overseas operations. I am thinking particularly of large consulting engineering firms where it is essential, if they are to operate at all, to operate in an overseas partnership. According to the Bill, the year of assessment is 1974–75, but for a partnership, where the preceding year of assessment is taken into account, there is an adverse effect. The effect of the amendment would be to delay the impact of the assessment for two or three years.
      I have an interest in this matter, which I hasten to declare, as a member of a Swiss partnership. We shall deal with these matters at a later stage of the Bill when other amendments will be considered. The present amendment deals with a matter of great importance for these large industrial partnerships. Having already made provision for taxation out of profits—if they made any— they now discover that their arrangements will be nullified by the date put forward in the Bill.
      Mr. John Cope: I am delighted to support the amendment, and I wish to make one or two comments about the situation of the United Kingdom resident who goes abroad. We shall have an opportunity to refer in more detail to these matters later on in the Committee stage, and I shall not argue the matter in full on this amendment.
      I believe that my hon. Friend is correct in seeking in his amendment to have this provision postponed so that its effect can be more fully understood by the Committee. It was certainly clear from the point of order from the Labour benches a few minutes ago that these provisions are not fully understood in the Committee. The amendment refers not only to a United Kingdom resident who works abroad for part of the year but to those with foreign emoluments—those who are
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      non-domiciled and who have a nonresident employer.
      The Bill will make it difficult for a United Kingdom resident who works abroad to compute his income since he will receive no allowance for the additional costs which he will have to pay in living and working abroad. Furthermore, he will receive no allowance for the cost of travelling to and from his overseas post. This will take away a great deal of his gross income, but it is on that gross income that he will have to pay United Kingdom tax.
      There are other areas in which the situation overseas is different from the position in this country. I refer, for example, to the question of medical expenses. If a man is working in this country and is paid here, he is covered by the National Health Service, but if he goes on assignment to the United States or somewhere else where medical assurance is more the rule and happens to fall ill, he may incur a great amount of medical expenses which are not deductible from gross income. These matters need to be fully understood and appreciated by the country. We need to see the effects of these provisions before the Committee plunges into this departure in the tax system. It is of great importance that we do nothing to prevent people from this country going abroad for short periods. This is important in terms of our visible and invisible exports.
      Mr. John Nott: I have a great interest in this subject since it is a matter which I considered in some depth in the Treasury until about three months ago. I support the idea underlying the amendment. Perhaps I could deal with the general situation of a United Kingdom resident in the context of this amendment.
      I wish to make one last appeal to the Chief Secretary to look at this matter again. This is a complicated tax matter, and we appreciate that a very great deal had to be studied by incoming Treasury Ministers in the three weeks before the Budget. Perhaps the Chief Secretary and I are among the few people who have read the underlying papers which led up to the measures contained in the Finance Bill.
      I should like to say a few words about the consultation which went into drawing up the views of the Inland Revenue on

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      this subject. It is necessary to refer to the history of the matter in some detail. The provisions arose out of the Lonrho situation. I am sure that all hon. Members in the Committee will agree that the alleged situation in Lonrho is totally unacceptable to Members of Parliament and indeed to the whole country. I say "the alleged situation" which arose in Lonrho, because it must be said that nobody has the slightest idea whether or not the principal characters in that episode were taxable at the highest marginal rates. From my general knowledge I would say they probably were fully taxable; I may be wrong, because I have no means of knowing. But following Lonrho it was politically necessary to take action against the siphoning of income into tax havens and the growing use of this tax avoidance device which had become an affront to public opinion.
      Having made these opening comments, I must confess that with our absurdly high marginal rates of tax, the tax system will be kept alive and breathing through its loopholes. Accountants, lawyers and other professional people will continue to concoct legal means of limiting the amount taken by the Revenue when it attempts to plunge its shovel into a man's stores. The skirmish between the Inland Revenue and professional advisers will continue. Those advisers will tend to be one jump ahead of the Inland Revenue. It will always be the function of Treasury Ministers to back up the Revenue in what is an extremely difficult task. However, the skirmish between the Revenue and professional advisers is a more healthy situation than one which all Governments are in danger of provoking. I refer not to legal avoidance but to deliberate, planned evasion of taxes.
      The ending of the remittance basis will tend to bring the Inland Revenue and the Exchange Control into greater contempt, because I believe that it will provoke fraud and more rather than less evasion. The new arising basis— because most of these payments are made overseas—will be difficult to police. A tax law which is difficult to police is not good law. To give the Inland Revenue its due—and I have the greatest respect of for its integrity and intelligence—it
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      was given a mandate to take action following Lonrho and came up with the proposals embodied in the Bill. The only problem is that the Inland Revenue's recommendation is wrong. I know that when the officials read my speech they will not be surprised to hear me take the view that the Inland Revenue's recommendations, in this case, are not the right ones.
      Yesterday I took the opportunity, as I am entitled to do to look at some of the papers from the time when I was a Minister not many months ago. I can say, I think without breaching any confidences, that as late as 20th February, eight days before the General Election, my colleagues and I were all still seeking an answer to the problem and we had not arrived at the conclusion which the Government have now embodied in the Bill. I must strongly emphasise that we had not decided to remove the remittance basis, and we certainly thought it was completely wrong to consider doing so in the case of pensions. I do not have the time to go into why I think that would be a great mistake.
      5.0 p.m.
      The proposals in the Bill represent the cleanest, simplest and easiest way of ending the avoidance. However, when considering this matter my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) was determined not to do anything which would damage the wider United Kingdom interest and discourage genuine business and professional engagements overseas. He was determined not to do anything that might, in a very intangible way—because these are intangible matters—undermine the delicate position of London as a major financial centre. He was concerned about the pensions problem in the event that the remittance basis was ended. Here we are talking not just of London as a financial centre, but as a cultural and artistic centre, because that enters into the matter as well. I do not want to go into all the reasons because they are well known to the Chief Secretary, but, while we do not wish to have the United Kingdom as a tax haven, it is not necessary for the measures in the Bill to be brought forward in this Bill to get over the avoidance devices that have been used.

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      I am not all that happy at the process of consultation. It is not the fault of the Inland Revenue that the process of consultation is what it is. It is all wrapped up with the Budget secrecy tradition, which I think everyone agrees is carried too far. Following our mandate after the Lonrho affair, the Inland Revenue considered the matter in some depth with the Tax Reform Committee. On a case like this, the Tax Reform Committee is not really a representative body. It consists of men of the greatest eminence and skill, some of them, because they are so eminent and skilful, being too busy to attend the meetings. But essentially the committee at the moment lacks—and this is nothing against the men who are on it— men of practical entrepreneurial qualities. It is made up too much of senior members of the Bar and so forth. If the committee is to continue with this work it should broaden its base.
      Another aspect is that the Department of Trade and Industry, which is the Whitehall spokesman for British industry, did not fight its corner very well on this issue in its discussions with the Revenue. I do not criticise the civil servants, but the processes of consultation in arriving at this kind of measure will have to be improved. I suppose I shall get into trouble for saying this, but I do not believe the DTI officials, in this case, were the intellectual equals of the Inland Revenue, which, after all, is charged with the duty to collect the taxes. The process of consultation has therefore reached its most important point in this debate. I hope that the Chief Secretary will consider the debate as the final and most important and genuine consultation of the whole affair.
      I was very keen at one stage to have, instead of the ending of the remittance basis, a time apportionment arrangement under which the Inland Revenue looked into each separate situation and decided that the United Kingdom citizen had spent so much time and effort abroad but where the onus lay upon the individual to show the Inland Revenue just how much time and effort he had spent overseas. I have come to accept that this is probably administratively not very sensible. Another possibility is that suggested by my right hon. Friend where it is clearly possible to tamper with the percentage in Schedule 2. If the Chief Secretary is
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      unsympathetic to everything else I hope that, as a last resort, he will look at this proposal because it is the simplest way of amending the Bill, even though I do not consider it to be the right way of doing it.
      I should like the Chief Secretary to consider two other possibilities, and I hope that he will agree to look at them before Report. All my right hon. and hon. Friends who were looking at this matter were coming round to the view that these were two possible alternatives to the ending of the remittance basis Instead of taxing 90 per cent. of earnings as proposed in Schedule 2—my right hon. Friend's amendment suggests 50 per cent. —will the Chief Secretary consider exempting overseas earnings up to a specified percentage of the United Kingdom individual's total United Kingdom income? For example, take a United Kingdom individual with a total income of £10,000. Can we not perhaps consider treating on the remittance basis up to, say, 50 per cent. of that man's overseas earnings—and I stress I am dealing here with United Kingdom residents. That is one possibility which has not been properly studied but should be.
      Of course, the tax avoidance problem is not one for the individual who works in France, Germany, the Netherlands or the United States and spends his time there. If he earns an income in the EEC or in the United States above a certain level, he will pay full French, German, Dutch or United States taxes. There is a belief in some quarters that a man who earns an income on overseas business does not pay tax. That applies only in the case of a tax haven. It is perfectly reasonable for a man working in France or Germany and whose work does not touch the United Kingdom to pay French and German tax. The problem is a tax haven problem. This is not a question of a man who does business in the EEC because he will be taxed on an EEC basis, although he may pay lower marginal rates than United Kingdom rates.
      Can we not look at the concept of a reasonable rate so that the man working overseas pays either the tax rate prevailing in the country where he works or, if he is earning that money by a device in a tax haven—whether it be the Channel Islands, the Cayman Islands or a place

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      where there is no tax for non-residents— taxes at the United Kingdom basic rate? There would then be no way in which a man working overseas paid no tax. He would pay at a minimum a reasonable rate which might be, say, the United Kingdom basic rate. That man would then either remit the money on a remittance basis and pay United Kingdom tax, or he would pay German, French or American taxes and would be taxable on that basis, or he would pay at a "reasonable rate" at the minimum. These are two other possibilities as well as the opportunity of reducing the percentage in Schedule 2. Personally, I think that both of them are preferable to an ending of the remittance basis. The ending of the remittance basis, for pensioners especially, will be extremely harsh and unjust. A man might have devoted the whole of his life to working in the colonial service overseas.
      In fact, there is other legislation for upgrading public service pensions which the Labour Party supported in this House. There is other legislation which impliedly accepts the concept that if a man spends the whole of his life overseas he is entitled to benefit from the remittance basis. I do not believe that we are right to end the remittance basis generally, and certainly not in the case of pensions. I could not be more aware of the difficulties involved in the alternatives but I ask the Minister to consider those that I have mentioned.
      I have made a comparatively non-controversial speech but I feel most strongly on this issue. I think that on the present basis the ending of the remittance basis will be damaging to the wider interests of the United Kingdom. I do not expect the Minister to confirm this, but I believe that we are all looking to an alternative which ends avoidance, which deals with the genuine political problem and which at the same time does not damage the United Kingdom interest.
      Dr. Reginald Bennett: I am sure that the Committee will be most grateful to my hon. Friend the Member for St. Ives (Mr. Nott) for his profound and well-reasoned consideration of the subject under discussion. I do not pretend to be able to follow to any extent the complexity of his well-informed thinking.
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      My hon. Friend made a reference to the financial value of the City of London as a trading centre. I have received representations from members of certain Italian-owned banks. I know that there have been consultations in London involving the whole consortium of the banks that are Italian owned. They have been boiling with indignation and they have sent me a document in which they state quite roundly that if this legislation goes through as at present intended the senior officials of the Italian-owned banks in London will cease to function here. The banks will take their own decision whether to cease their operations in London completely or to downgrade them to a petty basis.
      I do not know whether the Chief Secretary has heard about these matters but I believe that the Committee should be fully cognizant of them. I take this opportunity of bringing them to the attention of the Committee.
      5.15 p.m.
      Mr. Joel Barnett: This has been an interesting debate. I am much obliged to the hon. Member for St. Ives (Mr. Nott) for the excellent way in which he told us of his experience of this problem. I am grateful for his remarks.
      Before coming to the detail of the amendment I shall consider the general question of Clause 14 and some of the points that have been raised. The hon. Member for St. Ives talked about whether it was right to deal with the problems of avoidance. He said that when his right hon. Friend the Member for Altrincham and Sale (Mr. Barber), the former Chancellor of the Exchequer, decided to look into avoidance it was accepted that there was a serious problem to consider regarding the remittance basis. He said that he feared that to change it would create more evasion. It is possible that he may be right. I have no way of knowing whether he is right or wrong.
      It is obvious that the remittance basis is a complicated matter. There are already degrees of evasion as well as avoidance, as I am sure the hon. Gentleman will be aware. We shall deal with it, as he knows, by virtually doing away completely with the remittance basis. The hon. Gentleman has put forward one or two suggestions which I shall consider

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      carefully. He considered the time apportionment basis and decided that that was not a proposition for obvious reasons.
      The hon. Gentleman asked whether I would consider reducing the 90 per cent. basis of charge on overseas earnings. A number of hon. Members have referred to that, to the taxation of expenses and various matters regarding the taxation of academics and others who go abroad for a short time. If they go abroad beyond any 365 days they are not liable to United Kingdom tax in any way. That arises under Schedule 2. I am more than willing to consider these matters sympathetically when we come to consider Schedule 2.
      Mr. Peter Rees: If
      the Minister cannot enlighten the Committee this evening I ask him to apply himself, before we come to Schedule 2, to a point of particular concern relating to those who enjoy foreign emoluments. Let us assume that an American who is employed by an American bank serves in the United Kingdom. He may participate in a share option scheme and in pension arrangements in the United States which may not count as emoluments under United States fiscal law. It is clear from our earlier debates that any participation in a share option scheme is likely to give rise here to a charge on tax. It is unlikely that an American pension scheme has been vetted and approved by the Inland Revenue. Will the American banker that I have used in my example be assessable in respect of such matters in the United Kingdom? If the Minister cannot give us an answer now I hope that he will do something before we come to Schedule 2, otherwise, we shall have to debate the matter carefully at that stage.
      Mr. Barnett: I have given a great deal of thought to the situation that the hon. and learned Gentleman has described. However, it does not arise under this clause. We are talking about the non-United Kingdom man who comes here for less than 9 or 10 years. He is taxed on only 50 per cent. of his earnings within the United Kingdom. I think that may have caused some misunderstanding for the last hour or so. I am sure that the hon. and learned Gentleman understands that under Clause 14 non-United Kingdom citizens who come here and work for less than
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      9 or 10 years will pay tax on only 50 per cent. of their earnings in this country. Therefore, the American in the hon. and learned Gentleman's example would not be taxed on any share option scheme or pension scheme in which he participates in the United States. That arises on Clause 18 on the 9 or 10 year situation, which we shall come to later. It does not apply to Clause 14.
      Mr. Rees: I do not think that the Minister has understood my proposition. Let us assume that an American bank— I only take as an example an American because we know that they have share option schemes to a greater degree than in most other countries—sends one of its employees to this country for three or four years with a salary of $X or£X. Let us suppose that the American bank employee continues to participate in a share option scheme and in a pension scheme as a reward for his services as acting as the bank's representative in the City of London. Is the Minister saying that in that situation the Inland Revenue will calculate the benefits from participation in the share option and pension schemes and assess his tax liability on 50 per cent. of that? If so, that is a staggering and terrifying proposition.
      Mr. Barnett: That is precisely what I did not say. I am sorry if I did not make myself clear but this is a complex issue. The American in the hon. and learned Gentleman's example would not be taxed on any benefit from his share option scheme if he is here for less than 9 or 10 years. He would only be taxed here on 50 per cent. of his earnings. I hope that that is clear. If it is not, I shall be happy to give way again and deal with this and any other matter.
      Mr. Higgins: Does the Minister mean earnings that are paid here or earnings which result from employment here, wherever they are paid and under whatever basis they are paid?
      Mr. Barnett: I was referring to earnings paid in this country. That is my understanding of the matter. If I hear further from on high, I shall amend that statement, but my understanding is that the American in the example would be taxed at 50 per cent. of his earnings here. If I am wrong about the share options, I can assure hon. Members that that is not the intention under the less than 9–10

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      years situation. We shall put down amendments if necessary, but I do not think that it will be necessary.
      Mr. Tim Renton: That was not my understanding, but the Chief Secretary's expertise on the matter is far greater than mine. Does tax on 50 per cent. earnings in the United Kingdom apply if the non-resident here temporarily is employed by a British employer as well as if he has a foreign employer?
      Mr. Barnett: If his earnings are here, whoever his employer is, the employee will be taxed as to 50 per cent. of his earnings here.
      Mr. Higgins: I think that both my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) and I are under the impression that what the Chief Secretary said is not precisely correct. Will he give an undertaking that if that is so he will correct it in the debate on the Question "That the Clause stand part of the Bill"?
      Mr. Barnett: I shall look into that. I understand that a person is not taxed on share option schemes abroad but is taxed on 50 per cent. of his earnings here.
      I was dealing with the points raised by the hon. Member for St. Ives and his suggested alternative methods of dealing with the matter as opposed to the remittance basis. I promise him that I shall examine them. But the questions of 90 per cent. of earnings, the taxation of expenses or otherwise, and so on arise on Schedule 2, and I shall be considering those matters sympathetically when we come to the schedule in Committee upstairs. I promise also to look into the concept of a reasonable rate, but my first reaction—admittedly very quick—is that this might well make the matter even more complex.
      The debate was started by the hon. Member for Scarborough (Mr. Shaw). His amendment is very simple—to put off for two years the commencement of the clause. Here I should like to refer to the background to the need for the clause and the other clauses in question. As the hon. Member for St. Ives said, it stemmed from what was known as the Lonrho affair. At that time there was considerable agreement on both sides of
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      the House that that kind of abuse of a tax-avoiding scheme was an affront to hon. Members. One or two may have disagreed, but that was the general view, and it has led to the clauses. However, we are here dealing only with Clause 14.
      Mr. Hugh Fraser: This is a typical instance of what I call over-reaction of the most hysterical sort by both Front Benches.
      Mr. Barnett: I am not sure who is being hysterical or over-reacting, but I shall come to the point the right hon. Gentleman and other hon. Members raised.
      The clause deals with United Kingdom citizens working abroad on a short-term basis—that is, less than 365 days—and non-United Kingdom citizens working here for less than 9 or 10 years. This is where there has been a considerable misunderstanding during the debate.
      Mr. Michael Shaw: It is not just those working here for less than 9 or 10 years. In fact, it operates for the first two years, exclusive of the terms of Clause 18. It affects all non-United Kingdom-domiciled citizens straight away.
      Mr. Barnett: But Clause 18 does not come into effect anyway until two years have passed. Therefore, in the amendment we are dealing with the two classes to which I have referred.
      We have heard speeches about United States and Italian citizens and others leaving this country because of the more stringent arrangements after 9 or 10 years under Clause 18. One hon. Member asked whether we had had representations. We have had many representations, but almost all of them were on Clause 18. We have had very few representations on Clause 14 and the 50 per cent. basis of taxation. The United States Chamber of Commerce was not concerned; it accepted that this was reasonable.
      I shall try to explain why it is reasonable. The hon. Member for St. Ives pointed out that this country is something of a tax haven for the type of person we are considering. Until I started to look at the matter, I had never realised that Britain was a tax haven, but it was, for certain non-United Kingdom citizens.
      The argument is really about whether the 50 per cent. basis for less than 9 or

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      10 years is so stringent as to force those people abroad instead of working here. Where will they go? On 12th June, in answer to a Written Question, I gave comparisons of net incomes after tax in a number of countries, most of them in Europe, but including Japan. I compared taxation for foreigners there with the taxation of foreign citizens working here for less than 9–10 years under our proposals. In every case they were better off in the United Kingdom than in any of those other countries, even with Clause 14. Hon. Members can see that answer at c. 562 of HANSARD for 12th June.
      Mr. Hugh Fraser: Will the hon. Gentleman look at the French figures? It is easy for someone working in France to take his holiday in the last month of the year and, therefore, not pay this rate of tax. That is a simple and accepted way of getting round it for American executives in France. If the hon. Gentleman went into these matters more closely, and if some of the brilliant men at the Treasury spent a year or two looking at practical matters, we should be greatly advantaged.
      Mr. Barnett: I am obliged to the right hon. Gentleman. If he is saying that there are methods of avoiding French taxation, that is true, but I assure him that there are also methods of avoiding British taxation. I declare an interest. I have been dealing with that matter for many years.
      I was giving the facts of the tax systems of the various countries. [Interruption.] I can only refer to the tax systems, and under those systems the position is as I have stated it.
      A great deal of the substance of the debate has been about Clause 18 and the problems that will arise for those who are here for longer than 9 or 10 years. I shall give serious consideration to those matters when we debate upstairs the amendments to that clause. They do not apply to Clause 14.
      Equally, many of the points raised— for example, whether 90 per cent. of the income of a United Kingdom citizen who goes abroad to work for less than 12 months should be taxed—come under Schedule 2. I am prepared to listen sympathetically to those arguments when
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      we come to the schedule, but they do not apply now.
      The purpose of the clause was to stop a major tax avoidance industry that was going on because of the remittance basis. There is no dispute about that. The question was how best to deal with it. What we have done, certainly by removing the remittance basis as proposed under the clause, is to cut out substantially part of the abuse that was occurring. It will certainly cut out some of the things— not necessarily those which occurred in the Lonrho case; none of us knows whether or not that has yet been caught for tax. But certainly it will cut out many abuses by those who have been using the remittance basis and have been able to avoid tax because of that system. Where they are using that system properly they have, quite genuinely and legally, been able to avoid their tax liability.
      5.30 p.m.
      We have all accepted that this was an abuse and an affront and had to stop. Now we have stopped it, and it surely must be wrong for the Committee, recognising that it is an affront and an abuse and that the clause stops it, to say with the amendment that it should be left for another two years. I see no reason why we should leave it for another two years. It is an abuse which should be stopped now.
      Mr. Peter Rees: The Chief Secretary does not appear to have grasped the force of the amendment. Lonrho had nothing to do with foreign emoluments. One presumes that it was entirely to do with United Kingdom residents. On this amendment we have been debating the case of foreign domiciled employees of foreign companies who are here, and I hope, with great respect, that the Chief Secretary will recognise that.
      Mr. Barnett: I do not want to argue with the hon. and learned Gentleman as to who is right. I leave him to argue with his hon. Friend the Member for St. Ives. I am not resting on the Lonrho case. I thought that no one disagreed that the remittance basis allowed considerable abuse. What the clause does is to stop it. I do not believe that we should wait two years to do so. Therefore, I ask my right hon. and hon. Friends to oppose the amendment.
      [Sir M. GALPERN in the Chair]
      Mr. Emlyn Hooson: I am enabled to make a brief contribution to the debate because of the very liberal and broad way in which, on what is a narrow amendment, the debate has been interpreted. As the Chief Secretary has said, a great deal of argument has ranged on what is really contained in Clause 18, but as that clause will be considered in Standing Committee and Clause 14 is but part of the same broad process of dealing with not only British people resident abroad who are sending remittances here but also people from abroad who are working here, it is right that the debate should have been interpreted in this way.
      The great danger that the Government are in, in this case, is that in order to deal with what is emotionally and politically a very live issue, namely, the knowledge that there has been very considerable tax avoidance in this sphere—to put it at its lowest—the Government want to deal with it in such a way as to harm the long-term interests of this country. That is the fear which arises. Any detached person would agree. We are in danger, as J. M. Keynes once suggested, of getting the answer precisely wrong rather than broadly right. There is a clash of interest here between the long-term broad interests of the country and the more narrow sphere of dealing with immediate problems of tax avoidance or evasion.
      The Government would be quite wrong not to appreciate the strength of feeling on this matter by those who are extremely well disposed towards this country. The truth is that Britain is becoming an increasingly unattractive place for a multinational or international company to have its headquarters. No one would dispute that. It may be that the overall wisdom of the House of Commons is that that is a good thing. But if that is so, we must at least face the implications. Surely this country has always had what can be described as a rather open economy. We are in the perceptible process, under the previous Government and the present Government, of making it more and more a closed economy. The argument against going into the Common Market, advanced from the Government side of the House greatly, was that the Common Market was too closed an economy, too nationalistic. We are in great danger, while
      1872
      arguing against the Common Market on that basis, of becoming more nationalistic ourselves.
      Let me give an example. A friend of mine, a fellow countryman, happens to be the chairman of an international company. Its export earnings last year for this country were £71 million. In addition, it received into this country £34 million in dividends from other countries—though it paid some of this sum out to foreign shareholders. However, the net benefit to our balance of payments was enormous. I know that people in that company are greatly concerned whether they should continue in this country. A corollary to this matter is the unattractiveness for British citizens who are employees of international companies, who serve a time in France or the United States and then return to this country and find themselves in tax difficulties. The Chief Secretary has not given an adequate answer to the question that was posed about share option schemes in the United States and whether benefits from those schemes are taxable in this country. It would be of interest to know his final reply on that matter.
      I am absolutely sure, however, that this whole question needs more careful consideration. There has not been enough consultation on the matter with people who are tremendously interested and are staying in this country and making the system work, and who agree that these abuses should be put right. They are abuses. Hon. Members on the Opposition side of the Committee have not tried to hide that fact.
      The Chief Secretary said that this country was a tax haven for many foreigners working here. That is true, and that is essential if we are to remain a centre of international trade and to have benefits from the invisibles. Let us take shipping as an example. I know some people who have interests in shipping. I have no interests in the City or in any of these companies. I have simply listened to the contributions made by these people. I know, for example, that many employees of shipping lines—for instance, the Greek lines, run from Piraeus where their ships are when their trading is done in this country—live here for six months of the year and in Greece for six months.
      We are reaching a point at which our taxation system is such as to just change

      1873
      the balance in favour of those who are under pressure to leave this country. We have competitors. In the last year or two France has been adapting her tax system to try to attract international companies to set up international headquarters there. We are very lucky in many ways in that many international companies which have headquarters here have very distinct British ties. Many of their representatives frankly admit that they prefer living in Britain to living in any other country.
      I know a young man who is an extremely able businessman and a British citizen. He is the European director of a very large multinational concern. He will not live in this country at present, though he would very much like to live here. When the Chief Secretary says that from calculations he has had made he finds that the net income of these people would be larger in Britain than it would be in any other country, he should realise that in practice that is not true.
      Therefore, although I entirely agree with the Government, as does every sensible detached person who has made representations to me, that there are abuses which must be dealt with, it would be foolish for this country to jeopardise now much of the basis of its international position, as New York did with shipping just after the end of the war. Many great shipping interests, at the end of the war, went to New York. They left this country. The Chief Secretary would do well to inquire why they left New York in the 1947–52 period and the international dealings returned to this country.
      That is why this whole question needs to be examined again. Far greater consultation is needed. The Government have shown a willingness to consider many of the representations that have been made to them. Nevertheless, the process of dealing with this great problem is being rushed too much.
      Mr. Robert Carr: I wish to make a number of comments on the amendment because, although I know that several of my hon. Friends wish to express views on the subject, we have a number of debates on the clause still ahead of us and I sense the desire on both sides of the Committee to draw this
      1874
      debate to an end, given those further opportunities.
      I notice that the Chief Secretary declared an interest in that in the past he dealt with these matters in a professional capacity. May I take this opportunity to wish that he may quickly return to that lucrative service industry of which he was such a distinguished member? If I have to declare an interest, it is simply an interest as a poor taxpayer who finds it as difficult as other taxpayers to understand the complexities of a provision of this kind.
      The Chief Secretary took the view that as this was the first amendment on this and the related clauses and the schedule it was right to make a number of general remarks, and, Sir Myer, you and your predecessors in the Chair have allowed a number of general remarks to be made which have stretched the confines of the amendment if not to bursting point at least somewhere near it. Therefore, I take this opportunity briefly to put on record some of the Opposition's general views on the subject.
      I want first to make it clear, as my hon. Friends have done and as the hon. and learned Member for Montgomery (Mr. Hooson) has done on behalf of the Liberal Party, that we all recognise that there are abuses. None of us pretends that there are not, and we all wish to see them stopped. But in saying that we wish to stop abuse we also say quite clearly from the Opposition benches that we must avoid the danger of doing great damage to the national interest—damage to what the hon. and learned Member for Montgomery has just described as the long-term broad interests of this country.
      There is a danger that in stopping abuse—which we all want to do—we may damage the national interest. We genuinely believe, and obviously very large numbers of people outside this House believe, that the proposals in Clause 14 and the associated clauses and the schedule stop the abuse at too high a price for the national interest as a whole. In trying to get at the minority who abuse, we must take care that we do not damage the overall national interest or the interests of large numbers of business men and women and artists and professional people of all sorts who come here

      1875
      and give useful service to the community in an economic, social and a cultural sense.
      We believe that this country gains great advantage from our citizens going out and working abroad, from citizens of other countries coming to live and work here on a long-term basis, and from overseas businesses and organisations setting up here in Britain This is of great value to the country. It is a matter which struck me forcibly when the case of Professor Johnson was mentioned earlier. We must realise that the people and organisations that we are discussing have a choice whether to stay here or to go away. Similarly, United Kingdom residents may decide either not to bother to work abroad, as they do at the moment, or to leave the United Kingdom for good. In the same way, citizens from foreign countries living and working here can go elsewhere.
      I heard one or two hon. Members ask where there was to go which was as favourable as Britain, even under these proposals. My right hon. Friend the Member for Stafford and Stone (Mr. Fraser) pointed to France. It is well known that Belgium is also fairly favourable. What is more, we have to recognise that at the moment France is actively trying to make herself more attractive to both organisations and individuals to work and to base their activities in that country. We must not say too easily that there is nowhere else that these people can go. There are plenty of other places, and, overall, it is in our interests that they should stay here and be joined by others in the future and also that our own people should find it reasonably advantageous to go and work abroad for considerable periods.
      5.45 p.m.
      There is also the matter of fairness to individuals, and this arises most clearly in the case of overseas service pensions. Some 10 years ago I was the Minister in charge of technical aid to the developing countries. For that reason, I have a fairly vivid recollection of this. There is a great deal of interest in this House on behalf of such people, and there is no doubt in my mind that these proposals are harsh and unfair on them. Anyway, that is the view of the Opposition, having
      1876
      listened to all the many representations that we have had on the subject.
      We feel that this clause and its related clauses and the schedule do not avoid the danger to which I have referred. We believe that these proposals are too rushed. I agree that the Chancellor of the Exchequer and his Treasury colleagues have had a very short time in which to consider these proposals. But, in view of the fact that they have themselves said that they wish to have a second Finance Bill this year—not even waiting the normal full year—would it not be better to withdraw these proposals temporarily, to publish a Green Paper, to listen to and to think about what is said as a result of that Green Paper, and then to bring forward in their second Finance Bill proposals to deal with what we all accept to be abuses, bearing in mind that we all want to deal with them but that, in dealing with them, we also want to avoid some of the potential damage which we and very many responsible people outside this House believe will be done by the proposals as they stand?
      If the Government will not do that, we shall do our best to improve these proposals by amending this and the other clauses and the relevant schedule. But I fear that, however successful we are and however pliant the Chief Secretary becomes in listening to our arguments, it will not be possible to avoid damage.
      I make it clear on behalf of the Opposition that in due course, which I believe will probably be in the autumn, we shall reconsider this matter ad initial, and that if the Government proceed with proposals on these lines they can be assured that a future Conservative Government will tackle the abuse in a different manner.
      The amendment we are now debating touches only one part of the problem, but at least it ameliorates the position significantly. Therefore, I welcome the fact that my hon. Friend the Member for Scarborough (Mr. Shaw) has introduced it. But, although we are glad to hear from the Chief Secretary that he will consider various matters later as we come to them, I believe that this amendment is sufficiently important and sufficiently constructive to advise my right hon. and hon. Friends to support it in the Division Lobby.
      Question put, That the amendment be
      The Committee divided: Ayes 220, made:— Noes 253.

      Division No. 41.]

      AYES

      [5.49 p.m.

      Adley, Robert

      Grieve, Percy

      Mudd, David

      Alison, Michael (Barks ton Ash)

      Grist, Ian

      Neave, Airey

      Allason, James (Hemel Hempstead)

      Grylls, Michael

      Neubert, Michael

      Ancrant, M.

      Hall, Sir John

      Newton, Tony (Braintree)

      Archer, Jeffrey (Louth)

      Hall-Davis, A. G. F.

      Nott, John

      Atkins, Rt.Hn.Humphrey(Spelthorne)

      Hamilton, Michael (Salisbury)

      Onslow, Cranley

      Awdry, Daniel

      Hampson, Dr. Keith

      Oppenheim, Mrs. Sally

      Banks, Robert

      Hannam, John

      Osborn, John

      Beith, A. J.

      Harrison, Col. Sir Harwood (Eye)

      Page, Rt. Hn. Graham (Crosby)

      Bennett, Dr. Reginald (Fare ham)

      Harvie Anderson, Rt. Hn. Miss

      Pardon, John

      Benyon, W.

      Hastings, Stephen

      Parkinson, Cecil (Hertfordshire, S.)

      Berry, Hon. Anthony

      Havers, Sir Michael

      Percival, Ian

      Biffen, John

      Hawkins, Paul

      Peyton, Rt. Hn. John

      Boardman, Tom (Leicester, S.)

      Hayhoe, Barney

      Pink, R. Bonner

      Body, Richard

      Heath, Rt. Hn. Edward

      Price, David (Eastleigh)

      Boscawen, Hon. Robert

      Heseltine, Michael

      Quennell, Miss J. M.

      Bowden, Andrew (Brighton,Kemptown)

      Higgins, Terence

      Raison, Timothy

      Braine, Sir Bernard

      Hooson, Emlyn

      Rathbone, Tim

      Bray, Ronald

      Hordern, Peter

      Redmond, Robert

      Brittan, Leon

      Howe, Rt. Hn. Sir Geoffrey (Surrey, E.)

      Rees, Peter (Dover & Deal)

      Brown, Sir Edward (Bath)

      Howell, David (Guildford)

      Rees-Davies, W. R.

      Bruce-Gardyne, J.

      Howell, Ralph (Norfolk, North)

      Renton. Rt. Hn. Sir David (H't'gd'ns're)

      Bryan, Sir Paul

      Howells, Geraint (Cardigan)

      Renton, R. T. (Mid-Sussex)

      Budgen, Nick

      Hunt, John

      Ridley, Hn. Nicholas

      Bulmer, Esmond

      Hutchison, Michael Clark

      Rifkind, Malcolm

      Burden, F. A.

      Irvine, Bryant Godman (Rye)

      Roberts, Michael (Cardiff, N.-W.)

      Butler, Adam (Bosworth)

      James, David

      Roberts, Wyn (Conway)

      Carlisle, Mark

      Jenkin, Rt. Hn. P. (R'dgeW'std&W'fd)

      Rodgers, Sir John (Sevenoaks)

      Carr, Rt. Hn. Robert

      Jessel, Toby

      Rost, Peter (Derbyshire, S.-E.)

      Chataway, Rt. Hn. Christopher

      Johnson Smith, G. (E. Grinstead)

      Sainsbury, Tim

      Churchill, W. S.

      Jones, Arthur (Daventry)

      Shaw, Giles (Pudsey)

      Clark, A. K. M. (Plymouth, Sutton)

      Jopling, Michael

      Shaw, Michael (Scarborough)

      Clark, William (Croydon, S.)

      Joseph, Rt. Hn. Sir Keith

      Shelton, William (L'mb'th.Streath'm)

      Clegg, Walter

      Kellett-Bowman. Mrs. Elaine

      Shersby, Michael

      Cocksfoot, John

      Kershaw, Anthony

      Silvester, Fred

      Cope, John

      Kimball, Marcus

      Sims, Roger

      Cordle, John

      King, Evelyn (Dorset, S.)

      Smith, Dudley (W'wick&L'm'ngton)

      Cormack, Patrick

      King, Tom (Bridgewater)

      Spicer, Jim (Dorset, W.)

      Corrie, John

      Knight, Mrs. Jill

      Spicer, Michael (Worcestershire, S.)

      Co stain, A. P.

      Lamont, Norman

      Sproat, lain

      Critcl ley Julian

      Lane, David

      Stanbrook, Ivor

      Crouch, David

      Langford-Holt, Sir John

      Steel, David

      Davies, Bryan (Enfield, N.)

      Latham, Michael (Melton)

      Steen, Anthony (L'pool, Waver tree)

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

      Lawrence, Ivan

      Stewart, Ian (Hitchin)

      Dixon, Piers

      Lawson, Nigel (Blaby)

      Stokes, John

      Dodsworth, Geoffrey

      Le Marchant, Spencer

      Stradling Thomas, J.

      Dray son, Burnaby

      Lester, Jim (Beeston)

      Tapsell, Peter

      Durant, Tony

      Lewis, Kenneth (Rtland & Stmford)

      Taylor, Edward M. (Gl'gow, C'cart)

      Dykes, Hugh

      Lloyd, Ian (Havant & Waterloo)

      Taylor, Robert (Croydon, N.W.)

      Edwards, Nicholas (Pembroke)

      Loveridge, John

      Tebbit, Norman

      Emery, Peter

      Luce, Richard

      Thatcher, Rt. Hn. Margaret

      Eyre, Reginald

      McAdden, Sir Stephen

      Thomas, Rt. Hn. P. (B'net,H'dn S.)

      Fairgrieve, Russell

      MacArthur, Ian

      Townsend, C. D.

      Farr, John

      McCrindle, R. A.

      Trotter, Neville

      Fell, Anthony

      Macfarlane, Nell

      Tugendhat, Christopher

      Fanner, Mrs. Peggy

      MacGregor, John

      Tyler, Paul

      Finsberg, Geoffrey

      McLaren, Martin

      van Straubenzee, W. R.

      Fisher, Sir Nigel

      Macmillan, Rt. Hn. M. (Farnham)

      Viggers, Peter

      Fletcher, Alexander (Edinburgh, N.)

      McNair-Wilson, Michael (Newbury)

      Waddington, David

      Fletcher-Cooke, Charles

      Madel, David

      Wainwright, Richard (Colne Valley)

      Fookes, Miss Janet

      Marshall, Michael (Arundel)

      Walder, David (Clitheroe)

      Fraser. Rt. Hn. Hugh (St'fford&Stone)

      Mother, Carol

      Walker, Rt. Hn. Peter (Worcester)

      Freud, Clement

      Maude, Angus

      Walker-Smith, Rt. Hn. Sir Derek

      Fry, Peter

      Mawby, Ray

      Warren, Kenneth

      Gardiner, George (Reigate&Banstead)

      Maxwell-Hyslop, R. J.

      Weather ill, Bernard

      Gardner, Edward (S. Fylde)

      Meyer, Sir Anthony

      Wells, John

      Glyn, Dr. Alan

      Miller, Hal (B'grove & R'ditch)

      Winstanley, Dr. Michael

      Godber, Rt. Hn. Joseph

      Mitchell, David (Basingstoke)

      Winterton, Nicholas

      Good hart, Philip

      Moate, Roger

      Worsley, Sir Marcus

      Goodhew, Victor

      Monro, Hector

      Young, Sir George (Ealing, Acton)

      Goodlad, A.

      Moore, J. E. M. (Croydon, C.)

      Gorst, John

      Morgan, Geraint

      TELLERS FOR THE AYES:

      Gow, Ian (Eastbourne)

      Morgan-Giles, Rear-Adam.

      Mr. Marcus Fox and

      Gower, Sir Raymond (Barry)

      Morris, Michael (Northampton, S.)

      Dr. Gerard Vaughan.

      Gray, Hamish

      Morrison, Peter (City of Chester)

      1879

      NOES

      Abse, Leo

      Freeson, Reginald

      Morris, Rt. Hn. John (Aberavon)

      Allaun, Frank

      Garrett, John (Norwich, S.)

      Moyle, Roland

      Ashton, Joe

      Garrett, W. E. (Wallsend)

      Mulley, Rt. Hn. Frederick

      Atkins, Ronald (Preston, N.)

      George, Bruce

      Murray, Ronald King

      Atkinson, Norman

      Gilbert, Dr. John

      Newens, Stanley (Harlow)

      Barnett, Guy (Greenwich)

      Ginsburg, David

      Ogden, Eric

      Barnett, Joel (Heywood & Royston)

      Gourlay, Harry

      O'Halloran, Michael

      Bates, Alt

      Grant, George (Morpeth)

      O'Malley, Brian

      Bennett, Andrew F. (Stockport, N.)

      Grant, John (Islington, C.)

      Orbach, Maurice

      Bishop, S. S.

      Griffiths, Eddie (Sheffield, Brightside)

      Orme, Rt. Hn. Stanley

      Blenkinsop, Arthur

      Hamilton, James (Both well)

      Ovenden, John

      Boardman, H. (Leigh)

      Hamilton, William (Fife, C.)

      Owen, Dr. David

      Booth, Albert

      Hamlin, William

      Padley, Walter

      Boothroyd, Miss Betty

      Hardy, Peter

      Palmer, Arthur

      Bottomed, Rt. Hn. Arthur

      Harper, Joseph

      Park, George (Coventry, N.E.)

      Boyden, James (Bishop Auckland)

      Harrison, Walter (Wakefield)

      Parker, John (Dagenham)

      Bradley, Tom

      Hatton, Frank

      Parry, Robert

      Broughton, Sir Alfred

      Henderson, Douglas (Ab'rd'nsh're,E)

      Peart, Rt. Hn. Fred

      Brown, Hugh D. (Glasgow, Provan)

      Hooley, Frank

      Pen dry, Tom

      Buchan, Norman

      Horam, John

      Phipps, Dr. Colin

      Buchanan, Richard (G'gow, Springbrn)

      Howell, Denis (B'ham, Small Heath)

      Prescott, John

      Butler, Mrs. Joyce (H'gey, WoodGreen)

      Huckfield, Leslie

      Price, William (Rugby)

      Callaghan, Jim (M'dd'ton & Pr'wlch)

      Hughes, Rt. Hn. Cledwyn (Anglesey)

      Radice, Giles

      Campbell, Ian

      Hughes, Mark (Durham)

      Rees, Rt. Hn. Merlyn (Leeds, S.)

      Cant, R B.

      Hughes, Robert (Aberdeen, North)

      Reid, George

      Carter, Ray

      Hughes, Roy (Newport)

      Richardson, Miss Jo

      Carter-Jones, Lewis

      Irvine, Rt. Hn. Sir A. (L'p'l.EdgeHill)

      Roberts, Albert (Normanton)

      Castle, Rt. Hn. Barbara

      Irving, Rt. Hn. Sydney (Dartford)

      Roberts, Gwilym (Cannock)

      Clemitson, Ivor

      Jackson. Colin

      Robertson, John (Paisley)

      Cocks, Michael

      Janner, Greville

      Roderick. Caerwyn E.

      Cohen, Stanley

      Jay, Rt. Hn. Douglas

      Rodgers, George (Chorley)

      Coleman, Donald

      Jeger, Mrs. Lena

      Rodgers, William (Teesside, St'ckton)

      Colquhoun, Mrs. M. N.

      Jenkins, Hugh (W'worth, Putney)

      Rooker, J. W.

      Colcannon, J. D.

      John, Brynmor

      Roper, John

      Conlan, Bernard

      Johnson, James (K'ston upon Hull,W)

      Rose, Paul B.

      Cook, Robert F. (Edinburgh, C.)

      Johnson, Walter (Derby, S.)

      Ross, Rt. Hn. William (Kilmarnock)

      Cox, Thomas

      Jones, Barry (Flint, E.)

      Rowlands, Edward

      Craigen J. M. (G'gow, Mary hill)

      Jones, Dan (Burley)

      Sandelson, Neville

      Cronin, John

      Jones, Gaylord (Carmarthen)

      Sedgemore, Bryan

      Crosland, Rt. Hn. Anthony

      Jones, Alec (Rhondda)

      Selby, Harry

      Criers, G. R.

      Kaufman, Gerald

      Sheidon, Robert (Ashton-under-Lyne)

      Cunningham, (lsl'ngt'n,S&F'sb'ry)

      Kelley, Richard

      Shore, Rt. Hn. Peter (S'pney&P'plar)

      Cunningham, Dr. JohnA. (Whiten Vn)

      Kerr, Russell

      Short, Rt. Hn. E. (N'ctle-u-Tyne)

      Dalyell, Tam

      Kinnock, Nell

      Silkin, Rt. Hn. John (L'sham.D'ford)

      Davies, Bryan (Enfield, N.)

      Lambie, David

      Sillars, James

      Davies, Denzil (Llanelli)

      Lamborn, Harry

      Silverman, Julius

      Davies, Ifor (Gower)

      Lamont, James

      Skinner, Dennis

      Deakins, Eric

      Latham, Arthur(CityofW'minsterP'ton)

      Small, William

      Dean, Joseph (Leeds, W.)

      Lawson. George (Motherwell&Wishaw)

      Smith, John (Lanark shire, N.)

      de Freitas, Rt. Hn. Sir Geoffrey

      Lead bitter, Ted

      Snape, Peter

      Delargy, Hugh

      Lestor, Miss Joan (Eton & Slough)

      Spearing, Nigel

      Dell, Rt. Hn. Edmund

      Lever, Rt. Hn. Harold

      Spriggs, Leslie

      Dempsey, James

      Lewis, Arthur (New ham, N.)

      Stallard, A. W.

      Doig, Peter

      Lewis, Ron (Carlisle)

      Stewart, Donald (Western Isles)

      Dormant, J. D.

      Lipton, Marcus

      Stewart, Rt. Hn. M. (H'sth, Fulh'm)

      Douglas-Mann, Bruce

      Loughlin, Charles

      Stoddart, David (Swindon)

      Duffy, A. E. P.

      Mabon, Dr. J. Dickson

      Stonehouse, Rt. Hn. John

      Dunn, James A.

      McCartney, Hugh

      Stott, Roger

      Dennett, Jack

      McCormack, lain

      Strang, Gavin

      Eadie, Alex

      McElhone, Frank

      Strauss, Rt. Hn. G. R.

      Edelman, Maurice

      MacFarquhar. Roderick

      Summerskill, Hn. Dr. Shirley

      Edge, Geoff

      McGuire, Michael

      Swain, Thomas

      Edwards, Robert (W'hampton, S.E.)

      Mackenzie, Gregor

      Thomas, Jeffrey (Abertillery)

      Ellis, John (Brigg & Scunthorpe)

      Maclennan. Robert

      Tierney, Sydney

      Ellis, Tom (Wareham)

      McMillan, Tom (Glasgow, C.)

      Tin, James

      English, Michael

      Madden, M. 0. F.

      Tomlinson, John

      Ennals, David

      Magee. Bryan

      Tomney, Frank

      Evans, Fred (Caerphilly)

      Mahon, Simon

      Tuck, Raphael

      Evans, loan (Aberdare)

      Mallalleu, J. P. W.

      Urwin, T. W.

      Evans, John (Newton)

      Marks, Kenneth

      Varley, Rt. Hn. Eric G.

      Ewing, Harry (St'ling,F'kirk&G'm'th)

      Marquand, David

      Wainwright, Edwin (Dearne Valley)

      Ferny Hough, Rt. Hn E.

      Marshall, Dr. Edmund (Goole)

      Walden, Brian (B'm'ham, Lady wood)

      Fitch, Alan (Wigan)

      Mayhew,Christopher (G'wh,W'wch,E)

      Walker, Terry (Kingwood)

      Flennery, Martin

      Meacher, Michael

      Watkins, David

      Fletcher, Raymond (Ilkeston)

      Mulish. Rt. Hn. Robert

      Weitzman, David

      Fletcher, Ted (Darlington)

      Mendelson, John

      Well beloved, James

      Foot, Rt. Hn. Michael

      Mikardo, Ian

      White, James

      Ford, Ben

      Millan, Bruce

      Whitehead, Phillip

      Forrester, John

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

      Whitlock, William

      Fowler, Gerry (The Wrecking)

      Molloy, William

      Willey, Rt. Hn. Frederick

      Fraser, John (Lambent, Norwood)

      Morris, Charles R. (Openshaw)

      Williams, Alan Lee (Hvrng, Hchurch)

      1880

      1881

      Williams, Rt. Hn. Shirley(H'f'd&St'ge)

      Woodall, Alec

      Williams, W. T. (Warrington)

      Wool, Robert

      TELLERS FOR THE NOES

      Wilson, Gordon (Dundee, E.)

      Wrigglesworth, Ian

      Mr. Laurie Pavitt an

      Wise, Mrs. Audrey

      Young, David (Bolton, E.)

      Mr. John Golding.

