Sitting of 30 April 1975

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

    Vietnam
    Mr. Newensasked the Secretary of State for Foreign and Commonwealth Affairs if, in the light of recent events in Vietnam, he will now recognise the Provisional Revolutionary Government.
    The Minister of State for Foreign and Commonwealth Affairs (Mr. David Ennals): My best information is that representatives of the South Vietnamese liberation forces are in contact with President Minh and his Prime Minister. I should prefer not to anticipate the outcome of these discussions. I am keeping the matter under urgent review.
    Mr. Newens: Does my right hon. Friend agree that if we are to have anything to do with South Vietnam in future we shall have to recognise the Provisional Revolutionary Government? Would it not be better to take immediate steps towards recognition of that Government rather than cling to the remnants of a completely outdated and now failed American policy in Vietnam?
    Mr. Ennals: In the circumstances I have described it is not yet clear what the successor Government in South Vietnam will be. It may be that later in the day this will become clear. I am watching the situation carefully.
    Today the curtain has come down on a generation of war in Vietnam. Three thoughts are uppermost in our minds. The first is one of sympathy for those whose country and whose lives have been ravaged by war. The second is one of
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    regret that the parties concerned were not able to achieve a political rather than a military solution to their problems. Finally, we feel relief that at last it is all over. We shall want to make what contributions we can towards binding up the wounds of this long and bloody war.
    Mr. Eldon Griffiths: As the Minister has fairly said, what has happened in Vietnam is clearly of the greatest importance and could well be a turning point in the history of Asia, if not of the world. May I, therefore, with your inulgence Mr. Speaker, ask the Minister three questions?
    First, does the right hon. Gentleman agree that the Communist conquests of Vietnam and Cambodia represent a breach of the spirit and, indeed, the letter of the Paris Agreement and, as such, are a defeat for the rule of law and for the whole concept of peaceful negotiations as a way of settling disputes?
    Secondly, will the Minister of State tell us what residual obligations still lie upon the British Government in respect of South-East Asia—to Vietnam under the Paris Agreement, to Thailand under SEATO, and to Malaysia and Singapore?
    Thirdly, will the right hon. Gentleman accept, as Conservative Members accept, that no defeat for America can possibly be regarded as a victory for peace and freedom anywhere? Will he, therefore, use his influence to keep the United States, as far as they are willing, committed to the defence of the free world, including Europe?
    Mr. Ennals: I agree with that part of the hon. Gentleman's supplementary question in which he referred to the gravity of the events. I shall not at present try to apportion blame for the events of these months and years. More than one party has been in breach of the Paris Agreement.
    Her Majesty's Government's residual obligations in respect of Vietnam under the 1954 Geneva Agreements have been overtaken by the new international agreement, and the International Conference on Vietnam in 1973. The most important international obligation imposed on us is to refrain from any action which is at variance with the provisions of the Pads Agreement between the parties to the Vietnam conflict.

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    The hon. Gentleman referred to the effects of the Vietnam situation on the United States, and that country's rôle in the world. On 10th April President Ford told the Joint Session of Congress that events in South-East Asia must be kept in their proper perspective, that no potential adversary should believe in a slackening of the nation's will, and that America's destiny had never been more closely linked with that of Western Europe. Those are wise words, and I share those beliefs. I do not go along with those who want to use the Vietnam situation to weaken America's relations with Britain, with Europe and with others.
    Mr. Flannery: Does my right hon. Friend agree that although when Tory Members were in Government they rushed with unseemly haste to recognise what the junta did in Chile, at this stage they refuse to pursue an honourable course on this matter? Does he further agree that the rape of Vietnam by the dropping of napalm on children by those who recently said that they wanted to help orphans and the ravaging of a small nation by the most massive bombardment that has ever occurred in the history of mankind was one of the most disgraceful episodes that has ever happened and, therefore, that immediate recognition of the Provisional Revolutionary Government would be acceptance of a political reality and could only advance the cause of all mankind?
    Mr. Ennals: There have been terrible events in Vietnam. My hon. Friend has referred to some of them. Terrible actions have been carried out by both sides. We should not have our eyes blinkered to some of the horrors which have been committed by both sides in this terrible war. Today we should be looking to the future, conscious of the end of a ghastly period in the history of that part of the world. I do not think that it helps to rush into judgments and recriminations.
    Sir D. Walker-Smith: Although at the appropriate time Her Majesty's Government will no doubt follow the traditional British practice that recognition of a foreign regime depends not on the test of moral approval but on the test of capacity to exercise jurisdiction, will the right hon. Gentleman nevertheless make it clear to the Provisional Revolutionary Government or any would-be Government
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    that friendship and moral approval can be acquired only by humane conduct and a liberal and democratic attitude?
    Mr. Ennals: The judgments that we shall have to take in deciding—as we have to decide, I expect, very quickly—on the question of a successor Government, will be made on the traditional criteria. I doubt whether our first action in doing so will be to preach any sermons.

    Uganda (United Kingdom Assets)
    Mr. Laneasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on his efforts to secure the transfer to the United Kingdom of the assets of United Kingdom citizens expelled from Uganda in 1972.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Miss Joan Lestor): We continue to press the Ugandan Government on this matter, and will seek an early opportunity to renew our discussions.
    Mr. Lane: Will the hon. Lady keep in mind that nothing will do more to encourage the Ugandan Asians who are now working and making a useful contribution to life in this country than a real hope of getting some of their assets out at last? Will the Government now pursue this matter with more energy and urgency than hitherto?
    Miss Lector: As the hon. Gentleman is aware, officials went to Uganda last year for discussions. Our acting high commissioner saw the President as recently as 18th April. We have no reason to believe that the door is closed. I take the hon. Gentleman's point that people who have come here from Uganda are very anxious, but I can assure him that we are not dragging our feet.
    Mr. Kershaw: Will the hon. Lady nevertheless bear in mind the fact that there is an impression abroad that in pressing the claims in Uganda, Tanzania and Zaire this Government are some what less than anxious to protect the rights of our nationals?
    Miss Lestor: I am sure that the hon. Gentleman would not in any way contribute to such an impression if it exists abroad, but would always say, as I am

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    saying how, that in all these countries we are doing everything in our power to put pressure on the Governments to get the matters settled. It is a matter of fact that some Governments have made it clear that they intend to settle but they are not able to settle at this moment.