      Question accordingly negative.
      6.0 p.m.
      Mr. Maurice Macmillan: I beg to move Amendment No. 69, in page 11, line 26, leave out 'the deduction' and insert
      'a deduction of 50 per cent. or such larger deduction as is'.
      This is a narrow amendment, which I hope the Chief Secretary will be able to accept. Although it covers a relatively small range of individuals, they are important. It is designed to ensure that British companies are in no circumstances put at a disadvantage compared to other companies because they have no overseas subsidiary. We have been debating and shall again debate suggestions relating to Schedule 2 about foreign emoluments for people resident or ordinarily resident in the United Kingdom, those in Case I, and persons who are not resident here or who, if resident, are not ordinarily resident— those under Case II.
      The amendment applies only to Case II and would provide that whatever the deduction under Schedule 2 for foreign emoluments the deduction of foreign earnings for non-residents should be 50 per cent. A foreigner working in the United Kingdom who receives some of his reward abroad as foreign emoluments already qualifies for only half his income to be taxed under United Kingdom law. The amendment would produce the same effect whether or not the firm were domiciled in the United Kingdom.
      Foreign emoluments can arise only for someone who is not domiciled here and whose employer is non-resident. They do not apply to foreign earnings of employees of firms resident in the United Kingdom, regardless of the domicile of the earners. This means that if a British firm without an overseas subsidiary employs a foreigner, that foreigner is at a disadvantage compared to anyone else employed by a British company and working abroad, or a foreigner employed by a foreign company and working in the United Kingdom. There are technically, no foreign emoluments, although the firm concerned trading
      1882
      abroad may be able to pay its nonresident employee overseas.
      This means, for example, that if a wholly English company with no overseas subsidiary and no foreign links, apart from branches or trading agencies, is employing here a non-national, someone who is not domiciled here or who, if resident, is not normally resident, and this employee is paid part of his salary at his home, he cannot be treated as if he were a foreign employee of a company which has either an overseas subsidiary to pay the salary or of one which is itself a subsidiary of a foreign company.
      This may be a narrow point, but it is important. It means that it is impossible for a wholly English company to employ, say, a Dutchman as an agent abroad and pay part of his salary in Holland on the same lines as a Dutch firm employing him sometimes in England, sometimes abroad, and paying part of his salary in Holland.
      The reason that we have confined the amendment to Case II and have put it down to the clause rather than the schedule is that this proposition is wholly independent of the question whether or not the proportion is altered when we debate the schedule. The general case has been made out for an amelioration, which the Chief Secretary, not unreasonably, said that he would consider when we debate Schedule 2. But this amendment cannot be made to Schedule 2 because that deals wholly with foreign emoluments. The reference in this clause to Case II is to the deductions provided in Schedule 2 for the emoluments, if they are foreign emoluments. I am simply saying that if they are not technically foreign but are paid abroad by a British firm, they should be treated in the same way. I hope that the Chief Secretary will be able to meet this point.
      Mr. Joel Barnett: I am sure that the Committee is now aware how complicated these matters are, with or without the amendment.
      The amendment would affect persons who are not resident in the United Kingdom and also those who are resident but not ordinarily resident. An example would be someone who normally lives

      1883
      and works abroad but comes here to work for a short period. The amendment would give him, first, a deduction of 50 per cent. in any case and then, under Schedule 2, a deduction where the earnings are foreign earnings. In practice, only half his earnings for the job he does in the United Kingdom would be charged to tax, whether or not they were foreign emoluments.
      In other words, a foreigner living here but not yet ordinarily resident—staying here for a short time—would, under the amendment, pay tax on half his pay, whether his employer was a foreign company or a wholly British company. If a foreigner came here for a short period to work for British Rail or ICI, under the amendment he would pay tax on only 50 per cent. of his earnings here.
      The earnings in the United Kingdom of people within Case II of Schedule E already qualify for a 50 per cent. deduction if they are foreign emoluments. I apologise for the word "emoluments" which I do not like, but I gather that it covers all sorts of things which another word might not. So the amendment affects only those who are within Case II but who are either domiciled in the United Kingdom or are domiciled abroad but are working for concerns resident in the United Kingdom. It shows how easy this is.
      Both categories are treated under Clause 14 in the same way as under the present law. There seems no reason why the full amount of their earnings in this country should not be charged to tax. The reasons for giving a deduction for foreign earnings or emoluments cannot apply as only their earnings for duties carried out in this country are liable to tax.
      There is often provision for relieving these earnings from United Kingdom tax by way of double taxation agreements. Where the person concerned is not resident here the double taxation agreement with his country of residence would normally provide that his United Kingdom earnings are not taxed in the United Kingdom. It would depend on the person and the kind of double taxation agreement existing with the country concerned.
      A person who is here long enough to become resident, though not ordinarily resident, will continue as before to be
      1884
      liable to tax on his earnings in this country, without a special deduction, unless they are foreign emoluments. That is neither unreasonable nor unfair. I cannot imagine what justification there can be for taxing a man working in this country on only half of his earnings— whether he be a non-United Kingdom citizen or otherwise—if, under the terms of the amendment, a non-United Kingdom citizen working beside another in the same factory, shop, office or warehouse would pay only half as much tax as the other. That cannot be right. Those are the reasons why I cannot accept the amendment.
      Our rule in the United Kingdom is much less stringent than that in the United States. Under the United States rule they would be liable to pay tax on the full amount of world income in similar circumstances. We are not saying that.
      For those reasons I hope the right hon. Gentleman will accept this explanation.
      Mr. Macmillan: I understand the Chief Secretary's argument. I, too, apologies for using the word "emoluments". I do so because of its technical meaning.
      If a United Kingdom firm with a wholly-owned subsidiary overseas seconds from that subsidiary to its United Kingdom head office, someone from that overseas subsidiary, and that person continues to be paid from the overseas subsidiary, he is treated better than his opposite number who is coming from a branch rather than an overseas subsidiary, because, being from a branch, he must be on the payroll of the parent company and not on that of the overseas operation. I should be glad if the Chief Secretary would undertake to look into that aspect of the matter.
      I am concerned that English firms without overseas subsidiary companies should be able to bring back someone from their branch or allied organisations and still make part of their payment without deducting the full tax.
      This is important as regards some trainees from the developing countries. There are firms which bring people from Africa to train in this country. I speak from my personal experience of editorial staff. Although these persons are perhaps not members of the company, they are paid while working for

      1885
      it. They are paid partly abroad. These are not technically foreign emoluments. These persons do not necessarily remain part of our staff. They may return to work for the Ghana Government, for instance, as school textbooks editors. I do not want anyone to be inhibited from bringing persons to train here because of the different tax treatment of those people simply because of a technicality about what are or are not foreign emoluments.
      Mr. Barnett: I cannot promise. But it will be a pleasure to have someone look at the matter. I shall be writing to the right hon. Gentleman.
      Mr. John MacGregor: I should like to raise one technical point, which I do not fully understand, although I do not wish to make the confusion worse.
      It has been suggested that there is a difference of treatment of a United Kingdom company, for instance, in the North Sea oil situation. For instance, a small United Kingdom company based in Aberdeen with no overseas subsidiaries wishes to employ for a period an expert from the United States. The payments it can make to him will inevitably be taxed at United Kingdom rates compared with a similar company which has an overseas subsidiary and somehow manages to balance the two payments, so that the company with the overseas subsidiary is slightly better placed. This amendment would help with that although it may drive a coach and horses through other aspects. Would the Chief Secretary please look at that?
      Mr. Barnett: Although the amendment would drive a coach and horses through it, we will look at that.
      Amendment negative.
      6.15 p.m.
      Mr. Higgins: I beg to move Amendment No. 61, in page 11, line 31, leave out subsection (2) and insert:
      ' (2) Where a person performs any duties of an office or employment in the United Kingdom the emoluments from which are assessable under Case I of Schedule E and, in addition, he receives emoluments in respect of duties performed under a directorship or employment to which section 198 of the Taxes Act 1970 applies, such part only of his total emoluments shall be deemed to be in respect of duties performed wholly outside the United
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      Kingdom as is just and reasonable taking into consideration the nature of those duties and the period of time during which the person was engaged on them. Any remaining part of the total emoluments shall be assessable under Case I of Schedule E'.
      The Temporary Chairman: With this we shall take Amendment No. 57, in page 11, line 31, leave out subsection (2) and No. 67, in line 36, leave out from 'that' to end of line 38 and insert:
      'the emoluments were just and reasonable having regard to the duties performed by him wholly outside the United Kingdom',
      and Government Amendments Nos. 56 and 55.
      Mr. Higgins: It would be for the convenience of the Committee to take the amendments in the order you, Sir Myer, have suggested.
      The amendments raise a number of points. In one respect we have seen that the Government have had second thoughts. They have put down Amendments No. 56 on the Order Paper, although it is not as perfect as it might be. None the less, the Government have shown that they have looked at the matter and are prepared to suggest some amendment. I shall ask them to go further than they would apparently at this stage wish to go.
      I have sat opposite the Chief Secretary for the last three or four years. I have been told by him that VAT was a very complicated tax, contrary to the view I have expressed. To find him now putting forward this collection of clauses, and the complex issues involved, reinforces my view that it would be difficult to devise a tax as simple as VAT. Equally, it would be difficult to devise a tax more complex than this one, once one begins to look behind the wording, because, although the wording is not long, the points covered by the wording are very complex. Partly for the reason he mentioned, the words "emoluments" and "domicile" and other technical words embody what would otherwise take up several paragraphs. The use of jargon in that context is helpful.
      Amendment No. 61 is to some extent paved by some of the other amendments which have been related to it. We wish to pursue this point because we are concerned at the way in which the Government seek to put in the Bill as now

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      drafted the onus of proof on the taxpayer in a way which we feel is not justified. Indeed, in purely practical terms, we have some doubt whether it can be operated.
      Perhaps I am mistaken but I thought I saw the Chief Secretary nodding in response to these remarks. He seemed a little in sympathy with what I am saying. Perhaps I might spell out the point in the hope of persuading him as the evening goes on.
      The reason for Amendment No. 61 is that it is frequently the case that the employees of a United Kingdom company are seconded abroad for varying periods to work for an overseas subsidiary to provide technical and managerial services to the overseas subsidiary. That is a frequent commercial practice that may produce overseas earnings for this country, which in all economic circumstances are likely to be important. It is also true to say that in many cases the period of absence abroad of the expert or technician—he may be an accountant or scientist, for example—is remunerated by the overseas company and not necessarily by the parent company. The clause would treat such remuneration, as I understand it, as fully taxable in the United Kingdom without deduction unless —this is the crucial part of the clause— the employee shows that his overseas earnings relate to an employment abroad which is unconnected with his employment in the United Kingdom.
      A moment's consideration suggests that that is not a matter which is easy to prove, because it may well be that the expert concerned is employed by his company in the United Kingdom and is paid in the way I have suggested. But, clearly, the subsidiary company has some link with the parent company. That being so, it may well be that in many cases it is extremely difficult for the individual concerned, or his company, to show that what he has been doing abroad is not connected with his employment in the United Kingdom.
      I think it may be the case that in reality the operation the expert is conducting abroad is quite separate and that he simply goes from here to there and returns to base from time to time. In such a case, the two operations in any technical sense are quite separate and, indeed, in any economic sense may be
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      quite separate, except to the extent that the particular individual is employed by a company in this country which has subsidiaries abroad.
      It is not clear how the employee would discharge the onus of proof. There may be many instances where, for purely commercial reasons, the point of the overseas employment is that it would be connected with the employment in this country. But there seems no reason why such commercial arrangements should be attacked as a whole. The real point of concern, I presume, given the origin of these clauses, would appear to be that overseas employment or emoluments might be loaded at the expense of earnings in this country. I take the main point about which the hon. Gentleman is concerned, to be that a chap is employed here, works for a subsidiary abroad and in the event gets more money paid overseas than is really justified by the value of the operation he undertakes there. That I believe to be the crux of the matter.
      If that is so, the amendment would stop any attempt at such artificial avoidance without affecting normal commercial arrangements. There is no partisan point in this. We are seeking, as my right hon. Friend the Member for Farnham (Mr. Macmillan) suggested, to improve as well as we can the clause as drafted. It may be that one ought to scrap clauses 14 to 18 altogether, but, given that we cannot do that, this is one of the points which should be cleared up because we do not see any point in putting legislation on the statute book which in practice it will not be possible to operate. At the same time, as we have pointed out, we are quite certain that it is right that abuse should be stopped, and we would not wish to open a loophole in that respect.
      I turn now to Amendment No. 57. We are not clear why the Government think it reasonable that if a duty is carried out wholly abroad which has any connection whatever with the United Kingdom employment the earnings of that foreign emolument should not qualify for the 10 per cent. deduction. It should be sufficient that the duties are wholly abroad to qualify for the 10 per cent. deduction, whether there is any connection with the United Kingdom employment cr not. This is another point on

      1889
      which we hope to be able to persuade the hon. Gentleman.
      Amendment No. 67 is directed at the point that the clause catches all foreign earnings related to employment in the United Kingdom. The suggestion of my hon. and learned Friend the Member for Dover and Deal (Mr. Rees), in whose name the amendment stands, is that, in place of the Government's proposal "just and reasonable" earnings overseas should be taxed as foreign emoluments. No doubt my hon. and learned Friend will explain Amendment No. 67 more fully.
      I come now to Government Amendment No. 56. The provision to which it relates is designed to prevent tax avoidance, and we understand that. But it is arguable in this instance that it goes wider than necessary. We are seeking to remove the unnecessary side effects so that the employee, whether he is a foreigner working here, or, alternatively, a United Kingdom citizen working abroad, could prove simply that he had been paid emoluments regardless of his employment in the United Kingdom. Government Amendment No. 56 relates to this point, but it seems to us that it has disadvantages, that the expression "would have been" is very difficult to prove. The Government propose to leave out the words
      "they would have been paid"
      and to substitute
      "their amount would have been the same".
      We are not clear how it is that the Government think that anyone is going to prove what the amount would have been even though it did not happen, so to speak. I think that our amendment is better than the Government's and has a great deal to be said for it.
      Mr. Joel Barnett: It is different.
      Mr. Higgins: The hon. Gentleman says that it is different. We will listen with interest to how he explains that it is different. At all events, subject to what he has to say and whether he can persuade us on the point, our impression is that our proposal is better, and we are not convinced that it is significantly different from what the Government themselves have now suggested.
      We are trying to make it easier for people to present a case to the Inland
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      Revenue. This is something which ought to be in favors of the taxpayers. There is no point in passing a law which simply makes it unnecessarily difficult for taxpayers, who are otherwise working to the benefit of the country and the economy, to make a case to the Inland Revenue, with all the corresponding consumption of time and diversion from their normal duties.
      I hope that the hon. Gentleman will look favorably on our amendments and at any rate suggest that a selection of them should be agreed to.
      6.30 p.m.
      Mr. William Clark: Amendment No. 57 goes further than that of my hon. Friend the Member for Worthing (Mr. Higgins). I want to delete the whole of the subsection. I am sure that the Chief Secretary will not agree with this. I thought that this subsection was aimed at the situation where a person, having lost a remittance basis of relief, switches his emoluments to a foreign country. No one condones this sort of evasion. I am afraid that the wording of the subsection will hit a lot of innocent people who are not indulging in any tax evasion.
      I must declare an interest, in that I am a director of a company which from time to time sends experts overseas in connection with particular projects. Obviously they are paid overseas.
      This subsection will make the job of finding expatriates to go abroad for a short time extremely difficult. It can be a fairly traumatic experience for expatriates. They will no doubt leave their wives and children for a while. There may be educational problems, and so on. There are problems for the industrialist in persuading the employee to go abroad. If a man goes abroad and is then penalised by having his tax increased, I fear that we shall not get sufficient recruits.
      Taken in its wider context, we must consider those who go abroad, under the aid programme, for instance—agronomists, economists, and so on. It could mean that the developing countries will suffer because of the sledge-hammer which the Government are using to stop the evasion that comes from remittance and artificially transferring one's income abroad.

      1891
      The economy of this country is not as strong as we should like it to be. Consequently, it is incumbent on any Government to make certain that nothing is done to harm our invisibles. I have no interest in engineering consultancy but I am told that the amount of capital work which British consulting engineers are currently carrying out abroad adds up to nearly £4,000 million. In 1973 nearly £60 million was contributed in this way to our invisible earnings. We must not harm those in any way. We must of course eradicate any sort of evasion, but let us not use a sledge-hammer to get rid of the evasion and damage our invisible earnings in the long term.
      I hope that the Chief Secretary will consider this sympathetically. I can assure him that we shall come back to it, not necessarily on this Clause. No doubt in Committee we shall be able to have general debates pressing this point under Schedule 2 and other clauses.
      Mr. Peter Rees: Until my hon. Friend the Member for Croydon, South (Mr. Clark) intervened—I have the most profound respect for his expertise in these matters—I thought that I understood subsection (2). Having listened to him, I feel that one of us is at fault. I shall listen to the Chief Secretary's intervention with great interest. As I understand it, the subsection is meant to cover the case of a person who holds two directorships—one in a United Kingdom-based company and another—I choose the country at random—with a subsidiary based in Liberia. He spends three-quarters of his time in London working for the United Kingdom-based parent company and a quarter of his time in Monrovia working for the Liberian subsidiary.
      By an extraordinary chance when his aggregate emoluments are examined, it is found that three-quarters attach to his Monrovian duties and only a quarter to his London duties. It may be that in certain situations that would be an obvious abuse of existing rules. I think that there is a case for saying that that kind of situation could be dealt with under existing law. However we know the predilection of the Government, and the Departments which back them up, for the overkill.
      1892
      I assume it was to achieve this overkill that subsection (2) was introduced. It is certainly an overkill, because it would be practically impossible, in all but rather unusual circumstances, to meet the rather stringent tests it imposes. The taxpayer would have to show that the payment for his Monrovian duties would have been made irrespective of whether he performed any duties in London. In most cases the payment by the Liberian company would have depended on the tenure of his position with the London company. If he were sacked by the London company it would almost certainly follow that he would be sacked from the Monrovian subsidiary. So he would not be able to say with a clear conscience that his Monrovian salary would have been paid irrespective of whether he performed any duties in London. I assume this was the point of the subsection. But it has gone a little too far and imposes an impossible duty upon such a person.
      The Chief Secretary has tabled an amendment but I am not persuaded that it quite cures the defects, if I have identified a defect in the subsection. If the Committee carries the Government amendment it will mean that a person in the situation I have described has to demonstrate that the amount of his Monrovian emoluments would be the same whether or not he performed any duties with the London-based company.
      Assume the situation I have outlined. Assume the man has these two situations and that he has been sacked from his London company. Can he really say to the Inland Revenue "Yes, My Monrovian emoluments would have been the same."? In reality he would be bound to say that he would have lost his Monrovian position too.
      Admirable though the Chief Secretary's amendment may be in its intention, I hope, it does not meet the situation which Amendment No. 67 seeks to cure. I would ask the Chief Secretary to look with a little more sympathy than he may be disposed to at the moment at Amendment No. 67 because it seeks to set a different test. The test is that the person in question should be able to say" The duties I have performed in Monrovia are genuine. The emoluments I have been paid are in proportion to those duties. I satisfy you on that point, and, therefore,

      1893
      there is no argument about the basis for taxation on those Monrovian emoluments.
      My amendment has the same objective as that of the Chief Secretary. Without immodesty, I and my hon. and right hon. Friends like to feel that it is a little more exact. This is not a great political point between us. It is almost a fine point of draftsmanship. I know that the Chief Secretary can be very experienced and confident in this area. But, should I have shaken his confidence by what I have said, should he feel that there is possibly a case for adopting Amendment No. 67 rather than his own amendment, may I suggest, since it is a point of draftsmanship, that he enlists the help of one of the Law Officers? I put that forward with due diffidence but, as it is a point of drafting and we know the Chief Secretary's expertise in taxation and tax avoidance, perhaps he will enlist a little support before turning down, if he is minded to, the amendment in my name.
      Mr. Joel Barnett: I thank hon. Gentlemen opposite for the kind remarks that they have made about me—it is somewhat unusual. I always look at their amendments with understanding, even when I disagree with them. There is a considerable difference between what we propose and what hon. Gentlemen have in mind.
      I will speak first to Government Amendment No. 56, because its purpose is to clarify the position. The taxpayer does not have to show that the two jobs are unconnected. The purpose of Amendment No. 56 is to make clear that it is not the intention of the subsection to prevent a person who has a job in the United Kingdom from also having a job which qualifies him for a deduction under Schedule 2. The intention is that, to qualify for the deduction, he will have to show that the emoluments of the overseas job would have been the same whether or not he had the United Kingdom job and that no part of the pay for the United Kingdom job has been diverted to overseas income. As the hon. Member for Worthing (Mr. Higgins) correctly appreciated, that is the purpose of the subsection.
      6.45 p.m.
      In moving Amendment No. 61, the hon. Member for Worthing spoke in much the
      1894
      same terms as other hon. Members. Although the other amendments are slightly different, they are all on the same lines. Amendment No. 57 leaves out subsection (2), and Amendment No. 55, by providing that the taxpayer simply has to show that he is entitled to receive the emoluments, makes subsection (2) ineffective.
      If a man who had a job here and a job abroad, with a total income from the two jobs of, say, £10,000, arranged to receive £1,000 here and £9,000 abroad when the bulk of the work was done here, under Amendment No. 55 he would simply have to show that he was paid the £9,000 abroad. In view of the way in which hon. Gentlemen opposite have spoken of the need to cut out that form of tax avoidance, I hope that they will recognise that that amendment would be ineffective.
      We are dealing here with the type of tax avoidance that occurred because of the remittance basis. People were able to go abroad for a short period and earn substantial sums—and sometimes even receive golden handshakes—and as long as those sums were remitted here they were not taxed. We all accept that that cannot be right and must be changed. That is what the clause does. If we were to put the onus on an inspector of taxes to show that the payment abroad was just and reasonable, he would be in an impossible position. At the same time, I do not like the idea of putting the onus on the taxpayer because that is not a provision that we want in our tax laws any more than in our courts of law.
      The hon. Member for Worthing said that by taxing too heavily a United Kingdom citizen we might prevent him from going abroad for a short period. The hon. Member for Croydon, South (Mr. Clark) also put forward that argument. He said that the provision would catch British consultant engineers who wished to go abroad with their wives and families. If they went with their wives and families they would normally go for longer than a year and would, therefore, not be caught by the clause. They would not pay United Kingdom taxes. Some might take their wives and families abroad for less than a year, but it would be nonsense to allow a man to go abroad

      1895
      for one week of the year and arrange to have paid to him substantial sums free of tax. That is why it is essential to put the onus on the taxpayer rather than on the inspector.
      Mr. Peter Rees: With respect, the Chief Secretary does not wholly understand Amendment No. 67, which stands in my name. There is no question of shifting the onus of proof. The onus of proof is always on the taxpayer to dispute an assessment, except when it is out of time. It is merely that the form of words in my amendment is more apt to achieve in a reasonable way the objective which he and I apparently share.
      Mr. Barnett: In that case, unfortunately, the objective which the hon. and learned Gentleman has in mind would not be met in many cases. The inspector of taxes would have to show that the amount that the taxpayer was claiming as having been earned or paid abroad was just and reasonable, and it would put the inspector in an impossible position.
      The effect of Amendment No. 67 would be that the inspector of taxes and the appeal commissioners would have to prove that the claim was not just and reasonable. The point I am making is that they would not be able to prove that fact. If a man receives some of his income in Monrovia because he works there, and some income here, and if that man wants to avoid tax, the inspector of taxes would not have the slightest chance of discovering whether what that man said about income abroad was right or wrong. But if there were a genuine case involving a man who has been to Monrovia and earned, say, a quarter of his income there, that man would have no difficulty in proving that to the inspector's satisfaction. In those circumstances the man's earnings in the United Kingdom would be taxed in one way and what he earned abroad would be subject to deductions allowed in Schedule 2.
      I hope that is reasonably clear—and if it is not clear I shall clarify it further. That is the situation. If we leave the matter as the amendment suggests, it will be extremely difficult for the Inland Revenue to cut out the avoidance of tax —and all hon. Gentlemen want to see the situation put right. For this reason, I
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      hope that the amendment will be withdrawn.
      Mr. Peter Rees: I hesitate to detain the Committee, but it is becoming evident that the Chief Secretary has not understood the problem. He has not understood my amendment, or his own. The onus of proof in tax matters—I hate to talk like a lawyer, but I am one—is always on the taxpayer unless an assessment is raised out of time. Therefore, the Chief Secretary talks nonsense when he says that the onus is on the inspector. The onus remains on the taxpayer throughout to justify his foreign emoluments.
      Since it is clear that the Chief Secretary is confused, and has confused the Committee, I suggest that on this small but important point—a matter that is likely to affect a whole range of people- -the Committee might have the assistance of one of the Law Officers to give an authoritative ruling on this point. I do not think it right that the Committee should proceed in a state of total confusion when the Chief Secretary does not understand the position or, indeed, the amendment which he supports.
      Mr. Barnett: I am sorry if I have upset the hon. and learned Member for Dover and Deal (Mr. Rees) in his present legal mood, but may I tell the Committee what the effect of the Opposition amendments would be? This matter relates to Clause 14(2) in respect of a taxpayer who has an overseas job as well as a United Kingdom job. I am sorry if I have confused the Committee, but we are now dealing with a complex tax matter which probably few people outside understand. The amendment relates to a situation where the pay for an overseas job has to be shown to be bona fide related to the job. Under the amendment the only criterion for the overseas pay is that it should be just and reasonable. I am saying that that is not a satisfactory way of going about the matter and that it would be impossible for an inspector of taxes to prove that such a claim was reasonable. That is why I resisted the amendment. I am sorry if the hon. and learned Gentleman does not understand the situation.
      Mr. Cope: I am sorry to delay the Committee, and I shall do so for only a moment, but my hon. and learned Friend

      1897
      the Member for Dover and Deal (Mr. Peter Rees) has raised an important point. I am an accountant rather than a lawyer, and it is accountants who to a large extent will have to use this legislation in whatever form it is passed by Parliament.
      I do not see how the Chief Secretary can argue that the onus will be on the inspector. If the amendment proposed by my hon. and learned Friend were passed the legislation would state that emoluments would not be treated for the purposes of Case I of Schedule E unless the taxpayer
      "shows that the emoluments were just and reasonable having regard to the duties performed by him."
      Clearly the onus would be on the taxpayer.
      Mr. Barnett: How on earth is the inspector to judge whether a claim is "just and reasonable "? He has no chance of being able to prove that fact, nor has an appeals court.
      Mr. Cope: I do not think that the situation gets to that stage until the inspector is satisfied that the taxpayer has not shown a claim to be reasonable. I believe that Government Amendment No. 56 is defective, since it imports the idea that the amount would be the same. This would apply, presumably, whether or not the United Kingdom job had been performed. If, for example, a professor from a British university were to deliver abroad a number of lectures, the amount he received would in part be received because he is a professor from Oxford, or wherever it may be. If he were not a professor at Oxford, the amount he received for the lectures would be different. It seems to me that, if we are to achieve the aim which both sides of the Committee have in mind, this is not a reasonable test to apply.
      Mr. Higgins: One or two of my hon. Friends have apologised for delaying the Committee, but although we are discussing this matter on the Floor of the House we should not be in any hurry to dispose of it. Certainly, if we were in Committee upstairs, we should probe the matter thoroughly, and I believe that we should also carry out that process when we are discussing matters on the Floor.
      1898
      I find myself sandwiched between two accountants and one lawyer. I speak in these matters as a humble economist. Perhaps it is rare for economists to admit that they are humble, but in the middle of this discussion I feel that I can do so without any fear of embarrassment.
      The Chief Secretary should consider whether the Law Officers could help on this occasion. It is a brave man who tells my hon. and learned Friend the Member for Dover and Deal (Mr. Peter Rees) that he does not understand a matter of this kind and does not understand the way the onus of proof should go in a particular case. I think we might well have the Law Officers' views on this topic.
      It seems to me that the Chief Secretary got perilously close to saying that neither the taxpayer nor the Inland Revenue will be able to prove what is at issue, and that therefore the onus should be on the taxpayer. That is a rather dangerous situation in which to find oneself.
      My hon. and learned Friend said that, whether or not we accept these amendments, the onus is always on the taxpayer, except where the matter may be out of time. He further argued, as I understood him, that that would be the case regardless of whether the amendments were accepted. I am not clear whether the Chief Secretary agrees with that point of view. We should be clear whether that is the point at issue and the Chief Secretary should make his position clear. I understood the hon. Gentleman to disagree with my hon. and learned Friend. If that is the case, I believe that we should have the advice of the Law Officers.
      I am not clear whether there is a distinction between deciding whether the onus of proof is on the taxpayer to show whether a claim is just and reasonable, or whether he has to prove that he has paid that amount regardless of whether he has a home company. Perhaps I did not express that very clearly. There are two things that a taxpayer or the Inland Revenue may be asked to prove. They are either that the amount that has been received abroad is just and reasonable or, alternatively—and it is alternatively, because it is not the same thing—that the amount he is paid is such that he would have been paid that amount even though he had no base, that is to say, no home

      1899
      company. I agree with the view which was implicit in one thing that the Chief Secretary said, that the time apportionment basis might not be right. Let us take the simple case of a highly qualified surgeon. He may go abroad and conduct a particularly difficult operation the pay for which reflects his expertise as a doctor rather than the length of time he spends abroad. That case could not be dealt with purely on a time apportionment basis.
      May we have an answer on the specific point made by my hon. and learned Friend the Member for Dover and Deal? If that is the difference between us, we need to resolve it.
      7.0 p.m.
      Mr. Herders: I support what was said by my hon. and learned Friend the Member for Dover and Deal (Mr. Rees). As I understand it, the Chief Secretary is not arguing that the onus of proof is on the inspector. As my hon. and learned Friend said, the onus of proof must remain with the taxpayer. The Chief Secretary says that it remains a matter for the inspector to decide whether it is just and reasonable and that, therefore, means, in effect, that the onus of proof should remain with the inspector. My hon. and learned Friend tells me that the words "just and reasonable" are frequently used where the onus of proof lies absolutely with the taxpayer. If that is the case there is no change in terms of where the onus of proof lies. It therefore seems that this amendment is preferable to the one the Government are proposing. Although this is a small point it is one that should be recognised and met—now, with the assistance of Law Officers, or on Report, or at some other time.
      Mr. Nott: I always wanted to place this matter on a "just and reasonable" basis. If the onus of proof is on the taxpayer, we are faced with the problems which the Chief Secretary mentioned— the question how the tax inspector deals with such a matter. But of course the tax inspector must decide, in a whole range of other matters, what is just and reasonable. He must apply that judgment to all the claims under Schedule D, deciding whether a claim for expenses is just, fair and reasonable. Of course, as in all matters of government, Ministers must accept, ultimately through sheer exhaustion
      1900
      what they are told by Departments. In government I sought to help the Revenue a little more by introducing the time apportionment basis. But the taxpayer would have been able none the less to try to show that the time apportionment basis was not just and reasonable because he performed extremely valuable services in, say, Monrovia but he was a moron at his job in the United Kingdom. Hence, the onus is on the taxpayer to show what is just and reasonable. I do not understand why, in this one area, this method of approach is unsatisfactory. I never shall. Some day someone may be able to explain it to me, but after two years of instruction I am still dumbfounded.
      Mr. MacGregor: If the taxpayer has difficulty in proving to the inspector what is just and reasonable, will it not be equally difficult for him to prove that the amounts would have been the same and to get the inspector to agree?
      Mr. Barnett: The difficulty is—this deals with the point raised by the hon. Member for St. Ives (Mr. Nott)—that the clause seeks to put the onus on the taxpayer. The hon. Member asked why in this area alone that should not happen. The answer is that this is a complex area, involving remittance, overseas earnings, domicile, and so on. Anyone who has been in this Committee in the last hour or so will have come to the reasonable conclusion that these are difficult matters.
      If an inspector of taxes or the appeals commissioners had to decide whether or not a taxpayer was correct in saying that the £10,000 he earned abroad was just and reasonable, the only real evidence that the inspector would have on which to do that would be that the money had been earned. That would have to be accepted as prima facie evidence. That is the basic reason for the difficulty. There would be no other way in which an inspector of taxes or the appeals commissioners could deal with the case. That is why, if the amendment were accepted, a situation would be created in which the avoidance would not be removed and a substantial loophole would be left.
      I am not a lawyer, and I would not wish to argue matters of law. I therefore promise the Committee that if, on further examination—which I shall certainly arrange to be carried out, in view of the

      1901
      legal knowledge of the hon. and learned Member for Dover and Deal (Mr. Rees), which is much greater than I could ever wish to have—it turns out that I am wrong, I shall bring the matter back on Report. However, as I understand it, the result would be as I have explained to the Committee, and I hope for these reasons that it will accept that the amendment will make matters worse.
      Mr. Nott: The Committee will be pleased to hear that in two minutes' time I must leave to take part in a television programme. We could not have had a better illustration than has been provided by the debate that this subject is the most obvious candidate for a Green Paper. It is such an important matter. However much economists, lawyers, bankers and layment in the Committee may argue, this whole area is an extremely sensitive one. We could get it wrong. If the Royal Commission on Taxation could discuss this matter in great depth and could come to a conclusion which could then be changed—as it was when Mr. Macmillan was Chancellor in 1956, as a result of a debate in Committee—Ministers will not be humiliating themselves but doing the sensible thing if they decide that there should be consideration in depth.
      I said originally that this matter had not had the process of outside consultation which I genuinely believe it deserves.
      Mr. Peter Rees: I hope that the Committee will forgive me for intervening once again. It seems that we are making a little progress. The first objection raised by the Chief Secretary was that it would put an impossible onus on the inspector of taxes. However, after mature consideration, he has now changed his mind and has said, "Yes, the onus is on the taxpayer but it would be difficult for the inspector to challenge the taxpayer's evidence". We have seen a substantial change of view.
      I take up the point made by my hon. Friend the Member for Norfolk, South (Mr. MacGregor). If it is difficult for the inspector to challenge the taxpayer's evidence that emoluments were just and reasonable, why is it easier for the inspector to challenge the taxpayer's evidence that the emoluments would have been just the same?
      1902
      The Chief Secretary has been candid, disarming and charming, as he so often is. He would add greatness to his qualities if he admitted that he totally fails to understand the problem. In the long run it seems that the only answer is to have a Green Paper. We can revert to that on the debate which I hope you will be allowing, Mr. Murton, on the debate on the clause.
      If we are to make any progress on these points, I suggest in all humility, as a lawyer asking for lawyers' assistance, that the Law Officers should clarify the matter. I should accept their view. We should accept the view of such a distinguished quarter. If we had their clarification we could get away from these arid legalisms and turn to the broader question of whether the clause should stand part of the Bill.
      Mr. Joel Barnett: If I said that I failed to understand the whole of this matter I would not be achieving greatness but telling lies to the Committee. I shall do what I have said, which I hope will be acceptable to the Committee.
      Mr. Higgins: None the less, it might be helpful to consolidate the progress which, as my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) has rightly said, we seem to be making. Of course, we have a long way to go yet before the Bill gets anywhere near Third Reading.
      Are we to understand that the Chief Secretary agrees that whether or not the amendments are accepted the onus of proof is on the taxpayer? I hope that we can have a clear answer. That would help us at a later stage.
      I turn to the point made by my hon. Friend the Member for Norfolk, South (Mr. MacGregor). Is it the case that there are two alternatives before us—namely, that the taxpayer must discharge the onus of proof in any event and that he can say that what he has received is fair and reasonable, or, alternatively, that what he has received is the same as if he had no United Kingdom employment? Do we have those two alternatives before us? At a later stage the House, as it will then be, may well feel that it would like to make a choice between those two alternatives.

      1903
      I have the general feeling, which is shared by many of my hon. Friends, that I would prefer the taxpayer to have to show that it was fair and reasonable rather than just the same. To show that it is the same is a difficult proposition. I do not understand how the taxpayer would begin to set about achieving that task, whereas to show that it is fair and reasonable is something that the taxpayer may seek to do.
      If we could have the Chief Secretary's answers on these matters—I hope that he can answer them first time round without having to come back yet again— we might accept his undertaking that he will return to the matter on Report. I hope that if necessary he will return with the Law Officers, although, as has already been pointed out, my hon. Friends and I would prefer to have the whole matter more broadly discussed within a Green Paper.
      7.15 p.m.
      Mr. Joel Barnett: If I came back with the Law Officers it is my guess that the debate would be even more arid than has been suggested. Equally, that would apply if we had a Green Paper. Following a Green Paper there would probably be a Bill, and I believe that the matter would then become even more complicated. I do not accept that argument. The onus of proof is on the taxpayer, but in practice an impossible position would be created, as the inspector would not be able to disprove that what was put forward by the taxpayer was just and reasonable. The inspector would find his position totally impossible. That is why I have not been able to accept the amendment.
      I am sorry if the matter is not clear to some hon. Members. If an inspector had to disprove that a payment—it could be substantial—had been just and reasonable he would place himself in an impossible situation. He could not do anything about it. That is why the onus is on the taxpayer and that is why I am not prepared to accept the amendment. I am terribly sorry.
      Mr. Higgins: I am sorry to come back yet again. I hoped, as my hon. and taught Friend the Member for Dover and Deal had said, that we were making some progress. We now seem to have
      1904
      taken a step backwards. The point put forward by my hon. and learned Friend, which is supported by other of my hon. Friends, is that in any case—accept the amendment or not—the onus is on the taxpayer. However, we cannot see why that is relevant to the question whether the amendments are accepted. Does the hon. Gentleman accept that?
      Mr. Barnett: The onus is on the taxpayer, but, as I have tried to explain, the situation becomes impossible for an inspector. I thought that I had said that earlier. If I did not, I apologies.
      Mr. Higgins: That does not make sense. We must get the matter straight. I hope that the Chief Secretary will try again, as it is important that we get the matter right. That is why it has been suggested that we should send for the Law Officers, or at least one of them. If the onus is on the taxpayer whether the amendments are accepted or not the hon. Gentleman cannot say that the position which is created is impossible, because that is what his own Bill is doing. It may be that his Bill is impossible. If so, he should say so more clearly than he has up to now.
      Mr. Cranley Onslow: I hesitate to intervene, but I am depressed, Sir Oscar, to see the Chief Secretary happily giggling his way through this debate. He throws up his hands and does not try to answer a crucial question. There are two states of affairs—we shall have the Bill either unlamented or as it is sought to be amended. If the Chief Secretary is saying that the onus is in the same place whether or not the Bill is amended, will he make one final enormous effort to get to the Dispatch Box and say these words after me: "The onus is in the same place under the Bill whether or not it is amended."?
      Mr. Barnett: It would be difficult to make the matter clear to the hon. Member for Working (Mr. Onslow), who has not been in the Chamber for most of this afternoon. I have made it clear that the onus is on the taxpayer. However, if the amendments were accepted the inspector of taxes would be in an impossible position because he could not disprove that a payment abroad, which would be a form of evidence, was just and reasonable.
      Mr. Higgins: I think that the Committee will agree with me that the way in which the Chief Secretary has answered our questions has been highly unsatisfactory. However, we accept that he has been trying. We do not approve of the way in which he has reacted to some of our remarks. I believe that the best thing to do is for us to put clearly on the record that we expect the Chief Secretary to return to this matter on Report and for it then to be thoroughly sorted out. Let him then have a proper set of answers, or let the Law Officers explain the position. On that basis and on no other we are prepared to let this go.
      Amendment negative.
      Amendment made: No. 56, in page 11, line 36, leave out 'they would have been paid' and insert
      ' their amount would have been the same'. — [Mr. Joel Barnett.]
      Mr. Maurice Macmillan: I beg to move Amendment No. 62, in page 12, line 29, leave out subsection (5) and insert:
      '(5) In section 221(4) of the Taxes Act, for the words from "but" to "employment for that year" there shall be substituted "but the circumstances in which he performs the duties of his employment are such that the emoluments received are foreign emoluments or duties are performed wholly outside the United Kingdom"'.
      The amendment is intended to improve the wording of subsection (5), which deals with the calculation of taxation of retirement benefits. The effect of the subsection as it stands is to amend Section 221(4) of the Taxes Act so that an employee will be taxed on sums provided by his employer on his behalf under an unapproved retirement benefit scheme unless there is no charge to tax from Cases I and II of Schedule E, as amended by the clause, subject to any further changes that might be made in Schedule 2.
      What that means, in effect, is that, as the pension deriving from the sums with which the clause deals is also taxed, an employee may well effectively be double taxed, being taxed once on the pension and once on the sums going to provide it. I do not see how the Government can justify this form of double taxation. I do not believe that it is necessary in making the changes which the subsection makes to go so far as the subsection
      1906
      goes. Our suggested wording achieves what the Government set out to achieve, without being so unfair, and without going to such great lengths.
      Pensions arising in this country are already taxed. Clause 15 will abolish the remittance basis for foreign pensions and annuities. At least, we have still to go through the Committee stage on that clause, so perhaps it will not do so. But at present it does, and the amendment restores the former position for such pensions.
      No one can doubt the injustice of suddenly applying United Kingdom tax to overseas pensions earned before April 1974, whereas pre-April 1974 earnings will not be affected. I do not understand the Government's reasons for leaving earnings before April 1974 unaffected and suddenly saying that United Kingdom tax will apply to overseas pensions earned before that date.
      Such pensions are often paid from pension funds to which contributions were made from income wholly earned abroad, and income on which foreign tax was paid in full. By contrast, contributions in the United Kingdom receive tax relief. Therefore, it is perhaps not unreasonable to tax the pension itself. But no United Kingdom tax relief is given for contributions paid overseas, and, therefore, the argument cannot be applied with any justice or equity to overseas pensions.
      Further, in some overseas countries no tax relief is given for pension contributions. That applies, for example, to the Middle East, Japan and Indonesia, all places where British people have worked for many years.
      The amendment would restore an element of justice which the present wording of the subsection removes. We must bear in mind that many people who have retired from overseas employment still spend at least part of their year abroad. I do not see why they should pay United Kingdom tax on the income spent abroad for that purpose. It is money which has been earned overseas, resulting from contributions which have been paid overseas. It is money which frequently is spent overseas, money which often has received, in the hands of the owner, no tax relief for pension contributions.
      There is a further minor point. People who have been working abroad and are

      1907
      affected by the subsection have not benefited from the social services and other Government expenditure in the United Kingdom to nearly the same extent as United Kingdom residents have. Now they will be taxed as if they had.
      The Government should see the justice of accepting the amendment. I hope that the Chief Secretary will be as direct and forthcoming in response to this appeal as he can be. I hope that we shall be able to settle the matter now rather than let it drag on until later stages of the Bill.
      Mr. William Clark: I support my right hon. Friend the Member for Farnham (Mr. Macmillan), because there is a certain amount of retrospection in the subsection. The Chief Secretary should consider the amendment with more sympathy. I am sure that he is always sympathetic, but I want him to show a little more sympathy this time.
      If a person goes abroad and joins a pension scheme, he knows that when he returns to this country he has a certain tax advantage. It is on that premise that he takes on the job. I fully agree with my right hon. Friend that pensions that are paid and have been earned before April 1974 should not be subject to the stringent controls in the Bill. Pensions earned by people going abroad for the first time after April this year are a different matter, because those people's terms of contract will take into account that when they retire there will be no tax advantage as a result of earning their pension abroad.
      This is a question of retrospection. I think that if the Chief Secretary looks at it from that point of view he will see the validity of my right hon. Friend's argument. It is nonsensical that a person who has spent all his working life abroad— whether in the colonial service or in a company—and has been enjoying a pension with a tax advantage on the remittance basis, because it is a foreign emolument, should now have it cut on his retirement. The provision may be all right for new pensioners, but if the Chief Secretary does not exclude existing pensioners there will be an element of retrospection. I hope that the hon. Gentleman will reconsider the matter.
      Dr. Alan Glyn'. I support my right hon. Friend
      1908
      the Member for Farnham (Mr. Macmillan) and my hon. Friend the Member for Croydon, South (Mr. Clark). The Chief Secretary could give way on this point, which is purely and simply a matter of retrospection. Anyone who enters a pension scheme after April this year knows what he is in for, and takes the consequences. But we are considering quite a large number of people who draw considerable benefit from having worked abroad. The Chief Secretary might very well give way on this small point.
      7.30 p.m.
      Mr. Joel Barnett: The amendment affects the tax treatment of contributions to an unapproved pension fund by an employer in respect of an employee. Under Clause 14(5) as it stands, these will be treated as income of the employee unless the emoluments of the employment qualify for a 100 per cent. deduction because they are in respect of duties carried on wholly abroad for 365 days or more or are "foreign emoluments" in respect of duties carried out wholly abroad.
      The amendment seeks to extend the exemption, as the right hon. Member for Farnham (Mr. Macmillan) says, to cases in which, first, the "foreign emoluments" are for duties carried out in this country, and, second, the duties are performed wholly outside the United Kingdom but for fewer than 365 days. Where the foreign pension scheme can be approved by the Inland Revenue there is no problem. The employers' contributions do not rank as employees' remuneration. The foreigner who will now be liable on half his United Kingdom earnings and is a participant in a non-approvable fund in his home country presents something of a problem.
      I am obliged to the right hon. Gentleman for raising this matter. Although, as I would like to show, the amendment would do rather more than we would want to do, I nevertheless would be prepared to recommend that on Report we have an amendment to meet the main burden of the right hon. Gentleman's argument.
      Concerning the man based in the United Kingdom, it seems to us—this is another part of what the amendment would achieve—that there are no grounds at all for exempting the contributions to an improvable pension scheme. Such

      1909
      differences as foreign jobs make are recognised; that is to say, by giving them the relief of the deduction from emoluments which extends to employers' pension fund contributions. Nor, as a practical matter, does it seem likely that the United Kingdom based man who goes abroad for a relatively short period and is paid from the United Kingdom will find himself a member of an unapproved fund. Such funds hardly exist. Section 221 of the Taxes Act is, in effect, an in terrorem provision, and no one is going to set up such a fund just for the man who goes briefly abroad.
      That is the reason why I cannot accept the amendment. I hope that the right hon. Gentleman and other hon. Members will understand that. But I shall be prepared on Report to ensure that an amendment is tabled to meet the first part, which I have mentioned, of the right hon. Gentleman's amendment.
      Mr. William Clark: Am I to take it from those remarks that the Minister will table an amendment on Report that will allow existing pensioners to enjoy the same tax benefits as they enjoy at present?
      Mr. Barnett: I hope that the hon. Gentleman will allow me to look at the matter after we have finished this stage. I shall look at it carefully. I promise the hon. Gentleman that I will introduce on Report an amendment which will, I hope, satisfy him. If it does not, he has the usual option.
      Mr. Maurice Macmillan: I am grateful to the Chief Secretary. I take his point about the difficulty of accepting the amendment as it stands. We shall look, I hope with approval, at what he proposes for the foreigner who is a member of a fund in his own country which is not approvable in this country, for whatever reasons. I hope that the hon. Gentleman will also include the Englishman who has worked abroad in the past or is working part-time abroad and is a member of a fund which is unapprovable partly because it is a foreign pension fund and some of the African and other developing countries do not allow such a fund to be approvable. That is another point which I hope will be covered in the hon. Gentleman's undertaking.
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      In view of the undertaking, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Question proposed, That the clause, as amended, stand part of the Bill.
      Mr. Onslow: When I was prompted to intervene briefly a little while ago I committed what was, if not a solecism, an unwarranted anticipation of an event which we hope will occur. I look forward very much to the time when we shall be addressing you, Mr. Murton, as "Sir Oscar". I shall try to stick to "Mr. Murton" for the time being, though I hope that it will not be a very long "time being".
      I intervene on this occasion in the sense of someone who is a stranger in a strange club. I know how these debates are carried on between a small coterie of Members—though it is not too small, because I see a gratifying number of my hon. Friends present and a number of Ministers. The Ministers, however, are totally unsupported except by a Parliamentary Private Secretary and a recumbent figure. This must develop a sort of amity, a bonhomie. I understand that, in order to keep his end up, the Chief Secretary is bound to giggle from time to time. When intruders enter, it is as though a stranger comes. I do not care a row of beans if I did cause a certain frisson when I entered.
      This is not a very good clause. It would be a great advantage if it were not in the Bill at all. I rely for that statement not merely upon my judgment of what the clause says but on my knowledge of what its effect will be.
      In passing, may I say that I never quite understand why this particular exclusive club which meets from time to time to consider Finance Bills seems to get on without what other clubs which meet to consider other pieces of legislation usually regard as essential—that is, an Explanatory Memorandum. I thought that it might help me if I had a look at what the Explanatory Memorandum said about the clause. I could not find the memorandum. If any hon. Member could tell me where it is, I should be very grateful —although no, I would not be grateful, because it would prolong my speech.

      1911
      Different rules apply in different places. I shall come to my point, which is a letter addressed to D. Healey, Esq., M.P., House of Commons. The letter was copied to me, so I suspect that the Chief Secretary has a copy in his archives. This admirable letter reads as follows:
      "Dear Sir, I wish to spell out to you some of the adverse effects which will result from the introduction of a taxation on the world wide income of foreigners, by stating facts.
      My employer, an American, has indicated to me that if the proposal becomes law he will be forced to move out of the United Kingdom. The following will result from the movement of one man. Approximately 60 Britishers will lose their jobs. Many export orders placed at present in the United Kingdom will be placed abroad. There will be a loss in dollars to the United Kingdom of around $1,250,000 per annum. British charities, at present receiving several thousand dollars per annum from the personal pocket of my employer will suffer. If this is to be the result of one man leaving the United Kingdom the effect of the promised mass exodus could, I consider, be only to the detriment of the country.
      I have spoken to a number of people whose political opinions range from bright red to bright blue and not one of them has expressed to me any opinion other than that they consider this proposed tax to be the height of stupidity. I strongly recommend, therefore, that fresh thought be given to the matter."
      That is an admirable letter. I have not seen the reply from D. Healey, Esq. The letter was dated 2nd May, so I should have thought that a reply might have been sent by now. Perhaps the Chief Secretary will tell me whether a reply has been sent.
      There is no point in my attempting to conceal the identity of the American concerned. He is Mr. Paul Getty. He is not the only American resident in my constituency or the only American who will remove himself and his business from this country if this legislation has the effect which my constituent supposes it will. I do not know whether the removal of Mr. Getty and other Americans from this country is the deliberate intention of the ventriloquist whose dummy is to answer the debate.
      Mr. Joel Barnett: Oh!
      Mr. Onslow: All right—the Chief Secretary did, perhaps, overdo it. I will take that back, if he will take back what he has said.
      Mr. Joel Barnett: No, carry on.
      Mr. Onslow: If this legislation is to go into the statute book, will the Chief Secretary tell us what information he has so far had about the number of people who will behave in the way which my constituent, who stands to lose his job, has said he believes may happen? What statistics have the Chief Secretary and the Treasury been able to garner about the exodus of Americans and others from British soil, where they have been conducting business which, directly and indirectly, has brought in substantial sums of money and substantial profits—to make no bones about it—to the British economy? Can he quantify the loss which is likely to accrue if the effect of this legislation is as forecast, or what evidence can he show that the loss will not be as forecast?
      If the House of Commons has to pass legislation, it should do so in the knowledge of what the effects of the legislation will be. We may be able to assess the motives of those who bring it before us if we know that they are aware of the consequences of their actions. If they have taken a certain line of action without any knowledge of its consequences, it will lead us to one justifiable conclusion. If they know what is to happen and do not care about it, that will lead us to another justifiable conclusion, But, in this case, when we are talking about substantial sums of money, I do not think that we should make any bones about the fact that we are entitled to know whether this is being created as a situation to the disadvantage of this country by oversight or by deliberate and set purpose.
      I speak on behalf of my constituent who has written to me and on behalf of 59 others. As the letter says, they stand in imminent danger of losing their jobs. Naturally, they regret that fact. Naturally, they regret that there will be other substantial losses of various kinds to the economy and to our society generally.
      I do not make this plea on behalf of Mr. Getty. He has always been careful to play no part in the British political scene. So far as I know, he is not responsible for any of the Press notice which this possibility has already attracted. On 7th June the Daily Express carried a report in its William Hickey column which is not entirely accurate but clearly reflects upon the letter sent to "D. Healey,

      1913
      Esq.". But if that is taken to suggest that Mr. Getty had any part in making this public, I must say that I have no knowledge that that is so, and I have not spoken to Mr. Getty on the subject.
      My constituent and the many others who may find themselves in the position which he describes as a result of this legislation are entitled to expect a full and satisfactory explanation from the Chief Secretary whether he views this prospect with total equanimity or whether the representations which have been made since this proposal was first put forward have led him to change his mind about the desirability of the proposals in the Bill and whether at this late stage he cannot take some sensible remedial action which will enable the situation to continue whereby we have in our midst a number of people who have been welcomed for years, who have always been led to believe that the contribution which they made to our economy was appreciated, and which they could continue to make, and who are naturally astonished about what is being done.
      7.45 p.m.
      Mr. Nicholas Edwards: This debate has established two matters. The first, Mr. Murton, is the high esteem in which many right hon. and hon. Members hold you. The second is the extreme complexity of the subject that we have been discussing.
      I agree with my hon. Friend the Member for St. Ives (Mr. Nott). Never has there been a more obvious subject for a Green Paper. It seems to me that in view of all the uncertainty that has been revealed and in view of the probable damage which has been spelt out, the Government would be well advised to take that course and to reconsider the whole matter.
      I must declare an interest, in that I am a director of a merchant bank and of insurance broking companies in the City of London. For that reason, I am concerned about the possible consequences of the Bill upon the business conducted in the City.
      The Chief Secretary suggested that few representations on this clause had been received and that many more had been directed to Clause 18, but we have been in some difficulty throughout this debate,
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      which is one reason why, on occasions, the rules of order have been a little stretched. We have been confined to a set of amendments, and we are now confined to a specific clause, when in reality there are three interrelated clauses which separately and collectively affect the foreign community working here.
      Recently, Christians have celebrated Trinity Sunday, and preachers up and down the land have described that great mystery. In my own parish church, the curate, with his usual eloquence, produced a can of Three-in-One oil and described its interrelated properties. He could have pointed equally well to Clauses 14, 16 and 18 of the Bill. The Athanasian Creed, in language of complexity and incomprehensibility which rivals even the efforts of the parliamentary draftsmen, spells out the direst penalties for those who deviate a jot from its interpretation of the mystery. In the case of the Finance Bill, the penalties are reserved for foreigners who are misguided enough to work and dwell among us.
      The difficulty that we are all in is that the combined consequences cannot be dealt with adequately in this debate. I speak only to emphasise the need to return to the matter again in greater detail in Standing Committee and to express the view that it would be much better if the Government reconsidered the abolition of the remittance basis and came back to the House only after presenting a Green Paper and allowing adequate time for the consequences to be considered.
      The collective decisions of foreign firms will be taken because of the combined effects of this clause, dealing with individuals, of Clause 16, dealing with the income from trade carried on abroad, and of Clause 18, dealing with the taxation of worldwide income of persons resident here for comparatively long periods. In assessing their decisions, they will consider the costs in terms both of remunerating employees and of taxes paid on their organisations as organisations. They will think about the consequences on their staff as individuals and the impact on their employment policies. They will think of the relative benefits here and elsewhere and of the personal consequences for the proprietors. If, for one or all of those reasons, they concluded that they will be worse off in Britain

      1915
      than in another country of relatively equal convenience, they will go elsewhere.
      First, I will say a word about the position of individual employees in this country working away from their own countries. They usually accept some inconvenience. They are removed from their families and friends. They have obligations in their countries which they still have to maintain. Normally, their firms undertake to see that they are at least no worse off than if they stayed at home paying taxes at the local rates. Until now, they have done so in a variety of ways. I freely concede that some may be rather undesirable.
      Whatever methods such employees have adopted in the past, they will have to reassess that cost, and many are already doing so. They are having to consider complex and, as yet, undecided matters. I am advised that one of them is the question whether fares to and from the place of work from the home country are taxable as income. Whatever figures the Chief Secretary may produce about relative rates of taxation, many of them are concluding that it is not worth it to stay here.
      I am not so much concerned about some of the very large American banks which have taken the opportunity to cut down on expensive London office staff. I would be concerned if many of the foreign banks and consortium banks already here started to move their offices to Europe, but I am particularly concerned about many examples I have been given of the small or medium-sized non-European organisations which are now hesitating to set up here and which are, instead, considering places such as Brussels. These organisations already have to face the high cost of office accommodation in London, but they are inclined to come here because of the services which we can offer and because of the language factor. However, faced with what they regard as excessive taxes on their key executives, many have frankly and freely stated their intention of going instead to Brussels or elsewhere.
      There are also many executives who come from abroad to work for companies resident here. Some come from parent or associated companies abroad and some come as individuals. They now face the double burden of higher taxes
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      under this Clause and, if they stay for long periods, as many do, the penal impositions of Clause 18. We have heard this week of the example of Professor Johnson.
      I work for a banking group in which some outstanding men are posted here from an American associate, and many major British companies are receiving the services, skills and business acumen of top American, European or Canadian executives. I have in mind one or two of the best known shipbuilders, many firms engaged in North Sea exploration, as well as others. Nine years is not a long period, and it is ludicrous to drive away a top executive at what may be the most productive period of his career.
      I speak with particular anxiety about the consequences for our immensely important invisible earnings. I make this remark with particular feeling on a day when a particularly disastrous batch of trade figures has been announced. I think that there are more non-British shipping related companies operating in the City of London than anywhere else in the world.
      Let us take the Greek shipping community as an example. There are 150 Greek firms, some of which are full operating companies and some offices of convenience based in the City of London. Many came here a decade or so ago— for reasons which have already been mentioned in the course of our debates— from New York. Today, they are ready with their bags packed to depart to Brussels, Zurich or some other suitable capital. Many made this abundantly clear in the Poseidon gathering in Athens, where there was plain speaking on this subject. No Greek ship owner or any other overseas business man will sit in London and pay taxes on his world-wide income. It may be unreasonable that these gentlemen should escape British taxes, and I can see all kinds of arguments, on all the clauses, on grounds of equity, but the simple fact is that these people have complete freedom of choice, and if we impose taxes on them it will not benefit the revenue here; the people involved will simply go elsewhere.
      At present, many of these people live here and educate their children here. They have got to know and like us. They do business with British banks, the British insurance market, and with the Baltic

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      Exchange, as well as use all the services which the City of London has to offer. If they are forced elsewhere, all this business is put at risk and in future many would prefer to deal with institutions outside this country.
      The magazine Seatrade stated in its May edition:
      "Should a major proportion of foreigners decide to leave London, the financial service industries must follow. The British merchant banks the British shipbrokers, the insurance underwriters, the ship management companies, the equipment service officers, all will have to set up colonies abroad to service their clients. If they do, the non-national city will be that much more parochial."
      The abolition of the remittance basis, which is the central theme of the debate, could, in my view, have a catastrophic consequence for many of these overseas organisations now established here, for a variety of reasons. Certainly for ship owners hitherto based in London, and domiciled here, who have operated established companies in other parts of the world, the United Kingdom will be the loser.
      From all sides the story is the same. Cases have been referred to in the debate, and many of us have received representations from a wide variety of organisations. We have also seen copies of some of the representations made to the Chancellor of the Exchequer.
      This set of proposals—this unholy trinity of clauses—may give a few doctrinaire Socialists the moral satisfaction of catching a few United Kingdom citizens who are taking advantage of the rules, but they will do incalculable harm to British business and the British economy and, in turn, to the living standards of the British people.
      I ask the Government to lake the advice which my right hon. Friend the Member for Carshalton (Mr. Carr) gave earlier this afternoon and withdraw the whole package—the whole unholy trinity.
      Dr. Glyn: The Chief Secretary said that he had to bring in legislation and, indeed, that any Government ought to bring in legislation—I believe that is what he meant—as a result of certain events such as Lonrho. Everyone would agree that in the circumstances some legislation was required, but I believe that the Government have entered into the matter far too hastily and have not con-
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      sidered the effects which the legislation will have on our future economy. These are my main criticisms.
      Today, we have been dealing with a series of difficult amendments, and my hon. and learned Friend the Member for Dover and Deal (Mr. Rees), one of the greatest experts on tax, has been arguing with the Chief Secretary. These amendments are extremely complicated and difficult to understand; indeed, as a layman I do not pretend to understand them. Yet one can see from the exchanges today, not only involving our own Front Bench but also amongst the back benchers, whether they be accountants or lawyers, that there is an element of doubt in these measures.
      The debate has shown that the Government ought to have taken much longer to consider the matter, and ought to have brought out a Green Paper setting out the situation and sought views upon it.
      We are not concerned with just a part of the Bill, but the amendments which we have been discussing are illustrative of the Government's attitude and have shown that the Government have not had a chance—I do not blame them for this —in the three months or the six months that they have been looking at the matter, or possibly longer, covering the period when they were in Opposition, to appreciate the effect which such proposals would have on our future economy, not only upon individuals, but on companies.
      I would like the Chief Secretary to admit that the Government have made a mistake. There is no real necessity to introduce this particular attack on foreign earnings upon which this country is at present so dependent. We could easily have waited until the autumn Budget, if we are to have one, and the Government could then have brought forward measures perhaps not entirely acceptable but which, nevertheless, would have been much easier for us to accept and which would have been far less disastrous in their effects on the country at large.
      This country has built up over a number of years a centre of invisible earnings and of banking, and if people are to be influenced by this new form of overseas taxation we shall find that there will be

      1919
      one of three prospects materialising—a move out into Europe; a failure to attract new banks and money into this country; or a decision by everybody that it is no longer worth while having centers of business in this country. The last prospect worries me more than anything else.
      Our foreign earnings are the heart of our economy. Before we seek to change the taxation system the Government should consider all these matters very carefully. I hope that the Chief Secretary has appreciated the points made to him.
      8.0 p.m.
      Mr. Peter Rees: During the Budget debate, many hon. Members congratulated the Chancellor on his stamina. Of course, stamina is a prime quality for any democratic politician, but perception is another necessary quality. This clause and the complex of clauses of which it forms part show a remarkable lack of perception by the Chancellor and his right hon. and hon. Friends.
      The Chief Secretary had the temerity to say that they had received no representations, or very few, about the clause. He must live in a very cloistered world. Without any exertion—barely setting foot in the City—I have been overwhelmed by representations by all manner of people, both British people who work abroad and foreigners who have chosen to make their base in this country.
      It may be that the existing system is not perfect. Very few taxation systems are perfect. As my hon. Friend the Member for St. Ives (Mr. Nott) perceptively remarked, a high rate tax system breathes through its loopholes. That is what Labour Members must appreciate. One cannot impose a high rate system without having some loopholes—otherwise, the pressures become too great and people will resort not to avoidance but to evasion. The Chief Secretary, as a former practising accountant, will appreciate the distinction.
      I hope that the Chief Secretary will correct the widespread misconceptions in his party that, crudely speaking, by paying one's emoluments to the Cayman Islands, Jamaica or Monrovia, one can avoid United Kingdom tax. He knows that that kind of crude payment will not avoid tax. It is not at that kind of evasion that these clauses are aimed. But
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      of course, that kind of evasion will be generated if the clauses are enacted without substantial amendments.
      The real question here is not how much tax this country has lost in the past, or how much it may collect in future. I agree with my hon. Friend the Member for Pembroke (Mr. Edwards), that very little tax will be gained. Those who up to now have made the United Kingdom their base of operations will go abroad. Thus, not only shall we lose that taxation, such as it is; we shall also lose those people's rates and everything else that they contribute to this country's welfare. Also, those who have remained here but traveled abroad for some months a year to do business overseas will move their bases. They will cease to be United Kingdom-resident or domiciled and will set themselves up abroad. I forecast with utter confidence that these clauses—in particular, Clauses 14 and 18—if enacted in their present form, will result in a net loss and not a net gain to this country.
      But the real question is not a fine calculation of whether there will be more or less tax. The question is, do we want London to remain a great commercial and financial centre? Do we want to maintain, nourish and expand our commercial and financial outposts across the world? Do we want to encourage or discourage the enterprising members of our community who wish to go and do business abroad? Do we want them to go abroad, make their fortunes and come back, or go abroad and stay abroad?
      This clause, combined with the other causes that we shall be debating, will have a profoundly damaging effect not only on the City but on the whole fabric of our economic life. It became apparent in our earlier debates that the Chief Secretary had not fully appreciated the finer points of these provisions. Who can blame him? He has been under great pressure since 28th February. I therefore hope that he will forgive me if I now draw attention not only to some of the finer points which have eluded him but to some of the greater ones.
      Let us take the Eurodollar market. Its creation—as in the case of any market—depended on a combination of complex factors, but I should like to suggest two which are particularly relevant to our debate. First, there was the

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      interest equalisation tax, introduced in the States. I wonder whether the Chief Secretary has appreciated that President Nixon has just reduced the rate to zero. If he has noticed that fact, has he thought through the implications for the Eurodollar market in London and Europe?
      A market like this and, if one likes, the stock market and the capital market depend on a concentration of skilled operators. What will the effect of these measures be on the Eurodollar market or the capital market? These operators, whether British, American, Liberian, Greek or Italian, have international skills that can be practiced and are marketable anywhere. If the burden of personal taxation heaped on them is more than they feel to be just, they will move their centre of operations.
      As my hon. Friend the Member for Pembroke, who has such knowledge of these matters, has said, they can easily go, if not to Paris—the Chief Secretary's answer in this respect was highly suspect, because he ignored all sorts of factors which most businessmen would take into account—to Brussels, where the rates are lower, to Zurich or to Geneva. They might even go to Luxembourg. Is that really to the long-term advantage of this country?
      I do not want to stray too far from the subject of this debate, but let us combine this measure with the doubling of the rate of stamp duty. This clause cannot be taken in isolation; one must consider the combined impact on people operating in this country. If one is an Arab with money to invest, it does not matter whether one rings up London or Zurich or whether one's stocks and shares are bought here or in Zurich. At least, it has not mattered up to now, but it will matter significantly. I should like the Chief Secretary to inquire from the officials in the Box what the comparable rates of stamp duty are. Let us have an answer on that.
      I ask the Chief Secretary to take this argument seriously. If, so far, he has been deaf to the representations which have reached me and my hon. Friends, let him go to the City and have one of those tax account lunches which he and his hon. Friends are so worried about. I am sure that the City would be delighted to entertain him if they could get through to him and his colleagues just what their meas-
      1922
      ures are likely to do to the City as a commercial centre. Let them stand him a good lunch.
      I turn to what may appear to be a technical point which the right hon. Gentleman did not appear to have grasped when I put it to him in an earlier debate. Has he realised what is involved if the kind of person who is temporarily resident and doing a job here is to be taxed on the total emoluments paid to him by his firm? I come back to the question of share option and pension schemes, and the like. The right hon. Gentleman attempted to brush this aside, saying, "We shall of course be taxing only emoluments paid for services in this country."
      Let him inquire from the Official Box —if he has any doubt—what would happen if the Chase Manhattan Bank—I take the name at random; I have not been in touch with it—wrote to one of its bright employees in New York, "Do your tour of duty in London. We shall pay you a salary and you will still get your entitlement under our pension and share option schemes. Year by year you will be able to buy more under the share option scheme." Under our tax laws those things will be treated as emoluments for services performed in London. Therefore, by the very test that the Chief Secretary applied, they will be taxable here.
      First, the calculation will be enormously difficult and, second, it will impose an unwarrantable burden of tax on such a man. It is no consolation to him to be told, "Your United Kingdom counterpart is paying tax over there." His short answer will be, "More fool him. I am going back to New York, where they appreciate my services and I do not have to suffer tax at this kind of rate."
      I have one tiny practical question. How, for instance, will the pension schemes of foreign companies employing people here be approved for tax purposes by the Revenue? The Revenue is overloaded as it is. Imagine every company employing people in London submitting its pension schemes for approval by the Revenue. This is a practical administrative point, which the Chief Secretary cannot ignore.
      I ask the Committee to consider the realities. Those foreigners who work

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      here and who come from countries which have double taxation conventions with this country will play fair. They will have to, because most double taxation conventions contain provisions for an exchange of information by the revenue authorities of both countries. I take the United States as the most obvious example, but this could apply to any country which has a double taxation convention with the United Kingdom. Such people would have to play fair. Their firms will infallibly make them return the whole of their emoluments, whether paid in London, Cincinnati or Paris.
      Let us take the case of an employee who comes from a country which has no double taxation convention with the United Kingdom. When asked by the inspector, "What is your company paying you?" he will return particulars of the emoluments paid to him in London. Does the Committee think that he will make a return of the emoluments paid to him in Monrovia, Beirut or Kuwait? He will not. There will be set up an unfair discrimination between those who have to play fair and those who need not. All the abuses which the Chief Secretary and his hon. and right hon. Friends have pilloried during the past year will be multiplied, and not reduced, by the provisions that he hopes to introduce.
      In the time available the Chief Secretary has not thought through the implications of disturbing the existing system. One can only come back to the perceptive suggestions made by my hon. Friend the Member for St. Ives, who has a great deal of practical experience on both sides of the fence—both as a business man and in the Treasury. Why does the Chief Secretary not admit that this may be a slightly ill-thought-out measure? Why does he not withdraw it for further consideration? Let us have a Green Paper. We are to have one dealing with the wealth tax. This is equally important for the welfare of this country.
      The matter of expenses cannot be confined to the debate on Schedule 2. Has the Chief Secretary considered how to give relief to a person who holds one directorship in this country and another in Buenos Aires? Will he obtain relief for his air fare, the cost of his hotel, and entertaining his suppliers there? This
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      point cannot be brushed aside by saying that he must be paid such gross emoluments as ensure that, after he has paid tax, he will be left with enough to cover all his expenses. At current rates of tax that is not realistic.
      It is apparent that too many things have to be thought out with more care and greater leisure than lie at our disposal during the Committee stage of this Bill if it is to be passed by the middle of July.
      It is a badly thought-out Bill. It was conceived in prejudice and produced in haste. If it is enacted in its present form the taxpayers of this country will repent at leisure.
      I therefore welcome the robust pledge given by my right hon. Friend the Member for Carshalton (Mr. Carr). I hope that in the meantime, during the moments given to them, the Government Front Bench will do their best by listening to the arguments for the amendments which have been put forward, which are not party political amendments but are genuinely designed to rationalise and to humanise this provision.
      I hope they will do their best to introduce at least a measure of sense into what is an extremely damaging complex of provisions.
      8.15 p.m.
      Mr. Nott: Sir Oscar—[Laughter.] You will understand my confusion, Mr. Murton, because you have been knighted so many times this afternoon during this Committee that I thought I had mused an important announcement.
      I made my speech in the debate on Clause 14 on a very narrow amendment of my hon. Friend the Member for Scarborough (Mr. Shaw). Having now had time to study the amendment, I realise I was out of order. But what I said then holds good, for I was making a "Clause stand part" speech on the remittance basis as it affected residents of the United Kingdom. I do not wish to repeat what I said.
      I now wish to have the opportunity in Committee of the whole House to speak about non-residents, because I am not a member of the Committee upstairs, for which many thanks, after seven years
      I do not think the 50 per cent. rule for non-residents is particularly obnoxious. I take my hon. Friend's point. But I

      1925
      have not heard a lot of complaint about it. The Government have not, I believe, received a large volume of protest about the 50 per cent. rule.
      I have spoken to a number of American institutions, and what worries me more than the 50 per cent. rule is the moment at which the full United Kingdom marginal rates come into force after the 10-year period. I realise, however, that ninety-eight per cent. of the employees of overseas firms never work for as long as 10 years in the United Kingdom. The employees of the banks and the oil companies move around. Therefore, why one may ask, am I worrying about the 10-year rule?
      It is because there are in the City of London and in areas where professional advice is very important an army of people who have spent more than 10 years here, non-residents of the United Kingdom, who may be experts in the shipping business or the Eurodollar market, and there are a great number of them who are not domiciled in the United Kingdom. I do not know if I am using the correct technical terms. I think I am making my position clear. The shipping business is to a great extent peopled by members of Greek citizenship, and they have been in London for more than 10 years. We do not want to lose the business of Lloyd's to New York. If one extends the 10 years to 20 years the problem is still there. I prefer the 50 per cent. rule to work its way right through for those people. This may not be inherently very satisfactory but it is practical. If one is going to leave them alone because one believes that, by tackling them, one will severely damage London's business, one then has the problem of what one does with British residents, because it is not fair to say "We are leaving all the non-residents alone or are only tackling them as to 50 per cent.", and then penalise the British person—he may be a British citizen resident in London conducting international business from the United Kingdom—who is competing with the American, the Greek or the Egyptian, who are paying no United Kingdom tax, or tax on only a 50 per cent. basis. It does not seem sensible.
      If we heavily discriminate against our own nationals and tax them at the marginal rate of 75 per cent. and say that we are going to have the American, Egyptian or Greek living in London paying
      1926
      no, or little, tax, that will not be fair. We do not want to discriminate against our nationals in that way.
      Since I think that the 10-year rule is damaging to the country—I am talking of non-residents—I would not tackle the non-resident problem in this way. I know that it is rather unsatisfactory, but for good and wider reasons I would let them be. In that case, if I wanted to deal with the Lonhro situation, I would not do nothing. But I know that I could not end the remittance basis as proposed because if I ended it I should be heavily discriminating against British nationals. I hope that I am making myself clear.
      I come to the view, for this reason, that we must not abolish the remittance basis. The Chief Secretary comes to the opposite view He says "I want to abolish the remittance basis. Therefore, I must be fair and tax non-residents." But I say that we should leave the nonresidents alone, because unless we do we shall be damaging the City, Lloyd's and the shipping business, and keep the remittance basis in a revised form. That s my judgment.
      I repeat that if the Government leave non-residents alone they have to devise something else, something that is less severe for residents than what is proposed in the Bill. I have made alternative proposals which the hon. Gentleman has said he will look into. I am delighted with the commitment which the Opposition Front Bench has made. That commitment means everything, because Governments change.
      I hope that the hon. Gentleman will look at the question of getting rid of the 10-year provision and keeping the figure at 50 per cent. for non-residents. This will involve thinking up something rather less harsh than what is proposed in Schedule 2 for residents. I suggest something totally different from ending the remittance basis. By all means let us deal with the tax haven problem, but not in the way proposed by the Government.
      I apologise for a rather garbled unprepared speech, but I am trying to find ways to meet what is a genuine problem.
      Mr. Norman Lament: I follow one point made by my hon. Friend the Member for St. Ives (Mr. Nott)—the apparent asymmetry between

      1927
      the 50 per cent. deduction for nonresidents and the 10 per cent. deduction for United Kingdom residents in foreign emoluments when these people may be competing directly with each other in the provision of services.
      It is perhaps surprising, given the latitude which the Chair has so generously allowed, that we have not concentrated more on the problems that arise in respect of United Kingdom residents, considering that the amendments have covered almost every provision dealing with foreign emoluments. In such circumstances, we might perhaps have expected to deal a little more with the problems of United Kingdom residents.
      I agree with what my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) said—that in a country with high marginal rates of taxation the remittance basis in the past has acted as something of a safety valve. Whereas one might have expected the Government to modify the system, they have gone far towards eliminating special treatment altogether. The result is that many hardworking and hard-pressed executives will find themselves caught in the backwash of the Lonhro affair.
      There are many activities carried out abroad which will now be much less attractive. For example, there is the case of the consultant engineer going abroad for short periods. I want to focus my remarks on the person who goes abroad for a short period—for less than the 329 days, which is 365 days less 36 days, which is allowed under the Bill.
      It is often very difficult to persuade middle management to go abroad. It means that they have to separate from their families for quite a number of occasions in the year. It will be all the more difficult to persuade them to go abroad for over a year so that they will benefit from the provisions of this clause. It means prolonged separation from their families and often going to unglamorous and uncomfortable places, very often on extremely important business.
      Another group who will be caught is the academics. The fear has been expressed that someone who has a post abroad specifically for the academic year may be caught severely under these pro-
      1928
      visions because it looks at the moment as though an academic year would not qualify for the 365-day provision. The implication of the Bill at the moment seems to be that the work done abroad should be carried out over the period of 365 days. This matter is causing considerable concern.
      While the Government have gaily gone on putting up the tax in this area, there is no indication in the Bill that additional allowance is to be made for the costs of working abroad. For example, the Englishman working in the United States could incur medical expenses which would be deductable for United States taxation but would not be deductible against his assessment in this country. At the same time, he would not get the benefit of the National Health Service. Likewise, an engineer going to a high-cost low-tax country may find himself at a considerable disadvantage in returning hospitality.
      If the Government intend to maintain this asymmetry between the 50 per cent. for non-residents and the 10 per cent deduction for United Kingdom residents, I hope that they will look at the question of expenses which are deductible and allowed at the moment. This point has been mentioned by a gentleman who has already featured in this debate—Professor Harry Johnson. He made the point in his letter to the Director of the London School of Economics announcing his resignation. After referring to changes which have been made in the taxation system, he said:
      "Under the new tax proposals, and with the same main activities, I would still have to pay income taxes to the United States Government; and I would be able to deduct only a fraction of what I would have to pay the United Kingdom Government, both because United Kingdom marginal tax rates are so much higher and because British definitions of legitimate business expenses for academic workers exclude certain kinds of expenses that in the United States and elsewhere are accepted as necessary costs of membership in the academic community."
      I think that this whole area of expenses will, in the light of these changes, have to be looked at. I do not think that the Government's way is a good way of trying to meet the point. One of the unfortunate consequences of moving more and more towards high taxation is that expenses that can be deducted and allowable become more and more important.

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      8.30 p.m.
      If it is thought that the remittance basis has been the subject of abuse and that changes are necessary, surely the changes ought to be balanced much more carefully against the costs of providing services abroad.
      I do not know whether the Chief Secretary, as a former accountant, still reads Accountancy Age. and whether he saw the article by Professor Prest about the effects of the taxes the hon. Gentleman is introducing. Professor Prest quoted a number of examples, including one of a consultant drawing a fee of £5,000; under the previous arrangements, after various expenses, he had an emolument, after tax, of £1,450; it is calculated that after the changes in this Bill that man will end up making a loss on his operation abroad.
      One will have to look again at the whole matter of costs and expenses involved in providing services abroad. The Government seem to think that companies can simply pay executives rather more, but, first, it is very difficult and very expensive for companies to do that, and very difficult, with the high rates of marginal taxation, to do so in a way to make any difference at all. The effect of the 10 per cent. deduction will simply be to prevent movement into the higher income tax bracket, if that at all. So if change is necessary it ought to be balanced much more against both the costs and consequences.
      The consequences for the United Kingdom's economy will be these. There will be an effect on outward investment. That may not be a very bad thing. I can understand people perhaps arguing that one wants to restrict outward investment, but this is a very rough and ready and arbitrary way of going about it. These provisions are bound to have an adverse effect on our balance of payments; services depend on costs, and they have to be price competitive, as any other goods have to be that one intends or tries to export. The third consequence is that these provisions in the Bill are likely to have a significant effect on tax morality in this country. We have a very efficient Inland Revenue in this country and the most compliant taxpayers in the world, but I am not sure that that is a situation which will go on for ever after this Bill.
      The Chief Secretary has said that the ending of the remittance basis would be
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      regretted only by those directly affected by it. I do not think that everyone will take such a narrow, self-interested view. The ending of the basis in this way will be regretted by anyone who thinks about the consequences, and anybody who wants to avoid this country just retreating into its shell will regret that many commercial developments will pass us by.
      [Mr. GURDEN in the Chair]
      Mr. MacGregor: I should like to follow, briefly, the remarks by my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont) and my hon. Friend the Member for St. Ives (Mr. Nott). I think that I had managed to follow the logic of the arguments of my hon. Friend the Member for St. Ives, but it would be possible for many of these points to be considered on later clauses and on Schedule 2. The many amendments which we have proposed would, if accepted, go a long way to achieving what he has in mind irrespective of the arguments for or against the remittance basis.
      I must declare that I have a comparatively short acquaintance with the international financial and commercial community. It has greatly aided me in these matters, but I have no axe to grind, and certainly no overseas earnings.
      It is quite clear from what has been said that this is not a debate on party lines, because, to put it at its worst, many of the people about whom we are concerned have no votes in this country. What we are concerned about are the unnecessary effects, severe in some areas, on this country's economy.
      It has also become clear that we are talking not just about this clause, but about all that is associated with it, because many of the worst effects of the Government's proposals will come from other clauses and the Schedule. However, this clause is the standard bearer of all those clauses, and it is the only one of them which we are considering in Committee of the whole House. In view of the enormous alarm and despondency which this set of clauses has created in many key areas of our financial and commercial life it is right that we should debate this one fully on the Floor of the Chamber.
      I want to look at some of the evidence. I shall deal first with the question of foreign domiciles. A great deal has been

      1931
      said about the effects on Americans. Many of us have received representations —I know the Government have—not only from the American Chamber of Commerce but from individuals. I quote from the "Fortnightly Newsletter for US Citizens Abroad", which said in early May that:
      "Officials in Belgium … are confident that in the near future—even within six months— swarms of foreigners now resident in England will switch residence to Belgium because of more generous tax incentives Belgium hopes to be able to offer. Some officials express certainty that they can induce more and more foreign corporations to set up headquarters in Belgium as a result of more liberal tax concessions to be offered them."
      I do not know whether that is an accurate representation of the attitude being expressed in Brussels. The point is that it is being said—and fairly widely said—among the international community. It is such fears upon which people act. That same magazine conducted a straw poll of 41 per cent. of its readership in this country. It revealed that 69 per cent. were considering leaving as a result of the Finance Bill and 49 per cent. were considering a change of policy in relation to their United Kingdom headquarters.
      This is an important feeling, and one of which we must take account. We have heard about the Greek shipping community in the City of London. There is certainly a widespread fear that many of these people will leave and thus put at risk a high degree of marine insurance broking and ship broking business held by Lloyd's and "the Baltic. I have seen evidence from a small number of brokers that at least £3 million of broking income could be at risk as a result of these changes.
      We also know that many head-hunters are already busy among key American and European executives in this country, especially in view of the effects of Clause 18. Even journalists who have been here for some time are complaining about the effects of these measures.
      It is vital that we realise that these people have a most important part to play. We must take their concern into account. Taxation is the crux. It is because of our high rates of tax that we need a more generous formula to help retain many of these people with foreign domiciles.
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      I agree that the worst effects will come through Clause 18 rather than this Clause. There are certain matters in Schedule 2, for those who are here for less than nine years, which could give rise to a good deal of concern. We shall have to look at this in Committee.
      If we turn to the effects on the European headquarters of many international companies and consultancies we see that unless a more liberal attitude is taken towards them there is a risk of Brussels superseding London as a centre for many international companies. There is also a risk that there will be some decline in the influence of the City as a financial centre. Some management consultancies have written to The Times while others have written privately to the Chancellor, and others, pointing out that they are already giving advice to their clients to the effect that they should think carefully before they establish their European headquarters here or think about moving them.
      As these consultancies have pointed out, the decision to locate a major corporate headquarters in London or elsewhere is often marginal. We have some advantages and some disadvantages. Unfavorable tax treatment could easily tip the balance. It is a sensitive area, in which confidence matters greatly. We can see this applying in some cases to American banks which are holding fire on decisions whether to locate their enlarged centers here or on the Continent.
      So far we have tended to concentrate on the effect on the City. This subject goes well beyond that. There is the effect which will come about, through the influence of Clause 16, on partnerships trading abroad. When we consider the effect that it will have on individuals we are not just talking about directors or senior industrialists; we are talking about export managers who are away for four or five months a year, getting the export contracts. In their written evidence to many of us, these people, whether constituents or otherwise, have made it clear that they are greatly concerned about the effects of this measure.
      I understand that in the past year at least one-third of the earnings of the Management Consultants' Association's members were achieved overseas. Much of those earnings are now at risk. We are

      1933
      talking about professional people— consultants, engineers, accountants, bankers, and even pop stars. The question of the academics has been fully aired. All these people contribute substantially to our export drive and have a substantial beneficial effect on our balance of payments.
      We are also talking about able, ambitious, mobile and, on the whole, well-paid people who are working in a market which is highly competitive and who--particularly the younger ones—are prepared to consider remaining permanently abroad. This year it is extremely difficult to recruit British graduates from American business schools because of fears of not only this but other aspects of the Finance Bill. When they are abroad they compete with much better-paid foreigners, in terms of net income. They must be able to keep up their standards and to look the others in the eye.
      Here we must consider carefully the question of expenses. When one looks at tax rates one understands why. The Chief Secretary referred to a table which appeared in HANSARD on 12th June relating to foreign domiciles. The effect on British nationals is shown in a table produced by the Treasury on 9th April. Taking the countries with which we are most concerned competitively--Belgium, because of the position of Brussels, France, Germany and the United States —one sees not only that our earned income top rate is well in advance of that of any of the other countries but that the income rate at which it is payable is much lower. The graduated scales follow that pattern through. Often allowances and reliefs in the other countries are much more beneficial than ours.
      One sees other weaknesses in this set of clauses in the transitional period. One sees the unfairness to groups of people who have already made their commitments and who suddenly have to face a higher tax bill in a short period. The Chancellor of the Exchequer has introduced the principle of a six-year transitional period for loan interest reliefs, and it would be unreasonable not to have a similar provision here.
      Finally, I come to the cost. It is clear from questions that have already been asked and answered in the House that the cost is minimal. On any cost-benefit analysis, especially in relation to foreign domiciles, the balance is likely to come
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      out heavily on the wrong side, because of the loss of able individuals which one foresees, the loss to the balance of payments through headquarters moving elsewhere, the loss to the City of invisible earnings—it is notable that the Committee on Invisible Exports has been forceful in its evidence to the Chancellor on this question—and because there is no real political gain from these measures. We are using a steam-hammer to crack a nut, or to crack a basket of nuts only one of which is rotten.
      It is right, in this debate on the clause, to give notice that we are greatly concerned about several aspects of this set of measures as dealt with in the later clauses, and that we shall be pressing for changes. I am glad that the Chief Secretary said that he would be prepared to look sympathetically at some of the amendments later, and I hope that he will accept them when they come.
      Mr. Tim Renton: Like my hon. Friends the Members for Kingston-upon-Thames (Mr. Lamont) and Norfolk, South (Mr. MacGregor) I want first briefly to refer to Schedule 2, as it forms part of the unholy alliance of clauses which we have been considering for the past few hours. I declare an interest as a director of a British bank that does the greater part of its business in Australia and New Zealand but, unfortunately, I have no overseas earnings to declare.
      When he was justifying the 365-day provision in Schedule 2, the Chief Secretary remarked that people normally go abroad with their wives and families for more than a year, and he therefore thought that the 365-day provision was reasonable. Surely, we are also concerned with people who go abroad to promote British exports and build multi-million-pound process plants, for example, in the chemical engineering industry, for British contractors. Those people go abroad without their wives and families for a period of between three and six months, often experiencing unpleasant climatic conditions in countries such as Saudi Arabia, Libya and part of Latin America. One of the few ways by which they can be persuaded to go is by offering them some financial incentive during the time they are away from their families. This is what happened in the past. Under Schedule 2 it will not happen in future.

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      I have received a copy of a letter sent to the Chancellor of the Exchequer by the Association of Chemical Engineering Contractors. It points out that about 75 per cent. of its work is overseas, connected with export orders, and that the key construction staff which its firms send to sites overseas are usually abroad for between three and 12 months—rarely for more than a year. To persuade staff to accept these assignments in remote parts of the world, and severe climatic conditions, firms have to offer them financial incentives and home leave every three months. The staff is also required to return to headquarters for consultations. All these factors make the new 36-day limit on time spent in the United Kingdom difficult, and mean that those companies and others will tend to lose design and engineering staff to foreign contractors who offer better tax terms in respect of time spent overseas.
      Before the Chief Secretary goes ahead with Schedule 2, I suggest that he should look at the tax benefits given to overseas earnings by countries such as France, Holland and Germany, which are our competitors in exports. He must take care that by hitting these design, supervisory and management staff when they go abroad we do not just make it that much easier for engineering competitors from other industrialised countries to win export orders in the developing countries. I hope that the Chief Secretary will consider this point when the Bill goes upstairs.
      I turn to Case II and the revision of Schedule E. This is a matter of considerable interest to me because for many years I worked with a British-based mining company which had a great deal of international business. In that company we made it a matter of policy to bring foreigners to Britain from overseas companies not only so that we could benefit from a study of their Australian accents or the foreign languages which we could learn from them, but also so that they could contribute to the development of policy and management by their different approach to problems. Many British companies benefit from a conscious policy of bringing in foreigners and thus injecting new thought into management and policy-development groups in the United Kingdom.
      1936
      I should like to deal, under Schedule E, with the question of the overall level of tax on world earnings. I agree with the comments made by my hon. Friend the Member for St. Ives (Mr. Nott). I have no great objection to the 50 per cent. rule, which is not all that invidious, but I believe that it is wrong that it should stop suddenly at the end of 10 years. At the end of 10 years people have been in Britain for a long time, but it is often at that time that they contribute most to the company employing them. It must be wrong to drive them away at that point in time by removing tax benefits which they have enjoyed. I suggest that the Chief Secretary should consider rolling on this 50 per cent. treatment of their world earnings so long as they remain in this country.
      Finally, I should like to move on to a point on which we have all been muddled in the last hour or two. This relates to whether foreigners who work for British companies are in future to be treated in the same way, as regards United Kingdom earnings, as are foreigners working for non-resident companies. I understood the Chief Secretary to say earlier, in answer to an intervention of mine, that in future foreigners working for British companies would be treated in exactly the same way, in relation to their United Kingdom earnings, as are foreigners working for non-resident companies. If that is so, I welcome it, because it is right and it has not been the case up to now. It clearly should be the practice, because it is quite wrong that in attracting expert foreigners here for some specific skill or technology they possess British companies should be put at a disadvantage compared to non-resident companies.
      North Sea exploration is an example. Most people with North Sea technology are North American. They will have to be recruited to come here, and that recruitment is now going on. Considerable numbers of these people are being taken on to help us develop North Sea oil and gas fields as quickly as possible. We shall need them increasingly over the years ahead. They are drillers—men able to operate drilling rigs—deep-sea divers and wire line experts. It would be a great pity if foreign oil companies operating in the North Sea were able to entice these people to British shores more easily

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      than the British companies simply because they were able to offer them better tax treatment. I hope that the Chief Secretary will confirm that the interpretation he gave earlier is the right one and that in future British companies will not be at this disadvantage.
      Many of my hon. Friends have dwelt on the disadvantages to the City of Clause 19, and I shall not proceed further on that subject. I merely remind the Chief Secretary that the Paymaster-General, in an answer to a Question put down by me about the cost to our invisible earnings of his proposals to tax the worldwide earnings of foreigners working in the United Kingdom said:
      "I recognise the need for careful consideration of the proposals affecting foreigners in Britain and have indicated my intention to judge the issues raised on their individual merits."—[OFFICIAL REPORT 8th May 1974: Vol 873, c. 191.]
      I hope that he will show us tonight and later in Standing Committee that these are not just fine words but that the Government will back them up with action.
      Mr. Christopher Tugendhat: I apologise for intervening now in the debate without having attended any of the earlier proceedings on the clause. One of the disadvantages of the House of Commons is that so many things are taking place simultaneously, and I am deeply engaged in the Standing Committee on the Trade Union and Labour Relations Bill, which is sitting in the afternoons as well as in the mornings. I had therefore intended that this would be the first Finance Bill since I entered the House in which I would not be intervening or playing a part. I shall delay the Committee only for one moment.
      The provision of the clause particularly affect the City of London, which is in my constituency. They also particularly affect the City of Westminster, which is in the other half of the constituency. Since a great many, if not the vast majority, of the largest British and overseas firms with headquarters in this country have them in the city of Westminster if they do not have them in the City of London, I have had some opportunity to study first-hand the concern not only of the financial community but of the industrial community, both British and
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      foreign-owned, in this country. In addition, I have an interest to declare since I am a director of an American-owned oil company, the headquarters of which are, like so many other companies, in my constituency.
      In my opinion, the concern that has been voiced by the many companies which have written to me and to some members of the Committee is genuine. There has, of course, been some degree of abuse both by private individuals and by companies. I recognise that some of the abuse has taken place under the auspices of quite distinguished names both of individuals and of companies and that practices have been allowed to flourish which should not have been allowed to continue. I am confident that if the Conservative Party had won the last General Election some action would have been taken to put an end to those abuses.
      It is no part of my case to argue that abuses do not exist or that they should not be acted against. However, as my hon. Friend the Member for Norfolk, South (Mr. MacGregor) has said, the Government are taking a sledgehammer to crack a nut. There is a great danger that by over-reacting to some of the problems that have gained publicity and to some that have not serious damage will be done to the whole fabric of the business community in the City of London and at the other end of my constituency, in Westminster. I hope that the Treasury Bench will take it from me, as the hon. Member for the City of London and Westminster, South, that the worries expressed by my hon. Friends are valid and that they should be taken into account.
      Something was said a short time ago about the 10-year rule. I saw the Financial Secretary nod when it was said that if someone had been here for 10 years he had been here for a long time. In that sense he was right to nod. I bring out this point because I believe it illustrates the sort of mistake which the Government can make. It is sometimes suggested that someone who has been here for 10 years must be counted as part of the scenery and treated as if he was indigenous and that it cannot be said that it was necessary that he need have been here for so long. It is said that the great companies could produce other people who would be able to do the job

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      just as well. However, it is often the case that a large banking enterprise or an oil company, for example, may have an important link man who may well be here for a long time and in a sense is irreplaceable because he has been here for a long time.
      It is practical considerations of that sort, and not some of the more theoretical considerations which I fear may motivate the Treasury Bench that I hope will be taken into account. I must apologise to the Committee for intervening at this stage, not having taken part in the earlier debate. I know how irritating such interventions are to hon. Members. However, this is a matter of enormous concern to my constituency and, through my constituency, of enormous concern to the country. I could not allow the debate to pass without impressing upon the Treasury that I believe from my vantage point that the concern expressed by my right hon. and hon. Friends is genuine and that it should be taken into account.
      Mr. J. Bruee-Gardyne: Like my hon. Friend the Member for the City of London and Westminster, South (Mr. Tugendhat), I must apologise to the Committee for intervening at this late stage in the debate. I shall be very brief.
      I have mixed feelings about the clause. It has never seemed entirely logical that a foreigner who has been resident in this country for many years and is using this country's facilities and services should benefit from a different tax regime or that he should be obliged to pay tax to a country in which he has not lived for many years and whose services he does not use. The other side of the argument is that without any doubt, as my right hon. and hon. Friends have pointed out time and time again, the enactment of this clause will do a great deal of harm to our invisible earnings and, therefore, to our balance of payments. If that is the sort of thing that the Treasury Ministers want to do against the background of our present trade returns, they need their heads examined.
      The conclusion I draw is that this is the inevitable consequence of our having a fiscal system that is uniquely vicious against those with higher incomes. The answer to the problem is to bring this country more nearly into line with the
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      tax regimes prevailing in other countries which do not suffer from the jaundiced, green-eyed attitude to fiscal policy in the Labour Party. So long as we have these distinctions, the dilemma presented by the clause will face us.
      9.0 p.m.
      Mr. Joel Barnett: This has been an interesting debate. I am obliged to the hon. Members who have invited me to lunch in the City to learn what the City is saying about the matters we are considering. I have already listened to the City, and I have an idea what it is saying.
      I hope, Mr. Gurden that you will not mind if I stick to the clause. Many hon. Members have acknowledged that their main fears stem not from the clause but to some extent from Schedule 2 and to a greater extent from Clause 18. Indeed, the hon. Member for St. Ives (Mr. Nott) said that in his view a 50 per cent. tax in the circumstances of the clause was not obnoxious, and the hon. Member for Mid-Sussex (Mr. Renton) agreed with him. That is the point that we are debating.
      The hon. Member for Norfolk, South (Mr. MacGregor) talked about a straw poll, saying that a large percentage of Americans indicated in the US Newsletter that they were thinking of leaving. But it cannot be because of the clause. There is a considerable misunderstanding amongst Americans and many other foreigners about its effect.
      Mr. MacGregor: I agree with what the Chief Secretary has said. I think that the American Chamber of Commerce and many Americans would accept the clause as it stands, but the fears still exist over the whole package. We must debate that matter later.
      Mr. Barnett: I shall be happy to do so, but we are now debating Clause 14. The fears are based on a misunderstanding. Those concerned have little reason for those fears.
      When we were debating the amendments I referred to the prospects for foreigners who decided that they would rather work abroad for a period of less than 9 or 10 years than work here. I recalled that in an answer to a Written Question I had indicated on 12th June, in c. 562 of HANSARD, that, with a 50 per cent. tax

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      level here, the net-of-tax return is still better here than in all other countries. One hon. Gentleman said that it was likely to be better in Belgium, because the Belgians are thinking of changing their tax laws. But I am advised that under the present Belgian law it is better from a lax point of view—and, if I may say so, from many other points of view—to be in London instead of Brussels.
      It was said in our earlier debates that it is easier to avoid the tax in France. I replied that it is possible to avoid taxes in any country. I do not believe that we should be considering the matter from that point of view. We must look at the tax systems as they exist, and on the 50 per cent. basis that we propose people would be better off here net of tax than in those other countries. That, therefore, is the main burden of the argument.
      I appreciate the problem that it is difficult to look at this matter in isolation. That is true. It is difficult to look at the clause in isolation, but it is equally difficult, with our rules of order, to talk about every other clause in the Bill or even four or five of them. On the other hand, although it is difficult, it is fair to say—indeed, the hon. Member for St. Ives and the hon. Member for Mid-Sussex said so—that the 50 per cent. basis can be taken on its own, separate from what we are proposing under Clause 18. It is possible to look at the way that we are proposing, under Clause 14, to tax those non-United Kingdom citizens who work here, when they work here for less than 9 or 10 years, on 50 per cent. of their earnings here. That is not really an obnoxious point of view.
      On the other points that have been made about Clause 18 and Schedule 2, as I said earlier I recognise and am well aware of many of the problems that have been raised by hon. Members. I indicated previously that I was more than willing to look at Clause 18 and Schedule 2 when we reached them, but I find it hard to deal with them in detail as at this moment.
      Reverting to Clause 14, concerning the British resident who works abroad for less than 12 months—it will be appreciated that if he works abroad for more than 12 months, he will, as before, not be paying United Kingdom tax—as it stands under Schedule 2 90 per cent. of his earnings would be taxed. I am prepared
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      to look at that schedule when we reach it in Standing Committee. But the reason for this must be understood. One hon. Member said that this section was conceived in spite. That is not really true —or, if it is true, it was conceived by the previous Government. In this instance, I suggest that that was the reason that they set out on this path. They did so for the very good reason, after the Lonrho affair, that they recognised, as the Treasury did before, I am sure—as the hon. Member for Worthing (Mr. Higgins) has admitted—that the remittance basis of tax had been enormously abused and it was possible perfectly legally to use that remittance basis to pay very little tax here.
      One hon. Member said that we might, for example, have a situation in which we should find an exodus of pop stars. The only reason why that would happen would be that they had not been paying tax here and did not like the idea of paying tax under the clause. I do not know whether we should prepare our legislation on that basis, but I do not think so. That is why I cannot agree with many of the hon. Members who have spoken in the debate.
      At this point, however, I should like to deal with some of the rather more technical points that have been raised. I come first to the question of share options. On the questions of "domicile", "resident", "ordinarily resident" and so on, as the hon. and learned Member for Dover and Deal (Mr. Rees) will realise, this is a very complex area. I hope that the hon. and learned Member will forgive me if I give him the facts as they have been given to me. I shall read them.
      The position about stock options and foreign emoluments is as follows. If, for example, an American who comes here to work for the United Kingdom branch of an American corporation were granted a stock option before he took up duty in the United Kingdom, there would be no United Kingdom tax liability on any gain from his exercise of the option. If the option is granted while he is resident and ordinarily resident and working here— that is, he is within Case I of Schedule E —he will be taxable on one-half of the gain from this exercise if exercised while he is still resident here. If exercised after he has ceased to be resident here, the gain would not be taxable. Thus, generally

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      speaking, gains from the exercise of options will be taxable here only where the option was both granted and exercised here. This is surely fair, given that stock options are a form of remuneration.
      I hope that that explanation indicates some of the complexities of the tax both as it has been and as it will be.
      Mr. Nott: I ask a question which I know the Chief Secretary will not be able to answer. We do not want to place the person who happens to be an American citizen in a worse position than the British person working for an American corporation. As I understand it, if he was a British resident working for an American oil company and he was to receive an option on Standard Oil of New Jersey, if it still exists, and then was to go abroad and was to exercise it while working abroad for Standard Oil of New Jersey, he would be taxable when he exercised it as if it was income. But it may be that I have it wrong. In any event I do not expect an answer now.
      Mr. Barnett: I think that the hon. Gentleman has got it wrong. I will drop him a note about it.
      I turn to another matter raised by the hon. Member for Mid-Sussex. A foreigner coming here to work for a United Kingdom company is liable to United Kingdom tax on the whole of his United Kingdom earnings under Case II. The position is exactly the same as it was. Clause 14 does not affect it.
      Mr. Tim Renton: I accept that it is exactly the same as at present, but that is the opposite of what the Chief Secretary told us about two hours ago.
      Mr. Barnett: If I did, I apologise. In view of the complexity of the clause, I hope that I shall be forgiven.
      Mr. Peter Rees: Before the Chief Secretary leaves this complex area, what about the employee of a foreign company who comes to work here and is a member of that foreign company's pension scheme?
      Mr. Barnett: I think I am right in saying that we shall be coming to pension schemes on Schedule 2—but I do not hold fast to that, either. I will look into it.
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      I hope that I have dealt adequately with Clause 14. I am sorry if I have not dealt with Clause 18 and with Schedule 2, and I hope that I shall be forgiven if I do not deal with the Eurodollar market and the interest equalisation tax in the United States. Both matters may be in order, but they seem to be a little outside Clause 14, and we can deal with them later. At the moment, there are other matters to discuss.
      Several hon. Members have referred to the need for a Green Paper. That need could only be said to apply to other clauses. Certainly it could not apply to Clause 14. For reasons which I tried to give in earlier debates on amendments, I suggest that if we had a Green Paper on an area as complex as this, all that would happen is that when we came to the Bill itself we should be little better of.
      The hon. Member for St. Ives conceded fairly that the 50 per cent. basis in Clause 14 was reasonable. He could not see that it was obnoxious, anyway. Like other hon. Members, he was not happy about the abolition of the remittance basis. But hon. Members will recognise at the same time that there was a serious avoidance problem—indeed, an abuse— whereby British taxpayers were avoiding tax on a grand scale. They recognise that.
      The hon. Member for St. Ives put a number of propositions, all of which were very complicated, about how one might perhaps deal with the matter other than through the abolition of the remittance basis, and I promised to look at them. But all I can say now that is that if we want to stop the major abuses, which have been recognised by both sides of the Committee, the only practical way to do this in such a complex area is to abolish the remittance basis, and thus we have decided to go ahead with that proposal. But Clause 14 is a separate matter and relates to a much narrower point which I hope will now be acceptable to the Committee.
      9.15 p.m.
      Mr. Maurice Macmillan: As has been made clear by my hon. Friends who have taken part in the debate, a number of representations have been received by hon. Members and, indeed, probably by the Government, from many people in industry, in the City, and in the teaching

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      and acting professions, and from journalists. They have all been concerned not so much that their interests are damaged by this legislation, by Clause 14, but that in order for their interests not to be damaged beyond endurance they may have to take steps to arrange their lives differently, in a way which will damage this country and our economic position and perhaps, in particular, our overseas and invisible earnings, as well as our standing as a financial centre and market. In the past other financial centers have to their disadvantage lost their standing partly through tax legislation and fiscal systems which have discouraged people from remaining in those centers and have encouraged them to come here.
      In reading a large number of letters from various people I was struck at the high proportion who were concerned not about themselves but about the country. A large proportion of letters came from, or were about, people who could avoid these proposals quite simply, without any breach of the law or the need to engage expert accountants, simply by going away.
      My hon. Friend the Member for Pembroke (Mr. Edwards) referred to the Euthanasia Creed, in a somewhat theological line. I rather hoped that the Chief Secretary was going to quote Browning at him and use that great phrase:
      I the Trinity illustrate,
      Drinking watered orange-pulp—
      In three sips the Arian frustrate;
      While he drains his at one gulp.
      The complaint from this side of the Committee is that the Chief Secretary and the Government have insisted on taking this matter at one gulp and have tried to justify it partly by the charm and humour with which the Chief Secretary has replied. But he must not be allowed to get away with phoney arguments simply because he is nice to the Committee. That attitude does not justify his argument.
      It has been claimed that it would be too complicated to have a Green Paper on the matter. My hon. Friend the Member for St. Ives (Mr. Nott) said that he was not worried about the 50 per cent., but he was concerned that this was a case of seeing a fly on a marble table and that the Chief Secretary had decided to kill the fly, regardless of the effect that his action would have to destroy the table. My hon. Friend suggested that there were perhaps other ways of
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      tackling the matter and that it would not be necessary to go as far as abolishing the remittance basis altogether.
      The Chief Secretary's reply was that he did not think so, that it was too complicated to go into here and that a Green Paper would be so complicated no one could understand it. It is a thin argument that one cannot explain something because it is too complicated. As my hon. Friends have said, if it is as complicated as that, it will be impracticable to work and will put an intolerable strain on the Inland Revenue.
      Of course it is necessary to prevent abuses. Many years ago I pointed out in a debate on anti-avoidance legislation that the net spread by the Inland Revenue invariably caught the sprats while the sharks broke through. My hon. Friends have shown that many innocent sprats will be damaged by these provisions. There have been references to the fiscal effect and to what one might call "tax morality". Much of the problem comes from high tax rates and the fact that a system virtually without loopholes is likely to lead not to less but to more avoidance and to evasion.
      But we are complaining about something more. It has been said that the Chief Secretary made no attempt to quantify the effect of these clauses on the economy. We are seeing here the not unusual spectacle—this is not a party point—of fiscal purity as set out by the Inland Revenue overcoming common sense and economic good sense. Many things should be done if one stuck strictly to the rule book but they would tend to have an adverse economic effect.
      The fact that my hon. Friend the Member for the City of London and Westminster, South (Mr. Tugendhat) felt moved to put his views with studied moderation, outlining the seriousness with which his constituents, who are largely those whose employees and organisations will be affected, regard the issue, should be taken seriously. My hon. Friend was worried about the 10-year period and the practical considerations. Many people are resident in more than one place over the whole of their working lives; this is particularly true of the shipping industry. I know more than one person who is what one might call Anglo-Greek and spends six months in

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      one country and six months in another. Now they will not, nor will their businesses. That seems a severe loss to our invisible exports.
      The Chief Secretary said that it is not really Clause 14 that is causing the trouble. I agree that that is not the main fear, but it is a part of it. I cannot let him get away with the argument as each part of the Bill is discussed that it is tolerable by itself. We know that they are all part of a whole which is totally insupportable. It is dangerous to accept this 50 per cent. rate for foreigners without argument or protest. It is part of a wider complex of measures which themselves may be no more damaging than Clause 14 but are nevertheless all part of one whole.
      As regards United Kingdom residents, the Chief Secretary said that the major abuse of the remittance basis could not be allowed to continue. I agree. He implied that any major abuse depends on the existence of tax havens. I am more concerned about those who now go overseas—not necessarily for long periods but for short irregular periods—doing difficult sales jobs, frequently in unpleasant parts of the world, who are separated from their families and have had up to now some form of minor compensation provision in their tax agreement. That is not a serious tax avoidance but forms part of the incentive which we are now losing. That is what I meant by referring to the dangers of posing too purist an argument from the point of view of the integrity of the tax. We are damaging those we need to encourage and those who it is difficult enough already to get to do what is frequently an awkward job personally and one which sometimes is physically unpleasant. That is why we are having this debate.
      My hon. Friend the Member for Pembroke made it clear that Clauses 14, 16 and 18 hang together. My right hon. Friend the Member for Carshalton (Mr. Carr) indicated that we would do everything possible in the course of the Committee and Report stages of this Bill to improve these clauses, and the schedules that go with them, as we see they should be improved. He made it clear that that did not imply that we accepted that this method was the right way of dealing with any abuse of the remittance basis as it
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      now is. He gave a firm undertaking that in due course he would consider this afresh, without prejudice, from the arguments we have put forward in detail during the passage of this Bill. I gladly repeat that undertaking.
      In the light of this, and the possibilities of amending Clause 14 and Schedule 2, I would not advise my hon. Friends to divide the Committee on this clause but end by expressing our dissatisfaction with the complexity of clauses dealing with this intricate matter and the use the Chief Secretary has made of this complexity to charm the Committee with his expertise rather than answer the points put to him.
      Question put, and agreed to.
      Clause 14, as amended, ordered to stand part of the Bill.