    Israel (Foreign Minister)
    Mr. Leslie Huckfieldasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about his recent discussions with the Foreign Minister of Israel.
    Mr. Ennals: I have nothing to add to the reply given by my right hon. Friend the Lord President in the House yesterday.
    Mr. Huckfield: Does my right hon. Friend recognise that the State of Israel stands ready to make territorial concessions in return for peace and secure frontiers, and to that extent is prepared to see a resumption of the Kissinger initiative or to go to a reconvened Geneva conference? Does he recognise also that because Britain will have its own oil potential many people in Israel believe that Britain does not necessarily have to take exactly the same line as other European countries?
    Mr. Ennals: It is important that the Government of Israel should be prepared to be involved with other countries in a new round of negotiations, which I hope Dr. Kissinger will feel able to resume in one form or another. I believe that there is an extremely important rôle for the United States in the next stages of negotiations. It may very well be that those negotiations would be in preparation for a Geneva conference. The Government recognise that there is a rôle for a reconvened Geneva conference, but preparation is absolutely essential. The United Kingdom is prepared to play whatever part may be most useful. Suggestions were made to us of individual unilateral initiatives. I do not think they would help, but there may come a time when there will be a rôle for Britain, either as part of a broader initiative or in any other way that may be suggested to us.
    Mr. Walters: When the Foreign Secretary was in Dublin, did he discuss with his EEC colleagues the possibility of a European initiative in the Middle East which would have as one of its main
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    aims the formulation of a realistic approach by Israel towards the Palestinians and the creation of a dialogue between the Israelis and the Palestinians, without which there will never be lasting settlement in the Middle East?
    Mr. Ennals: Without necessarily disagreeing with the hon. Gentleman's concluding remarks, I should say that we have discussed this matter with our European partners, including the discussion in which my right hon. Friend took part in Dublin, but our conclusion is that we cannot at this moment see a useful initiative which members of the EEC could take.

    Southern Africa
    Mr. Biggs-Davisonasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on developments in British policy towards States and territories in Southern Africa.
    Mr. Ioan Evansasked the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government raised the question of the situation in Southern Africa at the Commonwealth Conference.
    Mr. Ennals: There has been no change in the policies which my right hon. Friend announced on 4th December. We shall continue to make a full and constructive contribution towards a peaceful solution of the region's problem. Problems in Southern Africa are a central issue at today's meeting of Common wealth Prime Ministers in Kingston.
    Mr. Biggs-Davison: I welcome the efforts being made by Her Majesty's Government, in line with the South African and other African Governments, to bring about détente in Southern Africa, but may I take it from the right hon. Gentleman's reply that the Secretary of State for Foreign and Commonwealth Affairs will be taking advantage of the Common wealth Conference to try to persuade African nationalists and leaders of African States there to do their best to end the terrorism in Rhodesia which is spoiling the atmosphere for a settlement?
    Mr. Ennals: Previously in the House I have recorded the Government's appreciation of the rôle of the three African

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    presidents and also of the rôle of South Africa in helping to bring about a détente. There are important discussions going on in Kingston. My right hon. Friend yesterday had meetings with the Foreign Ministers of Tanzania, Botswana and Zambia. From these discussions and the discussion which will take place with Bishop Muzorewa we hope that progress can be made.
    Mr. Ioan Evans: In the light of the Security Council's resolution on Namibia in December, what representations have Her Majesty's Government made to the Government of South Africa? Can my right hon. Friend throw some light on the deliberations in the Security Council on the question whether Namibia is to be welcomed into membership? As the African leaders are in Kingston, what proposals will the Government make to Commonwealth leaders to bring the illegal régime in Rhodesia to an end at the earliest possible moment?
    Mr. Ennals: Together with France and the United States, we made known our views about Namibia to the South African Government on 22nd April. This underlines the importance that we attach to an early solution of the problem. Our position is and has always been that South Africa should grant Namibia self-determination and independence, and should do so soon. These views have been fairly stated by the three Governments to the Government of South Africa.
    It was made clear by my right hon. Friend in discussions which we had with SWAPO representatives that if at the appropriate stage Namibia were to apply for membership of the Commonwealth we would wish to support that application.
    Rhodesia is probably the central issue at Kingston today. We shall have to see what sort of initiative comes from the Commonwealth Conference, and whether there are particular initiatives that can be taken by Her Majesty's Government in the light of the changing situation.
    Mr. Rifkind: Is the Minister aware of the suggestion that once Mozambique becomes independent in June it may desire to impose full sanctions against Rhodesia and will expect the Commonwealth countries, and Britain in
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    particular, to support such a move? Will the hon. Gentleman say what will be the British Government's attitude to such a suggestion, and whether they will provide funds for the imposition of sanctions if Mozambique requests that course?
    Mr. Ennals: The Provisional Government of Mozambique have said that decisions on this question will be taken after independence in June. Meanwhile, there is every reason to believe that Mozambique will support efforts to bring about a peaceful solution to the Rhodesia problem. This has been discussed by my right hon. Friend in Kingston, and the Government will certainly play their part in any effort to assist Mozambique in this respect.
    Mr. James Johnson: In the light of the supplementary question put by the hon. Member for Epping Forest (Mr. Biggs-Davison), is it not the Government's view that the indigenous peoples of Rhodesia are pursuing a civil war against an illegal Government now based in Salisbury? Is it not completely tendentious to use the term "terrorists" to describe nationalists who are fighting for their future freedom?
    Mr. Ennals: The most helpful comment I can make is that it is an illegal régime, but attempts are being made to try to create a changed situation. We should give every assistance we can to those who have the burden of responsibility of changing policies that have been ruthlessly adhered to up to this time. It is important for the House that this should be done, because the House has the responsibility, eventually, for granting independence to Rhodesia, and for that purpose there will have to be a constitutional conference. We should do everything we can to promote such a conference.