    Clause 19

      SUB-CONTRACTORS IN CONSTRUCTION INDUSTRY
      9.30 p.m.
      Mr. Michael Shaw: I beg to move Amendment No. 38, in page 15, line 42, at end add—
      '(5) In section 29(4) of the Finance Act 1971 leave out "30" and insert "33"'.
      Clause 19 makes various amendments to the Finance Act 1971, particularly in respect of those sections dealing with what is known in the construction industry as "the lump". In view of the tremendous interest which has always been evinced from hon. Members opposite on the question of "the lump", I am sorry that more hon. Members are not here to discuss it this evening. In making the amendments to that legislation in 1971 nothing seems to have been done about Section 29. Perhaps I may give a summary of what is intended.
      It was realised that there were gangs of men in the construction industry who received sums of money for their efforts from the main contractor and failed to pay any tax on their remuneration. It was felt, rightly, that that system should be brought to an end. Therefore, it was made clear in Section 29(4) of the Finance Act 1971 that, on making a payment to such a gang, the main contractor
      "shall deduct from it a sum equal to 30 per cent. … and the sum so deducted shall be paid to the Board of Inland Revenue and

      1949
      shall be treated for the purposes of income tax"
      and so on. In other words, a deduction was made at the rate of 30 per cent. That was handed to the Inland Revenue and was treated as a payment of tax by the members of "the lump".
      This year, the Bill seeks to increase the basic rate of tax from 30 per cent. to 33 per cent. I am averse to being called upon to pay 33 per cent. as my basic ate of tax when, as far as I can tell, the members of the various "lumps" throughout the country may well get away with 30 per cent. I may be wrong. Perhaps I have not read the various provisions properly. My amendment is designed to explore whether my reasoning is correct.
      9.30 p.m.
      Mr. Bruce-Gardyne: I am not sure whether I support my hon. Friend the Member for Scarborough (Mr. Shaw). I confess that I am a little concerned about the impact that the Government may have if they succeed in their purpose of eliminating the tax advantages of "the lump". Of course, the amendment is designed to ensure that the members of "the lump" pay the same standard rate of tax as the rest of us—an entirely proper proposition. I shall explain my anxiety.
      First, however, I agree that, considering the excitement generated in the Labour Party on the subject of "the lump", it is remarkable that so few Labour Members are present to listen to the debate. I have never believed that what caused the excitement in the Labour Party was the fact that "the lump" was escaping the tax net. What is much more serious in the eyes of the Labour Party is that the members of "the lump" tend to escape the trade union net. To escape the tax net is venal, but to escape the trade union net is an unforgivable sin — so it is surprising that not more Labour Members are present to take part in the debate.
      My anxiety concerns the impact which I believe the Government will have—if they succeed, through this clause, in eliminating the tax or non-tax position of "the lump"—on the prospects of fulfilling our expectations from North Sea oil. This may seem a remote proposition to the Financial Secretary but in reality it is not remote at all. Last week, I visited
      1950
      a number of the offshore oil installations off the east coast of Scotland. Time and again I found that the constructors operating on this plant were depending on "the lump" for any sort of labour force at all, because such is the rate of taxation which people working on those sites find they are facing that unless they can take advantage of "the lump" they are not prepared to work a five-day week or even a three-day week.
      Mr. F. A. Burden: My hon. Friend is adopting a very dangerous attitude. If the trade unions find that "the lump" is to be allowed to be free of tax, what is to stop the trade unions from demanding that all wages of their members shall also be free of tax?
      Mr. Bruce-Gardyne: If my hon. Friend will allow me I shall come to that point, as I was about to do. Of course, I do not defend the special tax regime which members of "the lump" have enjoyed. What I am saying is that so long as we have the sort of level of taxation on the earnings which people can earn in the construction industry on work of this kind —which is designated as a work of national importance—we shall not get the work done.
      Of course, one solution is to lower the rate of taxation. The crux of the matter was very well exposed in an extremely interesting answer which the Financial Secretary gave the other day to his hon. Friend the Member for Was all, South (Mr. George). His hon. Friend asked if he would list the tax thresholds for a single person, a married childless couple, a married couple with two children under 11 with four children, two over and two under 11, for each year since 1945. The reply was fascinating, because it demonstrated that in the period up to 1955-1956 the tax threshold was at or above the average earnings level for such a family. Since then it has gone down and down and down, and today it is down to 52.4 per cent. of average earnings.
      The consequence is that men on these construction sites for North Sea oil— who, the Financial Secretary may or may not be aware, have very high earnings— may find, if they are caught in this tax net, that they are paying very substantial sums in taxation to which they are not used. That is something they do not

      1951
      accept. The idea that resistance to the tax net is confined to the wealthy is an illusion indulged in only by hon. Gentlemen, like the Financial Secretary, who do not visit these installations and see what is happening. At one installation I saw the labour force had to be doubled to meet the requirements. That was because of the scale of absenteeism— again, because of the tax regime imposed on people with take-home pay of £60 a week.
      This is a serious problem. These construction firms have been relying to a considerable extent upon "the lump". I fully recognise, from the tax point of view, the objections to "the lump", but if it is removed the work will not be done.
      Tonight the Financial Secretary should reflect on the fact that the Chancellor of the Exchequer is going round the capitals of Europe hypothecating our future North Sea revenues as security for foreign borrowing to sustain the balance of payments. If, now, through Clause 19, we succeed in destroying "the lump", the Chancellor may find that the North Sea oil which he is hypothecating away does not come on stream in time—or not on the scale he expects by 1980.
      Of course, the right answer—the only sensible answer—to this problem is to bring down the taxation on average earnings and above, so that these people do not lose the incentive to give of their best to develop those natural resources, but so long as we do not do that, and if Clause 19 is successful in its operation, I have no doubt at all that there will be a significant effect in delaying the arrival of the resources of North Sea oil on which the Government are counting so much.
      The Financial Secretary to the Treasury (Dr. John Gilbert): We have had two rather contradictory contributions from the hon. Members for Scarborough (Mr. Shaw) and South Angus (Mr. Bruce-Gardyne). It seemed that the hon. Member for South Angus was failing to distinguish between "the lump" as such and tax abuses that have been connected with "the lump". We are talking about attacking the tax abuses rather than the principle of "the lump". There is nothing in the clause which makes it impossible for "the lump" system of payment
      1952
      to be continued in a perfectly reasonable way over a large part of the construction industry.
      It is always a pleasure to follow the hon. Member for Scarborough in any debate. He was good enough to say that he might have been under a misapprehension as to why we were not changing the tax deduction of "the lump" to bring it into line with the basic rate of tax. I think there is possibly a misapprehension here. When the 30 per cent. deduction rate was first introduced we were not on the unified tax system. The 30 per cent. rate was only a close approximation to the basic rate. There is nothing that necessarily binds the two rates together, either in theory or in practice.
      I can relieve the hon. Gentleman's mind of the anxiety that he or any basic rate taxpayer would be having tax deducted at 30 per cent.—33 per cent. under the Bill—whereas the man on "the lump" would be getting away with something less. The deduction for the purposes of "the lump" is taken without any allowance for personal reliefs or expenses of any sort. It is an immediate deduction from the top slice without any allowances whatever. The two are not on all fours.
      In our view, to adjust from 30 per cent. to 33 per cent. would make for considerable administrative difficulties. As I am sure the hon. Gentleman, who has great experience in these matters, will recognise, the Revenue is dependent to a large degree on contractors to operate the scheme for it. It is anxious to keep their good will. These calculations are often made in difficult and inconvenient physical conditions on site, and it would not be in the interests of good administration or co-operation between the Revenue and the main body of the construction industry to change from the now quite familiar 30 per cent. to the relatively awkward fraction of 33 per cent.
      Mr. Michael Shaw: I thank the Minister for that reply. It had not escaped my notice that Section 29 came into force in 1972–73 and the basic rate of 30 per cent. came into force in 1973–74. I felt it was clearly envisaged that the basic rate would be 30 per cent. and, therefore, this rate had been included in the 1971 Act. I felt it was worth having a word on this to show quite clearly that these

      1953
      two would not be completely linked in future. I fully accept that there may well be problems if the attempt were made to link them. Accordingly, I beg to task leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Question put and agreed to.
      Clause 19 ordered to stand part of the Bill.

    New Clause 1

      AMENDMENT OF SECTION 343 OF INCOME AND CORPORATION TAXES ACT 1970 TO ALLOW PENSION FUNDS TO INVEST IN BUILDING SOCIETIES AND RECLAIM INCOME TAX.
      Where any arrangements under section 343 of the Income and Corporation Taxes Act 1970 are in force in the case of any building society, as respects any year of assessment, income tax shall be deducted from, and repayment of income tax shall be made in respect of, dividends or interest payable in that year in respect of shares in or deposits with or loans to that building society by Pension Funds.—[Mr. William Clark.]
      Brought up, and read the First time.
      9.45 p.m.
      Mr. William Clark: I beg to move, That the clause be read a Second time.
      The Temporary Chairman: It will be convenient to discuss also new Clause 2
      —Consequential amendments:
      The enactment specified in the following table shall have effect with the amendments there specified, being amendments adapting and supplementing those enactments in consequences of the provisions of this Part of this Act.

  TABLE
  Income and Corporation Taxes Act 1970
  1. In section 343(1), after paragraph (a) there shall be added: —
  "(aa) on any sums as may be determined the society is not liable to account for and pay an amount representing income tax;
  and
  2. In section 343(3), in paragraph (a) after the words" notwithstanding anything in Part II of this Act" there shall be added the words "but subject to paragraph (v) of the proviso below".
  3. In section 343(3), in paragraph (6) for the words "subject to paragraph (i) of the proviso below "there shall be substituted the words" subject to paragraphs (i) and (v) of the proviso below".
  1954
  4. In section 343(3), there shall be added at the end:
  "and (v) the provisions of this subsection shall not apply to dividends or interest payable, in respect of shares in or deposits with or loans to a society, to Pension Funds" '.
  Mr. Clark: I am not necessarily wedded to the wording of the clause. It refers to a pension fund, but what I mean is a superannuation fund approved by the Board of Inland Revenue under Section 208 of the Income and Corporation Taxes Act 1970. I am sure that the Financial Secretary will not argue with me on the wording. What I want from him is an undertaking that the spirit behind the clause will be accepted by the Government.
  Much of the criticism of building societies is made in ignorance of what they do. I hope I shall not bore the Committee by saying that building societies can lend money to would-be house purchasers only if people invest in building societies. In 1951 31 per cent. of the houses in this country were owner-occupied. The figure today is just over 50 per cent. That is because over the past 25 years building societies have lent a tremendous amount of money to owner-occupiers. There are 15 million investors in building societies, the total investment is about £17,000 million and there are more than 4 million borrowers from building societies.
  People should recognise that over the years building societies have rendered sterling service to owner-occupiers. Those who criticise building societies seem to think that they have a responsibility to lend to all and sundry, but they can lend only investors' money, and it would be irresponsible of them not to take proper precautions when lending money to ensure that it will be repaid.
  As a digression, house owners are suffering from a high rate of interest. Building society interest is running at the rate of about 11 per cent. overall. I regret that the Government have set their face against the tax credit system, under which there would have been a 30 per cent.—now a 33 per cent.— reduction in the interest rate on a building society loan. With an automatic 33 per cent. reduction, the effective rate of interest on a building society loan would be 7 per cent. or 7½ per cent., which

  1955
  would be a great boon to the building society movement.
  I should like to explain the technicalities of the clause. To put it in a nutshell, under Section 343 of the Income and Corporation Taxes Act 1970 a building society is unable to repay tax to an investor. That means that for someone who invests £1,000 or £2,000 in a building society and gets 7½ per cent. interest tax-free there is no further tax liability. However, a person who invests in a building society may not be liable to tax at the standard rate. Such a person receiving dividends would get a tax repayment but, because of building societies' peculiar arrangements with the Inland Revenue, which have been built up over the years and have stood us in good stead, no repayment is allowed. The building societies have special arrangements with the Inland Revenue whereby they pay tax on behalf of their investors. It is called a composite rate, which is now running at 23·5 per cent. That rate is subject to negotiation, but I guess that it will be set at about 26 per cent.
  We must always remember that building societies borrow from the general public and the general public invest in the building societies. The institutions do not invest in the building societies. Investors in building societies can withdraw their money at very short notice— within seven or 14 days, or in some cases within a month. The building societies —and this has been at the bottom of their liquidity problems in the past two or three years—have suffered considerably from the fact that they borrow short from the public and then lend that money on a 20-year or 25-year basis. This amounts to the economic nonsense of borrowing short and lending long. I hope the clause will eradicate this state of affairs.
  When I originally thought of the provisions of the clause, the country was about to have a State reserve pension scheme. That scheme aimed at building up a fund to give everybody a pension at the age of 65 in addition to the ordinary retirement pension. I calculated that the amount of money which the State would have collected in contributions amounted to £260 million per year. This is long-term money, and it might be an idea to channel some of it into the
  1956
  building societies. One pays a contribution on an actuarial basis, and by the time one draws it one is 60 or 65. This is the only really long-term investment there is.
  The right hon. Lady the Secretary of State for Social Services has shelved the State reserve scheme, but no doubt will come forward with a further proposal. I trust that next time she will get her arithmetic right, for in past years the Labour Government have got their arithmetic on pensions wrong three times. When the right hon. Lady introduces some sort of State reserve scheme, it will be for the State to collect the superannuation contributions.
  I turn to a wider aspect relating to the position of pension funds. The occupational pension schemes and private pension schemes, which are admirable schemes, involve funds amounting to £1,400 million per year. The institutions must somehow invest those sums. Any institutional investor does not always invest in long-term securities. He may put some of the money on a short-term basis and may have some of the money on call, some of it in equities, but he will have some long-term money at his disposal. I believe that it would be desirable if we could get pension funds to invest in building societies. Why do they not do so at the moment? Pension funds are exempt from income tax. But I am sure, Mr. Murton, that you would not want me to go into that, and, in any case, it does not help my argument about lending by pension funds.
  Pension funds do not lend to building societies simply because if a pension fund lends £100 million or £200 million, for example, to a building society it will get its 7 per cent. tax free but, alas, it will not be able to reclaim the tax that the building society has paid on that investment. I am saying only that I do not want the repayment of tax from building societies to be extended to anyone but pension funds—approved superannuation pension funds, or whatever the definition may be.
  If the composite rate of tax is 26 per cent. and the going rate is 33 per cent., obviously, from an accountancy point of view, it is easy to keep investment of pension funds absolutely separate, and

  1957
  the building societies can pay the going rate on behalf of the pension fund. Presumably that rate will be 33 per cent., so there will be a repayment of 33 per cent. Compared to the ordinary investor paying 26 per cent., the pension fund paying 33 per cent. will be worse off. The pension fund will not necessarily get 7½ per cent. tax-free return. It will be more like 6¾ per cent or 6⅞ per cent. Grossed up, this will mean that pension funds will be able to invest in building societies and get a gross return of 10 per cent. or 10¼ per cent. By accepting the clause the Government will be able to channel more resources to the building societies.
  If the Financial Secretary accepts my formula of a special rate of 33 per cent. for money invested by pension funds it will cost the Revenue nothing. We have now reached the stupid position where the only long-term investors in the country are the pension funds—and the size of those funds will increase when the State reserve scheme gets going—and the only long-term lenders are the building societies. We should marry the two groups together. I hope the Financial Secretary has taken that on board. There is no party point in this. I want to ensure a continuous (low of funds to building societies so that the building societies can continue the work of helping owner-occupiers. That help will dry up if there is a cash flow problem if the interest rates go up too much or if the societies cannot compete with outside interest rates.
  We cannot continue to have the Government subvention to the building societies and that is something the Government should take on board. I hope that the Financial Secretary will give sympathetic consideration to the proposal. I would commend this proposal to a Conservative Government as much as to a Labour Government because it is logical and helpful to owner-occupiers. It will not cost the taxpayer a farthing but will do a tremendous amount of good.
  Mr. Robert Carr: I congratulate my hon. Friend the Member for Croydon, South (Mr. Clark) on bringing forward these new clauses. He has for a long time now, as I think the Committee knows, given a lot of constructive thought to this problem. I believe that his ideas deserve serious and positive
  1958
  consideration. I hope that that is what they will have.
  It being Ten o'clock, The CHAIRMAN left the Chair to report progress and ask leave to sit again.
  Committee report Progress.

  BUSINESS OF THE HOUSE
  Ordered,
  That the Motions relating to Ways and Means and to Procedure (Future Taxation) (No. 2) may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Thomas Cox.]

  FINANCE BILL
  Again considered in Committee.
  Question again proposed.
  Mr. Carr: As I was saying, my hon. Friend the Member for Croydon, South has given a great deal of constructive thought to this subject and I hope that the Financial Secretary will be able to assure us that the ideas which are embodied in the new clauses will receive serious and positive consideration. I am sure that there can be no doubt about the great need for new sources of savings to be channelled into the building societies.
  It seems that my hon. Friend's scheme has two major advantages. First, it involves no cost to the Revenue and, therefore, is unlike most bright and popular ideas. That is unusual, and I hope that my hon. Friend's scheme will be easier to accept on that account.
  Although my hon. Friend would be the first to say that his scheme bears no guarantee of producing results in all conditions, it seems to offer some real hope through the method he is suggesting of making investment in the building societies attractive to a whole new range of investment funds, to which it has hitherto been decisively unattractive. There is no doubt that if, as my hon. Friend said, we could marry the long-term investment sources of the pension funds to the building societies, which have to lend long term, we should be achieving something most helpful and substantial.
  I hope that the Financial Secretary will be able to tell us that he and the Government are prepared to take on board the

  1959
  spirit of these new clauses even if they may wish to make changes to them in detail. I think that the provisions within the clauses will be of considerable help in future. I ask the Financial Secretary to consider these matters seriously between now and Report. If he is not able to accept the clauses as they stand I hope that he will look at them in a constructive manner.
  Mr. John Pardoe: I wish to support the clause. It seems to be doing something important for the long-term future of housing. In the present crisis it is clearly the aim, as the hon. Member for Croydon, South (Mr. Clark) has spelt out, to get new funds into the building societies.
  I do not entirely share the hon. Gentleman's praises of the building society movement. To a certain extent I consider that it has been wasteful in its duplication and that its policies have been unimaginative, negative, methodical and, indeed, conservative. Having said that, there is clearly a desperate need to get more money to the potential owner-occupier as quickly as possible. The Government have made a move in that direction with their £500 million on an installment basis of £100 million a month.
  As the hon. Gentleman has already said, building societies get their cash by borrowing short and lending long. It is now clear to all hon. Members that that is an inadequate base for the future financing of the kind of expansion of owner-occupation that we desperately need if we are to solve the housing problem. We need a new source of funds— preferably a new long-term source—for owner-occupation.
  The clause would make it much more attractive to pension funds to put their money into building societies. There is a crisis in the building industry. The only solution, as the Government have partially recognised, is to get long-term effective demand—in other words, to provide the cash so that potential owner-occupiers can give confidence to the building industry to build houses for the future. That means having more funds available for house purchase. Short-term borrowing is not producing those funds, and is not likely to do so.
  1960
  The clause would not do the whole job. I am sure that the hon. Gentleman would be the first to recognise that. But in a very simple way it makes building societies a conceivable investment for the pension fund manager, which at present they are not.
  I should like to go much further. I should like to see index-linked mortgages and to see the interest rates and the capital debt index-linked. That would bring an immense amount of new pension fund money into the housing market. The clause goes some way, in a simple fashion, towards providing that new money, I hope without any cost to the taxpayer, without any cost to the Treasury. Therefore, I hope that the Government will be prepared to consider this principle.
  Mr. Michael Latham: In the interests of making progress, I restrained myself with great difficulty from speaking on Clause 19, but I cannot restrain myself from supporting the new clause.
  Before entering the House I had the honour to be director of the house builders federation, although I no longer have any connection with that organisation.
  It was suggested in our discussion earlier that the building society movement is not only very large, which we know to be true, but very important in the finances of this country. That is also true. The assets of one building society are bigger than the whole unit trust movement, I believe. Therefore, we know the size of the exercise with which we are dealing.
  It may well be that the clause, so ably moved by my hon. Friend the Member for Croydon, South (Mr. Clark), is an interesting idea that should be pursued and examined further. But I sound a note of warning. In particular, the money should be in the societies for a long time. That is most important. The lending must be long term in any scheme which is to be devised by which institutional money is to be attracted to the building societies. It is most important that it should not become hot money.
  By the nature of their activities, the building societies are on a rather peculiar gearing system. It would be disastrous if large sums of money flowed into them and were taken away quickly.

  1961
  The difficulty that must be examined—I am sure that the Financial Secretary will examine it when he considers the matter —is how, once the institutional money has got into the building societies, it stays there for a reasonable period so as to give stability to the housing programme, which we all want.
  I should like to ask the Financial Secretary some questions, although I appreciate that he may not be able to answer them off the cuff. The Treasury, with the Department of the Environment, is responsible for the present joint forecasting committee with the Building Societies Association, which was set up by my right hon. and learned Friend the Member for Hexham (Mr. Rippon) when he was Secretary of State for the Environment. It has an important rôle to perform in regulating the size of the building programme, which is crucial to the expectations of builders.
  There are two things I would ask of the hon. Gentleman. First, will he consider whether the builders should be included on that committee? I think that the rôle of the producers is very important, although I stress that I no longer have any interest in the matter.
  The second thing that I wish to ask the Financial Secretary is this. Is this forecasting committee considering at present not only how the £100 million tranches shall be allocated, and the rates of interest there shall be on them, and so on, but the future level of demand, the amount of mortgage money available, and so on? When at Question Time yesterday I asked the Minister for Housing and Construction about this, he said that the committee was not doing this at present. I think that I have paraphrased what he said reasonably well.
  It is most important that full, accurate forecasts should be made and that, having been made, they should be published. I hope that the Financial Secretary will comment upon that matter.
  I wish the clause well. It deserves considerable examination. Certainly if we are to get a suitable level of private housing output in this country it is absolutely crucial that the amount of money flowing into the building societies should be high and, above all, consistent in amount.
  Dr. Gilbert: I congratulate the hon. Member for Croydon, South (Mr. Clark)
  1962
  and echo what his right hon. Friend the Member for Carshalton (Mr. Carr) said about the interest that he has shown over a long period in subjects of this sort, which are of considerable complexity. I assure the hon. Gentleman that I would be the last person to rest any case that I might have against a case that he has advanced on technical defects in the wording of the new clause. I give that assurance without question.
  It may be for the convenience of the Committee if I dealt in passing with some of the other contributions before coming to the hon. Gentleman's main contribution to the debate.
  Concerning the questions posed by the hon. Member for Melton (Mr. Latham), I shall certainly be happy to pass on to the Department of the Environment his suggestion that builders be included on the joint forecasting committee. I am seized of his point about the committee considering the future level of demand. The hon. Gentleman would not expect me to go further than that at present.
  Concerning the matters raised by the hon. Member for Cornwall, North (Mr. Pardoe), we have already had one debate in this Committee on index linking of various sorts and we are due for another such debate before the evening is out. I hope that the hon. Member will forgive me for not following him into a discussion about index-linked mortgages on the new clause.
  I come to the points made by the right hon. Member for Carshalton and the hon. Member for Croydon, South. It is true that the proposals as put forward by the hon. Gentleman would not cost the taxpayer anything. Unfortunately, though, it would marginally cost various other people something—namely, the existing building societies' composite rate. To be fair, I think that it would be affected by only a very modest amount. I do not stress the case. But the technical point is that if one takes one body of potential or existing investors out, the composite rate could be marginally affected. But I do not wish to rest on that point.
  Mr. William Clark: Surely the hon. Gentleman is not entirely right in that sense. The composite rate is based on the fact that 78 per cent. of average investors, I think, are liable to tax at the standard rate and the other 22 per cent.

  1963
  are not. Consequently it is the correlation of those two figures that gives one the 23½ per cent. composite rate. The idea behind the new clause was to leave that composite rate as it is, but that any new money coming in from approved superannuation schemes would be accounted for separately and then the repayment of tax would be made only on that. Consequently, there should be no side effect at all for the ordinary investor in a building society.
  Dr. Gilbert: I undertake to look at that matter in greater detail later, but I am advised at present that there could be a modest effect on the composite rate. As I have said, however, I do not seek to rest on that point.
  The hon. Gentleman's proposal, which was so eloquently laid before the Committee, would seek to take pension funds outside composite rate arrangements entirely and give them the right to claim tax that had been deducted. This is an extremely constructive proposal, but there are a couple of reservations about which I have to tell the hon. Gentleman.
  10.15 p.m.
  The first of my difficulties concerns the effectiveness of the amendment in terms of channeling more funds into the building societies. The hon. Gentleman was good enough to suggest that the effect of an alteration in the arrangements of the kind that he proposed would bring about a return to the pension funds in the range of 10 or 10¼ per cent. I had in mind a slightly higher figure. I was thinking of something a little over 11 per cent. But, as I am sure he will appreciate, in these days of extremely high interest rates the shrewd investment manager of a pension fund can very often get a return considerably in excess even of 10 or 11 per cent. if he is successful in his investments. So, to that extent, I am confident that the hon. Gentleman's proposals would not be as fruitful in channeling funds into the building societies as he hopes.
  The second difficulty that I have at the moment with the hon. Gentleman's proposals is that they derogate from the principle, at any rate, of the composite rate. As he will know, the composite rate brings considerable benefits both to the Revenue and to the building societies. If, for any extraneous reason, we remove just one category of investors not liable to
  1964
  income tax, we tend to undermine the principle on which the composite rate is founded.
  I take the hon. Gentleman's point that he is not asking for this concession for anything other than pension funds. I see the force of his argument. But he will be the first to recognise that, even though he might be prepared to stick at pension funds, if we were to make the concession for which he asked, there would be considerable pressure on the Treasury to advance the line of concessions still further to other bodies. Once we opened the door for pension funds, we would find it difficult to restrict this relatively favored treatment to them. There would be other tax-exempt bodies such as charities which would have a claim to such treatment. All sorts of non-liable investors would seek preferential treatment on the same lines as pension funds.
  Having told the hon. Gentleman of the difficulties that I have about his proposals, I repeat that I regard them as very constructive, and I should like to look at them again in the spirit in which he advanced them. If he is prepared to withdraw his clause now, I undertake to look at it carefully between now and Report.
  Mr. William Clark: I am grateful to the Financial Secretary. I do not suggest that he pays too much attention to creating a precedent in terms of pension funds, because that argument can be thrown back at him. Pension funds are exempt from lax, and the argument could be used that because pension funds are exempt from tax many other people should be.
  I am not suggesting that the principle should be extended. The Financial Secretary said that charities might want to invest in this, that or the other. However, with charities we are in exactly the same position as with the general public. Charities do not normally lend long. They lend short. Only pension funds lend long.
  I shall not pursue the argument at this hour. I am grateful for what the Financial Secretary said. In view of his categorical undertaking to do something between now and Report, I beg to ask leave to withdraw the clause.
  Motion, and clause, by leave withdrawn.

New Clause 8

  CAPITAL GAINS TAX AND INFLATION
  (1) Part 111 of the Finance Act 1965 shall be amended in accordance with the following provisions of this section.
  (2) In section 22(10) (definition of chargeable gain) for the words "every gain" shall be substituted the words "every real gain".
  (3) After section 22(10) shall be added: —
  (11) in the preceding subsection 'real' gain means the money value of the gain diminished by reference to any increase in the cost of living index since the date of acquisition ".—[Mr. David Mitchell]
  Brought up, and read the First time.
  Mr. David Mitchell: I beg to move, That the clause be read a Second time.
  I understand that we may discuss at the same time New Clause 11—owable deductions in computing capital gains.
  I notice the absence from the Notice Paper of the names of some of my right hon. and hon. Friends in the list of hon. Members appended to this amendment. For that reason, I address my remarks to them as well as to the Financial Secretary.
  I want to go back to the original intention of the Labour Government in 1965 in introducing a capital gains tax. I quote from the speech of the then Chancellor of the Exchequer on 11th November 1964. Referring to capital gains tax, he said:
  "I intend to make a start next spring with two major tax reforms. The first will be a capital gains tax. The dividing line between capital income has become blurred. The Income Tax system has been misused by some to avoid paying Income Tax by entering into arrangements which dress up income, which is taxable, to look like capital, which is mainly untaxed."—[OFFICIAL REPORT, 11th November 1964; Vol. 701, c. 1039–40.]
  I accept for the purposes of the discussion that that purpose is not one with which I am to quarrel. The purpose of my new clause is very limited. I do not at the moment question even the principle of tax on the real increase in the value of investment. I shall be happy to question that on another occasion. Tonight I have a much more limited purpose, that of seeking to question tax on the paper gain which arises as a result of inflation.
  1966
  My right hon. Friends during the passage of the 1965 capital gains tax legislation took a robust view in opposing this point and seeking to link to inflation a rebate for any liability to tax. I am sorry that with the passage of time they have changed their view on occasions to one of saying "Do not get worked up about this. We are tackling inflation and it is better to stop inflation than to account for it." But we have to live in the real world and accept that inflation is with us. It is no use pretending that we can expect any Chancellor of the Exchequer, no matter how successful he may be, to make it go away. We take account of inflation in wages and prices and even in income tax. Chancellors have come forward and announced reductions in income tax. I do not charge the present Chancellor with such an act, but it has been done. As a result of fiscal drag Chancellors have been able to do this, and so they have taken account of the effect of inflation in the real world, but they have not taken account of inflation in relation to capital gains tax.
  I can give a simple straightforward example of how this situation operates in the real world. Supposing one had invested £1,000 in 1965. What would that be worth today? Would it be worth £1,400, £1,600 or £1,700; no, it would be worth £1,815 today purely on the decline in the value of money. I say "today" but that figure is for April 1974 and since inflation is gathering pace it is, of course, worse now. Nevertheless, of the £1,000 investment £815 is now to have 30 per cent. capital gains tax paid on it, and 45 per cent. of the paper value of any investment held today since 1965 is being made liable to a 30 per cent. tax. That is not a tax on gain but a wealth lax and on real investment.
  I should have thought that it would have been agreed on both sides of the Committee that the crucial need for the business and economy of the country is to generate an increasing flow of investment and an increasing amount of savings. Yet what do we do? We tax it and, indeed, do our best to discourage it taking place.
  I make no apology for referring to small businesses. The Bolton Committee, when it examined the position of small businesses, drew attention to the

  1967
  fact that they were businesses which expanded by clawing back their own profits. Any business proprietor who now considers expanding his business must take account of the fact that money which he ploughs back into it ends up as increased capital value of the business and has a 30 per cent. tax liability on it. So we discourage the proprietor from expanding his business.
  Then there is the 20-year cycle. Businesses are alive, moving from one generation to another. When they are given— not sold but given—from one generation to another, 30 per cent. of the increase in the value of the business has to be found. At the very time that the younger generation comes in to build on the foundation laid by a previous generation, retrenchment has to be the order of the day to find the funds to pay capital gains tax.
  Then there are farmers. The breakup of economic farming units is an absolute necessity in passing a farm from one generation to another, unless one is totally to prevent—perhaps that is what Labour Members want—any transference from one generation to another of a business or a firm.
  Mr. Russell Kerr: Declare an interest.
  Mr. Mitchell: I do declare an interest. I am a small businessman. I am not a farmer; I wish I were.
  Then there is the locking-in effect, which means that many older people stay in their businesses when they should have retired because of the liability to capital gains tax, which means that they face a real decline in the amount on which they will keep themselves in their old age. Among bigger businesses, the operation of the money market is dislocated. Instead of its being the best reallocation of resources in the economy, the blockage of capital gains tax liability locks investors into investments which they should have shed.
  These are many of the practical damages caused by capital gains tax which taxes inflation, the paper increase in the value of an investment. I will not embarrass my hon. Friend the Member for Worthing (Mr. Higgins) by quoting from some of his past speeches, but I am
  1968
  delighted to record the stout and robust way in which in 1965 he drew attention to the dangers and risks in this aspect. I hope that he will do so again tonight and that he will join me and some of my hon. Friends in the Lobby.
  I would ask the Committee to consider the effect of this situation on the sort of society in which we live. Those in the Labour Party who believe in Socialism believe in concentrating wealth into the hands of the State. This is a very effective way of doing it. No less than £1,000 million has already passed from private investment into the hands of State and Government. Man proposes and Benn disposes.
  We Conservatives believe in the creation of new wealth, in spreading wealth throughout the community, in encouraging investment and in all those concepts which are damaged by the taxation of paper gains by capital gains tax. For these reasons and for reasons of simple social justice—for this is confiscation, not taxation—I hope that I shall have the support of my hon. Friends in seeking to make the sort of society in which we believe.
  10.30 p.m.
  Mr. Bruce-Gardyne: I rise to speak very briefly—
  Mr. Russell Kerr: Hear, hear.
  Mr. Bruce-Gardyne: I have a train to catch, hon. Members will be relieved to hear.
  I support my hon. Friend the Member for Basingstoke (Mr. Mitchell), who has moved the Second Reading of his new clause most eloquently. We are also discussing new Clause 11, in my name and that of my hon. and learned Friend the Member for Dover and Deal (Mr. Rees). New Clause 8 is designed to achieve the inflation-proofing of capital gains tax. In case the Financial Secretary should be feeling too mean to accept that new clause, I hope that he will look with favour on mine, which is rather more modest, being designed simply to offset the impact of inflation in capital gains by only 5 per cent. per annum. At the present rate of inflation presided over by this Government, 5 per cent. per annum is nothing like inflation-proof, not by a very large margin.

  1969
  The Financial Secretary will recognise this amendment. We discussed it last year for five and a half hours. We may be able to dispose of it more swiftly tonight. There were special factors at work last year. When we discussed the proposition contained in New Clause 11 last year the Financial Secretary, speaking on that occasion on behalf of the Opposition, said he had some sympathy with the proposition because, in effect, he acknowledged that capital gains tax without some form of tapering for the impact of inflation amounted to a selective wealth tax. He was in favour of a wealth tax. We are now threatened with this famous wealth tax. In advance of that I should like to assume that the Financial Secretary will be able to accept New Clause 11, if not New Clause 8.
  From this side of the Committee we have demonstrated cogently the strength of the case for some relief from the impact of this highly discriminatory wealth tax—the effect of the capital gains tax—which is in no sense inflation-proof at a time of rampant inflation.
  I give one example of what is involved under the present arrangements. Last year one of my constituents pointed out that she owned jointly with her mother a small farm which they purchased in 1965 for £15,000. She and her brother worked the farm and one of her sons worked on the farm with them. Another son had an independent business. The mother reckoned it was tough that the son who worked on the farm should receive a very low wage, because that was all they could pay him. He had no participation in the capital value of the farm, whereas his brother was developing a business independently and enjoying capital appreciation and a much higher wage. She went to her solicitor and asked him to draw up a deed to enable her to dispose of half of her share in this small farm to her son. She was staggered to be told it would cost her £7,000 to do so. That is the impact of capital gains tax without any form of tapering provision for the impact of inflation. It is grossly unjust. It is time this was recognised.
  The case has been argued on recurrent Finance Bills. It has lost nothing in the telling year after year, as inflation has gathered momentum, until we are at the present horrific rate over which the
  1970
  Government are presiding when the case is overwhelming.
  If the hon. Gentleman the Financial Secretary cannot accept New Clause 8, he can at least accept New Clause 11.
  Sir John Hall: I support this provision partly from a feeling of nostalgia. From the time capital gains tax was introduced in its present form, year after year when Labour were in office I moved similar amendments designed to draw attention to the fact that this tax was not a tax on capital gains but a tax on capital. Even in those days, when inflation was running at a much less severe rate than it now is, this was true.
  It is even truer today that capital gains tax, in its present form, is destroying capital. This may be the intention, but the Government should be honest enough to say so. They should say "We are trying not only to tax capital gains but to tax capital. This is one form of wealth tax." I hope that when Labor's Green Paper on wealth tax is published it will take this matter into account, so that we do not have a wealth tax imposed twice—once in its normal form and then, in a hidden form, through capital gains tax.
  In equity, there is no justification for continuing a tax of this kind without some tapering measure taking inflation into account. I appreciate that to talk of equity in the same breath as fiscal legislation is nonsense, since fiscal legislation rarely has much to do with equity. I hope the Financial Secretary will admit that without doubt the imposition of capital gains tax in its present form will destroy capital. If he admits that, at least we shall know where we are. I hope that he will be more forthcoming than that and be prepared, if not to accept one of the new clauses, to suggest measures of his own which will have the same sort of effect.
  Mr. R. J. Maxwell-Hyslop: My hon. Friend the Member for Wycombe (Mr. Hall) emphasised that a capital gains tax in a period of inflation is a capital levy smuggled in under the guise of a capital gains tax. Whether or not one happens to believe that a capital levy is either a wise or a morally correct thing to do—and I do not believe it is either—what one can agree is that

  1971
  arguments for a capital levy are different from those employed for a capital gains tax. The strongest logical reason for accepting New Clause 8 is the argument that one form of tax is being smuggled in under the guise of another form of tax.
  There are also other cogent reasons for accepting the provision. The Labour Party, especially in the constituencies, likes to claim that it is opposed to the take-over of small businesses or their absorption into large businesses. But again this is what becomes inevitable when one has a capital levy smuggled in in the guise of a capital gains tax.
  In many small family enterprises the only way in which the capital can be raised to pay what is, in effect, a capital levy is by selling out to a much larger competitor. The net effect of this running through the economy is to agglomerate into larger and larger units what was once a highly competitive structure of small enterprises. Perhaps the Labour Party considers this to be a desirable aim, but its members should realise what is happening. No party is guiltless in this matter. The two elements should have been separated long ago. There should have been introduced into the computation of capital gains tax a discount for the change in the value of money. I have pressed this course on my right hon. Friends since the early 1960s. No time could be more appropriate than tonight to embody this new clause because at no time has the rate of inflation been so high. The higher the rate of inflation we have and expect, the more compelling is the argument for embodying the clause in the Bill.
  Mr. MacGregor: I support the clause. As a new Member I am well aware that this clause, or variations of it, have been proposed before. At the rate of inflation we have been experiencing recently, the need for such a clause becomes more pressing. Capital gains tax in its present form is much more penal. We have had many debates about inflation indexing, but this one is different. The previous debates were concerned with keeping the threshold allowances for the higher rates of tax at the same real levels as in whatever earlier period we were choosing.
  Here we are talking about whether a capital gain actually exists. For example,
  1972
  if at the date of the introduction of capital gains tax in April 1965 an investor had invested £100 in each of the 30 shares in the Financial Times share index he would at the beginning of this year have had an apparent gain of £4,743. But the effect of capital gains tax and inflation turns that into a loss of nearly £800.
  To put it another way, if a person had acquired an asset between 1965 and 1973 he would now have to show a so-called gain of 95 per cent., almost double, simply to break even. We can see that capital gains tax as it stands is a fraud and a disincentive to saving. I do not wish to expand now on the importance of saving. We all know that this year the effect of inflation and the expected rise in prices, coupled with the net return on savings when the highest increases in tax through this Bill are taken into account, has meant that there is no incentive to save.
  The effect of the Budget has been to reduce even further the incentive to save. Capital gains tax is a further severe disincentive. Acceptance of the clause would at least ameliorate the effect of the rest of the Bill on savings.
  Dr. Gilbert: As the hon. Member for Norfolk, South (Mr. MacGregor) has rightly said, we have already had several debates on indexing during the course of the Bill. I do not know whether this will be the last. I doubt it. I recognise that the hon. Member for Basingstoke (Mr. Mitchell), who moved this clause so fluently, has been perfectly consistent in urging his point of view on his own Government no less than this one. That is true of most of his hon. Friends who supported him.
  As the hon. Member for South Angus (Mr. Bruce-Gardyne)—who has explained to me why he has had to leave—said, when debating the 1972 Finance Bill I recognised that there was an element of unfairness in capital gains tax in that it did not take account of considerations of this sort, particularly in times of severe inflation. I have sympathy with what the hon. Gentleman is putting forward.
  Before hon. Gentlemen think that I am about to have a brainstorm, let me hasten to add that they will recognise that I was also consistent in that in Committee, while I had sympathy with the point

  1973
  of view that there was an element of unfairness, I never supported hon. Gentlemen in a Division for the simple reason that it was always my view, and that of my hon. Friends, that this was only one relatively minor element of unfairness in a fiscal system in which there were many other unfair nesses which needed to be attacked before moving in that direction.
  10.45 p.m.
  It might have been the hon. Member for Basingstoke who alluded to the series of rugged speeches made by his hon. Friend the Member for Worthing (Mr. Higgins) in 1965. Unfortunately, I was not then in the House to be privileged to hear those speeches. I am equipped with some rugged speeches made by the hon. Member for St. Ives (Mr. Nott) in Committee a couple of years ago which I am sure will be familiar to the hon. Member for Basingstoke. I do not seek to embarrass him by quoting them at him now. Suffice it to say that I am sure the hon. Gentleman recognises that once the principle of indexation is conceded in the tax system it is capable of indefinite expansion. No sooner do we have indexation of capital gains than we have the problem of the indexation of profits and the putting up of a case for the indexation of basic income tax. To say that it would simplify the tax system is nonsense. Hon Gentlemen opposite, who have many times urged the need for simplification of the tax system, will recognise that there is an element of conflict between the two objectives. The only answer would be to seek to reduce the rate of inflation, as the hon. Member for St. Ives said in the Committee debate to which I have alluded.
  In New Clause 11 there is an automatic formula for a 5 per cent. indexation year by year regardless of the rate of inflation over which the hon. Member for South Angus, choosing his words carefully, said that we were presiding. He did not say that we were agents of that inflation. It is not for me to suggest that in the foreseeable future we shall succeed in bringing the rate of inflation below 5 per cent, per annum. I only hope that we shall. Should that happy day dawn, a formula of the sort suggested in New Clause 11
  would produce uncovenanted benefits for those who are unfortunate enough to pay capital gains tax.
  For reasons which I am sure the hon. Member for Basingstoke appreciates. I cannot advise the Committee to accept the clause.
  Mr. Robert Carr: I shall be brief, which is a pity because this is an important subject which deserves lengthy discussion. However, at this late hour it is everyone's wish that it should be settled quickly.
  Had the Financial Secretary said what he said in the context of a Government who were pursuing a genuinely determined anti-inflation policy it might have cut some ice. But in view of the Government's policy, which is to tackle inflation in the manner of building sandcastles to stop the incoming tide, what he said cuts no ice and is unacceptable to us.
  If we are to have a healthy economy, investment must be encouraged and protected. It is essential for the independence and well-being of millions of individual citizens that investment can be made with confidence and that it can be protected. That is also essential for the stability of society as a whole. We shall not get strength and confidence in investment if at one and the same time we have inflation at this rate and real capital losses and then insist on taxing not capital gains but capital losses. For all those reasons I advise my right hon. and hon. Friends—
  Dr. Gilbert: Will the right hon Gentleman enlighten the Committee as to why, when inflation reached unprecedented levels under his administration, he did not introduce the proposals on which he is now so keen
  Mr. Carr: We were at least having a genuine battle against inflation which the present Government have given up. I advise my hon. and right hon. Friends to divide the Committee in support of the clause.
  Question put, That the clause be read a Second time: —
  The Committee divided: Ayes 118, Noes 136.

  Brittan, Leon

  King, Evelyn (Dorset, S.)

  Price, David (Eastleigh)

  Bryan, Sir Paul

  Knox, David

  Rathbone, Tim

  Buck, Antony

  Lamont, Norman

  Rees, Peter (Dover & Deal)

  Budgen, Nick

  Lane, David

  Rees-Davies, W. R.

  Bulmer, Esmond

  Lawrence, Ivan

  Rifkind, Malcolm

  Burden, F. A.

  Lester, Jim (Beeston)

  Roberts. Michael (Cardiff, N.-W.)

  Butler, Adam (Bosworthi)

  Lloyd, Ian (Havant & Waterloo)

  Ross, Stephen (Isle of Wight)

  Carlisle, Mark

  Luce, Richard

  Sainsbury, Tim

  Carr, Rt. Hn. Robert

  McAdden, Sir Stephen

  Shaw, Giles (Pudsey)

  Chataway, Rt. Hn. Christopher

  MacArthur, Ian

  Shaw, Michael (Scarborough)

  Clark, A. K. M. (Plymouth, Sutton)

  Macfarlane, Neil

  Silvester, Fred

  Clegg, Walter

  MacGregor, John

  Sims, Roger

  Cope, John

  McLaren, Martin

  Smith, Dudley (W'wick&L'm'ngton)

  Corrie, John

  Macmillan, Rt. Hn. M. (Farnham)

  Spicer, Jim (Dorset, W.)