    European Security and Co-operation
    Mr. Sproatasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on the latest progress of the Conference on Security and Co-operation in Europe.
    The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): Useful progress continues to

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    be made in Geneva. Positive and constructive work is being done on the Declaration of Principles and on confidence-building measures. I hope that this will soon again be the case in Basket III, where progress has recently been rather slow.
    Mr. Sproat: Will the right hon. Gentleman confirm that in spite of the hopes—in which we all concurred—expressed by his right hon. Friend on 9th April about further concessions, since that date no concessions have been made by the Soviet Union on confidence-building measures or on the freer flow of people and information across frontiers? At the NATO summit next month, will the Government seek to get from all members agreement that unless the Soviet Union gives concessions of substance there will not be an early CSCE summit?
    Mr. Hattersley: We shall not make much progress on the CSCE if we continue to talk of it in terms of concessions, which are related in people's minds to victories and defeats. I subscribe to the view expressed by the hon. Gentleman that progress has to be made on all the baskets and that we have to have a genuine agreement of substance rather than a bogus one. If that happens, as I think it will, there will be a summit, but a summit is less likely if we talk about concessions.
    Mr. MacFarquhar: While avoiding talking about defeats and concessions, will my right hon. Friend say what will be the minimum requirements of the Government on Basket III—the proposals for the free exchange of ideas and information—before Her Majesty's Government will be prepared to think that the security conference will be a success?
    Mr. Hattersley: It is not possible to stipulate minimum requirements, because in this last negotiating position, if we are not careful, minimum requirements will become maximum achievements. There fore, we have to continue to make what progress we can, a good deal having been made on the reunification of families and marriages but a good deal still being needed on the freer flow of information. Our first intention is to pursue all these objectives, make what progress we can and then, in a few months' time, decide whether that progress justifies a summit.
    Sir Anthony Royle: Will the right hon. Gentleman confirm that there is close co-operation between members of the EEC in the negotiations now proceeding, as he will remember that in July 1973, at the first stage of the negotiation, co-operation between members of the EEC and the British Government was very close and it is important that that should continue throughout all stages of this conference?
    Mr. Hattersley: These matters are invariably discussed in the political cooperation meetings of the EEC, and I expect that they will be discussed at the next political co-operation meeting in Dublin in 10 days' time.

    Namibia
    Mr. Hooleyasked the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with the United Nations High Commissioner for Namibia and the leaders of SWAPO.
    Miss Joan Lestor: We keep in touch with leaders of SWAPO and, as my right hon. Friend the Minister for Overseas Development announced on 28th April, we are giving them educational aid. Mr. McBride last called on me on 17th April.
    Mr. Hooley: Is my hon. Friend aware that I very much welcome the statement made a few minutes ago by her hon. Friend the Minister of State that the United States, France and the United Kingdom have made representations to the South African Government on Namibia? What representations have been made about the intimidation and victimisation of the Ovambo people in Namibia during the recent elections, and what further initiative do the Government propose to take if South Africa does not comply with the deadline of 31st May set by the Security Council for giving up the administration of Namibia?
    Miss Lestor: In reply to the first part of the supplementary question, SWAPO gave me a detailed memorandum alleging certain restrictions and making other allegations about what took place at the time of the elections. I am still studying that memorandum and I am not in a position to say which of those allegations are true and which are false, but the memorandum is a very detailed one. I

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    am not in a position to comment on what is likely to happen if South Africa does not observe the deadline until the deadline has been reached and the position is or is not changed. As my hon. Friend said, pressures are being put on South Africa to meet the deadline.
    Mr. Wall: Will the Minister confirm that Namibia consists of a number of potentially hostile groupings, the one thing that unites them being the fear of domination by the Ovambo, who represent nearly 50 per cent. of the population, and that SWAPO is Ovambo-based and should not therefore be regarded as the voice of united Namibia?
    Miss Lestor: I have always been and remain prepared to meet any people who claim that they are speaking for minorities or any other groupings in Namibia. I constantly meet the leaders of SWAPO and am always prepared to do so, but I do not regard any particular grouping as sole representatives of the Namibian people. I do not hold the view that the people are split in the way the hon. Gentleman described.