  Crouch, David

  Marshall, Michael (Arundel)

  Spicer, Michael (Worcestershire, S.)

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

  Mother, Carol

  Stanbrook, Ivor

  Dodsworth, Geoffrey

  Maude, Angus

  Steen, Anthony (L'pool, Waver tree)

  Drayson, Burnaby

  Maxwell-Hyslop, R. J.

  Stewart, Ian (Hitchin)

  Durant, Tony

  Miller, Hal (B'grove & R'ditch)

  Taylor, Robert (Croydon, N.W.)

  Fisher, Sir Nigel

  Miscampbell, Norman

  Tebbit, Norman

  Fox, Marcus

  Mitchell, David (Basingstoke)

  Temple-Morris, Peter

  Gardiner, George (Reigate&Banstead)

  Moate, Roger

  Thomas, Rt. Hn. P. (B'net.H'dn S.)

  Goodhart, Philip

  Money, Ernie

  Townsend, C. D.

  Goodlad, A.

  Morgan, Geraint

  Trotter, Neville

  Gorst, John

  Morgan-Giles, Rear-Adm.

  Tugendhat, Christopher

  Gower, Sir Raymond (Barry)

  Morris, Michael (Northampton, S.)

  van Straubenzee, W. R.

  Grant, Anthony (Harrow, C.)

  Morrison, Charles (Devizes)

  Vaughan, Dr. Gerard

  Grieve, Percy

  Morrison, Peter (City of Chester)

  Viggers, Peter

  Grist, Ian

  Mudd, David

  Waddington, David

  Hall, Sir John

  Neave, Airey

  Wakeham, John

  Hall-Davis, A. G. F.

  Neubert, Michael

  Weatherill, Bernard

  Hampson, Dr. Keith

  Newton, Tony (Braintree)

  Winterton, Nicholas

  Havers, Sir Michael

  Page, Rt. Hn. Graham (Crosby)

  Worsley, Sir Marcus

  Hawkins, Paul

  Pardoe, John

  Young, Sir George (Ealing, Acton)

  Higgins, Terence

  Parkinson, Cecil (Hertfordshire, S.)

  Hordern, Peter

  Percival, Ian

  TELLERS FOR THE AYES:

  Howe, Rt.Hn. Sir Geoffrey (Surrey, E.)

  Peyton, Rt. Hn. John

  Mr. Hamish Gray and

  Jenkins, Rt. Hn. P. (R'dgeW'std&W'fd)

  Mr. John Stradling Thomas.

  NOES

  Atkins, Ronald (Preston, N.)

  Fraser, John (Lambeth, Norwood)

  Marks, Kenneth

  Barnett, Joel (Heywood & Royston)

  Freeson, Reginald

  Marshall, Dr. Edmund (Goole)

  Bates, Alf

  Garrett, John (Norwich, S.)

  Meacher, Michael

  Bennett, Andrew F. (Stockport, N.)

  Garrett, W. E. (Walisend)

  Mellish, Rt. Hn. Robert

  Bishop, E. S.

  George, Bruce

  Millan, Bruce

  Blenkinsop, Arthur

  Gilbert, Dr. John

  Molloy, William

  Boardman, H. (Leigh)

  Golding, John

  Morris, Charles R. (Opens haw)

  Booth, Albert

  Graham, Ted

  Mulley, Rt. Hn. Frederick

  Brown, Hugh D. (Glasgow, Provan)

  Grant, George (Morpeth)

  Murray, Ronald King

  Callaghan, Jim (M'dd'ton & Pr'wich)

  Grant, John (Islington, C.)

  Newens, Stanley (Harlow)

  Clemitson, Ivor

  Griffiths, Eddie (Sheffield, Brightside)

  O'Halloran, Michael

  Cocks, Michael

  Hardy, Peter

  O'Malley, Brian

  Cohen, Stanley

  Harper, Joseph

  Ovenden, John

  Coleman, Donald

  Harrison, Walter (Wakefield)

  Palmer, Arthur

  Colquhoun, Mrs. M. N.

  Hooley, Frank

  Parker, John (Dagenham)

  Colcannon, J. D.

  Horam, John

  Parry, Robert

  Conlan. Bernard

  Howell, Denis (B'ham, Small Heath)

  Pendry, Tom

  Cook, Robert F. (Edinburgh, C.)

  Huckfield, Leslie

  Prescott, John

  Craigen, J. M. (G'gow, Maryhill)

  Hughes, Mark (Durham)

  Roberts, Albert (Normanton)

  Crosland, Rt. Hn. Anthony

  Irvine, Rt. Hn. Sir A. (L'p'l.EdgeHill)

  Roderick, Caerwyn E.

  Cryer, G. R.

  Jackson Colin

  Rodgers, George (Chorley)

  Dalyell, Tarn

  Janner, Greville

  Ross, Rt. Hn. William (Kilmarnock)

  Davies, Bryan (Enfield, N.)

  John, Brynmor

  Rowlands, Edward

  Davies, Ifor (Gower)

  Jones, Dan (Burnley)

  Silkin, Rt. Hn. John (L'sham.D'ford)

  Deakins, Eric

  Jones, Gwynoro (Carmarthen)

  Silverman, Julius

  Dean, Joseph (Leeds, W.)

  Jones, Alec (Rhondda)

  Skinner Dennis

  Delray, Hugh

  Judd, Frank

  Smith, John (Lanarkshire, N.)

  Dell, Rt. Hn. Edmund

  Kaufman, Gerald

  Snape, Peter

  Doig, Peter

  Kerr, Russell

  Spearing, Nigel

  Dormant, J. D.

  Kilroy-Silk, Robert

  Stallard, A. W.

  Douglas-Mann, Bruce

  Kinnock, Neil

  Stoddart, David (Swindon)

  Duffy, A. E. P.

  Lamborn, Harry

  Stone house, Rt. Hn. John

  Dunn, James A.

  Lamont, James

  Strang, Gavin

  Eadie, Alex

  Latham, Arthur (CityofW'minsterP'ton)

  Swain, Thomas

  Edge, Geoff

  Ledbetter, Ted

  Tavern, Dick

  Ellis, Tom (Wrexham)

  Lewis, Ron (Carlisle)

  Tinn, James

  English, Michael

  Loughlin, Charles

  Tomlinson, John

  Evans, Fred (Caerphilly)

  Lyon, Alexander W. (York)

  Tuck, Raphael

  Evans, John (Newton)

  MacFarquhar, Roderick

  Urwin, T. W.

  Faults, Andrew

  McGuire, Michael

  Varley, Rt. Hn. Eric G.

  Ferny Hough, Rt. Hn. E.

  Mackenzie, Gregor

  Wainwright, Richard (Coins Valley)

  Flannery, Martin

  Maclennan, Robert

  Walker, Terry (kingwood)

  Fletcher, Ted (Darlington)

  Madden, M. 0. F.

  Wellbeloved, James

  1976

  1977

  Whitehead, Phillip

  Woof, Robert

  Williams, Alan Lee (Hvrng, Hchurch)

  Wriggles worth, Ian

  TELLERS FOR THE NOES

  Wise, Mrs. Audrey

  Young, David (Bolton, E.)

  Mr. Thomas Cox and

  Woodall, Alec

  Mr. Laurie Pavitt.

  Question accordingly negative.
  To report Progress and ask leave to sit again.—[Mr. Harper.]
  Committee report Progress; to sit again tomorrow.

WAYS AND MEANS

  RESIDENCE (INCOME TAX AND CAPITAL GAINS TAX)
  Resolved,
  That provision may be made whereby for the purposes of income tax and capital gains tax residence in the United Kingdom has in certain circumstances the same consequences as domicile in the United Kingdom.—[Mr. Joel Barnett.]

  PROCEDURE (FUTURE TAXATION)
  (No. 2)
  Resolved,
  That any provision included in the Finance Bill in pursuance of the Order of this House of 1st April 1974 authorising provisions relating to ordinary residence in the United Kingdom and taking effect in a future year may be amended as if in that order the word 'ordinary' had been omitted.—[Mr. Joel Barnett.]

  CHANNEL TUNNEL [MONEY] (No. 2)
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purpose of any Act of the present Session to provide for the construction and operation of a railway tunnel system under the English Channel, it is expedient to authorise—

  (1) the payment out of money provided by Parliament of sums required to meet expenditure incurred by the Secretary of State in making payments for the purpose of restoring any land in pursuance of that Act;

  (2) the payment out of money provided by Parliament of any increase attributable to that Act in the sums so payable under any other enactment in connection with the use of the tunnel system;

  (3) the payment out of the Consolidated Fund of such sums as may be required for fulfilling guarantees given by the Treasury in relation to money borrowed for the purpose of providing finance for the construc-
  1978
  tion and maintenance of the tunnel system provided the sums so borrowed do not exceed £1,000 million.— [Mr. Harper.]

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

  RENT FREEZE
  11.2 p.m.
  Sir John Eden: I want tonight to speak briefly on behalf of landlords—not the property companies, for some of which I have no time whatever, or for those whose main business activity is the ownership of buildings for letting. The landlords I have in mind are those who own one or two houses besides the one in which they live or the man who may be the owner-occupier of a home which is divided into flats. These people can best be described as small private landlords. They include a high proportion of retired people whose life savings have been invested in the property as a hedge against inflation and to provide some security for their old age. Many live in my constituency and there are doubtless thousands throughout the country. All have been adversely affected by the Government's order freezing rents, and in several cases known to me there is evidence of real hardship.
  I ask the Minister to try to set on one side his undoubted prejudice against the private landlord as such and to comprehend the extent of the injustice for which his order is directly responsible.
  I want to put my remarks into balance by making clear that I am fully alive to the widespread unhappiness caused by inadequate housing conditions. People come to my constituency who find it necessary to draw attention to the plight of the homeless by illegally squatting in private premises.
  I am aware of individual cases of hardship and I am ready at any time to take up the cudgels on behalf of tenants where there is evidence of unscrupulous intimidation by private landlords. I do not want to make out that all small private landlords are good, but I

  1979
  emphasise that only very few are bad. In my constituency I know of more cases of abuse by the tenant than by the landlord. It is regrettably such a common experience that many people are deterred from letting rooms which would otherwise come on to the market. That applies to all forms of letting including, most unfairly, instances in which the owner of holiday accommodation has agreed to a cheap short-term let for the winter months only to find that when summer comes the tenant refuses to leave. The consequences of such a breach of faith can be a costly nightmare for the owner, as I am sure hon. Members will understand.
  There is no doubt in my mind that so heavily is legislation now loaded against the landlord that many people who would otherwise make rooms available are deterred from doing so by fear of being victimized by a bullying tenants exercising the muscle-power which the protection of the law undoubtedly gives him.
  On top of all that I have described, there is now the rent freeze. When I raised this matter in the House at Question Time on 8th May the Minister told me that he was examining the effects of the rent freeze order. Perhaps he will now explain just what has been involved in that examination and, more importantly, what has been the outcome. Has he yet come to any conclusions? If so, will he share them with the House? Will he tell us what the position is for those who under the Housing Finance Act 1972 registered a regulated rent which provided for increments to be paid over the period covered by the freeze? If a fair rent was fixed in 1971, it is clearly becoming progressively less fair as the rent freeze continues.
  The hon. Gentleman will be aware of the way that costs have risen in the past few months. I know that there is dispensation from the operation of the rent freeze in respect of rates and in respect of any genuine improvements which are made to the premises, but what has the Minister to say about the average increase of 30 per cent. on electricity charges, the 70 per cent. increase in night storage heater tariffs and the 100 per cent. increase for heating oil? Will he cast his
  1980
  mind forward to the circumstances which are likely to arise this winter and the effect that those increases are likely to have on the return that landlords can expect to get from the capital they have invested in the premises they have put out to let?
  It would be only fair if, in assessing rents under the Rent Act, rent officers were to pay more regard to the upward movement of costs and values at a time when, because of the operation of the rent freeze, no increase can take place which has regard to the way in which costs have gone up. We are told that the purpose of the rent freeze is to help to counter inflation. I have had letters from the Minister and from his hon. Friend the Minister for Housing and Construction explaining that while they recognise that in the operation of the Rent Act difficulties are undoubtedly being caused, such difficulties have to be endured in the overriding interest of countering inflation. I hope that tonight I shall not have from the hon. Gentleman a catalogue of statistics. I just want the briefest of comments from him, and I shall be very brief myself.
  We are told that the rent freeze has been designed to help to counter inflation. The hon. Gentleman will recognise how hollow that sounds to my constituents and others like them when they have to contemplate cost increases on the scale I have indicated. This is an exercise in futility.
  What is to happen this winter? Why should these people, many of whom have smaller incomes than those of their tenants, be even more out of pocket? Is this the Socialist concept of equality, which requires an elderly, low-income landlord to subsidise the rent of a young, able-bodied, wage-earning tenant? That is not a figment of my imagination. I have many examples where that is exactly the situation which has been brought about by the operation of the order.
  I emphasise again that it is for the small landlord that I speak tonight, for him and his kind who provide tens of thousands of homes throughout the country and who are being done a great injustice. They certainly deserve better treatment than that. Is there the slightest chance that they will get it from the present Government?
  11.12 p.m.
  The Under-Secretary of State for the Environment (Mr. Gerald Kaufman): The right hon. Member for Bournemouth, West (Sir J. Eden) has put his case with considerable strength of feeling. He was a distinguished member of the previous Government, which in 1972 introduced a similar rent freeze—in violation of the manifesto upon which his party was elected. We brought in a rent freeze three days after we became the Government. We did it under the legislation of the right hon. Gentleman's party and in fulfillment of our election pledge.
  The right hon. Gentleman's Government's rent freeze came in at the beginning of the winter, when the need for fuel services to which he referred was at its height. Our rent freeze came in at the end of the winter, and on present plans, provided we get our legislation for the first stage of the repeal of the Housing Finance Act through the House, it will end on 31st December.
  When the Government of which the right hon. Gentleman was a member introduced a rent freeze, we did not hear him protest at the impact on his constituents.
  Sir J. Eden: The hon. Gentleman said that the freeze will end on 31st December. Am I correct in taking it that no form of order or restraint will take its place?
  Mr. Kaufman: What I said was that, provided we got our legislation through the House for the first stage of the repeal of the Housing Finance Act, the rent freeze would lapse. Otherwise, we shall have to look at the situation again. It will depend on whether our legislation is through in time.
  The right hon. Gentleman did not protest at the impact of his Government's rent freeze, nor did any other Conservative Member campaign on behalf of the landlords to get it lifted. It was regarded as an indispensable part of that Government's counter-inflation policy. Nevertheless the present Government recognise that housing associations and good landlords who supply services involving heating and hot water have a case.
  As regards housing associations, which are non-profit-making organisations fulfilling a recognised social function, we have decided to compensate them for the
  1982
  rent freeze by amendments to the Housing Bill, which this evening completed its Committee stage. This is possible and fairly simple because housing associations are eligible for subsidy.
  My right hon. Friend the Secretary of State for the Environment pointed out at the annual general meeting of the National Federation of Housing Associations on 29th May that
  "We are proposing to provide some relief from the effects of the rent freeze in circumstances where housing associations have incurred inevitable increases in fuel costs for central heating and hot water and which are currently irrecoverable under the freeze."
  My hon. Friend the Minister for Housing and Construction reaffirmed that this was what we were going to do in the Standing Committee on the Housing Bill, which was completed today, when he said on 23rd May:
  "I am concerned that the measures we are already taking may not go far enough in dealing with the immediate problems facing some associations. My aim therefore is to introduce an amendment to tackle these properly … in a way consistent with, and to pave the way towards, any general switch to a deficit financing subsidy system for housing associations which might emerge as a result of the review which I have told the Committee is in hand. I cannot produce the amendment immediately, but I hope to do so as a new clause or at least on Report."— [OFFICIAL REPORT, Standing Committee B, 23rd May 1974; c. 165.]
  That is still the Government's intention. That deals with housing associations.
  I recognise that the Conservative Party believes in subsidizing private landlords. It did it in the Housing Finance Act, under which the landlord receives the full rent and the rent allowances are paid out of the public purse. The present Government do not believe that it is right further to extend subsidies to landlords, and the only other way to compensate landlords for the increased fuel costs, which without question they are having to bear, is by amendment to the counter-inflation order which we introduced in March. I advise the right hon. Gentleman and the House, however, that such an amendment is very difficult to devise in a way which would not provide a loophole which would allow bad landlords to frustrate the rent freeze.
  The right hon. Gentleman has spoken about good landlords. I do not deny his right to refer to them. But he will also recognise—I shall have occasion to refer

  1983
  to this matter—that there are bad landlords as well. The rent freeze to which the right hon. Gentleman refers with such strength of feeling also arouses strength of feeling in my hon. Friends, many of whom say that in any case it is decidedly not watertight. They are dissatisfied with the way in which it operates on behalf of tenants.
  The right hon. Gentleman has stated the case for good landlords—and there are good landlords. There are similar landlords in my constituency, and they have made representations to me of the nature of those which the right hon. Gentleman has put tonight. If all landlords were as innocuous and as deserving as those for whom the right hon. Gentleman has spoken and those who have written to me, there would be no problem. We could introduce an amending order with no difficulty. But many landlords are far from deserving, far from altruistic and far from the vulnerable widows and orphans who, the right hon. Gentleman implied, are victimized by the swaggering bullies who live in the accommodation which they provide. Indeed, even the landlords for whom the right hon. Gentleman speaks are not always as public spirited as he would imply. I refer, for example, to a lady whom the right hon. Gentleman will know very well. She is Mrs. Doris Johnson, of the Bournemouth and South-West Landlords' Association. The right hon. Gentleman is the Member for Bournemouth, West and, justifiably, has connections with that association and with that lady. She wrote a letter to the hon. Member for Bournemouth, East (Mr. Cordle) which was sent to me, and I commented on it in a letter to him of 14th May. She said:
  "All we really seek is that tenants (in addition to the landlord) keep to their contract, then there would be no need for tribunals, rent officers, court cases, etc."
  I think that that letter demonstrates the basic unwillingness to accept the very principles underlying the legislation on rents, and it is an attitude which we find totally unacceptable.
  Sir J. Eden: Is the hon. Gentleman now deliberately implying that the main purpose of the order is to get at the bad landlords—or is it, in his view, a genuine act to help to counter inflation?
  Mr. Kaufman: It is an order to fulfil the pledge we made in the General Election, namely, that until we had repealed the Housing Finance Act we would stop the progression in both public and private rented accommodation to what the Conservative Government quaintly called "fair rents" when they introduced the Housing Finance Bill. There is also a counter-inflationary element in it. We have introduced it under the previous administration's own Counter-Inflation Act.
  I have spoken about bad landlords. Every day, including today, I receive letters from my constituents about the most appalling cases of harassment and ill treatment of tenants in my constituency. Only this week a landlord in my constituency, in order to evade the provisions of the legislation which protects tenants, has tumbled my constituents' furniture out into the streets, poisoned their goldfish, kidnapped their pet cats and vowed to get them out regardless of the law. Another landlord in my constituency refuses to carry out repairs to a decrepit house inhabited by a bed-ridden old lady of 90.
  There are others besides the landlords of whom the right hon. Gentleman speaks so feelingly. Landlords like this are only looking for a way to dodge and fiddle their way round this Government's rent freeze. If these landlords were allowed to put up rents to take account of increased service charges, without the most stringent safeguards being implicit and written into any amendment, we would be giving them a licence to exploit tenants by putting up rents at will and blaming the increase on service charges.
  The right hon. Gentleman can imagine it very well. The landlord would go to his tenant and say "I have to put up your rent. I know that there is a rent freeze, but the Government are allowing me to put up rents where service charges or fuel charges are in question. The costs of oil and electricity have gone up. The cost of coal may go up. There are rum ours about the cost of gas. I have to put up your rent." The increase would be in no way commensurate with the increase in charges, and the landlord would be able to violate the rent freeze and violate the policy on which this Government were elected.

  1985
  This is our dilemma, and it is a difficult one. It is how to provide an easement, which we acknowledge should be considered for good landlords in genuine difficulties, without at the same time opening the door to bad landlords.
  Consequent upon the reply which I gave the right hon. Gentleman on 8th May, he asked me what we were doing. I shall tell him. We are doing our best to find a way of helping the good landlords. Within the Department of the Environment a number of consultations are in progress about how this can be done. We are not simply shying away from this matter. We accept that it is one at which we must look very carefully.
  We cannot be sure whether we shall succeed. Meanwhile, if we have to strike a balance, in my view, as a Minister in the Department responsible to landlords as well as to tenants, if we have to strike a balance we must strike it in favour of tenants who, despite the heartrending picture that the right hon. Gentleman painted, are more easily open to exploitation. I have files in my room full of examples of tenants viciously and heartlessly exploited by landlords— elderly people just like the landlords for whom the right hon. Gentleman speaks with such sincerity.
  All rent legislation recognises that the tenant must be protected while the landlord receives consideration. Our Rent Bill, to provide security of tenure for furnished tenants, which has received its Second Reading in another place and will shortly be coming to this House, goes a step further.
  The problems and even the plight of some landlords emphasise the inescapable fact that private landlordism is not only unsatisfactory to the overwhelming majority of tenants but is troublesome and unrewarding to many landlords as well, not least the small landlords. The collapse of the Stern Group over the last few days shows that the property companies which the right hon. Gentleman rejects are not up to private landlordism.
  The case that the right hon. Gentleman has made underlines the need to remove rented property, apart from let-tings in the landlord's own home, from fixed commercial relationships and to treat it instead as a response to social need.
  Mr. Peter Viggers: I am grateful for the Minister's reply to my correspondence on the subject of housing associations and I should be grateful if he could add anything to the correspondence. When will the Government announce the concessions to housing associations? It is unfair of the hon. Gentleman to make a flagrantly political point out of a fair question by my right hon. Friend. Landlords must be given consideration—
  Mr. Deputy Speaker (Mr. George Thomas): Order. Is the hon. Gentleman intervening or making a speech?
  Mr. Viggers: Will the Minister give the same concession to private landlords as to housing associations?
  Mr. Kaufman: I do not know whether the hon. Gentleman was present when I said that it was not possible to give the same concession to private landlords. As non-profit-making public organisations, housing associations are eligible for subsidy, which the Minister for Housing and Construction has said will be made available to help them with their problems through the rent freeze. Private landlords are in it for the money. They have an investment on which they wish to receive an income. It would be absurd to subsidise them in the same way.
  Before the hon. Gentleman so ingeniously tried to make a speech, I was saying that we believe that rented property must be taken out of the commercial nexus and instead be treated as a response to social need. This can be done only by social ownership, to which the Government are committed. Landlords will undoubtedly be grateful to the right hon. Gentleman for stating their case so winningly. We on this side are grateful to him for so graphically illustrating the relevance of and the need for the policies on which we hold office.
  Sir J. Eden: What on earth does "social ownership" mean?
  Mr. Kaufman: The right hon. Gentleman has been a distinguished—I would not dream of saying "discredited"— Minister in the Department of Trade and Industry. He supported the helping of lame ducks over stiles. His Government finally acknowledged, in defiance of the views of himself and his hon. Friend the Member for Cirencester and Tewkesbury

  1987
  (Mr. Ridley) that there must be a response, even by private industry, to social need and by the Government to the needs of private industry in the interests of the economy.
  We strongly believe that housing must be a social service, that everyone needs a roof over his head, not so that a profit can be made out of him but so that he and his family can live their lives in com-
  1988
  fort and happiness without feeling that they will be exploited by a landlord.
  I am grateful to the right hon. Gentleman for giving me the opportunity to conduct a mini political seminar at this late hour and for having initiated this debate.
  Question put and agreed to.
  Adjourned accordingly at half-past Eleven o'clock.

NATIONAL FINANCE
  Value Added Tax
  Value Added Tax
  Economic Trends
  Economic Trends
  War Loan
  War Loan
  Form P11D
  Form P11D
  Ratepayers (Price Increases)
  Ratepayers (Price Increases)
  Fiscal Drag
  Fiscal Drag
  Inflation
  Inflation
  Tax Credit System
  Tax Credit System
  Oil Companies' Profits
  Oil Companies' Profits
  Income Tax
  Income Tax
  Smaller Businesses
  Smaller Businesses
  Motor Fuel
  Motor Fuel
  Building Societies
  Building Societies
  Sterling (Parity)
  Sterling (Parity)
  Isle of Man
  Isle of Man
  Dividend Limitation
  Dividend Limitation
  Estate Duty (Works of Art)
  Estate Duty (Works of Art)
HOME DEPARTMENT
  Civil Defence
  Civil Defence
  Price Sisters
  Price Sisters
AGRICULTURE, FISHERIES AND FOOD
  Fishing Gear (Damage by Oil Installations)
  Fishing Gear (Damage by Oil Installations)
  Fish Quay (North Shields)
  Fish Quay (North Shields)
  Pigs
  Pigs
  Potato Wart Disease
  Potato Wart Disease
CIVIL SERVICE
  Public Service Pensions
  Public Service Pensions
  Parliamentary Commissioner for Administration
  Parliamentary Commissioner for Administration
ENERGY
  Gas Prices
  Gas Prices
  Fossil Fuel (Exploration)
  Fossil Fuel (Exploration)
  Power Stations (Wales)
  Power Stations (Wales)
  Coal Industry (Output)
  Coal Industry (Output)
  ARMS EXPORTS
  ARMS EXPORTS
  PRIME MINISTER (VISITS)
  PRIME MINISTER (VISITS)
  PRIME MINISTER (SPEECH)
  PRIME MINISTER (SPEECH)
  PRESS (ROYAL COMMISSION)
  PRESS (ROYAL COMMISSION)
  ECONOMIC AFFAIRS (CHANCELLOR'S SPEECH)
  ECONOMIC AFFAIRS (CHANCELLOR'S SPEECH)
  CHEVENING ESTATE
  CHEVENING ESTATE
  MACHINERY OF GOVERNMENT
  MACHINERY OF GOVERNMENT
  PUBLIC AND BUSINESS ACTIVITIES (ROYAL COMMISSION)
  PUBLIC AND BUSINESS ACTIVITIES (ROYAL COMMISSION)
  PRIME MINISTER'S OFFICE (STAFF)
  PRIME MINISTER'S OFFICE (STAFF)
DEFENCE
  Cadet Forces (School Grants)
  Cadet Forces (School Grants)
  Armed Forces (Length of Service)
  Armed Forces (Length of Service)
  RN Field Gun Crews
  RN Field Gun Crews
DEFENCE
  Terminal Grants
  Terminal Grants
EDUCATION AND SCIENCE
  Day and Block Release
  Day and Block Release
  Visually Handicapped Persons
  Visually Handicapped Persons
  Autistic Children
  Autistic Children
  Primary School, Bottesford
  Primary School, Bottesford
  School Building (Cornwall)
  School Building (Cornwall)
EMPLOYMENT
  Shift Work (Midlands)
  Shift Work (Midlands)
  Smaller Businesses
  Smaller Businesses
  Blind Persons (Training)
  Blind Persons (Training)
  Grangemouth Refinery
  Grangemouth Refinery
  Factory Inspectorate Offices
  Factory Inspectorate Offices
ENVIRONMENT
  Canals
  Canals
  Water and Sewerage Charges
  Water and Sewerage Charges
  Housing Finance
  Housing Finance
  Road Works (Warning Notices)
  Road Works (Warning Notices)
  Toll Bridge (Selby)
  Toll Bridge (Selby)
  Planning (Maps)
  Planning (Maps)
  Driving Tests
  Driving Tests
  Driving Examiners
  Driving Examiners
  Noise (Birmingham)
  Noise (Birmingham)
  Waste Materials (Recycling)
  Waste Materials (Recycling)
  Municipal Elections (London)
  Municipal Elections (London)
  Property Services Agency
  Property Services Agency
  Weights and Measures (Staff)
  Weights and Measures (Staff)
  Waltham Forest Property Transaction)
  Waltham Forest Property Transaction)
  Ilford
  Ilford
  Footpath Maps
  Footpath Maps
FOREIGN AND COMMONWEALTH AFFAIRS
  French Nuclear Tests
  French Nuclear Tests
  United Nations Decolonisation Committee
  United Nations Decolonisation Committee
INDUSTRY
  Smaller Businesses
  Smaller Businesses
  Waste Paper (Recycling)
  Waste Paper (Recycling)
OVERSEAS DEVELOPMENT
  Egypt
  Egypt
  Syria
  Syria
  Namibia
  Namibia
SCOTLAND
  Rent Control
  Rent Control
  Invalid Vehicles (Accidents)
  Invalid Vehicles (Accidents)
  Midwives
  Midwives
SOCIAL SERVICES
  Invalid Vehicles (Accidents)
  Invalid Vehicles (Accidents)
  Eastbourne District General Hospital
  Eastbourne District General Hospital
  Dentists
  Dentists
  Benefits (Industrial Disputes)
  Benefits (Industrial Disputes)
  London Hospital (Kidney Unit)
  London Hospital (Kidney Unit)
  Optical and Ophthalmic Services
  Optical and Ophthalmic Services
TRADE
  Hotels
  Hotels
  Birmingham Airport
  Birmingham Airport
  Insurance Companies
  Insurance Companies
  Fishermen (Health, Welfare and Safety)
  Fishermen (Health, Welfare and Safety)
  Export Credits Guarantee Department
  Export Credits Guarantee Department
WALES
  Invalid Vehicles (Accidents)
  Invalid Vehicles (Accidents)
  Water Rates
  Water Rates
  Colwyn Bay and Llanddulas (Road Proposals)
  Colwyn Bay and Llanddulas (Road Proposals)
  Sewerage Rates
  Sewerage Rates
  Roads
  Roads
  Improvement Grants
  Improvement Grants
  Celtic Sea Oil and Gas
  Celtic Sea Oil and Gas

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Portsmouth):
The LORD CHANCELLOR on the Woolsack.
His Royal Highness The Prince of Wales—Singly, took the Oath.
The Lord Hampton—Sat first in Parliament after the death of his father.
Several Lords—Took the Oath.

BRITISH AIRWAYS TERMINAL CHECK-IN FACILITIES
BARONESS BURTON OF COVENTRY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a Statement on the retention of check-in facilities for air travellers at the British Airways (B.O.A.C. Division) terminal in Buckingham Palace Road.
THE MINISTER OF STATE, DEPARTMENT OF INDUSTRY (LORD BESWICK): My Lords, I understand that British Airways propose to retain the present check-in facilities at the Buckingham Palace Road terminal.
BARONESS BURTON OF COVENTRY: My Lords, while being surprised and delighted at receiving a satisfactory Answer on this matter, may I ask the Minister, as he said that British Airways have decided to retain the facilities, whether that is an indefinite retention, or whether he can give any time period?
LORD BESWICK: My Lords, I should have thought anyone who gave promises of indefinite duration was very badly advised.
LORD HARVEY OF PRESTBURY: My Lords, will the noble Lord go a little further in this matter, bearing in mind that the country is waiting on a decision on Maplin, whether or not the Government decide to go there? I think the
614
indication is not; but if this were so, surely facilities will be required at Heath-row and at Gatwick? What would be a better place for the handling of passengers than the Victoria area?
LORD BESWICK: My Lords, I think that with a very great effort the noble Lord, Lord Harvey of Prestbury, is extending this matter too far. It has nothing to do with Maplin. There are two forms of traffic—the short-haul traffic, and the long-haul traffic. Long-haul traffic will be cleared at the Victoria terminal; it is better suited there and will continue to be dealt with there.

BADGERS ACT
3.8 p.m.
THE EARL OF ARRAN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that the Badgers Act 1973 is being enforced.
THE MINISTER OF STATE, HOME OFFICE (LORD HARRIS OF GREENWICH): My Lords, my right honourable friend the Home Secretary has no reason to suppose that the Act is not being enforced.
THE EARL OF ARRAN: My Lords, while I am grateful for that Answer, may I ask whether Her Majesty's Government are aware that on May 9 a demonstration of so-called humane killing of badgers by snaring took place at Stroud in Gloucestershire, sponsored by the Ministry of Agriculture, with the Parliamentary Under-Secretary of State in attendance? Is the Minister further aware that this was a direct infringement of Section 2(a) of the Badgers Act 1973 which forbids cruel ill-treatment of badgers?
LORD HARRIS OF GREENWICH: My Lords, the Gloucestershire police have received a complaint alleging cruelty at this demonstration. This is at present under investigation; in those circumstances it is not appropriate for me to make comment.
LORD KILMANY: My Lords, arising out of that reply, is the noble Lord aware that according to the Press, the Department of the Environment are to spend

615
£10,000 in digging a subway to allow badgers to cross underneath the A3 road in Surrey? Is the noble Lord confident that the badgers will in fact make full use of this subway?—because someone who knows quite a lot about badgers told me that it is very likely the badgers will suspect that the subway is a trap, and will not go near it.
LORD HARRIS OF GREENWICH: My Lords, I think this demonstrates that the Government are perfectly prepared to take a reasonable attitude towards the badger. I hope that what the noble Lord, Lord Kilmany, has said, will at least reassure the noble Earl, Lord Arran, who put this Question on the Order Paper.
BARONESS WOOTTON OF ABINGER: My Lords, I am sure that the Minister will correct me if I am wrong, but if the complaint has been received by the police and the matter is not yet before the courts it is not yet sub judice. Can the Minister tell the House whether any prosecution is at present in train, or contemplated?
LORD HARRIS OF GREENWICH: No, my Lords. I think the position is that a complaint has been received, and the police are investigating it. In those circumstances, I do not think it would be appropriate for me to make any comment.
LORD FOOT: My Lords, may I ask the Minister whether it is a fact that the long-standing definition of cruelty to an animal is "wilfully causing pain to an animal without justification"? Does the Minister or do the Government know of any way in which one can catch a badger in a wire snare without causing pain to the badger? If the Minister does not know of any way in which that can be done, what justification can there be for the Ministry of Agriculture taking part in the snaring of badgers?
LORD HARRIS OF GREENWICH: My Lords, I fear that the noble Lord, Lord Foot, is trying to get me to make a comment on the circumstances of this particular demonstration. As I have already indicated, I do not think that would be appropriate.
LORD CAMOYS: My Lords, are we going to allow civil servants to overrule the Common Law?
LORD HARRIS OF GREENWICH: My Lords, I am sure no member of the public service would in fact defy the law.

STORAGE HEATERS: ELECTRICITY CHARGES
BARONESS BURTON OF COVENTRY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, when the special 11-hour rate for users of electric storage heaters was eliminated in the spring of 1969, the changed conditions applied to new consumers only; and whether all existing contracts of supply were honoured.
LORD BESWICK: My Lords, I am advised by the Electricity Council that when the 11 and the 15 hour off-peak tariffs ceased to be available to new customers from April 1, 1970, they continued to be available for installations already being used under those tariffs.
BARONESS BURTON OF COVENTRY: My Lords, while I am glad to have that Answer, may I ask the Minister whether he considers that these contracts were honoured because the Electricity Council felt it was the correct way to treat customers or because they were in any way regarded as special contracts?
LORD BESWICK: My Lords, I should have thought normal commercial considerations and legal obligations were the basis of the decision here.
BARONESS BURTON OF COVENTRY: My Lords, I thank the noble Lord.
LORD PEDDIE: My Lords, may I ask my noble friend what is the longest term available for contractual tariff arrangements with the user?
LORD BESWICK: My Lords, that is an interesting point, but a different one. If the noble Lord cares to put down a Question, I will try to answer it.

SPOUSES (EQUAL TREATMENT) BILL [H.L.]
LORD AVEBURY: My Lords, I beg leave to introduce a Bill to amend the

617
law so that husbands of women who are British nationals or who are settled in the United Kingdom and Islands should have the same rights as to nationality and settlement as the wives of men who are British nationals or who are so settled. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a. —(Lord Avebury.)
On Question, Bill read 1a, and to be printed.

LAND TENURE REFORM (SCOTLAND) BILL [H.L.]
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD HUGHES): My Lords, I have it in command from Her Majesty the Queen and the Prince of Wales as Prince and Steward of Scotland to acquaint the House that they, having been informed of the purport of the Land Tenure Reform (Scotland) Bill, have consented to place their interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill. My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a. —(Lord Hughes.)
On Question, Bill read 3a.
LORD HUGHES: My Lords, the Amendment to place a new clause in the Bill is of a purely drafting nature. I beg to move.
Amendment moved—
After Clause 18 insert the following new clause:
Recording of extract orders of Lands Tribunal. 1949 c. 42. 1970 c. 35
".Section 3(12)(d) of the Lands Tribunal Act 1949 (as inserted by section 50(2) of the Conveyancing and Feudal Reform (Scotland) Act 1970) and section 2(4) of the said Act of 1970 shall have effect, and shall be deemed always to have had effect, with the substitution, in both of those provisions, for the word 'order' of the words 'extract of an order'". —(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES:: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.— —(Lord Hughes.)
On Question, Bill passed, and sent to the Commons.

LORD HIGH COMMISSIONER (CHURCH OF SCOTLAND) BILL
Read 3a, and passed.
PRICES BILL
Brought from the Commons; read la, and to be printed.

SPORT AND LEISURE
3.14 p.m.
VISCOUNT COBHAMrose to call attention to the Reports from the Select Committee of the House of Lords on Sport and Leisure; and to move for Papers. The noble Viscount said: My Lords, I rise to call attention to the Reports of the Select Committee on Sport and Leisure, a Committee of which I had the privilege to be Chairman. I feel that I should tell your Lordships first how the Committee chose to limit and define its mandate; next how we set about our task; and lastly some of our major recommendations and conclusions. I will then leave the field to the next speaker, saying only what an honour it is that he should have chosen to make his maiden speech in this debate.
At the outset we decided not to attempt too precise a definition of words like "sport", "leisure" and "recreation". We realised that they were not to be placed in watertight compartments, that to a large extent they overlap and that one man's work may indeed be another man's leisure. Climbing Everest might well be called sport, could be called recreation, but I do not believe that even Sir Edmund Hillary could in any circumstances describe it as leisure. Sailing and fishing and bird watching, on the other hand, clearly fall under all three categories. But we decided to confine our Report to those pursuits which demand active participation. Although spectators to-day seem to be taking a far from passive role in cricket and football matches, we felt that watching in general was already more than adequately provided for.
The Sport and Leisure Select Committee was set up in December, 1971, and it sat for eighteen months. I hope that your Lordships will not imagine that this sitting was a continuous process, for although we indeed sat for a very long time in copious sessions amassing and

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collating a very large corpus of information, we travelled many thousands of miles both at home and abroad, to find out what other people were doing and what had already been done. I should like, in passing, to acknowledge the debt that we all owe to those people both for their hospitality and for the time and experience they gave the Committee. Their help was quite invaluable.
My Lords, these may seem grave times in which to be debating matters so apparently frivolous as sport and leisure. Yet I hope to be able to persuade your Lordships that there may well lie at the very roots of some of our social and economic troubles feelings of very deep resentment in the hearts of millions of people that in their childhood and youth they were denied the simple pleasures of the countryside and of the playing field. Few noble Lords in this House would, I imagine, undervalue the opportunities for these things which we all enjoyed in our own youth, and surely the time has now come when the Government should take a hand in this and see that these things are made available to all. For too long sport and leisure has suffered from malnutrition, despite the heroic efforts of numerous voluntary bodies and organisations, supported usually by club membership, but also sometimes by various Trusts. I remember one such organisation whose members used to spend their own holiday time in taking urban children to the seaside, and the poignancy of a remark of a small boy on seeing the sea for the first time: "Isn't it wonderful," he said, "to see enough of anything".
Your Lordships need no reminding that during the past fifty years the machine has replaced the muscle. Mechanisation and automation—these are here to stay. But at the same time I contend that they have led to two evils much more enervating than mere bodily fatigue, and these evils are boredom and loneliness, something very akin to the Accidia of the early Christian church. It must be very hard to sing at one's work if one's work consists of punching out thousands of bucket-ears every day. So for tens of thousands of people, indeed for millions, work has now lost its significance, and now people will have to find new fulfilment and new purpose in what they do in their leisure hours.
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In the future, it is to be hoped that workers will be less physically tired, will work shorter hours, and that weekends and holidays will become periods of recreation in the truest sense, rather than mere periods of resting. The late Adlai Stevenson once wrote:
"There is no boredom or misery to equal the pursuit of distraction alone."
Too many people to-day, especially young people, are bored and miserable, and this, I think, justifies the need for a more positive approach to the whole subject of sport and recreation. That recreation has to be of their choosing. It was no part of the Committee's work to attempt to define leisure or recreation. Organised leisure is too dreadful to contemplate. But what we deemed to be our terms of reference were, first, to try to discover what people wanted to do; secondly, what facilities existed at this moment to enable them to do these things; thirdly, what could be done to extend or improve those facilities; and, lastly, what impediments to their enjoyment could be identified and, if possible, removed.
From our Report, your Lordships will be able to assess for yourselves the extent to which the Committee succeeded or failed. I think it is true to say that the Committee was encouraged by the amount of solid pioneering work which had already been put in train, not only by certain far-sighted local authorities but by the Sports Councils, the Countryside Commissions, and a host of other organisations. The Report states:
"The life-blood of sports provision hitherto has been in the voluntary clubs and governing bodies of the sports themselves."
There is also the National Playing Fields Association, financed voluntarily, which stimulates the provision generally of playing fields, adventure playgrounds for children, and other sports facilities, as well as acting as adviser to local government and small sports clubs for provision.
I believe that every possible encouragement should be given to these organisations to continue and increase their efforts. So much valuable expertise and local enthusiasm would be lost were such organisations ever to believe that the time had come when their work was no longer of prime importance. We recommend rating relief by local authorities as a

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sensible way of helping these voluntary bodies, particularly perhaps in Scotland where two associations complained of heavy rating and suggested mandatory rating relief to remove the present inconsistencies between adjacent authorities.
Considering that until recently the Government took scarcely any part in the provision of sport or recreation facilities, it was encouraging to find what progress has already been made in the recreational field. There can be little doubt, however, that most foreign governments attach a great deal more importance to sport and recreation as a whole. The Dutch, for instance, have a whole Ministry for Recreation. The Committee has not gone so far as to suggest that, but what we suggest is the appointment of a Minister, first, to be able to talk to his colleagues at Government level; and, secondly, to draw together the sporting or recreational elements in a number of Government Departments. Forestry, education, play groups, tourism, the Arts and water—the responsibility for all these things is centred upon different Departments of Government, and all have some bearing on an aspect of recreation.
Your Lordships will note the great importance that the Committee attaches to the role of the local authority. It is to be hoped that each one will shortly have set up a full recreational department, working in close liaison with the regional Sports Councils. In considering the administrative machinery needed to implement our ideas, we ran into certain difficulties connected with the imminent reorganisation and structure of local authorities. After a very great deal of time and discussion, it was decided to place responsibility fairly and squarely on the heads of the county councils in England and Wales, and the regions in Scotland. In England and Wales, ultimate responsibility must belong to the counties. In conjunction with other bodies, they should have the job of providing for larger facilities, with the districts providing for the more local ones. But only in the metropolitan areas should these duties be shared, and this view seems to be justified by the quite different circumstances of the great industrial complexes. The Committee suggests that the link between Government and local authorities should still be
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represented by the central agencies involved with recreation—the Sports Councils, the Countryside Commissions, and the water authorities—and it recommends that they should create a full and positive national policy.
Here I should like to make two points for your Lordships' consideration. First, since resources for recreation are limited—and by "resources" I mean not only those of land and water but also financial ones—the provision of facilities must be planned; and planned, so far as possible, in accordance with local needs. Sports centres, swimming pools, and golf courses must be located where they are most needed, and there should, of course, he lateral communication between adjacent authorities to prevent overlapping, and to ensure even spacing and provision in ratio to the density of the population. Secondly, in our view the segregation of different social, sporting, recreational and cultural activities into separate compartments is wasteful. So far as possible, they should be considered together and planned together. By linking them, not only will it be possible to provide centres more economically, but there will probably be some measure of what we may conveniently call "cross-fertilisation". People may well discover some new sport or activity which otherwise they might never have seen or tried.
As your Lordships may well suppose, the Committee spent a very great deal of time when they considered the countryside. Our main strategy in this field was centred on the "honeypot" system. This somewheat homely phrase is used to describe the attraction of large numbers of people to a comparatively few locations, in order to free the rest from overcrowding. In summer, our coastline is probably the biggest "honeypot", and the football stadiums all over the country are in winter. This is why we recommend the placing of open spaces, parks, golf courses and sports centres on the fringes of our big cities and towns. This will meet the needs of many of the urban population, and at the same time do something to prevent the surrounding countryside from being too much invaded at weekends and holiday times, so that those who really seek peace will be able to find it.
We also made the suggestion that transport should be provided to take to those

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country parks in the urban fringes families who have no cars, as well as old people who would enjoy a day in the country. In this context we also hope to spare large numbers of people the tedium and frustration of the endless traffic queue. The nearer we can place these amenities to the big towns the better it will be for all concerned. In these afore-going remarks I have attempted only to outline what one might roughly call the strategy of the campaign. The tactics are numerous and complicated; they are detailed in the Report, at the end of which we have briefly summarised our conclusions.
My Lords, some of the major recommendations will undoubtedly need fresh legislation and others will require a new injection of funds. We have tried to deal with the dual use of school playgrounds, with inland waterways, with rivers and reservoirs and the need for recreational management and training. My mention of inland waterways and rivers was, perhaps, a little too cursory considering the importance of the subject. I should like to emphasise the great importance which the Committee attaches to water recreation as one of the prime providers of sport and leisure. Notwithstanding this, the grant available for water amenities is both mixed and uncertain. There is no grant-aiding machinery at all. In so far as the Sports Councils and the Countryside Commissions are to be responsible for aiding water recreation they will need extra funds to do so. The main financial help which might be provided by the Government is twofold: the British Waterways Board should continue to receive an annual subvention and its rate should be substantially increased; the regional water authorities should receive aid where needed to enable them to discharge their recreation duties under the Water Act 1973.
To summarise, then, what we feel is that the Government should, by the appointment of a Minister, show their recognition of the importance which the Committee attaches to the whole wide subject and so encourage the local authorities—and indeed all other bodies connected with sport and leisure—to put forward plans knowing that they will be given encouragement and every support by Central Government.
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In hard economic times like these, my Lords, there will always be a temptation to relegate sport and leisure to a low, if not the lowest, priority. Yet the fact is—and we say so in our Report—that so far public expenditure has been generally inadequate to provide facilities on the scale needed. It is, prima facie, very hard to argue that recreation should ever be allowed to take precedence over such things as housing, education or pensions. Nor, of course, can it. However, we have been told on the highest authority that man cannot live by bread alone. This sterile, scientific and mechanical age has robbed mankind of so many of the good, clean, simple pleasures of life. In our endless search for a higher standard of living we have ignored a much nobler objective, a more ample and a more rewarding way of life for all our people. Surely, my Lords, it is time to make a start. My Lords, I beg to move for Papers.
3.34 p.m.
THE PRINCE OF WALES: My Lords, I rise with some degree of fear and trembling at my maiden speech. I discovered that it is about 100 years since a member of my family had spoken in this august Chamber. I learned that in 1829 there was a debate in this House in which the three Royal Dukes, the Duke of Clarence, the Duke of Sussex and the Duke of Cumberland took part. Each got up one after the other and attacked each other so vehemently and used such bad language that the House was shocked into silence. It was a very droll scene, as the Greville Memoirs put it, but I can assure your Lordships that I will not use the same tactics on the noble Duke, my cousin, who is sitting on my right. I also discovered that the Prince of Wales, who later became King George IV, appeared one day to take his seat—although he did not actually speak—and he arrived exquisitely dressed in black velvet, lined with pink satin and embroidered in gold and wearing shoes with pink heels.
My Lords, I believe Oscar Wilde once said that,
"If a thing is worth doing, it's worth doing badly"
the truth of which statement I leave your Lordships to debate after I have sat down. Of course, it is perfectly true when applied to the realm of leisure and even more apt when applied, for instance,

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to my attempts at water colour painting—one of my less violent recreations. I hesitate to say it, but those of you who have come here to-day, and are not speaking (and by sheer weight of numbers recreation and the sporting use of leisure must rank as one of the major pastimes) are, in effect, utilising your leisure time by listening to these highly entertaining speeches: that is, of you agree with Dr. Paul Weiss who was, or maybe still is, Professor of Philisophy at Yale University, and who said that:
"Leisure time is that portion of the day not used for meeting the exigencies of existence".
But then, perhaps, for some people, listening to speeches is an exigency of existence.
At the expense of being unoriginal I always find it rather intriguing to read what other people have said about a subject. Aristotle, for instance, suggested that:
"The purpose of education was the wise use of leisure"—
rather like the purpose of this debate is the wise planning of the use of leisure. Now that everyone does receive an education Aristotle's profound statement becomes universally applicable instead of in the narow sense in which it was applied originally. Now that there are so many more people chasing a rapidly diminishing number of recreational facilities in a small island (and there must be a formula to express this function) we are forced, whether we like it or not, to plan our whole existence and to consider the coordination of our leisure time with all the other factors which comprise our human existence.
The noble Viscount, Lord Cobham, expressed the point that, of course, leisure, in the sense of its being, as it were, an empty box into which you insert the things which use leisure—in other words, recreational activities of all sorts—ought not to be organised, as such, but should be seen as a growing problem facing responsible bodies and local authorities and needing urgent attention in the overall planning sense. God forbid that we should ever need planning permission to "recreate" ourselves! The Report most definitely does not suggest the installation of a "gauleiter in plimsolls" but rather a "Warden in Wellingtons".
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My Lords, there is inevitably a danger here of finding ourselves trying to tell people how their leisure time should be spent. This is not the object at all. But I do believe that if leisure time is employed anti-socially by some people it is therefore well worth while trying to channel that anti-social recreation into more healthy pastimes. One way of doing that must be by providing better and more planned facilities. That is why I particularly support the Committee's recommendations concerning the establishment of urban parks and recreation areas which would be more immediately available to a larger group of people in the towns and cities and which would also help to spread the demand and the load which is already weighing so heavily on the countryside. The Lee Valley Regional Park Scheme at Picketts Lock in Middlesex is a classic example of what can be done with derelict land if the determination and impetus is there.
The fact that we are all gathered here in this Chamber to-day and the fact that I am making, with some considerable trepidation, my maiden speech on this interesting Report, must indicate to all but the simplest that we have something of a problem facing us over recreation and, what is more, have had one for some considerable time. All the time that our neighbours across the Channel —especially in Holland—have been planning and co-ordinating their leisure facilities, we have continued somewhat haphazardly simply to let things happen and to rely on people's innate good will and common sense. We can still rely on that good will and common sense, but the seriousness of the game now makes it imperative to co-ordinate and cooperate.
Even in 1966, the noble Duke, my father, said in an address to the University of California that only a coordinated plan, backed by legislation, could possibly prevent a state of complete chaos developing in a very short time. Without doubt, there are many people who would argue differently, but it is nevertheless indisputable that such organisations as the Central Council of Physical Recreation—in its own words. "the independent collective voice of British sport and leisure"—and the Sports Council, together with many other bodies directly associated with recreation are seriously concerned about the lack