    Middle East
    Mr. Aitkenasked the Secretary of State for Foreign and Commonwealth Affairs if he will pay an official visit to the Middle East.
    Mr. Ennals: My right hon. Friend has no plans to do so at present.
    Mr. Aitken: Is the Minister aware that the Foreign and Commonwealth Secretary is the only Foreign Minister of a major Western country not to have taken the trouble to visit any country in the Middle East either in 1974 or in 1975? Will the Minister try to stir his right hon. Friend out of this diplomatic lethargy, or are we to understand from the Minister's answer to Question No. 3 that the British Government have no intention of making a contribution towards peace making in the Middle East, other than their increasingly doubtful rôle of leaving it entirely to Dr. Kissinger?
    Mr. Ennals: I certainly would not accept the last part of the hon. Gentleman's question. Her Majesty's Government keep very closely in touch with all the States in the area, not only by
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    diplomatic means but by visits in one direction and another. We have made important representations. I do not accept the hon. Gentleman's conclusions. He will know that my right hon. Friend made a visit to the Middle East only a very short time before he came to office. He has said in the House that he would be prepared to go on a personal visit to the Middle East if it seemed to him, and those with whom he would be in touch, that such a visit would be a helpful initiative. It is not the wish of my right hon. Friend to stand on the sidelines, but there is no point in Britain's seeking to take an initiative unless we can see that it will produce positive results.
    Mr. Leslie Huckfield: Although that is an acceptable position to take, will my right hon. Friend bear in mind that matters such as the reconvening of the Geneva Conference are for the Secretary-General of the United Nations?
    Mr. Ennals: The question of the Geneva Conference is not a matter for Her Majesty's Government. It has been suggested to us by the Egyptian Government that it would be helpful if the British Government were to take part in the Geneva Conference. We have said that we would seriously consider doing so if all the parties to the Geneva Conference, and their joint chairmen, were to invite us. I agree with my hon. Friend that it is not a matter for a British decision, but Britain is prepared to play its rôle in assisting to bring about a peaceful solution.

    Cyprus
    Mr. Townsendasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the latest negotiations over Cyprus.
    Mr. Hattersley: Her Majesty's Government welcomed the resumption of the intercommunal talks in Vienna on 28th April, in the presence of the United Nations Secretary-General. We are encouraged by the initial reports of progress in the talks.
    Mr. Townsend: Bearing in mind Britain's special obligation towards Cyprus, is it not curious that the British Government have not been taking a more active part in the series of talks? What

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    pressure are the British Government putting on Turkey to hand back Famagusta—a move which would make a big improvement, overnight, in the refugee situation?
    Mr. Hattersley: I think that the British Government have a series of obligations. Some of them concern our legal status in Cypriot matters and others concern reality. Our obligation to reality requires us not to become involved in attempts to set up a conference, and the like. Such attempts might begin with a fanfare of trumpets and a great deal of Press publicity, but might end in failure. Her Majesty's Government have believed since the Second Geneva Conference, that the best prospect of progress and peace in Cyprus is through intercommunal talks. We have done a great deal to get those talks going again. I think we can claim with some justification that we played a substantial part in bringing together the parties on 28th April. I believe that our obligation to reality requires us to hope for, and to promote, the successful outcome of the talks, rather than to mount the initiative on our own.
    Mr. Atkinson: If that is the case, does my right hon. Friend not recollect the decision, taken by the Government which he represents, to support Dr. Luns and the NATO nations in their decision to replace the armaments prevented from going to Turkey by the United States' embargo on arms to Turkey? Is he now saying that although it is the Government's intention to allow the Denktash-Clerides talks to get under way without interference from the British Government, it is now our policy to replace the arms embargo operated by the United States by supplying arms ourselves to Turkey through NATO?
    Mr. Hattersley: First, I am not saying that it is the Government's policy to allow the Denktash-Clerides talks to get under way; it is Government policy to encourage and promote them, which is a very different matter. As far as the arms embargo is concerned, I hope that I am in order in saying that my hon. Friend has tabled a Written Question today about what he describes as NATO policy of replacing arms which have been withheld as a result of American policy. His assumptions about NATO are entirely wrong. Our attitude towards arms to
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    Turkey is clear. We have two obligations. The first obligation is the preservation of the situation in Cyprus as it should be rather than as it is, and the promotion of a peaceful solution to the Cyprus tragedy. Our second obligation is towards Turkey as a member of NATO. The Government will examine the merits of both propositions in an endeavour to meet both obligations.

    Seychelles
    Mr. Michael McNair-Wilsonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the constitutional conference on the Seychelles.
    Miss Joan Lestor: Good progress was made but differences remained over an independence constitution. In the circumstances, I could not recommend new elections, nor that Her Majesty's Government should impose a solution. But Her Majesty's Government have agreed the next steps, including a coalition Government, an Electoral Review Commission, and a timetable for independence, subject to parliamentary approval, by 30th June 1976. A White Paper will be published soon.
    Mr. McNair-Wilson: Will the hon. Lady outline the political timetable that she has in mind leading up to independence? Will she say what discussions have taken place about the defence of the islands after that date?
    Miss Lestor: At present we envisage that the coalition Government will be formed in June and that the interim constitution will be introduced in September. The Electoral Review Commission is to be asked to report to my right hon. Friend in December in time for the renewed constitutional conference that will probably take place in January. On the question of matters of defence, those discussions will take place the next time the whole matter is discussed.

    Passports
    Mr. Arnold Shawasked the Secretary of State for Foreign and Commonwealth Affairs what changes in the attitude of international passport conferences there have been concerning the use by a wife or widow of a joint passport unilaterally.
    Miss Joan Lestor: None, Sir. It has been internationally agreed practice since 1926 that the head of a family may travel alone with a family passport but that it may not be used by his wife. Widows may hold a passport as head of a family, but they are advised not to travel with their former husband's passport.
    Mr. Shaw: Nevertheless, does not my hon. Friend agree that in this year particularly, it being International Women's Year, this is certainly an anomaly? Will Her Majesty's Government do something about the matter by taking the initiative?
    Miss Lestor: I certainly agree with my hon. Friend, but this is an anomaly in all years and not only this year. We consulted a number of Governments about a joint passport which might be used by either party when travelling alone. We found some support but by no means complete support. In the absence of any greater support in dealing with these issues we do not consider that there would be very much point in calling a conference, but we have the matter very much in mind.
    Mrs. Dunwoody: Does my hon. Friend not accept that support would come from Englishwomen, Scotswomen and Welsh women? Does she agree that this is precisely the sort of anomalous situation that suggests that a husband is a person in his own right but a wife is not?
    Miss Lestor: I think that all the women in the House are very much women in their own right, with or without husbands. I totally support what my hon. Friend has said. This is not a restriction that the British Government have any part in, and we would like to see it changed. However, we do not have the necessary co-operation. I think that any persons speaking on International Women's Year, be they male or female, would do well to draw attention to this matter.