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of overall planning and the shortage of funds for the provision of adequate facilities.
In the foreword to a recent pamphlet produced by the Sports Council for Wales and entitled, A Strategy for Water Recreation, it says:
"If we are to ensure effective use of our resources in Wales, it is important that water areas should be identified and recommendations made for those which are suitable for recreational development, while at the same time preserving their amenity value."
Your Lordships may be intrigued to discover that the submission in 1971 of a landscape report for the Brenig reservoir scheme in Mynydd Hiraethog in Wales for the Dee and Clwyd River Authority marked one of the first occasions in the history of reservoir construction that recreational potential had been written into the primary plan. This was a great step forward, for the Report recommended sites for scenic beauty spots, walking, pony trekking, boating, caravanning and many other activities. This, to my mind, is exactly the type of operation recommended by the Committee which compiled this Report, and such operations as these, with the planning involved, should become common practice.
Having said that, let me for a moment indulge in presenting you with a positive plethora of Welsh enterprises. A Committee in Wales, of which I am Chairman and which basks in the glorious title of The Prince of Wales's Committee, has recently embarked upon an ambitious project to restore a seven-mile section of the Montgomeryshire Canal near Welshpool. Over the last 50 or 60 years, this canal has fallen into complete disuse, mainly because the British Waterways Board has only a limited allowance for all maintenance. The idea is that, once the canal has been restored, it should be available —among other things—for boats and barges to take handicapped children for holidays and expeditions. That is one of the principal reasons for restoring this canal—mostly by voluntary labour and on a leisure-time basis, I would add—but I would emphasise for the benefit of all local authorities the very real economic benefits and spin-off which can easily derive from such a project as this, particularly in the more deeply rural areas of mid-Wales. Inevitably, with the opening
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up of new canal sections, many more people will be tempted on to them and local farmers and others may have a small boom on their hands, which could have far-reaching and beneficial effects on the farming community if handled sensibly and planned properly from the start.
However, one essential point to remember about recreation as such, and as a type of industry, is that it cannot be allowed to develop in isolation from the local community. In other words, local users should be encouraged and, indeed, allowed to organise the facilities provided for them and should not feel themselves subject to the imposition of outside bureaucratic control. One of the most gratifying aspects of several projects my Committee has encouraged in Wales has been the readiness—after initial persuasion and encouragement—of local firms and companies to supply equipment and plant free of charge. Not only does this do the companies immense good, but it creates a phenomenal degree of harmony and good will and an urge to soar to even greater heights of local self-help. I entirely support the Committee's recommendation that the Government should develop a central impetus to encourage local government to promote recreational facilities and recreation departments.
As is so often the case in Britain, an astonishing number of societies, clubs, organisations and bodies of all kinds spring up to deal with what amounts to the same problem. An element of co-ordination is essential if their efforts are not to be entirely wasted and resources apparently squandered. I believe that the Welsh Office and the Scottish Office already have recreation sections of their own and can therefore help to co-ordinate the various opinions by bringing all the different bodies together. So far as England is concerned—if we have to bring nationalism into it—I should have thought that the present Minister for Sport could quite easily become the Minister for Recreation or the Minister for Leisure, which would be a far more apt title. After six years of a Minister of Sport, we must surely be taking the position more seriously now, though I daresay the Press does not.
That is a most important chapter in the Select Committee's Report on what

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is called, Dual Use and Dual Provision—in other words, the shared use of facilities by members of the public for whom the facilities were not primarily intended. Until I read the Report, I must admit that I had no idea that something I was already concerned about had such an apposite description. I have felt for some considerable time that a place like a school which is empty for a substantial part of the year and which, as often as not, has some splendid facilities is basically wasted. For that reason, I have encouraged plans for the establishment of an extra-mural department at the United World College of the Atlantic at St. Donat's—again in Wales, I hasten to add, my Lords!
When completed, this department will provide facilities for all sorts of people who otherwise might not so readily find them outside the school. I am hoping that it will be possible to organise a similar type of enterprise at my old school, Gordonstoun, where there are a multitude of facilities in a sports centre standing idle in the holidays. However, finding staff during the holidays is a major problem—unless it is possible to find people who consider looking after the public and wild children to be a leisure activity.
Inevitably, there are certain drawbacks to the concept of dual use and one of these is that schools and other organisations are not keen to see their grounds and facilities over-used and, possibly, abused. It would be a groundsman's nightmare, for a start. For this kind of reason, I would urge the education authorities to be at least aware of the potential afforded by dual use and to try to achieve some element of that potential through adaptation, experiment and encouragement in the schools within their areas. I believe very strongly that the last thing one should do is to make any of these recommendations compulsory—not, anyway, until it seems absolutely necessary. One of the great traditions of this country has been the comparative freedom with which organisations and societies have been allowed to operate, and this is an essential tradition of civilised, intelligent living which must be preserved at all costs. All the various organisations involved in the use of leisure time should be given the chance to develop their potential, but this they are finding increasingly difficult
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and increasingly more impossible as we face a similar inflationary situation in a field of leisure; that is to say, too much demand and only a limited supply.
Among the alternatives we are faced with are the following two: either the Government step in completely and we have what will virtually amount to a form of State-controlled recreation or the Government make it easier for the main statutory and voluntary bodies to operate, on the one hand, by exempting them from certain forms of tax and rates of all kinds and, on the other, by making it more possible to plan effectively on a nationwide basis, both through local authorities and through a central Ministry for those aspects of recreation which are beyond the capacity of the local authorities to deal with. I believe that we should favour the second alternative. The Treasury may not do so, of course, but I have made the point.
In his book, The Future of Man, Teilhard De Chardin asserts that:
"Mankind is bored. Perhaps this is the underlying cause of all our troubles. We no longer know what to do with ourselves. Hence, in social terms, the disorderly turmoil of individuals pursuing conflicting and egotistical aims—the excess of accumulated energy destructively released".
That may be a vague generalisation, but there is more than an element of truth in his remarks. My Lords, this Report must awaken us to the challenge of removing the dead hand of boredom and frustration from mankind. If it can be done, it can be done in Britain, and we can do it by planning sensibly, with humanity and with adventurous enthusiasm.
3.50 p.m.
THE LORD PRIVY SEAL (LORD SHEPHERD): My Lords, the Prince of Wales sought the sympathy of your Lordships' House in making his maiden speech. I would suggest, with all respect, that your Lordships should forget that plea and transfer it to me, called upon to follow him; because in all my experience in your Lordships' House I do not recall a speech of such character and so beautifully delivered. I suspect that one will have to wait very many years before hearing another of its kind.
My Lords, may I at the outset congratulate the noble Viscount, Lord Cobham, not only on introducing this

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debate but also on his chairmanship of the Lords Select Committee on Sport and Leisure; and may I, through him, express our appreciation and congratulation to the Members of the Select Committee for the quality and the thoroughness of their Report. This debate has attracted an unusual amount of attention and, looking around an unusually full House bearing in mind the period since publication of this Report. I have no doubt at all that the noble Viscount would put that down solely to the importance of the subject. In a sense, this is so, because it has provided the opportunity for the noble Prince, the Prince of Wales, to come and sit among his Peers in this House and to make his maiden speech.
My Lords, when I heard that the Prince of Wales intended to speak I had some research done on how we should conduct this debate. I regret that I found little that was helpful. True, as the Prince of Wales himself has said, in the past hundred years a Prince of Wales has spoken, and on one occasion even presented a Petition in support of a Bill on Marriage with a deceased wife's sister. I hope that that precedent will not be followed! But what I wanted to know was: what had been the practice? How did one refer to the Prince of Wales in debate? Alas!, here again I found no guidance, for it appeared that on those previous occasions the subsequent speakers never referred to the noble Prince. To-day, I think we can put that right; and therefore may I, as Leader of the House, speaking on behalf of all noble Lords, extend our sincere congratulations on, as I said earlier, one of the most notable maiden speeches we have heard. The fact that the speech had a quality and understanding did not surprise me, for we in this House have from time to time extended in a formal way our deep sense of appreciation and gratitude for the manner in which Her Majesty the Queen and other members of the Royal Family serve this country; and it was only last Monday that, in deep sorrow, we paid our own tribute to the Duke of Gloucester. But it is good to be reminded in a direct way and by personal contact and involvement.
My Lords, maiden speeches provide not only an opportunity for praise but also an opportunity to say something
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of the Peer concerned. The noble Prince was born to great privilege and great opportunity, and also to a position of influence. Equally, such a position, by its very nature, is open to temptation. It would be easy to find the easy way out and to seek narrow, selfish interests, for we are all human, we are all subject to human frailties. But the noble Prince, like his mother and father, perhaps because of them, has chosen the hard road of duty and service. He is open to scrutiny and criticism. Among my numerous and varied duties as Lord Privy Seal I am chairman of the Chevening Estate Trust. May I wish the noble Prince happy days and infinite relaxation, leisure and recreation at Chevening House.
My Lords, at the beginning of his speech the noble Prince spoke about his ancestors, the Royal Dukes. May I assure him and his cousin the Duke of Kent, whom we are very pleased to see here this afternoon, that if ever they were to behave in such an unseemly manner I have no doubt at all that the noble Lord, Lord Ferrier, whom I see opposite, would call upon the Clerk to read Standing Order No. 31 on the asperity of speech. In my researches I found that in 1884 the noble Prince's great great-grandfather chose the debate on Housing of the Working Classes as the setting for his maiden speech. Ninety years later, despite an ever-increasing social conscience and much greater resources, the problem of housing in which the people of this country can live with dignity is still with us. Financial resources are still inadequate to meet the fundamental demands of the social services and education. The importance of this is illustrated by a quotation from my right honourable friend the Home Secretary, Roy Jenkins, who said:
"Squalid housing, overcrowded schools and community facilities of every kind breed alienation and resentment in society".
The question of resources is one which will run through my remarks.
Ninety years ago working conditions in industry were harsh and hours were long. True, through legislation and the activities of the trade unions, life in industry is easier; but through automation, as the noble Viscount, Lord Cobham, said, monotony and mental pressures have increased. To achieve efficiency in industry, perhaps as an aid to

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the avoidance of industrial disputes, our people need leisure and not just sport but recreation, in greater measure. As Disraeli said:
"Increased means and increased leisure are the two civilisers of man".
But leisure should be something more than an interval for possible recuperation between exhausting stints of work. It should be used excitingly and with enrichment. Its use should be for each person's choosing. If a leisure-time activity is not freely entered into, it ceases to be recreation. This requires the provision of a wide range of facilities. But I think it is necessary to construe recreation very widely. When we talk of recreation, I suspect we tend to think of the more physical types of activity: all forms of sport; the popular team games and some slightly less popular—and your Lordships may wonder, perhaps, why polo springs to mind!
The Select Committee chose to interpret their terms of reference in a wide sense, and I will seek to follow them. The spectrum is extremely extensive: sport at one end and more gentle activities at the other. Unlike the Committee, I would not exclude even gardening from this field. Cultural pursuits, the enjoyment of the Arts, the theatre, the galleries and the museums have their place in this catalogue, and have an important part to play in adding to the dimensions of people's lives. Wherever special facilities are called for, their provision has to be considered in the light of the resources available, but I doubt whether anyone would question Government support for the Arts, and not many our removal of entrance charges to museums.
I would add one point on the value of making recreational provision and its use. It seems to me that some of our young people suffer from what amount to withdrawal symptoms when they leave school. At school there is ample opportunity for getting rid of surplus energy in both constructive and destructive sporting activities. If we could go on channelling that energy into sport or other forms of recreation when young people have left school, it might mitigate some of our problems of violence and hooliganism. I am not sure whether there is any conclusive evidence on this point at present but it is obviously an area in which a lot more research is needed.
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But the transition from school to work should not necessarily mean the end of participation in sport.
I come now to some of the specific questions considered by the Select Committee. What have they sought to do? First, to build up a comprehensive picture of the changes that are taking place (and that are expected) in the way in which we as a nation occupy that part of our lives which we devote to sport and informal outdoor recreation. Secondly, to consider the implications of their findings for the allocation of our national resources and of central and local government funds. And thirdly, to identify organisational weaknesses which must be remedied if the available money and effort are to be applied effectively and economically.
The magnitude of this undertaking is shown by the fact that the Committee made no less than 62 far-ranging conclusions and recommendations. The House would not thank me at this stage for going through all those 62 conclusions, but the Government hope to set out their attitudes and their intentions in a comprehensive White Paper which they plan to publish later this year and in which we shall be greatly assisted by studying the views which your Lordships will be expressing in the course of this timely debate. I shall therefore confine myself to commenting on a few points in the Reports which seem to me of particular importance and to informing the House of certain steps which the Government have already taken as a result of their study of the Reports.
It is abundantly clear that, with a growing population, more leisure time for more people, and with the increasing tendency for that leisure to be used in a more positive and outgoing way, the demand for recreational facilities of all kinds is running ahead of supply, and that the shortfall will become greater as the years go by unless urgent action is taken. Sport and recreation, as I have sought to suggest earlier, have their place of importance alongside the provision of social services. I must, however, inevitably return to the thorny question of resources and perhaps strike a note of realism which may not be popular with the noble Viscount. But it is a nettle which in all fairness I must grasp at this stage of my remarks.

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I hope I have already said enough to make it quite clear that the Government have no disposition to dismiss recreation as (in the words of the Select Committee) an "optional extra" which must take its place in the queue. But, equally, your Lordships will recognise that this is only one of the many areas of public expenditure in which it is becoming increasingly recognised that provision falls far short of need. The hard fact is that our national resources are simply not great enough to enable us to make good the deficiencies of generations as quickly as we should like. Certainly in our present economic circumstances I should mislead the House if I suggested that, particularly at this point in time, any increase in Government spending on sport and recreation could be expected. Clearly it cannot. But the Government are equally clear that, when the economic situation permits, these fields of endeavour should get their fair share.
The present situation makes it all the more important to ensure that we get the best value from all our other resources. The Select Committee rightly point to the concentration of demand, particularly for informal recreation, in the traditional holiday months. Various factors, including habit and the pattern of the school year, contribute to this situation. Previous efforts to bring about a change have had only limited success, but we must go on trying. I am interested to learn that the Association of Metropolitan Authorities is at present studying the possibility of a four-term school year. That would make a considerable difference. The capacity of the total recreational facilities of the community could be increased by reducing the extent to which facilities are reserved for specific sectors of the population and not generally available.
I was pleased that the noble Viscount, Lord Cobham, singled out dual use, as also did the noble Prince. The Committee painted a picture of unsatisfied demand for recreational facilities of all kinds. We should all want to avoid a situation in which large numbers of playing fields, sports halls, and the like, provided at taxpayers' and ratepayers' expense, stand empty for unduly long periods. I doubt whether there is any
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single measure which would do more to open up new leisure opportunities for people all over the country than the breaking down of the obstacles which stand in the way of throwing open school facilities to the wider community out of school hours and terms. Of course, much progress has been made towards increasing the dual use of existing facilities and I should like to pay a tribute to the many educational authorities which have made enormous efforts. Certainly the problems are real enough: problems of security, of staffing, of management, and the wear and tear of grassed areas. But this is an area in which I am sure, with imagination and good will on all sides, and with a relatively modest injection of extra money to smooth the path, much of the potential benefit could be achieved.
Dual use, as the Select Committee says, applies to other facilities provided by public money and there is more scope here: for instance, the Armed Forces' facilities which are employed a good deal already—and one has in mind R.A.F. Cosford. We need more imaginative management to allow more people to enjoy the countryside without detriment to other users or to the environment—and here we are fortunate in having not only the recommendations of the Select Committee but also those of the Committee chaired by the noble Lord, Lord Sandford, in their Report of their Review of National Park Policies.
Another resource, the use of which we should do well to maximise, is land, which as we all know is scarce. Its use for recreation has to compete with many equally worthy claims. Here I am speaking without the benefit of my colleagues' views, but it often seems to me that there are plots of land in urban areas, where the pressure for facilities is greatest, which could be used as open spaces with the expenditure of little money or preparation; nothing elaborate, just a piece of grass to which the street football game, and so on, could be transferred. That would set at ease many mothers' anxieties, in central London particularly. I am glad to hear that my honourable friend the Minister of State for Sport shares these views and is inquiring of the regional sports councils to what extent there is provision for such "kick-about areas", as they are called, where

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coats can be thrown down as goal posts or cricket stumps chalked on walls.
Another resource which is used increasingly for recreational purposes is water. Great strides have been made in cleaning up our rivers, but some stretches are still polluted. The provisions of the Control of Pollution Bill, which the House has just passed, confer powers to control water pollution and, perhaps by making new areas of cleaner water available, will help to absorb what has rightly been called a water sports explosion. It was only last Tuesday that my noble friend Lord Garnsworthy was able to inform your Lordships' House of the new fish that are appearing in the River Thames.
The noble Viscount, Lord Cobham, and also the noble Prince, spoke about the need for local sports and recreation clubs, and these assume particular importance. I am sure that here, too, local authorities could help perhaps more than they are now doing. I suggest, as one who recently visited a series of old people's homes, that much more could be done for our elderly living in these homes. A TV set is not sufficient recreation. Also, we should not forget the needs of those who are disabled, the families with young children, those without cars, who will increasingly require facilities within their neighbourhoods.
The Select Committee recommended priority for the recreationally deprived areas which, as they pointed out in their Report, are in the main areas of multiple deprivation—a problem which has long been recognised, but for which there is no simple answer. The point here is that we get a situation in which the deficiencies of housing, education, recreation and so on react on and reinforce one another, so that the total effect is overwhelming. Deficiencies have in the past been tackled piecemeal, but it is now accepted that a comprehensive approach is more likely to provide the answer. Work on this is in progress in the Home Office, and I hope that the recommendations of the Select Committee will be taken into account.
The noble Prince spoke of recreational developments. I can mention Holmepierrepoint, a joint project by the Nottinghamshire County Council, the Sports Council, the Countryside Commission and private enterprise. There are also the great developments of old opencast
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sites at Ashton-Peak Forest Canal. These are a result of co-operation between not only the Waterways Board but also several local authorities and the local Civic Trust, with, in addition, the hard physical labour and money contributed by volunteers. I believe that the noble Prince would be particularly interested in this development, because I think that a few weeks ago he visited the Montgomery Branch of the Shropshire Union Canal, which is being restored under the aegis of his own Prince of Wales' Committee. I believe that industry has its own part to play. One has only to go to Holland and Switzerland to see the extent to which companies feel that they have not only a local identity but also a local responsibility. I feel that much more could be done by industry and by the local authorities in co-operation together.
My Lords, the noble Viscount, Lord Cobham, pressed upon the Government, as also did the noble Prince, the possibility of appointing a Minister for Recreation. This is an area which is under active consideration. We already have a Minister for Sport, and he operates within clearly identifiable areas and there is already a good deal of co-ordination within Whitehall. But the strongly held views that have already been placed before us to-day, and which will no doubt be repeated in the course of the debate, will be most carefully considered by the Government. I have no hard and fast view as to what should be incorporated in the White Paper. We need to assess the views of your Lordships' House on the Select Committee's Report, and also to continue our discussions with the various authorities, particularly the voluntary bodies who administer sport; and I saw a deputation from the Central Council of Physical Recreation only last week. I believe that we can do the planning now, and hope and trust that the resources that the noble Viscount and his Committee require will eventually become available. I shall listen to the debate with the greatest interest. I have no Scottish connections, but I think it would be remiss of me, especially on a debate about snort and leisure, not to conclude these remarks without conveying my best wishes, and I am sure those of your Lordships' House as a whole, to

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Scotland's football team when they embark to-morrow on the hard task of doing what England once did—winning the World Cup.
4.16 p.m.
LORD WINDLESHAM: My Lords, as Leader of the Opposition it is my very pleasant duty to follow the Leader of the House and to endorse most warmly from these Benches everything he said about the way in which the maiden speech made by the noble Prince was received. It was exactly the right length it was well-informed; humorous in places; and it was totally unassuming. As a result it had the effect of illuminating a subject in which we know the Prince has a deep interest. Like all the most effective speeches in this House, I think noble Lords will agree it owed its effect to a large extent to the fact that what the Prince was saying was so true to himself, to his own character and to his own interests. He would be listened to with respect in any case, but I can assure the noble Prince that on this occasion we have listened to him with pleasure and with admiration as well.
I suspect the noble Prince would prefer us not to make too much of a meal of his historic participation in our debate today. His great-great-grandfather, later King Edward VII (I hope I have got the right number of "greats"), when he was Prince of Wales, spoke in a debate in your Lordships' House in 1884. As we heard from the Leader of the House just now it was on the subject of the Housing of the Working Classes and I note that because of his interest in this subject he found himself appointed as a member of a Royal Commission which was appointed to inquire into it. Since our present debate follows rather than precedes the setting up of a Select Committee, that is a risk from which the noble Prince has been spared.
The only other historical rootnote which I might add is a reference to the Prince of Wales's prowess at the old game of real tennis which I understand he played at Cambridge. I do not know whether tennis or the noble Prince's other sport of poio is the older. But it is certainly an ancient game, a game of skill and one that was played by many former Kings of England, including Henry VIII who built the court at Hampton Court,
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and also by both Charles I and Charles II. So it is very much in a Royal tradition that the noble Prince should play, and if he ever does so at Hampton Court he will be following quite literally in the footsteps of his energetic and gifted Tudor predecessor. The main difference might be that it would now be rather less dangerous if his opponent were to win.
My Lords, every so often in politics a subject is recognised as being of importance and underlying significance, but tends to be overlooked, until somehow it comes to the surface. This I believe is what has happened with sport and leisure. So many other apparently more pressing matters—such as the reorganisation of local government—have dominated the stage that there has been inadequate recognition of the need to make systematic assessments of the future demand for recreational facilities and realistic plans as to how these demands can best be met.
In retrospect, it may appear that the main Report of the Select Committee which sat under the chairmanship of the noble Viscount, Lord Cobham, represented a significant breakthrough. The Committee was certainly a most authoritative one, judged by any standards. It contained distinguished sportsmen and noble Lords who have had experience of providing facilities for physical recreation, as well as Peers with first-hand knowledge of central Government, local government and the educational system. The Select Committee had the benefit of specialist assessors and heard a very wide range of evidence which is contained in the two companion volumes. Some of the evidence makes entertaining and lively reading. On the conflict between conservation and development for purposes of recreation, for instance, I particularly enjoyed an answer given by a witness who was engaged in trying to develop disused gravel pits as centres for water sports. His complaint read as follows:
"… the nature people are anxious to conserve things like stinging nettles and bramble bushes because they perform a certain function for butterflies, but we are anxious to create an enjoyable environment for people out of what would normally be considered to be a derelict site. … Similarly, we had some oak trees and the nature people said, 'Do not lop the dead limbs off because the woodpeckers feed on the grubs', but the forestry people said,

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'Look at those lovely oak trees. You arc doing nothing to preserve them'. At one point we were a little frustrated."—[Third Vol., Evidence, Appendices and Index, p. 439]
This example of understatement brings us hard up against one of the central issues in considering this subject; namely that land (and indeed water space, too) is so scarce in this overcrowded Island that different people want what open space remains for different, and quite often contradictory, purposes. Water recreation is a subject which has already been mentioned in his opening speech by the noble Viscount, Lord Cobham. Thus the Nature Conservancy was quite entitled to say, as it did, in evidence to the Select Committee:
"Noisy sports often cause serious disturbance to wildlife. For this reason water-skiing, power-boating and motorcycle scrambling are incompatible with nature conservation, or indeed with the peace which many seek in the countryside. Between these extremes are pursuits whose effect on wildlife varies according to the number of people involved and their standard of conduct."—[Third Vol. Evidence, Appendices. and Index, p. 549.]
The Reports of the Select Committee indicate how conflicts of this sort can be mitigated, if not entirely resolved. The starting point is to be found in public attitudes. Only if there is a change in public attitudes will the necessary degree of mutual understanding emerge. In both their First and Second Reports the Select Committee emphasised that the provision of opportunities for the enjoyment of leisure should be regarded as an essential part of the general fabric of the social services—in the widest sense of that expression. A key passage is contained in paragraph 67 of the Second Report which reads:
"Until Parliament, government, planners and educators accept the place of leisure as an essential ingredient of life, there will be no satisfactory provision of recreational facilities and the well-being of the community will suffer. Society ought to regard sport and leisure not as a slightly eccentric form of indulgence but as one of the community's everyday needs".
The noble Prince in his speech referred to the necessity for a co-ordinated plan backed by legislation, and in doing so he echoed some words used by the noble Duke, the Duke of Edinburgh, at the University of California some years ago. There can be no doubt at all that there is a need for more co-ordination between all the existing agencies that are already active in this field. I get the impression
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that there is more co-ordination in sport through the Sports Council and the regional sports councils than there is as regards informal recreation. But in both areas a whole range of bodies have proliferated: national organisations, commercial concerns, voluntary bodies, and local authorities.
While there is some advantage in diversity, and in individual enterprise and initiative, the Select Committee came down firmly in favour of decentralisation and co-ordination at local authority level. Consequently the Committee recommended, in what was perhaps their most important single proposal, that:
"In addition to the recreational powers which counties, districts and parishes already have, a statutory duty to secure, in conjunction with other suppliers, that adequate facilities for recreation are provided within their area should be laid on the County Councils metropolitan and non-metropolitan) and metropolitan District Councils in England and Wales, and on Regional Authorities in Scotland".
That was recommendation 8 in the summary of recommendations contained in paragraph 351 of the Report.
I naturally have an interest in this since I was responsible for introducing into this House the Recreation and Youth Services (Northern Ireland) Order, 1973, on which this proposal is, at least in part, based. I suspect that most local authorities would indeed accept this to be their duty, but might be less happy about having it imposed upon them by Statute, even if the difficulties of finding an appropriate form of words could be overcome.
The financial implications are also important. I know very well that many people who are active in local government feel that Parliament is often too ready to impose additional statutory duties upon them, and yet at the same time to deny them the necessary financial resources adequately to fulfil their new responsibilities. I do not think this aspect was touched on by the noble Lord the Leader of the House in his opening speech. He may perhaps have an opportunity to say more about it when he comes to wind up at the of the debate. But we shall shortly have the benefit of hearing the wise guidance and experience of perhaps the most knowledgeable man on this subject in the country, the noble Lord, Lord RedcliffeMaud.

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My Lords, We have a long list of speakers and I know that the House appreciates short speeches whenever possible by those who are taking part. Let me end, therefore, by reiterating how grateful the House is for the impressive and thorough work done by those noble Lords who served on the Select Committee, and for the honour the Prince of Wales has done the House by making this debate the occasion of his maiden speech.
4.29 p.m.
LORD BYERS: My Lords, I should like to follow the noble Lord the Leader of the House and the noble Lord, Lord Windlesham, by offering my congratulations to the noble Prince, the Prince of Wales, on a quite remarkable and much appreciated maiden speech. I speak as one of those who served on the Select Committee, and we are deeply sensible of the help which his personal influence will afford us in bringing to a wider public the results of our endeavours. I would only say to the noble Prince that there are many other subjects on which he is well-qualified to speak and on which this House would like to hear him—perhaps Her Majesty's Navy, the media or some other non-controversial subject!
As the second member of the Select Committee to speak to-day, I should like to pay a very warm tribute to the amiable chairmanship which we received from the noble Viscount, Lord Cobham. In a way, this Committee was a House of Lords experiment, and if we can claim any success I think it stemmed very strongly from his chairmanship and, if I may say so, from the assistance that we received from Mr. Hayter, the Clerk. When the Report was finished I had two major sentiments: I was surprised at the ground we had covered and at the amount of evidence we had received. There were literally mountains of it. People ought to remember the risk of compulsory reading they take when they join a Select Committee or a Royal Commission. It becomes formidable over the period of time on which one is engaged. I was also amazed to discover that we by no means exhausted the whole subject. We are the first to admit that there are gaps in our Report which will hopefully be filled later on. Indeed, both sport and leisure, each in their own
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right, are very broad and substantial subjects. Participation in sport to-day affects relatively few people directly, unfortunately, but it has its problems. But provision for leisure affects millions of individuals of all ages.
As has already been said, there is more leisure to-day than in the past. One of the problems that we have to face is: how to enable people to use that leisure as they would wish, and this, like freedom, is an exercise in trying to accommodate the desires and rights of the maximum number of people whose requirements and interests will often conflict. It is for this reason that we have advocated the need for planning authorities at all levels to bear the needs of leisure constantly in mind, because planning for leisure cannot be an exercise in isolation. It has to be related to all other present and future developments in the area concerned. For the same reason, while we believe facilities for both sport and leisure must be mainly the responsibility of central and local government, we believe very sincerely that the principal requirement is for local facilities reflecting local actual demand and local conditions. Where "wider than local" facilities are needed, we believe it is right to propose that there should be central finance available to co-ordinate and often to stimulate the action of local authorities, and, in particular, to enable the poorer rural communities to act as hosts to urban and foreign visitors. So much for the facilities.
More important still, I believe, is to identify the correct level for operating those facilities; and here we had no hesitation in recommending that there should be a statutory duty placed on certain local authorities. The quotation has already been made by the noble Lord, Lord Windlesham. This seems to have given offence in some quarters. But this was not suggested in any way as a criticism; it was not suggested that local authorities had not been doing what they should in many areas. But we felt it would enable the country, through a recreation committee at local authority level and a recreation department set up under its own chief officer, to identify recreation as a positive function of local authorities. and create a forward look in planning which is so often absent. That

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is the reason why we put forward this statutory duty, which is bound to be con, troversial. I would be the first person to recognise that a statutory duty would require financing from some quarter, and perhaps in some areas—with the economic situation as it is—this could only be limited for the time being. Nevertheless, I think it is a right attitude.
I should now like to turn to a subject which covers both sport and leisure; namely, water recreation. On this subject the Report is quite clear—there is simply not enough water to go round. The noble Viscount, Lord Cobham, has already referred to the congestion on water, and I do not think it is necessary to spell out the great attractions of water for recreation, or to quote figures showing how much use of water there is. But I would make the point that we have to make the best possible use of all existing water for recreation, and to bring new areas into use if the demand in the near future is to be met. There are, for instance, the rivers and canals which are run by the British Waterways Board. The Board seem to us to work on a shoestring and they must clearly be given more financial support if they are to have any hope of making good the terrible backlog of maintenance work which they have inherited. I was interested to hear of a debate in another place a fortnight ago, which showed that in this connection the Minister for Sport is thinking along the same lines as the Committee. He said, if I may quote him:
"I believe that we ought not to be closing canals but opening many more and even building new ones".—[OFFICIAL REPORT, Commons, 24/5/74; col. 771.]
I agree wholeheartedly.
Water for recreation is in very short supply and we need more of it. Fifteen years ago inland waterways were nearly deserted. Since then, however, they have swung from one extreme to the other and we are now in danger of saturation. So we should be looking for ways of recovering derelict and partially derelict waterways, and giving them a new lease of life. And I would stress that it is not only the waterways that will get a new lease of life. As the noble Prince said, the neighbourhood in which the reclamation takes place will benefit, too.
The rubbish-filled canal, pushed out of sight at the back door, can be turned into
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a clean and welcome beauty spot. Areas of Manchester are profiting in this way from the restoration of the Ashton Canal; London's canal towpaths have been opened to the public with great success; and only 10 days ago Her Majesty the Queen Mother was re-opening the Upper Avon navigation in Warwickshire after 100 years of disuse. These are things which should please all of us. But I would mention one handicap to the restoration of waterways, which we touched on in paragraph 198 of our Report; that is the problem of waterways classified as "remainder" under the Transport Act 1968, and I would ask the Government how they propose to tackle this, if at all.
There is one aspect of leisure which concerns me as one who has a direct interest in better pensions; that is, the need for adequate income and, more important, adequate purchasing power if the leisure which is available during retirement is to be enjoyed. Of course not all leisure pursuits involve expenditure, but many do. I do not propose to develop this thought in detail, but I want to emphasise the very real social problem which is created both where inadequate pension arrangements are made for retirement, and where inflation at present levels can halve the purchasing power of retirement income over a period of five years, unless special protection is provided. This will be a big social problem as people retire and look forward to enjoying leisure, which they cannot do unless the wherewithal is there.
Before I turn to sport, I want to say one thing about recreation in general. We have said in the Report that the demand for recreation, if it is to be properly met, needs professional and specialist management. This does not mean merely the management of facilities and property, but the management of people in large and small numbers and conservation against over-use. It entails such things as traffic management. All this means that a wide selection of opportunities for training in these new skills must be made available. We were impressed by the work being done in this field by the Countryside Commission, the Department of Education and Science and some universities and polytechnics. As we point out, this whole area will provide a worth while career for thousands of people in the future. I

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believe that the section of the Report which deals with this subject is one of the more important ones.
So far as sport generally is concerned, our two most important recommendations are, first, the need for adequate funds to be available for the Sports Council. We are fully aware of the need for establishing proper priorities, but the sums of money involved are not so large if one looks at them in detail. We pointed out that the grant-in-aid for the Sports Council for 1972-73 was £3·5 million, which was increased to £5 million for 1973–74, and £6·5 million for 1974–75. Of these figures about half goes on current expenditure, including administration, the runnin7, of the National Sports Centre, grants for international events, Olympic and world training research, and grants towards the administration and coaching schemes of the governing bodies of sport. That leaves roughly half the sum available for capital expenditure. The grant is rising but not even sufficiently to keep pace with inflation, and certainly not by an amount which is related to the problem to be faced if the deficiencies in facilities are to be made up.
The Sports Council have estimated that to meet the foreseeable deficiency in facilities by 1981 they will need about £300 million to £325 million. That is total expenditure. Most of that will have to come from local authorities, but it would also require contributions from the Sports Council of about £10 million a year for the second half of the 1970s. We are virtually on that threshold now, and unless there is an increase in funds placed at the disposal of the Sports Council this target simply will not be met.
I recognise that all this is of course a matter of financial priorities, but I believe that failure to provide funds of the required order will prove to have been shortsighted. I should be the last to draw the comparison of the Arts Council getting—what is it?—£23 million while the Sports Council get £6½ million; and I should not in any way wish to see a reduction in what is given to the Arts Council. But, if we do not meet this requirement of the Sports Council, I am told it will take something like sixty years to get the facilities which were identified by the Sports Council as necessary and which should in fact be put into opera-
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tion by 1981. This, of course, could not be a worse time for pleading for money, but one ought to keep it in perspective—£6½ million at the moment is just not enough.
I would stress in regard to sport that we do not suggest any change in the central agencies involved in recreation. We believe the Sports Council, the Countryside Commission and the water authorities are doing a good job. The Sports Council has now settled down to a useful and understandable pattern of work and it would, in our view, be quite wrong to take it up by the roots and take another look at it to see whether its charter wants amending or anything of that kind. It is surprising how much the Sports Council can achieve, provided it is given the funds. It is the most efficient and cost-effective way of stimulating other organisations and authorities to meet the increasing demands. This, I believe, is the way of discharging our responsibilities which best fits in with the British system of central and local government. I hope that the Report generally will commend itself to your Lordships' House.
4.42 p.m.
LORD REDCLIFFE-MAUD: My Lords, I think there are 16 noble Lords down to speak after me; so I shall be briefer than I should like in paying my tribute to the maiden speech which we all so immensely enjoyed. I should just like to claim that, great though the pleasure has been to every Member of this House who heard the maiden speech of the noble Prince, his presence and his speech and the presence of the Royal Duke beside him were of particular pleasure to the occupants of the Cross Benches. The exigencies of existence of an ordinary Cross-Bencher are to listen to speeches rather than to make them. I very much hope that Their Royal Highnesses will be with us on future occasions, when the speech cannot be a maiden one and even when no speech is required.
My Lords, I must pay tribute to one other person who is not with us in his place today, the only begetter of the Select Committee on Sport and Leisure, the noble Earl, Lord Jellicoe. We all should remember that, in addition to the great services he performed when Leader of this House. he invented this new way of

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showing how noble Lords could try to help in the long-term planning of the future of the country; Lord Jellicoe would have a permanently honoured place here if only for this reason. 1 will not take time in praising my friend the noble Viscount, Lord Cobham, because we saw too much of each other on the Select Committee for it to be necessary for me to tell him how much I admired his chairmanship and enjoyed working under him. But as a Cross-Bencher and non-partisan I must say that there was really more recreation than sport in the work of that Committee. I owed my membership of that Committee to the fact that it was an all-Party and no-Party Committee, and I got into it only as a Cross-Bencher; but the Party politicians, and very distinguished ones they were, behaved in that Committee with such exemplary restraint, consensus-seeking, love of each other, that I really did not earn my keep as a non-partisan. Nevertheless, I am grateful to them and I must add a tribute to the Secretary. With some experience of having first-rate secretaries for committees, I have never known a better one than Paul Hayter.
My own personal conclusion from working in the Committee for those 18 months is that the time has come for the Government and Parliament, local authorities and the people of this country to say once and for all that leisure is an essential part of the good life. The noble Prince quoted Aristotle, and wisely so. and related it to the wise planning of leisure. I cannot avoid being pedantic and reminding noble Lords, though it is of course unnecessary, certainly, for the noble Prince coming from the university that he does, that the word "leisure" comes from a Greek word "schole", suggesting therefore that there is no necessary distinction between leisure and civilised life. Whether at present we can spend more money on it or not, now is the time to declare that opportunities for the use of leisure must be provided. As the people of this country grow up and become better educated, as they come to have more time away from the "exigencies of the existence of life"—in other words, more time when they can choose what to do—they must be provided with opportunities wherever they live, and particularly if they live in towns or in places deprived
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of the kind of opportunities which those who live in the countryside still enjoy. It is an obligation on society to see from now onwards that we make a new kind of effort in that direction, with jet propulsion from public money when that propulsion becomes available—and it may not come for some years; that is, until we have conquered inflation and made progress on the economic front. But we should not wait for that time. We should decide now that this shall be part of the general fabric of our society and of the social services. That was my personal conclusion.
However—and I must disclose an interest in local government—I was also very pleased that the Committee were unanimous that the operational work of wise planning and providing choice of leisure actsivities for all people in all parts of the country must lie inescapably with local government. Private enterprise, Heaven knows, has its part to play in a hundred ways, and particularly in making available the land which is in private possession, so long as it remains in private possession. But it is local authorities at three levels that are indispensable for this purpose. The parish has an essential part to play in seeing that, whether cricket or football or an arts centre or some other form of culture or public convenience is needed, that is provided in the really local community of the parish, round the village church and the village pub. So do not let us forget that the parish council has its responsibilities and its powers, and has increased power to spend money too.
Then above that there is the district. Now we have districts which combine town and country, but some of them are the old county boroughs, boroughs and urban districts. Some of these already have a magnificent record. I think particularly of Huddersfield for music, of Coventry for theatre, of Birmingham. Now there is Thamesdown, the old Swindon united with the rural district next door, with a great complex of leisure opportunities under one roof and in one place for all members of the family who like to come; Kerrier in Cornwall, with a £1 million leisure centre, was inherited from Redruth and Camborne. There at the district level, I think, most money will be spent and most actual provision made. But—and I know this is controversial—I am unrepentant about the

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unanimous conclusion of the Select Committee. That there ought to be a special responsibility on the county—the metropolitan county, of course, as in the case of the Greater London Council—I do not think anybody would dispute, though of course the metropolitan districts have an essential job within those great metropolitan complexes. But outside the metropolitan areas we thought that, though the concurrent powers of the district and the county for recreation must of course remain—and no one dreamt of suggesting that the districts should do less than their present powers enable them to do—the duty, if in due course Parliament decided to give a statutory duty to anybody, should lie at the upper of those two levels, the county, not because it is superior to the district but for two simple reasons. The first is that the county by nature is covering a wider geographical area and therefore is in a better position to plan wisely so that there is a genuine choice of ways of spending leisure time not only for people who are living in towns or on the fringe of towns, but for those in the country. Secondly, the county is the education authority. Believe me, my Lords, there is nothing more difficult or more necessary than to persuade education authorities that the schools, colleges, playing fields and equipment belong to all of us in these areas; they are part of the local community and, if possible, they should help meet the local need for art centres, for concerts, for theatres. The school must, of course, have absolute priority of use during school hours, as must also the college, but when they are not being used for that purpose, as they belong to all of us in the local community they should be available for these other needs.
If you seek dual use from two separate authorities—the county responsible for educational use of the building, and the county responsible for its community use —what chance have you of breaking down those inherent obstacles to dual use, of which the caretaker is often the fattest and the most difficult to move? He does not want anything to be done in that particular building, except when the school is at work. In our view, therefore, there can be no doubt at all that the lead ought to be given by the county, with the districts playing their crucial part
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and also taking trouble to get the collaboration of the parishes. That is the local organisation which I believe we need. The county is responsible fox structure planning and for the transportation plan for the whole area, although the district has its crucial local planning to do, too. For all reasons both of geography and common sense, I commend to your Lordships the recommendation that in recreation the county should be made clearly responsible for seeing that provision is made. Debate will quite rightly follow. But let no one say that we are down-grading the district or saying that the job has been done badly in the past. The district has a tremendous job to do in the future, but let it be the county whose duty it is to sec that things are done—not to do the things themselves, except those which are better done on a county basis, but to see that either the district or the parish do their stuff.
If I may say a word about the regional level, there we had the excuse, which the Labour Government had in their time and which the Conservatives had in their time—"The Kilbrandon Commission has not yet reported so we need say nothing about the regions". Unlike the Labour Party and the Conservative Party we had the courage to say, "We will not wait for the Kilbrandon Commission". How right we were. We said that there ought to be a regional level for the wise planning of the use of leisure. We said, "Do not re-negotiate the present pattern of regional Sports Councils, Countryside Commission, water authorities, Tourist Board"—the Tourist Board has not been mentioned to-day but their work is very relevant—"Let us accept this structure. Let us draw together the various regional bodies and pinpoint the regional function which needs to be performed by some coherent group if leisure is to be planned on a wider than county, wider than metropolitan area, basis". So I very much hope that the Government will now seriously consider what the Royal Commission on Local Government in England put forward in 1969, which has always been put on the shelf until Kilbrandon.
I would not dare to speak about Scotland or the Principality of Wales. But for England, by a majority of eight out of thirteen, Kilbrandon backed what the Local Government Royal Commission had suggested should be the regional level

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in England; namely provincial councils which would not be directly elected or appointed either by the gentlemen in Whitehall or by 10 Downing Street, but would be indirectly elected by local authorities and, therefore, be rooted in democratic local government. There is a lot to be said for thinking about this, because no major restructuring is needed. But, however we do it, we need to get the Countryside Commission, Sports Council, Water Authorities, Tourist Board, the Arts Council, too, which was outside our terms of reference, involved together at the regional level.
The Select Committee thought it important that one should not think of leisure or recreation as directed between sport on the one hand and art on the other; still less between highbrow and lowbrow, active or passive. Within the new local authority, both at district and county level, we thought there might well be one Committee which looked at recreation as a whole. That must mean, as the Greater London Council and many other authorities such as Thamesdown have done, a Committee on art and recreation, or whatever you like to call it. It might oversee libraries, museums, art centres, as well as sport and other kinds of recreation. But clearly each authority must be free to decide its own internal structure.
My last word, therefore, is this. I believe that in the Report of the Select Committee there is a serious challenge to the Government and to Parliament to decide whether, as in 1870 was done for education, the time has come to start a new chapter in our social history. It was only in 1870, terribly late in the day, that we made education a priority function for British society. I believe that before 1974 is over we ought to have done something of the same kind for recreation. Of course it cannot be a top priority. But, let us decide as a country which means to become more prosperous, more just and more civilised, that we are going to enable all our people, and especially those living in areas of deprivation, instead of moving from boredom to vandalism and other kinds of barbarism as they have more free time at their disposal, to choose more civilised ways of using it.
4.57 p.m.
LORD GREENWOOD OF ROSSENDALE: My Lords, having recovered from the graceful references of the noble Lord, Lord Redcliffe-Maud, to those whom he described as the Party politicians on the Select Committee, I want to say what a pleasure it was to hear the noble Viscount this afternoon and what a pleasure it was to sit under his chairmanship as a member of that Select Committee. And it was a privilege to hear the speech of the noble Prince, the Prince of Wales, this afternoon.
There have been many occasions in the last couple of years when I have felt that I have been treading on all too familiar ground. Before the war I was on the staff of the National Fitness Council under the chairmanship of Lord Aberdare, the distinguished father of the Deputy Leader of the Opposition. I know he would take great pride in the way his son is following in his tradition of public service. One of my masters in those days was the noble Marquess, Lord Exeter, who is, I believe, to speak next. My responsibility was to urge the advantages of the Physical Training and Recreation Act 1937, an Act which can still bring great advantages if only the financial resources are available to back it up.
After the war I was Chairman of the Labour Party's Working Party which produced the document Leisure for Living which was a trail-blazer in this field. Later, in the days of the last Labour Government, when Mr. Denis Howell was Minister for Sport, he was Minister of State under me at the Ministry of Housing and Local Government. Therefore I have spent many years discussing the inadequacy of the provision that we make for leisure and the lack of resources that are available for it.
For most of those years, my Lords, we worked on the assumption that the increase in leisure time that we all anticipated would stem from technological advances. It seems now that unless we get the economy of the country right the increase in leisure time may stem from lack of work. I am sure that my noble friend Lord Shepherd was right to warn us of the economic implications and to remind us of the necessity to get the economy of the country on a firm

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basis once again. But equally I am sure that my noble friend—if I may so call him—Lord Redcliffe-Maud is right in saying that although it may be difficult to find the resources now, we must allow nothing to stand in the way of planning what is required for the time when those resources become available. Whatever the cause of increased leisure the demand for facilities will be there, and I was delighted when the Select Committee was set up. I am glad that the Report has been so sympathetically received and I should like to join in the praise that my colleagues have given to the quite outstanding work of Mr. Paul Hayter as the Clerk to that Committee.
Looking back, however, I am not quite certain that our terms of reference were really right or perhaps that we interpreted those terms of reference as flexibly as we might have done. I think the Report would have been still more valuable if it had covered the whole field of leisure. Perhaps I may give an example. I recently had the privilege of being invited to succeed Lord Howick of Glendale as President of the British Trust for Conservation Volunteers. It is one of eight major youth organisations which organise work camps on a national scale, but it is the only one which, through the National Conservation Corps, concentrates its efforts in the conservation field in the widest sense. They do the kind of work to which my noble friend Lord Shepherd referred, and it is, I think, a remarkable manifestation of the spirit of service posessed by so many of our much maligned young people that they should be prepared to devote their time, and indeed their money, to preserving what is good in our country and improving that which is bad. It is a use of leisure time which deserves greater financial support from central and local government and from the public at large.
As one who believes firmly that our Monarchy is the best form of democratic Government that the world has yet devised I was more than pleased that the Prince of Wales should have joined in our discussions to-day. I was sorry to hear the noble Lord, Lord Windlesham, say that he had been spared a Royal Commission because I am wondering whether perhaps His Royal Highness does not have a continuing role to fill in this field. Your
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Lordships will recall—although none of us, I think, was present at that time!— that before the Great Exhibition a Royal Commission was set up under the chairmanship of Lord Granville to plan the exhibition, but it is clear that the real direction came from the Prince Consort, and the contribution of the Prince Consort at that time did much to enhance public respect for the Monarchy.
We now have a standing Royal Commission on Pollution which keeps the whole problem of the environment under retiiew and draws public attention to the shortcomings and successes of many agencies, organisations, systems, and laws over a wide fieid. Can we not have a standing Royal Commission on recreation under the chairmanship of the Prince of Wales —a kind of expansion of the Prince of Wales' Committee in the Principality? It would not of course be executive or co-ordinating, but it would ensure that as a nation we do not lose sight of what will be a problem of continuing importance. As chairman of such a Commission we should need a young man en rapport with the thinking of his own generation —a generation which is not extensively represented in your Lordships' House.
I think it is right to say that ail of us on the Select Committee were much impressed by the evidence of both Mr. Howell and Mr. Eldon Griffiths. Both have made a great contribution in this field and I am satisfied that both are equally anxious to stop the provision of leisure facilities becoming part of a "Dutch auction". Both have done great work, but like the noble Viscount, Lord Cobham, I am not at all sure that so far we have got the Ministerial structure or the allocation of departmental responsibility quite right. Therefore, I support most strongly the conclusions of the Select Committee as found in paragraph 117. I most seriously commend those views to my noble friend Lord Shepherd, mentioning in passing that the proposal has attracted a good deal of support in local government circles, and I very much hope that the Government will take the recommendation seriously.
I want to say one or two words about local authorities. I am not wholly happy about the impression that we have created. Looking back, I think it may be that we went into too much detail