    Tanzania (United Kingdom Assets)
    Mr. Tebbitasked the Secretary of State for Foreign and Commonwealth Affairs if he will ask the Tanzanian Government to expedite payment of blocked moneys due to United Kingdom citizens and compensation for nationalised British assets.
    Miss Joan Lestor: We are in frequent contact with the Tanzanian authorities, through our High Commission in Dar-es-Salaam, on both these matters. We welcome recent signs of progress on some aspects of the problem.
    Mr. Tebbit: Until there are more signs of progress, in the sense that the moneys which are due to British citizens are actually paid to them, would it not be a good idea if we began to tighten our hold a little on the moneys which we pay to Tanzania in the form of aid at the expense of citizens who cannot get their money?
    Miss Lestor: First, the money has not been paid at the expense of citizens who cannot get their money. Some compensation payments have been made—[Interruption.] I said that the money has not been paid at the expense of those people who cannot get their money. If Conservative Members will let me finish they will see what I am getting at. It is, after all, International Women's Year.
    Some compensation payments have been made over the past year totalling about £400,000. The Tanzanian authorities recently made offers to a number of British farmers whose properties were nationalised in 1973. We understand that agreements have been reached with some companies on compensation payments. I can only repeat what I said on the last occasion on the question of aid, namely, that Tanzania is in very great economic difficulties, and if the payment of this compensation rests on Tanzania's economy being viable it would clearly be a self-defeating policy, if we want to get our compensation, to withdraw some of the aid which is assisting the country in its progress.

    Portugal
    Mr. Norman Lamontasked the Secretary of State for Foreign and Common wealth Affairs whether he will make a further statement about British relations with Portugal in the light of political developments since he answered on 9th April 1975.
    Mr. Hattersley: The political developments that have taken place in Portugal since 9th April have not altered our relations with that country. They remain excellent.
    Mr. Lamont: I accept the Minister's difficulties in commenting on the internal affairs of another country, but does he agree that the elections were a victory for the moderate forces, particularly for Dr. Soares, who has been so encouraged by the Foreign Secretary and all those who are interested in the development of Portugal? Will the right hon. Gentleman go further and express the hope that the Armed Forces Movement will find some form of accommodation for all those who have popular support in the country?
    Mr. Hattersley: I subscribe to the proposition that the elections in Portugal, the turn-out and the result are a victory for moderation in Portugal. Therefore, they were greatly encouraging to those who want to see a policy of moderation spreading throughout Western Europe and flourishing there. The Armed Forces Movement has a special rôle in Portugal—a rôle conditioned by the fact that Portugal has been without democratic institutions for the last 50 years. I have no doubt that a combination of the AFM on the one side and the political parties which stood in the election last week on the other will bring Portugal to a democratic solution of its problems—a solution which will be remarkably successful if they take account of the difficulties which they have experienced in the last half century.
    Mr. Whitehead: Should not the House congratulate the moderate party of the Centre Left on its victory and also congratulate the Armed Forces Movement on holding free elections after 48 years of dictatorship in Portugal? Will the Minister now make clear to the Government in Lisbon that Her Majesty's Government will wish to welcome Portugal to the Council of Europe as soon as a Parliament is elected in the same free manner as a constituent assembly?
    Mr. Hattersley: I have already had the privilege, in a ministerial meeting at the Council of Europe, of saying how much Her Majesty's Government would welcome Portugal's inclusion in that body as soon as the election of a Parliament makes it possible. I am sure that the demonstration of friendship and understanding by the Community, as well as more material aid policies, are what the West should do to support Portugal. Her
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    Majesty's Government will continue to support those policies.
    Mr. Blaker: Will the Minister confirm that Portugal will be eligible for membership of the EEC if and when it becomes genuinely democratic?
    Mr. Hattersley: Portugal will be eligible for membership of the EEC when—and only when—it becomes a democratic country in the full sense of the word. The House will recall that Portugal has already applied to the EEC for a special arrangement, which is more than an association agreement but a little short of full membership. Her Majesty's Government, like the Netherlands Government, are anxious to promote the EEC-Portuguese co-operation which the Armed Forces Movement in Portugal wanted to bring about.

    EUROPEAN COMMUNITY

      Commonwealth Countries
      Sir A. Meyerasked the Secretary of State for Foreign and Commonwealth Affairs how many Commonwealth Governments have now concluded trading and/or aid agreements with the EEC.
      Mr. Hattersley: In the answer I gave to the hon. Member for Bedford (Mr. Skeet) on 26th March I listed the EEC's trade and aid agreements, including its agreements with Commonwealth countries. The Lomé Convention, signed by 22 Commonwealth countries, is the most extensive. In addition, the Community has, since our accession, concluded food aid agreements with Bangladesh, Cyprus, The Gambia, India, Malta, Mauritius and Sri Lanka. Kenya and Tanzania are likely to sign agreements in the near future. Some of these countries have concluded more than one agreement.
      Sir A. Meyer: Does the Minister agree that there is now a delicately interlocking structure of agreements which are greatly to the benefit of the Common wealth, and particularly the developing nations of the Commonwealth? Does he also agree that this delicate structure might be irreparably damaged by our withdrawal from the Community?
      Mr. Hattersley: I am always cautious about the use of words such as "irreparable", but putting that word aside, I