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about the allocation of responsibilities between different types of authority. Like the noble Lord, Lord Redcliffe-Maud, I am one who believes in leaving the greatest amount of responsibility possible in the hands of the locally elected authorities, and I do not think that any of the members of that Select Committee wished in any way to derogate from the position of the district councils. Like the noble Lord, Lord Byers, I have a feeling that some councils have perhaps read too much into what we were trying to say in paragraphs 92 to 99. It was not a question of brushing anyone aside; it was really an insistence that this must be a partnership between the various types of authorities which have come into existence under the re-organisation, in the course of which the noble Lord, Lord Rcdcliffe-Maud, played such an outstanding part.
I should like to express thanks to the Greater London Council, the Association of Municipal Authorities, and the Association of District Councils for the interest that they have taken in our Report and for the constructive cornments that they have made upon it. I very much hope that the suggestion made by the Association of District Councils about further discussions will be followed up by Her Majesty's Government, and I am quite certain that both Mr. Crosland and Mr. Howell are anxious to be as helpful as they can in this sphere.
In conclusion, my Lords, as chairman of the Local Government Staff Commission, I have been looking at the management structures of the new local authorities and, so far as I can see, at present 15 counties and 158 district councils, both metropolitan and non-metropolitan district councils, have appointed officers specifically for leisure and amenity services. If I may give one example of a non-metropolitan district council, it is that of Blackburn where there is a recreation department of the council. The department consists of a director, a deputy-director and six assistant directors who are responsible for the Arts, for general activities, for entertainment and pleasure, for indoor and outdoor sports, for parklands, and for liaison and development work with organisations. That is how I think most of my noble colleagues on the Select Committee really envisaged the develop-
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ment of the new provision of facilities for leisure, and I think Blackburn has set a splendid example—even though it is one of those district councils, which are feeling that they have been elbowed out of the way. I should perhaps mention in passing, with some pride, that my old constituency of Rossendale, another district council, now has a ski-slope manager.
My Lords, lastly, I want to go back to what my noble friend Lord Shepherd said about the competing claims on the limited resources available to us. For it is quite clear that over the next few years central Government and local authorities will have to face tremendous financial difficulties and responsibilities. All our recommendations, and all the Government's good intentions, will come to nothing if economic difficulties mean that the finance is not available. As the Association of District Councils has put it, freedom of choice has very little meaning if there is insufficient money to distribute. Indeed, perhaps the main lesson we all have to learn is that, as a nation, we may have to work harder if we are to be able to afford to play more.
5.11 p.m.
THE MARQUESS OF EXETER: My Lords, may I start by congratulating the Select Committee on the wonderful job they have done. They have taken an immense amount of evidence, much of it contradictory and spread over a wide field, and they have filtered and coagulated it into these good recommendations. We owe them a debt of gratitude. May I also pay my tribute to His Royal Highness, the Prince of Wales, for his excellent maiden speech. The content of his speech shows that he has taken an immense amount of trouble and knows his subject, which is a very encouraging sign.
My Lords, when speaking on a subject such as this, one finds that there are so many facets—recreation, leisure, sport, and so on. I have a kindly feeling for your Lordships, so I do not propose to talk on all of those subjects, but I want to say something about amateur sport, where I have a certain amount of experience over the last fifty years. I think I should say why I speak about "amateur" sport. I am not talking about professional sport. That is a perfectly honourable and proper way to obtain a livelihood, and it provides pleasure for

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an immense number of spectators. But from its very nature there are few people in it, because few can rise to the height of accomplishment and achievement to be able to attract the public to pay to be spectators. But amateur sport is not like that. It is true that some of those at the top in amateur sport can attract large crowds, but they are not the important ones. I can say this because I was one of that little group, and looking at the youthful faces of your Lordships, it was probably before many of you were born. But I was in that group, and we were not really so important. We were the tip of the iceberg. The iceberg below is important, the tens of thousands of young men and women who are getting immense pleasure out of amateur sport in the clubs, many of whom will probably never even be placed in a club competition yet who gain the exhilaration of being really fit. I believe a feeling of competition is a good thing for them, not just against others but against themselves. They have pushed themselves, they have punished themselves, and they are better than they were. Every time they give a better performance they have this reward. There is also a very good fellowship to be found between people throughout the world of sport.
To digress for a moment, I shall say something about the international side, because this is important, too. I believe we have every right to be proud of the fact that in this country, over 100 years ago, we formed our voluntary associations. They drew up their own rules. Only the people who are best in the world can win. That is one test, and it was all done by fair play. We spread that to the rest of the world who have taken it up. I get around quite a lot because I am, and have been for nearly 30 years now, president and chairman of the largest of the international federations. We have 141 member countries. China is not yet a member, but we hope she will come back soon. Everywhere we find the same spirit that we have here; that is, an enormous bond between the ordinary people of the world. They feel that they are on all fours with each other; they know other people elsewhere in the world. There is no one between them and other sportsmen; there are no
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bosses, no government leadership, but simply fair, straightforward sport. As Mr. Brundage said, that is one of the greatest social movements in the world for bringing people closely together, to know and respect each other, to like each other, and to feel they have something in common. This is very important. But I will leave that now as just another reason for the importance of amateur sport. I will return to what I was going to say about the Report.
My Lords, what have we got? How are we to bring this about? How are we to increase the facilities and the organisation? We are lucky. We have an enormous body of voluntary helpers, thousands of men and women in all different sports who, week after week, day after day, give up their spare time for no material benefit, but who enthusiastically help to organise the club committees, and are secretaries of the little clubs and organise their competitions. The organisation is there. It is a joy to them to feel they are putting something back into the sport out of which they have had so much fun themselves. But we do need money, not great quantities. Amateur sport, by the very nature of things, is poor. Money must largely come from Governments and local authorities.
I hope that whatever can be spared will be spared because this is not just a casual throwing away of money, but something which is infinitely important for the future. If we can get facilities all over the country and then run propaganda through the schools, pointing out to young people when they leave "why not go on and join clubs, out of which you will get something worth while", this would be a good thing. From amateur sport one gets the guts, the determination, the courage, the learning to know the fellow members of the club, and if this is carried through into life, these are just the characteristics we want for a good citizenry in any country in the world. I hope when the time comes, and when the money is looked at, that as much as possible will be found, because I can assure your Lordships that casting one's bread on the waters in this way, it will come back 100-fold so far as the happiness of the future generation is concerned.
5.18 p.m.
THE LORD BISHOP OF SALISBURY: My Lords, I rise, during the extended but undefined tea interval that I know is the custom of your Lordships, to welcome this Report. Before doing so I should like to add an episcopal tribute to those already paid to the maiden speech of the noble Prince. Those of your Lordships, like the last speaker and one or two others, who are Trinity men will remember that when His Majesty King George VI—another Trinity man—came back on a great occasion to his old college, which has nurtured Isaac Newton, Tennyson, Macaulay, and one or two others, the then Master, Professor Trevelyan, in his speech of thanks, remarked that the Palace had asked him to supply some notes for His Majesty's speech, but that the King had wisely torn them up and said what he thought. "After all", said the Master, "he is a Trinity man." For some of us there is no higher praise. I must confess to a note of disappointment in the noble Prince's speech, because I had hoped he would reveal whether he was one of that select band to which all of us have tried to attain, to imitate the last speaker, the noble Marquess, Lord Exeter who I believe, as I am told, is the only member of Trinity College who has succeeded in running round the Great Court of Trinity while the clock struck 12.
As your Lordships will see from the Report, the right reverend Prelate the Bishop of London, was a member of the Select Committee. He would undoubtedly have wished to speak in this debate had he not been on duty to-day in America, representing the Church of England at the installation of the presiding Bishop there. So I shall be echoing some of his own thoughts in addition to mine, although on the subject of sport our personal tastes differ. As the noble Lord, Lord Sandford, is aware, because we are always meeting in the airport at Zurich (where he is usually writing his sermon for the next day), my sport has been ski-ing. As your Lordships will know, in this sport one tries to make progress standing upright on two pieces of wood going forwards. The sport of the right reverend Prelate the Bishop of London has been rowing, where one attempts to make progress sitting on a hard seat going backwards. My Lords,
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I welcome the Report because it recognises that leisure can no longer be treated as a "residual" category of activity, to be left to private initiative. It is an integral and growing part of one's life in our society, and requires a concerted effort and planning if adequate provision is to he made for it. I was so glad that the son of the Bishop who confirmed me, the noble Lord, Lord RedcliffeMaud, talked such amazing sense about this matter. It is naturally what I expect from a Bishop's son. It is a matter not of providing opportunities for recreation for those who can afford it; it is a matter of making these amenities available as part of the overall pattern of our society.
I suggest there may be a risk in thinking and writing, as people do, about the "problem" of leisure. We tend to assume that leisure is what happens when work is over, to take for granted that the conditions of work for most people cannot significantly be made more attractive or fulfilling. But if we were to think of the overall needs of people for a variety of satisfactions in life, we might find more was achieved by a greater intermixing of activities that we have hitherto thought of as work or leisure. Your Lordships will know that just as we use statistics to help our decisions, so we tend to chop up life and human affairs to ease our administration; housing, transport. education, health, are parcelled-off for purpose of Government. And when leisure, or rather communal leisure activity, grows to the point of needing Government attention, so it becomes another parcel. In order not only to administer but also to understand it, we then apply the parcelling to our analysis of life itself, and we define leisure as the time left over after work and personal chores. We identify chunks of time, evening, weekends, annual holidays, as being leisure, the rest as being something else, with the implication that the fulfilments which leisure can bring are sought exclusively within leisure time.
However, my Lords, as you know, life is not like that. For a start, work and leisure interpenetrate in many subtle ways. Voluntary overtime, second jobs, do-it-yourself, twilighting, evening education, are all familiar examples of work in leisure. The professor who chops wood at weekends and the forest worker who reads in his spare time show how things

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can stand on their head. But more important than this is the fact that life is integral, or people wish it to be so. Life's satisfaction is to be gained from all parts of it, from work and personal chores as much as from leisure. The human need, I submit, may not be for a white patch, which is leisure, to cancel out the black patch, which is work, but rather for a rich fabric with a life-thread running through the weft of alternating activity.
Before I mention three specific areas in which I hope to see the researches of the Report bear fruit, I want to venture with great diffidence one slight criticism, or perhaps note of disappointment. The Report is concerned throughout with sport as a participant activity, and how honoured we were to listen to the noble Marquess who has been participating in it, as he told us, while we were not yet conceived. The Committee, therefore, concluded that questions arising from professional sport—including the behaviour of spectators and supporters—because of what the Committee called the "commercial nature of the sports concerned" make their own organisations best suited to judge and provide the facilities. Is it not a pity perhaps that the Committee did not allow themselves an opportunity to speculate further on the likely split between spectator and participant sports in the remaining years of this century? Not only does this raise the issue of the allocation of resources, but it would be useful to know whether it is the same population or different sections of the population who engage in the two types of sport, and what are the effects on the overall health, in all senses of that word, of society of promoting one type of sport rather than the other. Spectator sport is apt to get a rather bad Press just now, and even to be regarded as morally inferior to participation sport. It has been seriously suggested, however, that, like space exploration, it serves a valuable function in international relations in drawing off into symbolic stylised conflict national tensions otherwise liable to find expression in actual conflict, whether within or between these nations. But that is my only criticism.
Now I turn to three parts of the Report which in my view merit special consideration. I want to join with other
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noble Lords in pleading that when schools are built it should be taken as axiomatic that the time when they are used for the education of children only should be regarded as an important part, but only a part, of their use. They should be designed with the question in mind, "How can this school best serve the Community?". That involves those many hours when the children and their teachers are no longer there, and of course as a Bishop there is probably nobody better qualified to know the problems of caretaker versus manager versus vicar versus irate mothers and pugilistic fathers. This is merely a problem to be solved with local knowledge and imagination and a good deal of episcopal oil pouring. One particular criticism that has been raised about the dual use of facilities, which are very popular with some local authorities, is that where leisure facilities have been provided in a set of buildings also designed for educational use the demands of the education system tend to take priority in any conflict; consequently, the leisure needs of the local community may not in practice, although they were intended to, be as adequately met as the widespread use of such dual purpose facilities might suggest.
Of course, I agree in thinking we are proud of our playing fields at our schools, especially in urban areas. But I just wonder—and I hesitate to say this because I can imagine how easily it will be misconstrued—whether a reduced area of playing field would be acceptable, and then more money could be spent on sports halls which could offer far more varied facilities to the whole school and the outside community. In this connection I welcome the attention paid to swimming facilities. The increase among the richer members of the community of those in possession of a swimming school and the almost status symbol of the possession of a pool should not blind us to the fact, as the Report says, that swimming is one of the most popular family sports. Dad, Mum, the kids, and even Gran, can all disport themselves together, regardless of vital statistics, relaxing in a sport which is healthy and enjoyable and which, thank heaven!, is by no means expensive.
With the greatest diffidence, and while throughly agreeing with and trying to understand the immense changes that have gone on in my own diocese, with

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national, regional, districts—the number of services in which I have blessed outgoing mayors and welcomed incoming chairmen have been legion in the last three months, and I always put up a special prayer for Lord Redcliffe-Maud —I wonder whether we should not benefit from a national policy about such matters as footpaths, bridleways and the preservation of waterways. As the Report points out, those of us, like myself, who have been brought up in the town have to be educated to the proper code of conduct for behaviour in the country. I used to work in Westminster; then I had to learn about the "gin and Jag." belt of Guildford; and now by the waters of the Avon we have sat down and slept, and I am trying to learn about country things in Salisbury. That involves education which should have come at my school. It would be helpful, would it not, if what I learned to do or not to do in one part of our country were applicable throughout, so that, as Professor Joad would have said, I was prepared for the untutored townsman's invasion of the countryside?
Similarly, could I suggest that we might have a national organisation, however it is organised locally; whether I could join a national organisation for the provision of people, men or women, who would ensure that our limited countryside resources in our small Island were properly preserved and opportunities provided for recreation in as wide a field as possible. You will note, my Lords, that I have not used the word "wardens". That is because the word for most of us town dwellers— and most of us in this country are town dwellers—has an ominous ring. The word "warden" for me conveys the image of a person, usually of female gender, largely yellow in colour, whose descent on my car means an ominous gesticulation towards a yellow line, a feeble reply from a defeated Bishop, and the loss of several pounds!
Your Lordships will feel some sympathy for the member of my cloth who was attending a conference for clergy in one of our more congested towns—was it Canterbury, York or Salisbury?—and had to leave his car on a yellow line. He left the following note on the windscreen:
"I am a minister of the Church attending a conference, which I have done for 15 years. I am already late and the parking places are
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getting fewer and fewer. Forgive us our trespasses."
When he returned to his car, he found the following note on his windscreen:
"I am an officer of the law, accompanied by a traffic warden, and I have been doing this beat for 20 years. My superior is due within the hour, and he is getting stricter. Lead us not into temptation."
So, my Lords, will the noble Viscount consider not calling them, "warden"? "Ranger" is the word. It has an outdoor, romantic, almost "cowboy" sound. It speaks of wide open spaces. "Warden" speaks of the crabbed, cabined and confined spaces of the inner city.
But my most passionate pleading is for the development, promotion and financing of the adventure playground in the densely populated areas of our cities. Well do I remember working for eleven years a few hundred yards from this House in Vincent Square. My parish was 30,000, ranging from the Crazy Gang to your Lordships' House, and comprising people of every level. But only a few of those parishioners—people living in Vincent Square—had the great privilege of playing games in Vincent Square. And, obviously, any too generous sharing of that small bit of turf with all and sundry would only have resulted in ruining it for everybody. But the days of relying on turf are gone. Other substances are very acceptable.
I think of Poplar, where my son has just completed some four years in a parish of some 50,000 people. Adventure playgrounds there are an absolute godsend. Your Lordships will be fully aware, as are the Members who produced this Report. of the vital necessity of securing the active co-operation of the local community. Here is a playground where sometimes a paid official, sometimes parents from the surrounding area, man the adventure playground for supervisory duties. Here is a playground where within a concrete shelter-looking building are tools with which the local youngsters can do all sorts of constructive activities.
I noted, I think, a complete omission of any provision for the handicapped. I do not suggest for a moment, nor would I, that the handicapped want to have segregated adventure playgrounds. They want to have a part, with the other children, of the same playground where they can be at least a bit protected but not segregated. Who knows whether, if we did

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that, we might have the great joy and privilege of having more attractive and amazingly brave people like the noble Baroness, Lady Masham of Ilton, in this House as a result of having provided adventure playgrounds for the handicapped?
But what puzzles some of those folk, like my son and his Bishop, Trevor Huddlestone, is why tracts of land can lie waste for some four or five years where it is intended to build "something" in the future, but where that "something" is quite unknown to the locals, and the date of starting to build is also so indefinite as to be incredible. I know only too well the fear of local councils, that if you clear ground and allow something like an adventure playground to be temporarily constructed it will be almost impossible to get rid of it when you want to build—in the same way as it must seem at times almost impossible to get rid of a Bishop after his usefulness has evaporated. But four years in the life of a boy, especially a small boy, is a lifetime, and who knows whether in that time we have missed the opportunity of nurturing not a vandal but a John Hunt.
It did not need the head of an Oxford college to remind the noble Prince from Trinity and myself, that the Greek word for leisure is skole, though I am grateful to the noble Lord, Lord Redcliffe-Maud for the reminder that it is the word for "school"—the place and the time where we learn about ourselves, our relation to others, to the community, and to the universe. Because this Report, if I may venture to say so, opens wider visions than those which we may now enjoy, I wholeheartedly welcome it, as I am sure will all my brother Bishops, and hope that its recommendations may be implemented, especially in those areas on which I have ventured to lay special stress.
5.36 p.m.
BARONESS PHILLIPS: My Lords, I, too, should like to add my word of congratulation to the noble Viscount, Lord Cobham, and his Committee on this splendid Report, and also to congratulate our distinguished maiden speaker. Those of us, who are many, who have always admired his high intelligence, his good humour and his courage, were I am
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sure delighted that he chose this debate in which to participate. I suppose that we all have recollections of the noble Prince, but I remember that when he was in Wales some of my Welsh friends said that he spoke better Welsh than certain Welshmen. Having been married to a Welshman, it seemed to me that there could be no higher praise than that.
I have been in the leisure industry all my working life, and at least it solves one problem—that of leisure. If you work for other people in their leisure, you have no bother about knowing what to do in your own leisure time because you do not have any. The Report points out that leisure is increasing, that we have shorter working hours, that we have earlier retirement, and of course the machine—if it produces anything—should produce for mankind more leisure. I feel that we must sound one note of warning. It would be impossible if we all tried to move in on the syndrome of the Monday to Thursday nine-to-five week, when there appears to be some reluctance to have any kind of work outside that.
I also feel that with the decrease in certain kinds of labour, our leisure has been gradually eroded. We all have to, "Do it yourself" these days, whether it means painting our houses or cutting our lawns. We have slower journeys to our workplace, which again eats into our leisure, and we have self-service of every kind. Recreation should be exactly what it says. It should be a re-creation, a recharging of our batteries. Every human being needs this if he is to live fully. Today we are talking about active recreation, and the terms of reference of the Committee were good. I should certainly like to endorse all that has been said about the greater use of facilities and the dual use of facilities. Schools and playing fields are actually closed for more hours than they are open.
But I want to speak today—and I hope the noble Viscount will not feel that this is a note of criticism—about a large and successful group of people who provide splendid opportunities for active leisure, enjoyment and enrichment both outdoors and indoors, who have been completely left out of this Report. These are the people who are involved in movement and dance. I feel sure that none of your Lordships would be so out-of-date as to imagine that this applies only to the

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female population. Gone are the days when anybody imagines that somebody performing in the ballet is a delicate gentleman. Everyone now knows that he has to be of a very strong and acrobatic capacity. But this movement is largely concerned with females, and it is one of growing numbers.
I understand that the Select Committee decided not to discuss movement and dance, for two reasons. One was that it is not a sport or a recreation—a very interesting arrangement; secondly, it could be in some way called "commercial". I should like to suggest that certainly the second reason was partly mistaken, and that the first was almost wholly mistaken. There are nearly three million people—and this does not include schoolchildren and students in colleges of education—who enjoy all kinds of music and dance. Look, my Lords, at the division of the Central Council of Physical Recreation that caters for this —and I have selected just a few including the Keep Fit Association, of which I have the pleasure and privilege to be a Vice President. It has 500,000 participants, I hasten to say, outdoors as well as indoors. Your Lordships will know that this is no longer the old system of calisthenics that some people remember in school; it is a free movement.
Last week the Albert Hall was crammed with happy, energetic women of all ages, drawn from all classes of society, taking part in beautiful keep-fit demonstrations. These are the kind of activities that receive no publicity in the newspapers, possibly because people are enjoying themselves and because there is no violence among the thousands who are assembled. There are waiting lists for classes in this particular activity, certainly in the London area. We worked it out that it would take at least three years before one would be likely to get into a class. The Government survey, "Planning for Leisure", showed that ballroom dancing and all the other kinds of keep-fit and dancing were by far the most popular form of physical recreation for females of all ages, including the "grans", referred to by the right reverend Prelate —and as a "gran" I might say that I enjoy any kind of keep-fit activity.
How can women easily arrange to get into some of the more active pursuits and sports which have been described
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earlier? It is always difficult to take part in a team sport, unless you are able to indulge in it fairly frequently. The average married woman can participate only in that type of activity. We have to look at the Welsh and English Folk Dancing Society and its Scottish equivalent to see that here we have about 500,000 participants. Its annual rally filled the Albert Hall where it held three separate performances—wonderful occasions of colour, enjoyment, fun and health-giving activity at the same time. This group, particularly, is a family pursuit.
Recently there has been a revival of the movement techniques as a treatment for psychiatric and other hospital patients. Some prisons have had helpful therapy from this kind of activity. The suggestion that movement and dance is commercial, is belied by the Imperial Society of Teachers of Dancing, the National Association of Teachers and Dancing and the Royal Academy of Dancing, whose participants are almost certainly amateurs, using the word in the widest sense. So often commercial are the clubs which spring up all over the place, offering slimming facilities for high fees. Indeed, I believe that they offer other facilities in some cases; but these clubs are not part of the Central Council of Physical Recreation and never have been.
My Lords, I wonder whether I may point out the international side of the movement and dance organisations. These events enable participants to go to all parts of the world where, I should like to emphasise, they meet in perfect harmony, bringing the truly international spirit. Some of these are competitive, but more infrequently they are not. One does wonder whether this is perhaps why the type of animosity which we see in some other events is not so prevalent there. Incidentally, I should like to ask Her Majesty's Government whether they would assist the movement to take part in some of these international events? The Sports Council is not very generous to this section, certainly not as generous as it could be. It is an expanding movement, with an appalling lack of facilities. All that most people want in taking part in these activities at local level is a clean, accessible hall, a problem which has been mentioned by other Members of your Lordships' House. The modern

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movement has no need of apparatus, but all of us who have had to tackle the caretakers when hiring school halls know full well the difficulties that must be overcome. Indeed, I tell my organisers, "Do not worry too much about the Director of Education; so long as you keep on the right side of the cooks and the caretakers you will be able to carry out your work."
My Lords, I ask the Department of Education and Science to issue a circular letter outlining codes of conduct for letting halls. I am bringing forward the case of music and dance movement now because it is most important that this group should be included in any White Paper proposals which Her Majesty's Government may present after studying the Report of the noble Viscount's Committee. I hope that my few words may elicit from the Minister some reassurance on this point.
5.46 p.m.
LORD LUKE: My Lords, I should like to add my tribute to the maiden speech of the Prince of Wales and to compliment him on the great interest and value that he contributed to the debate. I am particularly glad to hear of the extra-mural Chair at the Atlantic College in Wales which he himself has established. I took note of what the noble Lord, Lord Shepherd, said about the White Paper being issued. I welcome this, because much of what has been said to-day may possibly be included in it. I am not so happy about the resources not being sufficient at present but I notice that the noble Lord, Lord Byers, took that one up. I hope we shall at least get some money, even in these hard times.
The question of dual use has been mentioned many times, but I make no apology that I shall bring it up again shortly during my speech. I should like to compliment my noble friend the Marquess of Exeter on his excellent and sharp-shooting speech. If I may say so he got over his hurdles in record time. The right reverend Prelate the Bishop of Salisbury also spoke of dual use and he mentioned adventure playgrounds. I am glad that he did so because we have done a certain amount of it. He has apparently had trouble with wardens. I suggest that play leaders are a good substitute for looking after possibly him and the adventure playgrounds. I should
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like also to congratulate my noble friend Viscount Cobham and his Committee on its masterly Report which draws together the knowledge and experience of those most concerned with the provision of facilities for recreation in leisure time, and sets out pointers and guidelines for the solution of connected problems and the way to greater development.
My Lords, I agree with so much of the Report. My only regret is that it did not go further, that its terms of reference were not drawn wider, though I suspect that members of the Committee may have been tempted to go further and, indeed, did go outside their writ. I am glad they did. In fact, recreation as a whole is so much wider than sport and it covers all age groups. However, I noted what my noble friend said about aspects of overlapping. Those who take part in active sport, and not spectator sport, are somewhat circumscribed by age, although some sports can be continued all through life. In observing the changes and trends it is possible, as the Committee points out in paragraph 43,
to stimulate and encourage participation in activities simply by providing facilities and gaining popular sport.
The National Playing Fields Association has proved this with adventure playgrounds. Although they were new and expensive, they obtained immediate popularity whenever they were established and they continue to do so.
I especially welcome the suggestion in paragraph 57 under the heading,
"Assessment of demand"
for leisure activities, that
"Surveys must go on and a continuous process of research should be encouraged."
It adds that this should be
"promoted and co-ordinated from a national centre."
The noble Lord, Lord Redcliffe-Maud developed that aspect in an excellent speech. This should be over the widest possible field in all sectors, for all age groups. It should include what is going on in the local and Central Government, industrial and voluntary spheres, from the playgroups for young children to the leisure activities of old age pensioners—and "continuous" is the operative word, for we need to harness knowledge, I experience and resources upon the widest

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front and the centre to co-ordinate it needs careful attention in its composition.
While appreciating the "Sport for all" campaign of the Sports Council, "Recreation for all" would have a much wider application, and I warmly support the Committee's dictum that the provision of opportunities for the enjoyment of leisure is part of the general fabric of the social services and is an essential ingredient of life. This has recently been reinforced by the Association of Metropolitan Authorities, which has emphasised that recreation is an essential part of the fabric of society. They even suggest that there is a strong case for transferring recreational capital expenditure to the key sector of expenditure. That is the best news I have heard for a long time, in view of the very low priority which is always given to matters concerned with recreation.
The voluntary element has received its rightful tribute as the lifeblood of the clubs and governing bodies of sport. A good deal of pioneering work has also been done and it is essential to preserve the voluntary element. The clubs have provided facilities with the assistance of public money and voluntary funds raised locally. We have done quite a bit with interest-free loans from voluntary sources, and these have been of great value and help. If somebody receives a loan he can get on with what he wants to do and does not have to try to encourage people to raise money. At the present moment, we have £400,000 and this is generally returning within five years. The money goes on round. Of course, it is not enough, but I think the Government might well consider a similar scheme through existing voluntary organisations, so that interest-free loans could really go out and get things moving. As I said, the money returns.
Clubs throughout the country have done great work for local communities. In fact, they have literally become, "Local recreation centres". We have produced a publication with that title, giving all the technical details for providing these facilities, but as the Committee said, local authorities have made the lion's share of provision. However, some set a higher priority than others which makes for a very uneven picture over the country. As the noble Lord, Lord Byers, said, there is great hostility
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towards a statutory policy. I am not quite sure why this is so, but it is. The recent Local Government Act has been unhelpful by withdrawing grants for the acquisition of land for public open spaces at a time when land is at a very high price, and the burden lies very heavily on the smaller councils. I made an effort to rectify this by an Amendment but, as will be remembered, the Committee stage of the Bill was taken without Amendments. I very much hope that the Government may reinstate central grants for open space provision, at least for local councils in rural areas.
I am very glad that the Committee has stressed the importance of the alliance between public authorities and private enterprise. This certainly exists and there is great co-operation, which has brought about the great advance in recreational facilities since the war. But the best alliance is through a proper balance of financial resources. I am in favour of recreational committees and departments for the better co-ordination of local amenities and recreation. This would assist a greater use of educational facilities in out-of-school hours.
The large section—Chapter VIII—of the Report which deals with dual use is most important and I make no apology for speaking about this matter again, because it can provide a key to the whole situation. Here, again, there is no uniform policy, but there is a definite trend towards improvement. I should like to mention in passing that the National Playing Fields Association has been pressing for dual use for nearly 50 years and I think it is about time that we got around to it. Education authorities have autonomy in this matter and, quite naturally, their chief interest is in education and not in the community at large. But I am not alone in believing that recreation is a part of, and complementary to, education in building character, more particularly in out-of-school hours. Great harm is done by the lack of facilities for young people who have no recreational accommodation in out-of-school hours and in holiday time, when the schools and playgrounds are closed. I hope that the Government will pay serious attention to this vital matter. I know that there are troubles about wearing out the grass, but we have got around to hard areas now. I know that there are also difficulties because the caretakers do not want

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to be there. But, as I have already said, it is simple to train play leaders to see that everything is looked after. We ourselves have done a certain amount in this sphere through adventure playgrounds and play leadership schemes for the younger children.
A good deal of thought has been given to the laison between the Sports Council and the Countryside Commission, and it is stated that conservation and recreation cannot profitably be separated; indeed, conservation of land for recreation is one of the central features of our whole discussion. However, land is pretty rapidly being lost to recreation, and unless an area is reserved for long-term recreational use it can be acquired only at development prices—and what local authority can afford these without a special Government grant or loan authority? In the Greater London area, 150 acres of private recreational land were lost in the years 1970 to 1972, and 22 acres of open space have also been lost. The Sports Council has been endeavouring to persuade the Government to provide safeguards through planning to save these vital national assets from being lost—not very successfully, I fear—and to help local authorities to finance the purchase of similar open spaces.
There are many aspects of the whole field of recreation which need to have their own commissions and all of them must be co-ordinated under the proposed Minister of Recreation. I have one particular matter in mind. I know the noble Lord, Lord Shepherd, has already said that he does not want more new departments and commissions, but this matter concerns play areas, play leadership and adventure playgrounds which all have to do with the recreation of those under school age or children in out-of-school hours. It is here that everything should start. Provision has grown over the years through various voluntary organisations and local authorities. But there is an immense amount still to be done, and these developments would be greatly assisted by a commission which would draw together all that is going on in this neglected area so that there could be a clear responsibility for out-of-school time.
I make the most earnest plea that a continuing dialogue should be built up
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between the Government and those who are making tremendous efforts, and who are most closely concerned with the subject in the area of play leadership. It would be most helpful if the Government could give a lead to local authorities, urging them to develop this new policy. I am sorry to have gone on for so long, but there are relatively few opportunities of discussing this whole subject of recreation. I am very glad that such prominence has been given to it by the Committee's Report and by this debate, and I hope that much progress can he made in the immediate future on behalf of the whole community.
6.0 p.m.
BARONESS MASHAM OF ILTON: My Lords, like all other noble Lords I should like to add my congratulations to the noble Prince, the Prince of Wales. It is not the first time that I have heard the noble Prince speak: last time was in Yorkshire, and His Royal Highness was as popular there as he has been in your Lordships' House to-day. I want to speak only very briefly in this debate, as I spoke in your Lordships' House yesterday —and especially after what the noble Lord, Lord Redcliffe-Maud, said about Cross-Benchers. There has been considerable disappointment felt by many people that the facilities for the disabled to participate in sport and leisure have not been included in this Report. The disabled do not want segregation: they want integration—and integrating their needs into these Reports would, my Lords, have helped. One must not think of the disabled just as individual people with problems which have to be overcome; one must think of the whole family of which they are a part. This involves children who will be deprived of many activities if access is not improved for their disabled parents. Therefore, more provision should be made for the recreation of handicapped persons in such a way that they can participate with people who are not handicapped. I should like to take this opportunity to congratulate the people concerned with the Albert Hall, because they have made great efforts to make this vast hall accessible to people in wheelchairs; and music, which has been hardly mentioned today, is a very important part of our lives. I think the world would be a very dull place without it. Research is needed into facilities in

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National Parks, countryside parks and urban parks. These facilities of course include lavatory accommodation. Universities are interested, but they need funds to carry out research projects.
My Lords, on our honeymoon, a few days of which we spent in Wales, the noble Earl, my husband, wanted to show me Gelert's grave at Beddgelert. To get to the park leading to the grave we had to negotiate an obstacle barring our way. This was a kissing gate. My noble husband, determined to get me through, got the chair halfway, and I was stuck. Nothing we did could budge me. Finally, the village policeman was summoned, and the gate had to be dismantled around me. Kissing gates are impossible obstacles for wheelchairs. Would it be possible co find some alternatives to them in places of national interest open to the public? The noble Prince, the Prince of Wales, spoke of the benefits to handicapped children going on waterways. I was delighted to hear this. My Lords, when the noble Earl, my husband, was in hospital earlier this year I had to be in London, and it happened to be the week our daughter had her half-term holiday. One day I thought it would be of benefit to her to see London from the river. I drove to the piers of the pleasure steamers only to find too many steps. But what made the situation rather frustrating was that most of the access was ramped. If only this had been extended, I could have given at least one child an enjoyable afternoon.
Swimming is a sport beneficial to all, especially the disabled, but one aspect which worries me is the risk to the splendid helpers who may lift disabled people in and out of swimming pools. There are now excellent water hydraulic lifts which a disabled person can work himself to gain access to swimming pools. I should like more encouragement given to the use of these aids. Without frightening the public, I think more warning should be given to people about diving. Accident prevention is a very important matter. I have seen too many young men with broken necks as a result of diving. Three Members of your Lordships' House broke their backs riding: the noble Duke, the Duke of Buccleuch; the noble Lord, Lord Crawshaw; and myself. The noble Lord and myself, I know, feel this was a risk worth taking for the love of the sport. I should like
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to take this opportunity to congratulate Her Royal Highness Princess Anne on her equestrian ability, and to thank the Princess for the encouragement Her Royal Highness gives thousands of people who are helping with riding in giving pleasure and benefit to physically and mentally handicapped children.
My Lords, I used to ride and ski a great deal, but having broken my back does not stop me taking part in sport, I swim and play table tennis, and I still ride occasionally. Sport is of benefit to all, and of all ages. I should like humbly to suggest to your Lordships that it would be of benefit, and that your Lordships would be fitter and more alert, if your Lordships' House had more sporting facilities on the premises. We have heard this week that there may be fishing facilities from the Terrace. Perhaps it is too much to hope for a swimming pool, squash courts and table tennis facilities.
6.6 p.m.
LORD MONTAGU OF BEAULIEU: My Lords, I should first like to say what a pleasure it is to have Lord Cobham here to-day to move this Motion on his Report. He and other Members of the House may recall that I in fact had a Motion down to debate this Report during the time of the previous Administration, but of course it got lost with the change of Government. However, better late than never. Certainly this Report, and the debate to-day, covers a very large area, and much has already been said. I wish to concentrate my few remarks on paragraphs 338, 339 and 340; namely, the need for action on the better provision of trained management and education for leisure.
My Lords, not only are we now living in a leisure age, but the problems of such an age are becoming more acute year by year. History may well judge that this leisure age will in due course have a greater effect upon our civilisation than did even the Industrial Revolution. To-day we are still suffering from the effects of the nineteenth century industrialisation, and, with the benefit of hindsight, I am sure that our ancestors could have done a great deal more to mitigate the bad effects of that era. Let us not make the same mistakes. Should we not to-day be asking ourselves: is the bulk of our population, whether from the factories or from the offices, really

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ready for a vast increase in leisure time? Is the average man and woman psychologically prepared to have, literally, time on their hands? Let us assume for a moment that we will in due course have a four-day week. How will those extra days be used? Not, if the housewife and mother has any say in the matter, around the house; and I hope certainly not in the pub, or at the racetrack. What is certain is that many more will go to the country; and there is no doubt in my mind that people must be taught to get the full benefit from this increased leisure-time, and also to understand the country. There is no doubt that there is a great need for a comprehensive plan for leisure education right through from primary schools to universities, and beyond to adult education—not forgetting the unions.
In the cities, the provision of facilities can do much to absorb leisure activities without too much damage to the urban environment. However, there is one big potential danger: the effect of increased leisure on the countryside. Last week a conference organised by the English Tourist Board was held in the Festival Hall, and this very subject was discussed. I do not think I can do better than to quote briefly from the Report, in which it is said:
"The Committee believe that a proper emphasis in schools on education for the countryside and for recreation pays handsome dividends".
But they go on to say:
"Ignorance of the Country Code and farming methods are often the reason why visitors cause damage to the countryside and thus arouse the hostility of the farmers and landowners. Great pressure for outdoor recreation inevitably increases the threat of trespass and makes farmers more reluctant to let the public on to their land. If the public can acquire at school a better understanding of how the countryside works and what farmers are doing, they will do less unintentional damage during their leisure when they are adult. Continued teaching of the urban public in the responsible use of the countryside will make them more welcome there and reduce the risk of conflict".
Thus it is clear we must somehow encourage the intelligent use of leisure in the countryside where both the mind and body are exercised. But how can it be done? First of all, no doubt, at school, where I believe without great extra cost extra-mural studies can be ser-
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viced by the existing teaching staff. Certainly more school projects involving conservation would be welcome.
I should also like to say a special word about the unions to-day because if the unions look overseas to America they will find that there they have been forced to set up departments to appoint officers to provide leisure advice to their members. They have bought hotels for holidays for their members and provided other leisure facilities. I hope that the Government will have a word with the T.U.C. to see whether Mr. Murray will agree to ihe setting up of a small committee for the study by its members of this very important problem.
There is no doubt a need for a country education service to be run perhaps in co-operation with the Countryside Commission, which I know is indeed very much aware of the problem and has itself appointed interpretive officers in its ten National Parks. But I believe that much can be done also in the private sector. The "strictly private" notice which one sees around the countryside will, I believe, become more and more unacceptable in this modern age. It will perhaps be better understood if part of a country estate is made more available—perhaps as a nature trail, or to organise forestry or farming open days, or to use disused gravel pits for scrambling or water sports. I believe that landowners are sometimes over-protective and that the private sector has a big part to play. Certainly we have the setting up now of some fine countryside parks, but some of these have been delayed inexcusably by bad planning decisions and planning policies. There must be much better co-operation between the local authorities and private owners in the setting up of such parks, because I believe that access willingly given will benefit the owner and the public—whether the owners are the public authority, the Forestry Commission or the private owner.
But where you get increased access, you must have increased understanding. Therefore, another important part of education in the countryside is the information centre or interpretive centre. These are now successfully appearing all over England and Scotland. Some have been set up by the Countryside Commission, others by private people and yet

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others by the English Tourist Board. These centres not only guide people to the places of interest but inform them what they can do, and, more important perhaps, sometimes guide them away from the more sensitive areas which need protecting. Naturally, siting is vital, and in the beginning many information centres were put in the wrong place—for instance, in the middle of a National Park. Now it is the accepted policy that these centres should be built on the edge of Parks and, as the noble Viscount, Lord Cobham, said, transport should be used sometimes to move people around within the Parks. But they certainly should be planned on a national scale.
Coming as I do from the New Forest, I am very saddened to see that the Department of the Environment in its wisdom has decided to end the M27 right at the gateway to the New Forest, at the Cadnam roundabout. Very wisely the Forestry Commission decided that this would be the ideal place for an information centre, but due to recent cuts, that information centre has now been cancelled and next year, when the M27 opens, the New Forest will be very seriously damaged, I believe, by the extra influx of people which an information centre sited there would have done a great deal to prevent. That is very sad because, in co-operation with the county council the Forestry Commission has done so much in recent years to control the problem in the New Forest. But I was very pleased to see that the Report, in paragraphs 263 to 267, recommends the greater recreational use of woodlands and their ability to absorb people and cars.
Finally, I turn to management and here lies the key to the removal of frictions and towards making the best use of all of our leisure and sporting facilities for the largest number of people. There are far too few leisure-management courses at our universities. What a splendid career this would be for a young man or woman to-day. It would be up to them to make us see to it that the leisure boom works for and not against the interests of the countryside. I believe we can strive to educate as well as to entertain—as I believe we do so well in England's stately homes which attracted no less than 43 million visitors last year. In this leisure age this generation is more conservation-minded than
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indeed were past generations. Under right planning, control and education, future generations can have their leisure in a green and pleasant land.
6.16 p.m.
LORD HALE: My Lords, this has been a very distinguished debate and I almost apologise for intruding, but if any Lord is tempted to ask "Que le liable allait-il faire dans cette GalÈre?"—using the last word on this distinguished occasion in its meliorative, and not its MoliÈrative, connotation—I must put the blame firmly upon the shoulders of the Ramblers' Association and their associated bodies who wrote to me a very charming and moving letter, which rather cunningly referred to some Parliamentary battles of the past in another place and, indeed, recalled to me some of the happiest days of my life. I also have a duty to thank them for something else—for calling to my attention one of the finest State documents that I have ever read. I have had the privilege in the last week or two of examining the products of the Economic Commission at Brussels—admirably reasoned, full to the brim with facts, containing an infinite variety not quite from cabbages to kings. But after the first hundredweight the interest tends to dissipate and the change to this admirable document, admirably phrased, generously phrased, generously presented and introduced in just the same spirit by the noble Viscount, Lord Cobham, in his speech to-day, was something new and I found it very touching.
During the admirable speech of the Prince of Wales, I recall another qualification: that the only job I have ever held, and one which I openly solicited, was the stewardship of Her Majesty's three hundred Chilterns, an area of still almost unspoiled beauty, home of the famous Beeches and the site of Gray's Elegy in a Country Churchyard. I was not permitted to hold it for long, because there were other applicants. But I should like to explain to the noble Viscount that the ramblers, who do not realise I can no longer ramble but can only meander—and I do not propose to meander long to-day—make no criticism whatever. On the other hand, they are full of praise for the courtesy and understanding with which they were received, for the understanding of their problems, for the tolerance and for the consideration. It was

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the noble Viscount himself who referred to suspicions which are based on a rather long history of dubietics arising from old controversies. To that extent, I might say that that is not wholly dissipated and there are two reasons for this.
During the long period of cold storage into which I was put by my political superiors, some changes took place in the use of the British language which I personally deplore. I came back to find people talking about taking a "realistic" view, which invariably precedes the adumbration of some major breach of principle. I now hear people constantly talking about the "environment", which used to mean the area of beauty by which we were surrounded and now seems to refer to nothing but polluted areas, to rubbish dumps, sewage farms and brothels, all lacking beauty. The second complaint was admirably put by the noble Earl. Lord Arran, to-day when he said that there were literally some fields in which Statute law did not seem to run so effectively as in others.
I omitted to say that the word to which the ramblers have called attention is "rationalisation", which now has a special connotation in connection with footpaths. The word "rationalisation" which now appears in leading articles and so on, indicates no extension to footpaths at all unless they are to divert one around the two-and-a-half sides of a 25-acre arable field; no increase of footpaths, quite definitely, in the very areas in which, as the noble Viscount so ably said in his speech this afternoon, they are so much needed. One realises the inevitable controversy which arises from the increasing demand for arable land and the demand for footpaths near the metropolitan areas.
I referred to the point made by the noble Earl. Lord Arran, to-day. It really is true that before the noble Viscount's Committee complaints were made by agriculturalists about the very serious problem of the ploughed field and the use of the plough on extensive areas where the footpath runs across. Those who complained were apparently wholly unaware that provision had already been made substantially to deal with that problem, and to permit the limited ploughing up of footpaths in such circumstances on due notice, and on replacement by an alterna-
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tive. So, my Lords, they can show justified apprehension when they check up recent legislative provisions for the sign-posting of footpaths, the implementation of which in some counties varies from moderately fair to pretty poor, and from pretty poor to shocking, one county having ignored it completely from the time of the passing of the law. I am certain that they will all be encouraged by the noble Viscount, who spoke with such sympathy and understanding and by hearing the speeches from both Front Benches.
I myself recall with some emotion, particularly when I heard the touching and moving speech of the noble Baroness, Lady Masham, what has happened in places like Oldham in the last 30 years. We started by trying desperately to get help for a playing fields association. Now we can even point to small yachts on the local lake, to bringing the Lake District within transportable distance, to rescue teams operating from Oldham on the Welsh mountains and the Yorkshire hills, to the proximity of the Pennine Chain path and to other facilities which have been created.
I do not know whether the noble Viscount will permit me a single diversion on a matter in which I am always interested. I have only one criticism to make. In his definition of "leisure" he did not include chess, for which I forgive him, but he heard without contradiction evidence that chess is not a form of physical activity. My Lords, that is quite untrue. The amount of energy needed for a chess master to win a master game is really stupendous and it costs much more energy to lose one as is shown by the comparative illness which often follows a defeat. One chess master declared after winning 10,000 master games that he had never defeated an opponent who was in perfect health at the time of his defeat. Now that the contest of world mastership varies from Iceland's icy mountains to Cuba's not quite coral strands, we have found in these combats that both heat and cold can have deleterious effects upon a defeated champion. So I put in a plea, as I did on sports earlier, for this game.
Finally, my Lords, I make one serious observation which I think is worth making. I do not wholly share the somewhat morbid prognostications of yesterday

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made by the Leader of the Liberal Party about our economic future, but I apprehend that we have come to a time when there may be a need for a little belt-tightening. There is no cheaper, no more rewarding sport than visiting on foot the beauties of our country, with or without a botanist's microscope, with or without a camera, and so on. I think the time is coming when, instead of taking a couple of dozen bikinis and four or five parasols to find the dubious sun of Spain, people may recall that all the equipment you need for the Lake District is a mackintosh, and that sometimes what looks to us like a drizzling rain—what we describe to visitors as a mountain mist—is part of one of the most invigorating ways of participating in the pleasures of the countryside. It is a healthy, cheap and admirable activity, which has the essential nature of peace. I am very glad to have been convinced to-day that I need not raise any fractious points in this debate, as the speeches from either side have been so comforting and so reassuring that I feel that this Committee has not only produced a magnificent Report, but has initiated measures which will redound to the pleasure of pedestrians everywhere.
6.28 p.m.
LORD HUNT: My Lords, I am the 15th speaker to rise and congratulate the noble Viscount, Lord Cobham, and his colleagues on their remarkable and comprehensive Report. It is no criticism of the noble Viscount and his colleagues to suggest that it has come late in time, and perhaps only just in time. It perhaps will not be minded by the noble Viscount, Lord Cobham, if I remind him that some of the ideas that are embodied in his Report were floated in a debate in your Lordships' House as long ago as 1968, and in those six years the needs have grown and the problems have grown apace with them. May I also—addressing myself to the noble Viscount—congratulate him on his remarkable patience in remaining in his seat throughout the debate. In my experience of your Lordships' House I have never seen this happen before.
At the beginning of his speech the noble Viscount wondered what Sir Edmund Hillary might feel would be the proper category in which to place the climbing of Mount Everest—whether as a recrea-
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tion, a hobby, a leisure or a sport. I think I can tell him. It falls under none of these categories. I think it could be said to fall somewhere between a celestial mission and the drudgery of the treadmill. It has no part in this debate at all.
The noble Lord, Lord Windlesham, suggested to the Prince of Wales that he probably would not wish us to make too much of a meal of the eulogies expressed in regard to his remarkable speech. If he were in his seat, I should be offering him the 15th course! Naturally, I enjoyed and admired his speech as much as anyone else. I have only one complaint to make about it, and if he chances to read Hansard to-morrow I hope he will forgive me for making such a complaint. It is that he pinched the famous quote attributed to Aristotle, which I was going to make use of myself. I cannot help feeling that if Aristotle were with us to-day he would be sitting on the Cross-Benches.
I would say that the great merit of the Report—and indeed this point has already been made—is that it is making leisure respectable and responsible in its own right for everybody, not only for the privileged, and not simply as an expedient for improving one's work potential. I would say it has a particular message and significance for young people, for those who work at the coal face, on the shop floor and in our fields, many of whom have the least experience of the whole range of leisure activities. As the Report says, leisure is essentially a matter of personal choice, but unless the whole range of options and opportunities are made available and are made known, too many people will continue to be drawn into a narrow selection of city-based activities and entertainments which are all too well organised and all too attractively displayed, and which pay handsome commercial dividends. This is a crucial point, and it was made by the noble Lord, Lord Shepherd, two and a half hours ago. Perhaps he will permit me to make the same point now—although this is not, of course, really the time to develop it. We must do far more than we are doing at present to provide incentives and encouragement to our young people to use the great outdoors to work off their aggressions and energies, if we are ever to make any significant reduction in the trouble we are having on

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the football terraces and in our back streets.
There is so much in this Report about which I am positively enthusiastic that, quite obviously, at this stage in the debate I must be carefully selective. I will concentrate on those aspects of recreation which fall mainly within our National Parks. First, I would hope that the statutory duty—and I wholly support the suggestion that there should be one —laid upon the local authorities will at last provide those local authorities and the Countryside Commission with the power and the will to give our National Parks effective protection from the further encroachment to which they have been exposed for much too long. I cannot help reflecting ruefully that had its timing been earlier—and this is no reflection upon the noble Viscount—the impact of this Report might have spared the Lake District its bisection by the A.66 and it might have saved Snowdonia from the Dinorwic pump storage scheme. Indeed, I hope that as a result of further surveys of land resources which the Report recommends, more recreational land in our unexploited hill and mountain areas will be placed under protection from further industrial encroachment.
I have said that I am fully in support of the statutory duty. I believe it is the only way of ensuring equal opportunity in this and indeed in any other field. At the same time, I think it is of crucial importance that the many voluntary bodies which have been in this field for so long and have gained so much experience should continue to receive the maximum encouragement, financial and otherwise, so that their know-how and enthusiasm should be given full scope. I recall that their enthusiasm was mentioned by the noble Marquess, Lord Exeter—and there is no more important aspect of this enthusiasm than that of voluntary work in improving the amenities of the country. Mention has been made of the canals, but of course there are footpaths and, in the cities, playgrounds in which voluntary workers are the essence of the exercise.
I come back to the need for expanding the available areas for adventurous outdoor recreation, and there is the related need for providing information and publicity with the object of spreading the
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load of growing demands on the use of the available areas at present. It is already a matter for serious concern that some existing areas—and I am thinking particularly of Snowdonia—are under excessive pressure which, in turn, reduces their value as wild and remote country. There can be little feeling about "being away from it all and out on your own" if you go to Snowdonia with a group of friends and find the mountainside crawling with other groups who have come along with the same laudable idea. Already particular interest groups, such as climbers, tend to feel threatened when they find conducted tours under training on their favourite crags, festooning those crags with multi-coloured ropes, and hear the valley echoing with the shouts of the instructed and instructors alike. I devoutly hope that the day will not come when notices have to be placed on the access roads into the Snowdonia National Park, announcing "Park full" and when there are road patrols ensuring that cars going through those roads unticketed continue without stopping to the further exits.
I also welcome, as I believe the right reverend Prelate also did, the proposal for a co-ordinated so-called "warden service". I should like to use the words "ranger service", and I hope the right reverend Prelate will notice that I have adopted his suggestion. The service should have some power to enforce rules, with a career structure and nationally recognised duties. Already hooliganism is rearing its ugly head in our National Parks, and erosion and litter are doing a great deal of harm.
There are two other matters which I should like to mention which, while not being specifically referred to in the Select Committee's Report, stem directly from the recommendations relating to outdoor adventurous education. If your Lordships will permit me, I should like to say a word or two about them. First, as regards training in adventurous activity, if we are going to encourage the leisure options which are attended by risks even more than we are doing at present, then it is all the more essential to ensure that appropriate training facilities for leaders is also expanded so that the quality and number of adults rise to keep pace with the demand. I am speaking specifically of the mountain-based activities, but I think