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      have no doubt that a delicate, complicated and beneficial series of aid and trade agreements has been concluded between the developing countries and the Community. That is no doubt one of the reasons why no country of the Commonwealth, developed or developing, wishes Britain to leave the EEC after the referendum on 5th June. Were we to do so, it would be necessary for those developing countries of the Commonwealth to conclude new agreements. I have no doubt they could do that in any case, but it would be more difficult without Britain working on their behalf inside the EEC.
      Mr. Jay: Will the Minister say what proportion of the population of the Commonwealth is covered by the Lomé Agreement?
      Mr. Hattersley: A small proportion of the Commonwealth—a figure which my right hon. Friend no doubt heard quoted in the Sobell Sports Centre on Saturday afternoon. But having no doubt attended diligently to my answer, my right hon. Friend will recall that as well as the Lomé Convention there were agreements in regard to Gambia, India, Malta and other countries. Those agreements cover a majority of the Commonwealth. There fore, not only is the majority of the Commonwealth benefiting from the EEC; the totality of the Commonwealth does not wish us to leave.

    Foreign Ministers
    Mr. Hurdasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the most recent meeting of the Foreign Ministers of the EEC.
    Mr. Blakerasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about his latest meeting with the Foreign Ministers of the EEC countries.
    Mr. Hattersley: The last occasion when Foreign Ministers of the EEC met was the Council of Ministers in Luxembourg on 14th-15th April. The Ministers discussed subjects referred to in the statement of Community business which I made on 27th March.
    Mr. Hurd: From the Minister's discussions with our partners, how does he rate the chances of the recently-published
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    proposal that if there were a "No" result in the referendum we would be able, by 1st January, to negotiate a free trade agreement with the Community which would allow our goods free access into the Community without our accepting limitations on our sovereignty—limitations which have been accepted by Norway, Sweden and other EFTA countries?
    Mr. Hattersley: I made a speech on Friday in which I said that the speed with which we concluded a free trade agreement with the Community if we were to leave that organisation would depend wholly on the price we were prepared to pay for that speed. If we were prepared to leave the Community quickly, we might be forced to do so without the relationship to the EEC which would be necessary for our continued trading success. Looking at this morning's newspapers, I think that perhaps my remarks five days ago were a somewhat optimistic prophecy about our prospects. I see that industry in Belgium has said that a Britain outside the EEC should not have a free trade agreement with the Community. That is the sort of problem we would be bound to meet if we rejected EEC membership and then asked to enjoy the benefits without incurring any of the payments.
    Mr. Fernyhough: When my right hon. Friend refers to the trading success, will he say whether, in view of the adverse balance of trade, the EEC is not more likely to miss us than we are to miss it?
    Mr. Hattersley: I take the view that we are likely to miss each other—in other words, that we have something to contribute to the EEC and that it has a great deal to offer us. One of the things its members have to offer us is a trading base which is better inside the EEC than if we were to leave. My right hon. Friend no doubt will recall that our deficit in the EEC has multiplied fivefold, whereas our deficit with North America and the Commonwealth has multiplied 13-fold and 15-fold. I have no doubt that had our trading pattern in the last three years not changed in the way it has begun to change. Our deficit with those countries would have been greater.
    Mr. Blaker: Even if the other eight members of the Community were prepared to conclude a free trade agreement

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    in the event of our departure from the EEC, does not the Minister think that it would have to include food as well as industrial materials?
    Mr. Hattersley: It would have to include a number of matters. It would almost certainly include food. What is certain is that if we were to conclude a free trade agreement with the Community, it would be on the pattern of agreements entered into by Norway, Sweden, Austria and Switzerland, and would involve our acceptance of the Community's commercial policy. In other words, if we were outside the Community we would have to accept commercial policies without being able to influence them as we would if we were a partner within that body and participating in the Council of Ministers.
    Mr. Mikardo: In the light of the last answer, does my right hon. Friend recognise that there is no comparison between our position and that of Norway and the other countries he mentioned, since we are by far the largest customer in the Community? Is he aware of the fact that industrial traders do not normally spit in the eye of their best customer—[An HON. MEMBER: "Ignorance!"] Would the hon. Gentleman who said "Ignorance" bear in mind that last year we sold £800 million in manufactured goods and bought goods worth £1,700 million and will he also bear in mind that last year we took 350,000 tons of butter from the Community? What on earth will the Community do with that butter and with the Volkswagens, Fiats and Renaults if the Community does not give us a free trade agreement?
    Mr. Hattersley: I have never doubted—indeed, I have always said—that if we were to leave the Community we would be able to negotiate a free trade agreement of some sort. My concern relates to the price that we should have to pay for such an agreement. There is no doubt that a part of that price would involve acceptance of a common commercial policy—a policy which at present applies to all countries with free trade arrangements with the Community. That is the minimum price we should have to pay. To think otherwise is to fly in the face of reality.
    Mr. Spearingasked the Secretary of State for Foreign and Commonwealth Affairs when he next expects to meet the
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    Foreign Ministers of the EEC in the non Council series of meetings of Foreign Ministers similar to those held at Schloss Gymnich and Dublin.
    Mr. Hattersley: Informal meetings of this kind are arranged when the Foreign Ministers think that it would be useful to have a general exchange of views. There are no plans at present for a further meeting.
    Mr. Spearing: Whilst it is a diplomatic convention for meetings between Foreign Ministers of sovereign States to be held in confidence, does not the existence of this series of meetings between members of the EEC, as distinct from normal meetings of Foreign Ministers, suggest that the foreign policy of the EEC is being hammered out as a distinct policy and that therefore we have lost a good deal, if not all, of our sovereignty in this respect?
    Mr. Hattersley: I have never been able to understand my hon. Friend's confusion between loss of sovereignty and co-operation. It has always seemed to me that the countries of Western Europe had a great deal to gain by coming together and discussing, without commitment or sanctions, their common policies on a variety of issues. If my hon. Friend looks at the record over the past two years, he will see that there have been a number of occasions when the Community has not agreed on what its common policy should be, and when member countries have taken their individual paths. Frankly, I regret that. I think that Britain's voice is more likely to be held in authority in the world and listened to with respect if we speak within the Community according to a common Community policy. Long may that continue.
    Mr. Eldon Griffiths: Does the right hon. Gentleman agree that the whole point about sovereignty is that it is not something we hoard or admire, like the Crown jewels; it is something used to protect and promote the best interests of the country. We are far more likely to be able to use that sovereignty within the Community to achieve our best purposes than by going outside and simply trying to admire it like somebody's cast off cloak.
    Mr. Hattersley: I agree with that, although I do not altogether like the