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the same is equally true of water sports, caving or any other activity attended by risk. Indeed, there is a very real danger, as I see it, of publicising these sports, and the areas where they may be enjoyed, in advance of the availability of an adequate cadre of instructors. What is more, I believe that it is wise to expose young people to potential dangers only at a slow pace from the simplest of beginnings and on only moderately rugged terrain, rather than (to borrow a metaphor from another sport) to "plunge them in at the deep end". The idea surely should be that they should enjoy and find an ongoing outlet in those activities rather than end up quite early by saying, "Never again".
For this reason, I think it is important not to press on with those who are not enthusiastic and not enjoying the experience. I am against making young people take part in activities of this kind because someone deems it to be good for them. It is all very well for the police or the fighting Services, as part of their training; but it is wrong to impel young people into experiences which involve risk of which they can have no notion beforehand. The acceptance of risk must be a matter of personal choice, taken when you are well aware of it. What is more, if more absolute beginners were headed for the moorlands rather than our rugged mountain areas, it would mean less congestion in places like Snowdonia than is the case at present.
My final point concerns safety. Given that a free choice has been made to indulge in a "risk" sport, I deprecate the overplaying of this word "safety". Of course it is up to the individual to choose the risks he takes, and to safeguard against avoidable risks. This is even more the responsibility of teachers, youth leaders and anybody else who take young people and prepare them for taking risks. But I detect a positive complex about safety nowadays to the point almost of emasculating the sport of its main attractions. If you so hedge a sport around with precautions as to eliminate the possibility of an accident with a multiplicity of signboards and coloured cairns all over the hills, with shelters at frequent intervals, and so on, we shall finish up with the ultimate absurdity of placing safety nets at the foot of the crags to catch falling climbers. There is no surer way of
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destroying adventure and losing adherents to it than this.
Accidents in our mountains are serious matters, and sometimes tragic. But some accidents are bound to occur occasionally and when, unhappily, they do, it is wrong to put the whole splendid momentum, the whole spirit of the daring, into reverse from a failure to retain a sense of proportion. The Sports Council, the local authorities, the Minister of Sport, all, as I see it, have a duty to help the media to put such accidents when, sadly, they occur, into perspective. I hope that they will do so. These two points, training and safety, are consequentially important to the kind of development which I and all your Lordships very much hope we shall see outcoming from this splendid Report.
6.42 p.m.
LORD DULVERTON: My Lords, I should like to start by adding my own word of congratulation to the noble Prince on his speech earlier this afternoon, which we all enjoyed and which gave us so much food for thought. Having served as the country member of Lord Cobham's Committee and, in some sense, as the Scottish countryside member, I shall confine my remarks to those problems connected with the countryside, and at this time of the evening I shall try to be brief. The noble Lords, Lord Montagu of Beaulieu and Lord Hunt, have already made many of the points I wanted to raise and I thank them for making them. I was particularly glad that the noble Lord, Lord Montagu, made so clearly the point about the need for education in the use of the countryside, so that people may not get in conflict with users of the countryside, but also—and equally important—so that they may the more enjoy access to it.
A number of noble Lords have drawn attention to the sombre facts of the changed circumstances in our economic position since the Committee sat. We were of course working, and all who came and gave evidence to us could be said to be working, on the premise of growing affluence throughout the nation, greater productivity and thus more leisure and more means to enjoy that leisure. One or two noble Lords have drawn attention to the fact that this may not necessarily be the position. I only hope that our grounds for optimism a year

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ago may be enabled to return to this sphere.
I have referred to the point which the noble Lords, Lord Montagu and Lord Hunt, made. I shall not make a speech at all. I shall simply raise one point and try to underline it, because it is one which has not been made so far during the debate. I want to say a word about the part our forests have to play in meeting the demand for outdoor recreation. It is not always realised what potential exists here, but the Report of the Select Committee spelled out something about it, and referred to the special capacity of forests to absorb people in an unobtrusive manner. Provision for this is being made both in the public sector by the Forestry Commission and in the private sector, although they are not so much talked about.
The Forestry Commission are the largest public owners of land in the country and their estate extends to three million acres, most of which, but not all, is planted with trees. For many years they have been experimenting rather unobtrusively with the provision of facilities for walking, picnicking, camping and enjoying the beauty of the forest and wildlife which finds harbour there. In their Report for 1970–71, the Forestry Commission published a comprehensive and forward-looking recreation policy. Since then the pace of providing and developing facilities has quickened, and it is known that they have even more ambitious plans afoot. Such developments have been financed out of the Forestry Fund, the main purpose of which is the planting of a national forest. It is worth noting that the total disbursement by the Exchequer between 1919 (when the Forestry Fund was established) and the year ending 1972 was £281 million.
It is also worth noting that our present bill for imports of timber and timber products is running at well over £1,000 million per annum, and is still rising. This is annually four times the total of Exchequer grants to public and private forestry over the half-century that has elapsed since 1919. At the end of this century, our forests could be providing a quarter of our timber needs. I mention that in passing and for two reasons. First, the prime role of our forests must be the
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production of timber. Secondly, the development of the great recreational potential of the forest should not be debited in the nation's accounts against the cost of growing trees. These things cost a lot, particularly if they are provided to the high standard of taste and workmanship which the Forestry Commission and others have happily set for themselves. They should not have to be found from the Forestry Fund on the scale that is required.
When I was in Holland a year or two ago, looking at the progressive plans which they have laid—which have already been referred to once or twice this afternoon—for getting their national recreation needs well organised, I was shown around and guided by an official who was from, I think, the Ministry of Recreation and Natural Resources. He emphasised to me the value which they put on their forests for recreational purposes. They thought that next to water facilities, which tended to crowd people, for dispersing people who wanted peace and quiet and fresh air the forests were of immense and unique value. My guide emphasised this point and added, in a little less than perfect English, "You see, it is not so good to recreate among the potatoes."! This attitude of foreigners towards their forests is not general in Britain, but I think it will grow as more and more people experience the refreshment and content which the woods can and do offer.
In urging your Lordships not to underrate the potential of the forest resources in relation to what we are considering today, it perhaps needs restating that the prime concern of the forester must be growing timber. But growing timber can be reconciled with the needs of recreation more easily than can some other uses of rural land. Public access to woods, however, contains one grave and mortal danger, especially to young woods. I need hardly say that I refer to fire. Picnickers and others just have no idea how easy it is to set fire to dry grass or heath, and how difficult it is for an army of men to put it out again—back to education again which we have mentioned already. Furthermore, it is my belief—and others who know the countryside well share this point of view—that it should be made illegal to light any fires or stoves at certain times and in certain places, as is the case in many other

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countries. I will plead this case again with your Lordships at some appropriate time, but in the context of what we are now discussing I hope the point might go on Record.
I think I ought to conclude by declaring my interest in that particular point. I would rather not in a way, because I was to make the point in any event and now it will look as though I am axe-grinding. We have just lost 100 acres of young forest trees on an estate for which I have responsibility—burnt to a cinder in Scotland. I quote it as an example. It happened a month ago, and it took 90 people to put it out, but it could easily have burnt much, much more. Three boys and a primus stove were found to have been responsible. My Lords, they and others just do not realise the dangers. It could happen anywhere in the Highlands and it is remarkable that it does not happen more often.
6.52 p.m.
BARONESS D'ARCY DE KNAYTH: My Lords, may I add my congratulations to the noble Prince on his exceptional maiden speech, and my thanks to the noble Viscount, Lord Cobham, for enabling us to debate this Report, which is particularly welcome as it deals with an increasingly important subject. However, I find far from welcome the fact that I can see no mention of sports facilities for the disabled in all three volumes of this Second Report. My noble friend Lady Masham of Ilton has already mentioned the widespread disappointment that this has caused. There are two lamentably brief allusions to the disabled. First, under publicity, it is reported that the Disabled Living Foundation spoke of the lack of publicity about facilities which are available and already accessible to the handicapped. The Committee agreed that
"some improved publicity would be beneficial at not too great a cost".
The second reference, albeit oblique, is made when Dr. Bannister speaks of a group studying various aspects of sport and recreation
"including the special needs of the underprivileged, prisoners, the problems of race relations and sports participation".
The disabled were included in this curiously assorted bunch as, I suppose, underprivileged. But this Committee was wound up after two meetings. There is
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no further mention of evidence supplied by the Disabled Living Foundation and no reference whatsoever to that submitted by the British Sports Association for the Disabled, which is the umbrella organisation embracing all types of handicap for all the individual disabled sporting organisations.
The exclusion of such evidence and the failure to mention the needs of the disabled in any context in this Report is a very grave omission, particularly as sport can play an important part in assisting the integration of disabled people into the community. The Committee, having concluded that leisure time will increase, ask:
"What will people do with their leisure? Will they make use of it? Is there any reason why they should fill themselves with fresh air instead of relaxing in an armchair? "
The question is a valid one. I think that if one asked this question of the disabled one would find that a very high percentage of people wish for some form of physical activity in their leisure time. Able-bodied people with sedentary jobs have realised the importance of sport and physical recreation to their wellbeing. Sport, whether competitive or noncompetitive, is even more important in the case of people who are chairbound or who walk only with difficulty. It assists the development of the physically disabled child; it helps the newly disabled adult to maintain maximum physical fitness. It is a good means of improving balance and co-ordination, of strengthening the muscles, of speeding-up the reflexes. Its physical values are great to many people with diverse disabilities. From the psychological aspect, sport can boost the disabled person's confidence enormously. He can also derive much pleasure from the knowledge that he is performing some action with the maximum skill, grace and co-ordination that his physical disability allows.
Sport provides an excellent means of working off aggression, which is useful for the able-bodied, as the noble Lord, Lord Hunt, mentioned, but particularly so for physically handicapped people who in many cases cannot get up to go for a walk to "let off steam". The discipline which the practice of sport instils is especially valuable, for example, to the handicapped child who has been somewhat spoilt, or to the recently disabled

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adult who is struggling to re-adjust himself. Participation in sport has great social value for both handicapped children and adults, enabling them to make friends and join in activities with their contemporaries. It can help to keep the disabled family united by providing a shared interest, and can, in turn, integrate the disabled family into the community by means of that interest. Furthermore, it can influence society's attitude to the disabled. It is good publicity value. If an able-bodied person sees what disabled people can do in the field of sport, if he meets them and talks with them and discovers that they have many interests and ideas in common, he begins to understand why the disabled desire to become fully-fledged members of society, although alas! at the present moment some members of the community are not yet attuned to seeing the disabled actively participating in sport in public.
We can therefore say that the handicapped benefit from sport for many of the same reasons as do the able-bodied, but perhaps to an even greater degree. So I was delighted, my Lords, on arriving at Chapter III, Provision of Facilities, to read the Committee's statement, already quoted by the noble Lord, Lord Windlesham, that:
Society ought to regard sport and leisure not as a slightly eccentric form of indulgence but as one of the community's everyday needs."
Yet there is still no mention of the disabled. I cannot believe that this was because the Committee assumed the disabled were so much a part of the community as to need no special mention. Gratifying though this assumption would be in many circumstances, it is impracticable when discussing "facilities", which necessarily include access and so forth.
We live in an environment tailored to an able-bodied society, and this is as it should be. Indeed, as the average wheelchair user's dimensions are something like 4 ft. 6 in. by 2 ft. 1 in. by 3 ft. 7 in., posterity could form some curious conclusions about its ancestors from an architecture based on these. But the certain special provisions which must be made to allow the disabled to live in this environment involve little or no extra expense, provided they are made at the design stage. So I am not asking for
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more resources. They present obstacles to no one and indeed smooth the way for many other sections of the community such as the old, the pregnant and those accompanied by the young.
Chapter V deals with facilities for water recreation where mention could have been made of opportunities for canoeing, sailing, et cetera, for the disabled which are becoming increasingly popular. There may not be great numbers of disabled people wishing to do these things—indeed, people with certain disabilities might be quite unsuited to them (the noble Lord, Lord Hunt, has already warned on risk sports for the able-bodied)—but the facilities should be there in case they wish to use them. This type of activity brings the disabled person into closer contact with nature and the elements, and these are things from which lie can feel quite isolated, especially if he is chairbound.
Chapter VI, Facilities: Leisure Out-of-Doors, mentions play areas for children and adventure playgrounds. It is important to ensure that disabled children can obtain access to and benefit from these, for it is vital to integrate the disabled child as early as possible in life. I was particularly delighted that the noble Prince mentioned handicapped children in his excellent speech. There was no mention in the Report of disabled children with regard to adventure playgrounds— something the right reverend Prelate has already pointed out. There was no mention of access to parks, trails, et cetera. The Committee say that more car parks, lay-bys, picnic sites, lavatories, et cetera, are needed for people visiting the countryside. I hope the latter will be accessible and signposted as such.
Chapter VII is entitled "Facilities: Sport". In this Chapter the Committee welcomes the tendency to provide sports centres. I quote:
"Sports Centres involve grouping and cross-fertilisation"
and, again,
"They encourage social contact".
The noble Viscount has already spoken about this. My Lords, this underlines my point, that sport can provide a very valuable contact between disabled and able-bodied members of society—and where more so than in sports centres? Yet there is still no mention of accessibility or of

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other facilities. Perhaps there was no need to mention these. Did the Chronically Sick and Disabled Persons Act remove such problems? Let us examine the situation.
It is true that that Act did a great deal to ensure that new sports centres were built with access, adequate parking and sanitary facilities for the disabled. One of the main objects of the British Sports Association for the Disabled is to secure access to sports centres and its officers visit and advise centres about this. The Sports Council keeps a watchful eye on new sports centres which are being built. Despite all this, the fact is that there are still some sports centres being built which are inaccessible to handicapped people, and it would have been helpful if their needs had been mentioned by the Committee in this connection.
The British Sports Association for the Disabled, the Sports Council and the Central Council for Physical Recreation have all helped to improve the attitude of coaches towards taking on disabled people. Hitherto, some of them were inclined to think that sport was, "not for them". The Central Council for Physical Recreation has asked all governing bodies of sport to name somebody in each sport to act as a liaison officer for the disabled, and I think it would be helpful to have a specific name to approach in case of need. However, I hope that it will in no way discourage others—coaches, for instance—who are already doing a valuable job, from continuing their work with the disabled because they feel that it is now somebody else's particular concern.
The Sports Council has appointed a disabled sportsman, Norman Croucher, as a member of the Sports Council. He is a double below-knee amputee who has climbed both Mont Blanc and the west flank of the Eiger since he became disabled. He is, therefore, an excellent example of a disabled person who takes part in integrated physical activity—in his case, to a remarkable degree. However, I hope that he will also have some knowledge of the special facilities required for the more severely disabled who wish to take part in sport. My Lords, much is being done to ensure that the disabled can take part in sport, but much more needs to be done. This Report contains no suggestions about what should be done
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and no acknowledgment or criticism of what has been done. I hope that the noble Lord the Minister who is to wind up for the Government, who has shown such interest and concern for other aspects of the lives of the disabled and who has already mentioned them in this context to-day, will have something to say about this grave omission. The disabled derive as much, if not more, pleasure and benefit from sport and leisure activities as do their able-bodied fellows, and they have an equal right to practise them. Therefore, I deeply regret their exclusion from this Report.
7.4 p.m.
LORD GAINFORD: My Lords, it is my great pleasure to add my congratulations to the noble Prince, the Prince of Wales, on his magnificent maiden speech this afternoon. Also, I wish to congratulate my noble friend Viscount Cobham who initiated this debate, and in particular to extend my congratulations and thanks to the Select Committee for their wonderful work in producing this Report: collecting and presenting all the evidence, conclusions and appendices.
As a Londoner the problem of recreation for my family and myself is ever-present. I am a man who needs exercise and who never seems to get enough of it. Therefore, I support the noble Baroness, Lary Masham, in her plea for exercise facilities in the precincts of your Lordships' House. Particularly welcome is the emphasis given in paragraph 211 of the Report to the objective of the Greater London Council,
"… to achieve a distribution of open space within London which will allow every home to be reasonably accessible to different types of open space".
The Greater London Council itself welcomes this Report and praises the work of the Select Committee. There is much to praise and commend and little to criticise. Some of those criticisms have already been mentioned.
I speak not as a member of the Greater London Council, but as a member of its staff. The affairs of the parks are not included in my daily duties, but they interest me. On January 31 of last year, my noble friend Lord Nugent initiated a debate in your Lordships' House on the quality of life in the urban environment. It was my privilege to take part in that

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debate. I spoke about the need for the increased use of our parks and the importance of open spaces in our cities, particularly in connection with the use to which they are put. We hear a great deal about proposals for recreational facilities for young people, from infants to those who are still youthful in mind and body and who want to participate in some form of sport or active leisure. Recalling once again the debate of January of last year, I mentioned the need to enable children to play adventurously. I was pleased to note that the right reverend Prelate spoke on this subject. I used as an example the town of Thetford which has an adventure playground and, in addition, has facilities for children to be able to take their bicycles out at night and cycle in the dark, using their bicycles in complete safety without fear on the part of their parents, or danger to themselves or to the public.
Some activities of youth cause concern. A leading example in our parks is the festivals of modern music. The very suggestion of such an event now creates pictures of overcrowding, litter, vandalism combined with wild, reckless behaviour. Those who cannot understand or appreciate the present-day tastes of the young complain that there is not enough control over these festivals and that the police are too lenient. They fear, also, that even if there were enough of them to get together so that they could exercise some form of control themselves, they might find themselves in trouble with the law to a greater extent than the music enthusiasts.
It is a pity that youth does not have a good public image. I noted particularly that the noble Lord, Lord Greenwood, referred to the much maligned youth. Human nature is the basis of this. In every organisation or group, big or small, it is the minority adverse elements who attract the most notice. However, I say: Thank goodness for the majority of young people who are not the moronic creatures the publicity image tends to make out. Whenever I hear of a group of persons likely to maintain this unfavourable image by their behaviour, I express regret and then try to tell people about those whom I have met and can respect for their courtesy and intelligence, even if I cannot share
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their taste for music, or the Arts, or fashions. They can give the world confidence in modern youth, and they must be given every possible opportunity to to bear the responsibility of creating a favourable image. It is up to them.
The Select Committee has pointed out an interesting fact in modern society and behaviour. In spite of all the facilities of modern transport, private and public, which provide opportunities "to get away from it all", not many of those opportunities are taken. On the whole, people do not seem to want the wide open spaces, although they are there. The majority seem to prefer crowded conditions; they take a motor trip into the country and go where the other crowds are. They do not stray very far from their cars. Are we all suffering from such a mass of fears, known or unknown, that we have to rely to such an extent on the herd instinct to keep our minds at ease? Is it a feeling of insecurity or frustration that causes the crowds to collect and for some persons among them to misbehave? Just at a time when it is possible to enjoy the spirit of adventure, that spirit of adventure is in danger of being lost.
The veteran citizens of our society can help to foster the spirit of adventure. I like to use that phrase "veteran citizen" and I try to use it rather than such negative words as "old", "elderly", or "aged". History is becoming very prominent these days. Modern science and technology are aiding the historian so that it is a living subject. Each district is discovering more of its local history, and the fascinating facts combined with instances in actual living memory give the history student of to-day a telescopic view of the past. So many works, buildings or landscaping, whether it be for business purposes or for leisure, dig up some more examples of history, and where these are being discovered personal memories are useful. In some cases they are vital. We live in a fast changing world, and it is the veterans who can assist us in keeping the local history alive.
The only comment I wish to make on this Report by the Select Committee is in regard to the accent on youth and the little reference that is made to the needs of the veterans. They need their own particular leisure: it may be active or it

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may be quiet. Fortunately, veterans are able to be more active. For example, in London—and I have no doubt in many other cities—evening classes have been very well attended by persons of all ages. This is not only attendance to study and to gain qualifications but for social contact. In a class of mixed age groups the veterans can help the younger people. Tact may be necessary because experience and knowledge can sometimes clash with youthful confidence.
Social contact in study leads us to the consideration of social contact in sport. Here we look to the education authorities for assistance and we have the mention about the use of schools and facilities in after-school hours. Schools which have large swimming pools, gymnasia, tennis courts or assembly halls could be used for much better purposes. I mention assembly halls because I have had to visit a number of schools personally, to inspect them in connection with entertainment licensing. Schools have arranged for the public to be able to use their assembly halls as theatres, for concerts or plays. That is a valuable use to the local community.
I was particularly interested in the mention made by the noble Prince of Gordonstoun School because I was privileged to be an early pupil at that school. One of the maxims of its founder, Kurt Hahn, was that a school should not only be a place of education but should also provide service to the community. When compiling my notes about the possible use of schools after school hours I was naturally thinking about London, but when the noble Prince mentioned Gordonstoun it caused my mind to go to other schools in the country and how they might help the tourist industry.
To use Gordonstoun and the area in which it is situated as an example, it is a beautiful strip of land on the South coast of the Moray Firth which has one of the best climates in the British Isles. It is a long way from the South of England, but once you are there it is well worth visiting. The shore line is a mixture of rocks and beautiful sands, and not far away there are the mountains, and the climate is splendid. One stands a very good chance of having a sunny holiday there, but for swimming the sea is a little cold. If schools in that area would open their swimming pools to the public there might be a noticeable in-
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crease in the number of tourists during the summer months.
Of course there will be difficulty in regard to conversion of schools for public use, and any complaints by the education authorities in regard to those difficulties would certainly be justified, particularly in regard to the expense involved; but if local authorities came to their assistance it would make the raising of such funds easier. I particularly ask Her Majesty's Government whether consideration has been given not only to any possible use of the facilities at existing schools, but also whether all new schools that are being planned, either now or in the future, could have included in the plans the possibility of using the gymnasia, swimming pools, and so on, for public use.
Again, private sports clubs have facilities for social contact. They often provide means whereby people can get together and have refreshments. They can meet and talk in such clubs. But it is the public grounds that suffer. For example, many publicly-owned tennis courts have been closed owing to lack of use. This lack of use results from a lack of social amenities once the actual hard exercise period is over. If it is not possible to bring friends or relatives—and particularly close relatives—people tend to seek other forms of exercise or, regrettably, none at all.
Many sports depend on the weather. Football is one of the most popular sports in this country, but it is also highly vulnerable to the elements. As a very popular sport there is constant demand for more space so that pitches are available. To reduce the need for additional land and to keep existing land readily available for games there is a movement afoot to introduce synthetic turf surfaces. To quote from the Report, paragraph 291:
"The Football Association say that they do not advocate a widespread change from grass to all-weather areas or synthetic surfaces since the very nature of the game is closely related to the surface of the pitch, and the Committee appreciate the force of this argument."
However, there are advantages in the use of synthetic surfaces. More games per pitch can be played per day or week. Games can be played under some weather conditions which would be considered totally unplayable for ordinary grass

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pitches. Less land will be required, and maintenance will be easier. The cost of outlay will be high, but in the long term it will be a valuable investment, although private sports organisations may find the expense prohibitive until, with research and experience, the cost can be reduced. Public bodies may be able to raise enough funds at least to experiment at the beginning.
Many a new idea finds opponents more quickly than supporters. It is always up to the supporters to have the courage to experiment. I have it on authority from the Chief Officer of the Parks Department of the Greater London Council that the Council is a supporter of this idea, and is seeking every possible opportunity to experiment in the use of synthetic turf surfaces. If these experiments prove successful, the results could be revolutionary in a beneficial way. I also wish to add that in the event of the experiments proving the success which is hoped for, any change from natural to synthetic pitches will not result in any redundancy of staff.
My Lords, a few more speeches and we come to the end of a most important and interesting debate, one which is likely to gain considerable public notice. I have already tried to express a tribute to those who have worked so long and hard to produce this valuable Report. This debate is therefore the beginning of our work to see recommendations become realities.
7.22 p.m.
BARONESS ELLIOT OF HARWOOD: My Lords, I shall be brief as time is going along and there have been some twenty speakers, but I am the first to speak from Scotland. I think the voice of Scotland ought to be heard somewhere. We have heard a good many voices from Wales—quite rightly—but I should like to say a word or two from the Northern Kingdom. I should like to add my congratulations to those already expressed to the Prince of Wales on his remarkable speech. I think we are fortunate that in the Royal Family we have always had people tremendously keen to help in this world of leisure, recreation and sport. My mind goes back to the 1935 Jubilee of King George V and Queen Mary, when the Prince of Wales of the day, Edward, raised a great fund which became the King George Jubilee Trust, of which I was the first
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woman member and one of the very first trustees. For thirty years the late Duke of Gloucester was chairman of the King George Jubilee Trust. I should like to put on Record the appreciation I feel for the tremendous service which he did in being the chairman of that Trust. The noble Lord, Lord Hunt, became a member of it later on. But it would be nice if in this debate in this House we could pay a tribute to the Duke of Gloucester for his thirty years as chairman of the King George Jubilee Trust, and to the work which that Trust did and still does for young people. I hope—perhaps I ought not to say this—that Her Majesty the Queen may consider making the Prince of Wales the chairman of the King George Jubilee Trust, the chairmanship being now vacant.
I should also like to say a word or two in support of what the noble Baroness, Lady Masham of Eton, and the noble Baroness, Lady D'Arcy de Knayth, said on the subject of the integration of the handicapped and the non-handicapped in every way that is possible. At the present moment, I am engaged in trying to do this very thing, building a college for further education, one that is purpose-built for handicapped people. But it will also take non-handicapped people. I hope those who have given us such a marvellous and interesting Report, an excellent document, will, as a follow-up, ensure that whatever is done as a result of all this work will also include facilities for handicapped people to join in the sports that they can do with non-handicapped people. That is the real point that the noble Baroness, Lady Masham, and the noble Baroness, Lady D'Arcy de Knayth, were making. I support that very strongly indeed.
My Lords, I should also like to support the suggestion made by them for riding for the disabled. I have actually organised such an enterprise in my own county. This is extremely popular, and is a very simple sport. In a country area, such as where I live, it is easy to do this kind of thing because everybody has ponies, and one can get able-bodied people to come along and help the disabled with their riding. It has been a tremendous success, and is another matter that might be pressed on local authorities when they are considering the development of sport of one kind and another.

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In Scotland, we really are enthusiasts for outdoor sports, such as ski-ing in winter. When I think of all the years that I have lived in Scotland, yet it is only in the last ten years that anyone has decided they would ski in the Cairngorms! It is very odd that these things "catch on" when the facilities have been there for so long. But ski-ing is very popular, with pony-trekking, hiking, rambling, caravanning, mountain-climbing. All these things are enormously popular. It is very exciting because it does give one faith in the development of community activities. Even our education committees—and no one finds in education committees very adventurous people—are setting up outdoor schools, part camping and part living-in, where children can spend a week or a fortnight away from traditional buildings and the traditional curricula of education.
It is not only the young who are so keen on all these activities, but adults as well, judging by the youth hostels, one of the very successful organisations, which are used by all ages. I agree with the noble Lord, Lord Hale, on the subject of the Ramblers Association. I, too, have read the documents that that Association has sent round. I think we can well encourage and support them in every possible way in the work that they are doing. I was interested in Chapter VI of the Report, "Leisure outdoors". As we all know, the National Parks play a great part in that, and the forest trails. The noble Lord, Lord Dulverton, spoke about the Forestry Commission, and I endorse what he said. I live in the largest forest country in the whole of the United Kingdom; in fact I believe it is the largest forest country in Europe. This forest is now at last being developed for the public for recreational activities. In the Kielder Forest there is a little museum of nature study, birds, the beasts, and the trees, what I think is technically called an interpretive centre, and which is very popular indeed. There is space for parking, and for caravans; families can go there as well as individuals. In a forest near where I live there is a new picnic place which has just been opened, with the most glorious view that you ever saw. That, too, will be used by the public.
There are two other places I should like to mention. One is a small building
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in the Queen Elizabeth Forest in the Trossachs, called Marshall Lodge, after a Chairman of the Carnegie Trust People can go there and sit outdoors if it is fine weather, and can enjoy the view; or if it is wet, they can go inside and have a picnic indoors. There is a similar centre in Brecon near the Brecon Beacons, where similar facilities are available. I mention these two things because they have been financed by the Carnegie United Kingdom Trust as pilot projects, and are now described in the Report of the noble Viscount, Lord Cobham, as places which would fall into the "honey-pot" facilities described in paragraph 226. All these developments are quite excellent. I hope very much that they will be copied in other parts of the country. It is quite true that walking, hiking, rambling, are the most inexpensive of all these facilities, and I should like to see these developed in every possible way. In my own county we have made a study of all the rights of way and footpaths and these are now being put into maps which will be available for people, to enable them to enjoy the facilities which are provided for hiking and rambling. It is only the beginning, but I hope it will lead to further developments in other parts of Scotland and through other local authorities.
One has to remember that even the wildest land—and we have a great deal of wild land in Scotland—is now used for agricultural purposes, for grazing cattle and sheep, as well as for the sports I have mentioned. That the public can damage private property, for instance by walking with dogs that they cannot control, which roam about and disturb the sheep, or dropping the horrible litter that has been spoken of, or leaving gates open for stock to stray, annoys the farmers, and quite rightly. To prevent these things happening, membership of one or other of the recreational organisations is, in my opinion, a great safeguard; these organisations exhort their members to care for the countryside and not to make life more difficult for hill farmers and others.
In paragraph 246 the Report speaks of rationalisation of rights of way and country paths. I am sure that that is probably something which has to be looked at, but I agree that if possible we should try to do it only when necessary.

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I hope that if possible the old routes that have been so popular for many years and which are very often historic can be kept in the traditional way. I know it cannot always be done and I am, therefore, in favour of what the Report has said about making alterations where necessary. But I hope that in hill country, where it is really very wild, where paths have existed for years they will remain. We have a Roman road across the hills in the Border country called the Weal Causeway. It dates back, I suppose, 1,000 years, and is still available for people to walk across, although the Forestry Commission have planted up vast acres of it and it is not quite so visible as it used to be.
In the outdoor centres I spoke of at the beginning, the training and understanding of the value and importance of rural areas is part of the education of young people, and this is certainly an insurance against the abuse and misuse of the freedom for people to walk over private property without doing any damage. I have myself made an excellent arrangement with an outdoor school right next door to my own property. The children can walk all over my property, but they can do so only so long as they do not disturb the sheep and cattle, and close the gates. So far this has worked very successfully.
I support very strongly what the Report has said about the importance of the local authorities being urged to take an active part in all this recreational work. It is all very well having Government Departments—and they are important because that is where so much of the central funds come from—but it is really the local authorities who know the areas, know the people and know what is wanted. I would strongly support Lord Cobham's Report when he says that they want the local authorities and regional authorities to take the first initiatives and work to develop these activities.
I do not think I have disagreed with a single person who has spoken in this debate. This is a matter upon which both sides of the House are entirely agreed. What we want to try to do is bring about some of the changes many of us have hoped for over a great many years. I hope very much that this debate
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will draw the attention not only of the Government—because that we can do in Parliament—but all local authorities to what they can do to help. If that happens, Lord Cobham and this great debate will have done a splendid service, and I am glad to have been able to take part in it.
7.35 p.m.
LORD SANDFORD: My Lords, I rise at the end of this long debate with rather mixed feelings, with, of course, a sense of honour, which I share with all noble Lords, at taking part in a debate which was graced by that admirable speech of the noble Prince, the Prince of Wales; a sense of pride in belonging to an assembly which has produced, under the chairmanship of my noble friend Lord Cobham, such a valuable and comprehensive Report on a most important subject; but also with a sense of envy towards my successors in office as Ministers of Recreation. It is, I think, a mantle of which I wore at any rate a part for three years while I was in the Department of the Environment.
I am envious for at least five reasons. Ministers of Recreation in the future will have, as I did not have, the guidance of this admirable Report; that is, I reckon, my greatest loss. They will have, as I did not, the support of this Report in exerting the influence that a Minister of Recreation necessarily needs to wield in Whitehall, as the Committee recognise. Ministers of Recreation of the future will have a title which was not available to me, or to my successor so far, which is a much more apt description to meet a much more pressing need than any that is in use so far. I think my colleague, Mr. Eldon Griffiths, would agree—I do not know what Mr. Denis Howell will say—that being called the "Minister of Sport" is really a misnomer. The requirements of recreation are, as the Committee identified, much more pressing and require much more Ministerial influence if they are to be met effectively. My fourth point of envy is that Mr. Denis Howell, who is now doing what was my job, is getting paid more to do it. And my fifth is that while I should have spent those three years concerning myself wholly with matters of leisure, I was distracted over and over again in getting twenty-five Public Bills through your Lordships' House.

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I am sure the Committee are right to say categorically, as they do in paragraphs 100 to 108, that we need a national strategy for this subject to give proper effect to it. It is certainly needed here, if it is needed anywhere, in this densely packed Island, where every patch of land and water has to be fully used, and most of what we need for recreation has to be got out of water or land which is also being used for something else. That is one reason. The other reason is because this densely packed Island is now filled almost as full as it can be, certainly in England, with people with an ever greater affluence, ever increasing mobility, and having, as a result of universal education which has now gone on up to the age of 15 or 16 since the end of the war, far greater powers of appreciation of the Arts, amenities and countryside facilities, creating a demand which has for far too long run far too far ahead of the supply of facilities to meet it.
I think, too, the Committee were right to advocate an effective regional point of focus to give effect to and implement this national strategy. I would, if he will forgive me, tease the noble Lord, Lord Redcliffe-Maud, a little in claiming that the Committee went into this matter thoroughly. My reading of paragraph 14 of their summary, and paragraphs 119 and 120, is that they used the fact that the Commission on the Constitution has not yet reported as an excuse for ducking what is undoubtedly a rather difficult issue. That is an omission that I shall seek to make good in a moment. I believe indeed that the regional offices of the Department of the Environment provide a useful point of focus.
I go on to talk hereafter about England alone, because that is the part of the Kingdom of which I know most. There is certainly no need to talk about Wales because the Prince of Wales himself did full justice to the Principality. Until the noble Baroness, Lady Elliot of Harwood, spoke, I was rather afraid that I should have to make some remarks about Scotland, because otherwise it would have gone totally omitted, which would have been a serious omission indeed. I could have said a little about the Borders and Kielden, but I am hoping to make good my ignorance of that area later on this year.
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I believe that the regional directors of the Department of the Environment (the regional arm of the Secretary of State), properly linked, as they can easily be, with the Regional Tourist Boards, the Regional Arts Councils, the Conservancies of the Forestry Commission and the regional water authorities, who are already within the Department of the Environment, could, and should, play a significant part in making it easier, to use the Prince's phrase, for local authorities to work out together their part in the national strategy, in helping the local authorities to give effect to it, and to be instrumental in assisting them to clear the planning and financial hurdles on the way, and to put forward projects to the Secretary of State for his approval, where that is necessary.
I use the word "projects" because I would prefer to take the idea that the Committee has formulated about recreational priority areas, and proceed instead by way of a series of regional recreational projects. Not, of course, single, purpose-built complexes but integrated schemes; concepts mainly serving major metropolitan areas but incorporating a whole cluster of diverse but linked facilities—tow paths, adventure playgrounds, picnic sites, viewpoints, and all the things that we have been talking about this afternoon—provided and managed by the various levels of local government, including parishes, and by private owners.
By way of illustration I shall take just three particular projects which happen to be my personal favourites because I think that they are imaginative, serving a valuable purpose in important areas. There is the project for the reclamation of the whole of the Tame Valley where it passes across what is now Greater Manchester. This was a scheme put forward in the first instance by two counties, what were then 11 urban districts and boroughs, and in which the Civic Trust for the North-West played a major part. The Tame Valley through Greater Manchester is virtually unused and unusuable for recreation purposes. The river is polluted—that can be put right—and it is being used for tips, not all of which are properly controlled. The Bill that we have just passed will help there. It is potentially a valuable source of recreation.

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Another slightly different one, but in the North of the country too, is the Pennine Park. This is a green wedge of invaluable countryside straddling the Pennines between Leeds and Manchester, the West Yorkshire metropolitan area and the Greater Manchester metropolitan area. Schemes for that have been worked out. I think they were stimulated in the first place by the Calder Civic Trust, but they have now been worked out by the old West Riding of Yorkshire and are lying waiting implementation.
The third that I would claim would qualify for this sort of accolade of a regional project would be the complete restoration of the Kennet and Avon Canal between Bath and Reading; a remainder canal passing across Berkshire, Wiltshire, and through the county of Avon. A good deal of restoration is going on under the aegis of the British Waterways Board, with the strong support of the Kennet and Avon Canal Trust and the local authorities concerned. That too could be elevated to a regional project. I would not claim that it is serving an area of great recreational need, but it is a facility which is there on the ground and is scandalously under-used.
I would claim that you could pursue six aims in any one of these or similar projects, all of which are well worth while. I believe in large schemes of this kind where a lot needs to be done, it would be one way of getting the best value for the resources deployed. It would be the most exciting way of making progress in what is undoubtedly a difficult economic climate, because it would concentrate the resources we have on a number of limited areas where we would see results. It would provide a framework of co-ordination of effort among different local authorities and between statutory and voluntary bodies. It is the difficulty of achieving this which, as much as the lack of a statutory duty and resources, has inhibited more rapid progress in this field. It would provide a vehicle for getting local publicity and consultation of an extensive kind—more extensive than we have seen hitherto—and provide an opportunity for maximising a sustained voluntary effort and self-help, and if we are short of Government finance this is one way of making progress. It would provide a chance to
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deploy more skilled management than any one of the separate facilities would attract if they were tackled one at a time.
Those would be my aims in proceeding in this way, and I should like to put forward for consideration four ways and means of carrying forward what we need by way of projects of this kind. First of all, we need an extension of the principle of dual provision and management—something that has been advocated from all sides of the House and which, as a Minister who served for the short period of eight months in the Department of Education, I would endorse more strongly now than I did before I joined the Department. It is particularly scandalous in the case of educational facilities, but the need for dual management for recreational purposes applies just as much to reservoirs, forests, and defence lands. We now have in the Water Act forestry policy that I hope will emerge quite soon, and in Lord Nugent's Report on defence lands, all the framework for giving effect to that policy.
Secondly, I believe that we should consider the extension of the interpretation of the word "countryside" when used by the Countryside Commission in considering what they will and will not give grant aid to, and include in that interpretation at least all Green Belt land in and around our cities. I really do not see any reason why what has been designated Green Belt to prevent development, cannot also be used to enlarge the understanding of the word "countryside" by the Countryside Commission to get positive development of recreational facilities. This would enable the Countryside Commission to take an active part—and I think that the Committee was right in discerning that they are not taking a sufficiently active part at the moment—in recreational projects in and around our big cities, and converting under-used patches of Green Belt land to receational use, and encouraging local authorities to do that with the aid of the very substantial grants that they are now in a position to give and were not at the time that the Committee was deliberating.
Thirdly, another way forward is to consider the extension of grant for reclamation of derelict land where it falls within the envelope of an area that contains an approved recreational project to cover

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not only reclamation and landscaping but development for recreation as well. I do not think it is right to do this generally for all reclamation of derelict land, but where the reclamation is part of a regional recreational project I think it would be appropriate to do so. I would also suggest that we should consider now—again the Committee touched on this—that these grants and all other finance of facilities in approved regional recreational projects should be made out of the key sector, because the difficulty of getting key sector finance, which applies for instance to schools, and the locally determined finance to match the right moment is really a considerable cause and an inhibiting factor. I know that there are strong arguments the other way but it should, I believe, be considered.
Finally, my Lords, in respect of this regional project approach, I think that we must use them to secure flexible but, nevertheless, precise arrangements for the management of the several facilities within each regional project, especially those involving dual use, and decentralising management in the normal course at least to districts, where possible to parishes. and also, where appropriate, to private owners, and making in that process the maximum use of management agreements to get good recreational or amenity use out of blighted or underused land which is being held for eventual development or redevelopment for some other quite different purpose. Several noble Lords said what a pity it was that we do not use for adventure playgrounds land which is being held for development but is not going to be built on for another five years.
These are all points of detail. The main point which, for me, comes out of the debate is that the Committee and the noble Viscount have done us all an admirable service in establishing—at least I hope that the noble Viscount has established—that in recreation we are not dealing with a residual service which gets what is left over only when enough schools, highways, prisons, clinics, et cetera, have been built; but a service which has its own rightful claim on our resources. If the facilities we have been speaking of are not provided, and are not provided soon enough, to match the demand for them, which is running ever further ahead of demand, we shall, I fear, continue to see even more of the pheno-
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menon of which we are already seeing far too much, as the noble Prince said:
"The excess of energy destructively released,"
whereas what we want to see, and can see, are the powers of appreciation, enjoyment, creativity that have been stimulated and widened by universal education in this country, now sharpened and fully satisfied far and wide across the cities and the countries of this land.
7.54 p.m.
Lord SHEPHERD: My Lords, in winding-up the debate, by leave of the House, I intend to be brief, not because of the lateness of the hour and in no way as a reflection upon the importance of the debate, to which the noble Lord, Lord Gainford, drew our attention. But, by nature, I am one who likes to be able to reply full-face to questions and points I am ready to admit this evening that, whenever I have sought advice upon an issue, the advice I have been given has been so wrapped up that it is to me—at least a reasonably straightforward sort of fellow—hardly intelligible. I think there is a reason for that. In my earlier speech, I indicated that the Government intend to produce a White Paper. I think I am right in saying that it will be the first time a Government have ever considered that a Report of a Select Committee of your Lordships' House was worthy of a White Paper. So I hope the House will take that as a signal of the importance which the Government attach not only to the Report but to its subject matter. Quite clearly, those now seeking to formulate policy do not in any way wish to close the door to further consultation or consideration of these matters; hence the non-committed nature of the advice to me. As I indicated in my earlier speech, the debate will be taken very much into account in the various Departments concerned.
To the noble Baronesses, Lady D'Arcy de Knayth and Lady Masham of Ilion, I mention the question of the disabled, among many others. I have no doubt that this is an area that will be considered. Knowing the Minister for the Disabled and his superior, the doughty Barbara Castle, I have no doubt that those interests which have been drawn to our attention will be fully considered and, I hope, taken care of by the White Paper. If they want any other assurance, may I

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say that I will also take particular care, because I have no intention of coming unprepared to your Lordships and defending a White Paper against the formidable forces which I know can come into this Chamber on occasions.
I stressed earlier the economic situation and the limits which, if we are realistic, we shall need to put on development in the recreational field. I have no doubt that it is the wish of the House that the Government should seek to put the economy right, to ensure that the resources are there and to see that they are disbursed sensibly. I can only repeat what I said earlier: that the Government have no disposition to dismiss recreation as, in the words of the Select Committee, "an optional extra". Those words are there quite deliberately. In one or two strands of the debate, I noticed that in dealing with local authorities the noble Baroness from Scotland, Lady Elliot of Harwood, was perhaps closer to my view when she used the word, "urge", as opposed to those who would leave this task entirely to local authorities, and those who would seek, as in Scotland, to put a statutory duty upon local authorities to operate in this field. This is very much a matter for local authorities and they should accept the duty, not only for themselves but also for the regions around. I would therefore stress very much the need for regional co-operation. We need to have the right organisation and co-ordination, and to make use of all the resources that are available.
A good deal of work is already being done. My honourable friend the Minister of State for Sport has already invited a number of people with wide experience in recreation to be members of a Working Party to review these matters. The Working Party has given birth—if that is the right phrase—to four working groups concerned with sport, international sport, water recreation and co-ordination. My honourable friend is anxious that this particular review should be completed by the Summer Recess. My Lords, throughout the debate there has been a strong feeling that there should be a Minister for Recreation, although I think the noble Lord, Lord Sandford, perhaps because of his more recent Ministerial experience, and, if I may say so, loyalty, was not so sure.
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As the Select Committee and others who have taken part in the debate have made clear, recreation and the use of leisure cover a wide range of activities other than just sport, and the Government recognise the force of the case for greater co-ordination. I am not thinking so much of the Arts and other kinds of cultural recreation which are already provided for, guarded and guided by my honourable friend the Minister for the Arts, but there is much to be said for increasing the degree of co-ordination which already exists between the Government Departments dealing with sport and other outdoor recreational activities. These cover various aspects of Government policy and extend into the interests of the various Departments. There is already some degree of co-ordination and the Government are now looking into the possibility of increasing the co-ordination and the implications of doing so. I can assure your Lordships that in this study the points made to-day will be most carefully considered.
A number of noble Lords, including the noble Lords, Lord Byers and Lord Montagu, have stressed the need for a career structure and training in recreational management. I believe that the Countryside Commission's Report includes recommendations to this effect, and the Government are at present looking at this. I understand that there are some three to four thousand places in our various institutions of higher education in the field of management, and that there are 20 places in the North London Polytechnic specifically for recreation. Facilities are also available at the Glasgow Technical College. However, this is clearly an area which we should look at quite seriously because, if we are to extract the maximum from our limited resources, management must be one of the keys.
The noble Lord, Lord Byers, raised the question of the remainder waterways. As the noble Lord knows, the British Waterways Board has a duty for recreational facilities on those canals which come into a particular category. I understand that there has been a plea that these remainder waterways should be upgraded and I can tell the noble Lord, Lord Byers, that my honourable friend, Mr. Howell, is at present studying the point but of course it is entirely a question of the resources

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which are available for the waterways. Here again, as we have seen with the Ashton Canal, a great deal can be done with the co-operation of the local authority and with willing volunteers to provide labour and finance.
The right reverend Prelate the Bishop of Salisbury is not in his place, so I think I shall write to him.
My Lords, a great deal has been said about dual use of school premises. I agree with the noble Lord, Lord Sandford, that this use should not be confined to schools; the Services have facilities which could well be used and I think that we should look at all the facilities available in order to see whether we can use them. However, as the noble Lord, Lord Sandford, said, there are practical difficulties, particularly concerning managing the school facilities in the evening and during the holidays when the school staff is absent.
LORD SANDFORD: My Lords, with great respect to the noble Lord, I did not say anything about the difficulties. I think far too much is made of the difficulties.
LORD SHEPHERD: My Lords, I must have assumed that the noble Lord had been thinking of the time when he was in the Department of Education, because they lay great and, I think, justifiable stress on some of the difficulties. However, these are difficulties which, in my view and speaking personally, ought to be overcome.
The noble Viscount, Lord Cobham, spoke about the need to develop the fringe areas in order to relieve the pressure on the more rural districts of our countryside. This is a matter which clearly the local authorities will have to take into account, but the noble Viscount will be aware that the Countryside Commission are examining this matter urgently. It is one in which they have a very direct interest. The noble Viscount also raised the important question of public transport for those who have no cars. Provision is made under the Local Government Act 1972, and it is open to local authorities to decide how best they can exercise the particular facilities available to them under the legislation.
The noble Lord, Lord Hale, and I think also the noble Baroness, Lady Elliot, dealt with the question of foot-
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paths and bridleways. This is a matter which, clearly, causes friction between the public and those who have interests in the land. Some of this can of course be dealt with through education and through the setting of an example, in particular by older people to their children; but the Government believe that the Committee is right to concentrate on the scope for revising the pattern of paths in areas where this can be done with benefit both to amenity and to the farming interests.
My Lords, other matters have been raised in this debate. I think of my noble friend Lord Greenwood and of the noble Lord, Lord Redcliffe-Maud. I have dealt with some of the points which they have raised. I was particularly interested in the speech of the noble Lord, Lord Hunt, about the acceptability of risk in one particular field of recreation in which I think he still has an interest. I have always been a little worried about youngsters going up into the mountains and hills of this country, because the weather changes very quickly and what may appear to be safe at the moment of going out can turn into quite a dangerous position. I think that this is very much a question of training and also of having back-up facilities if there should be an accident. I think that we should accept the risk but should seek to minimise it. There are many other facilities. I think of swimming pools in particular and here I think one should, as one can, eliminate almost all the risk, by ensuring that staff are present at the pools to see that the risks are diminished as far as is humanly possible.
My Lords, I hope that the noble Viscount feels that his debate has been worth while. From the Government's point of view it has certainly been so, and we shall study with the greatest care all that has been said. I hope that when our White Paper comes out it will receive the same acclaim as has the speech of the noble Prince this afternoon and that from that White Paper we can consider ways and means of implementing the noble Viscount's proposals.
BARONESS PHILLIPS: Before the Minister sits down, could he give me one crumb of comfort? I was the only one who mentioned the 2½ million people in the movement and music section, and I asked that they should be included in the

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White Paper. I feel that if I do not get that point in now it will not happen.
LORD SHEPHERD: My Lords, I am glad that my noble friend reminded me of that point because if she had not done so she would have been cross with me for a long time. When I met the representatives of the Central Council for Physical Recreation last week, the case which the noble Baroness put was made with perhaps not quite the same force but with the same clarity. I naturally undertake that this will be considered, because clearly this is a form of recreation which is enjoyed in this country by many thousands of people of all ages. If that is a form of recreation which people like, and if there are the funds available, then clearly it is a form of recreation that should be considered and supported.
8.10 p.m.
VISCOUNT COBHAM: My Lords, I rise to offer belated, indeed terminal, congratulations to the noble Prince on his wise and witty speech. After listening to him, my only regret is that his multifarious public duties prevented his becoming a very valuable member of our Select Committee some two years ago. I indeed welcome the assurance of the noble Lord the Leader of the House that the Government propose to issue a White Paper; and I think this whole subject has been dealt with by the noble Lord with great care and in considerable detail. I hope he will not think me churlish if I stress once more what I consider to be the terrible urgency of the matter if we are not to lose the momentum engendered by the publication of the Select Committee's Report. It has aroused interest at the moment among local authorities and elsewhere, but I think that interest can easily die away again, perhaps never to be resuscitated; so we must seize this moment and go ahead. I assure your Lordships that the wiring is all there: all that is needed now is the electricity. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

WRIGHTSON NMA LIMITED BILL [H.L.]
Reported, with an Amendment.
GREATER LONDON COUNCIL (MONEY) BILL
Reported from the Standing Orders Committee, that the Standing Orders not complied with in regard to the Petition for Additional Provision ought to be dispensed with: read, and agreed to.

CORN EXCHANGE
[Petition for Bill]
The CHAIRMAN OF COMMITTEES informed the House that the Promoters do not intend to proceed further with the Bill: Ordered, that the Bill be not further proceeded with.

  THE BULLOCK COMMITTEE REPORT
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  BASIC FOODSTUFF IMPORTS
  BASIC FOODSTUFF IMPORTS