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    image. Nor did I like the image when the right hon. Member for Sidcup (Mr. Heath) used it in the House a fortnight ago. The point is this: the Lomé Agreement was a matter of co-operation between the countries of the EEC, which might be regarded by some of my hon. Friends as a reduction in British sovereignty. That reduction in sovereignty—if it was that—achieved benefits for the developing Commonwealth countries which could not have been obtained by Britain operating as an individual sovereign Power. I am prepared to make concessions on sovereignty to achieve that kind of success.

    Under-developed Countries
    Mr. Dennis Canavanasked the Secretary of State for Foreign and Commonwealth Affairs what representations he has received from underdeveloped countries about the possible effect on them of the Common Market renegotiations.
    Mr. Hattersley: None, Sir. However, my hon. Friend will have noted public statements by representatives of many developing countries welcoming particular aspects of the renegotiation package.
    Mr. Canavan: Does my right hon. Friend consider it unworthy of the Marketeers to boast about the Common Market aid schemes to under-developed countries? If we take a close look at that scheme and go through the list of countries which receive preferential treatment and the associated countries, we find that there is no mention of three of the poorest countries in the Commonwealth—India, Bangladesh and Sri Lanka.
    Mr. Hattersley: I hope that my hon. Friend was in the House when I answered a Question a moment ago. I said that as well as the extraordinary benefits available through the Lomé Convention, agreements of one sort or another had been negotiated and were being negotiated with the countries of Asia. I have no doubt that that process will continue, and more successfully, if Britain remains in the Community.
    Mr. John Davies: Will the Minister also extend what he says to cover the field of the generalised preference schemes? Although we have been of
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    considerable help in generating better generalised preference schemes in Europe, there is no doubt that alone we would not by any means be able to offer to those same countries the facilities offered by the Community.
    Mr. Hattersley: Not only do I share the views of the right hon. Gentleman: I believe that a Select Committee of the House of Commons said that the most important sort of aid and assistance to developing countries was free access to developing markets. The general preference schemes offer that benefit to the Asian Commonwealth countries as well as those countries involved in the Lomé Convention. That is a considerable boon

    Common Energy Policy
    Mr. Rostasked the Secretary of State for Foreign and Commonwealth Affairs if he is satisfied with progress towards a common energy policy within the European Community.
    Mr. Hattersley: Progress towards a common energy policy has to date been satisfactory. The Community has adopted a general strategy, which has yet to be discussed in detail, aimed at reducing dependence on imported fuels, Britain will of course retain her control over exploration for, and exploitation of, North Sea oil.
    Mr. Rost: As the Secretary of State for Energy is opposed to the Government's European policies—he has revealed that by his lack of co-operation in Europe on energy matters—who will be responsible for pushing forward the Government's policies on energy in Europe?
    Mr. Hattersley: I had hoped, vainly, that the hon. Gentleman would rise above that sort of point. The position is clear. The Government's attitude to Europe has been specified, and will be specified more clearly and increasingly loudly during the next five weeks. If the Energy Council meets during those weeks I hope that my right hon. Friend the Secretary of State for Energy will attend it. I have no doubt that if he does he will articulate the Government's policy not only clearly but honourably. That satisfies me.
    Mr. Hooley: Is my right hon. Friend prepared to submerge our sovereignty with regard to the control of North Sea

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    oil and gas within the ambit of a European organisation?
    Mr. Hattersley: Of course not. That is why my initial answer ended in this way. I shall read it again since my hon. Friend clearly missed it. I said:
    "Britain will of course retain her control over exploration for, and exploitation of, North Sea oil."

    Energy and Industrial Raw Materials
    Mr. Tugendhatasked the Secretary of State for Foreign and Common wealth Affairs whether he will make a statement on the attitude of Great Britain and the European Community towards proposals for a world conference on energy and other industrial raw materials.
    Mr. Hattersley: There are many established international agencies where producers and developing countries discuss such matters. The hon. Member will be aware of the discussions now taking place with the Commonwealth Prime Ministers on the initiative of my right hon. Friend the Prime Minister.
    Mr. Tugendhat: Yes. We have not yet seen the Prime Minister's plans. Therefore, it is impossible to comment on them. Does not the Minister of State agree that the failure of the recent talks in Paris was a serious setback to all those who hoped for co-operation between the industrial countries and the raw material producers? Does he foresee those talks being respected? Does he believe that in the summer there is scope for the kind of major international conference, either on oil or on oil and all other raw materials, for which everybody hoped before the recent conference began?
    Mr. Hattersley: I do not believe that the preparatory meeting in Paris was a failure. That meeting was intended to discuss energy matters and not raw materials questions in general—which is why I did not refer to that in my first answer.
    The reason for the breakdown after many days of discussion was a dispute between the participants on the question whether it should be related only to energy matters, or widened. I continue to hold the view that energy, and energy alone, should be discussed in that forum. But I believe that the exploratory discussions held in Paris made some pro-
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    gress. They provide the framework for future discussions. I hope that such a meeting can be resuscitated in the not too far distant future.
    Mr. Skinner: Does my right hon. Friend appreciate that in his answer to the previous Question on energy he seemed to be reasonably categoric about the control from this country of the exploitation and exploration of the North Sea oil and gas energy resources? Will he answer the question whether he can give a complete and categoric guarantee that the total benefits resulting from the exploration and exploitation of North Sea oil and gas will accrue to the United Kingdom and not to any of the other Common Market countries?
    Mr. Hattersley: I hope that I was not reasonably categoric about exploration and exploitation; I hope that I was totally categoric in saying that matters remain in the hands of the British Parliament and Government.
    The answer to the question relating to benefits from oil follows from what I said previously. The important elements of policy remain with the Government and this House. If the Government choose to concentrate the benefits on Britain, that remains the Government's right.
    Mr. Pardoe: Does the right hon. Gentleman accept that at some future time we shall need the help of other countries to keep the price of North Sea oil above the cost of production?
    Mr. Hattersley: I accept that in many matters concerning energy policy the day may come when we need to make agreements which will involve compromises with other countries. When that time comes, this House, Parliament and Government will be able to make those decisions unfettered by any requirements placed on them by Brussels.
    Mr. Guy Barnett: Why does the Minister think that it is to our advantage to pool our sovereignty in so many areas but not in that of energy?
    Mr. Hattersley: There are many answers to the sovereignty question. This is the basic answer: we pool sovereignty in a number of areas when by doing so we become not less powerful but more so—not less free but more so. That is my

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    view of the sovereignty argument over recent months. As regards energy, there are special problems affecting the British economy and people which are understood and appreciated by our partners in Europe. Their understanding is a contribution towards the preservation of the right of sovereignty.
    Mr. Adley: Does the right hon. Gentleman agree that it is reasonable and proper for countries in the Middle East to sell their oil at the best price they can get for it, in the same way as food-producing countries sell their produce for the best prices they can get? If the right hon. Gentleman accepts that proposition, is it not obvious that there is no more likelihood of there being so-called cheap food in the world than of there being cheap oil in the future?
    Mr. Hattersley: I agree with that so much that it causes me considerable pain to say that that is another question.

    VIETNAM (BRITISH SUBJECTS)
    The following Question stood upon the Order Paper:
    Mr. Leadbitterasked the Secretary of State for Foreign and Commonwealth Affairs why Britsh passport holders were refused assistance by the British Embassy in Saigon in leaving South Vietnam during the evacuation of British Embassy staff; and if he will make a statement.
    Mr. Ennals: Our embassy in Saigon did all it could to assist holders of British passports registered with the embassy to leave on the special flights arranged for the British community and embassy staff on 7th and 24th April. The embassy gave all the assistance it properly could.
    Mr. Leadbitter: Without prejudging the reports which have come to this country and without accepting them as fact, will my right hon. Friend never theless agree that there is room for concern? Does he appreciate that the report of John Pilger, a correspondent of considerable repute and standing, gives rise to considerable concern? Will my right hon. Friend look further into that report and indicate that, if the conduct of the ambassador is as reported, it should be dealt with, and dealt with swiftly? I
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    reiterate, however, that I am not prejudging the situation, because not too much reliance can be placed on newspaper reports at this stage.
    Mr. Ennals: I have no reason to believe that there is any basis for criticism. My information is that only one or two members of the British community remained behind for want of the necessary exit documentation, which was a matter for the Vietnamese authorities. To have delayed the evacuation of the rest would possibly have jeopardised the safety of the others.
    Plenty of notice was given. The British community was first advised to leave Saigon in a warning notice delivered by messenger on 1st and 2nd April to all those registered with the embassy. A final warning was delivered to remaining members of the community on 6th April. Repeated oral warnings to leave were given between 7th and 24th April.
    Mr. Goodhart: Does the Minister of State recognise that there are still in Saigon many Vietnamese who wish to leave and who have connections with this country? Will the right hon. Gentleman make representations through Hanoi, now that it controls South Vietnam, that these Vietnamese should be allowed to leave, and will he ensure that some of the aid earmarked for Vietnam is spent in support of those refugees from Vietnam who have left and who have connections with this country?
    Mr. Ennals: It is not so much a matter for us as for the people who wish to come to this country. If there are Vietnamese who want to come to Britain as refugees, I have no doubt that my right hon. Friend the Home Secretary, as he said, will look very sympathetically at any applications.
    As for aid, the hon. Gentleman knows, as the House does, that a substantial amount of aid has already been made available to Vietnam. It was announced by my right hon. Friend the Minister of Overseas Development that roughly £1 million was available for relief work in all parts of Indo-China. I might add that on behalf of the European Community Her Majesty's Chargé d' Affaires in Hanoi informed the Democratic Republic of Vietnam on 24th April that the Community had decided to take immediate

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    action to provide relief for the victims of the Vietnamese war. This includes substantial quantities of powdered milk, rice and sugar, as well as medical supplies. Costs of transport will also be met. The aid will be distributed through the International Red Cross and the United Nations High Commission for Refugees.
    Rear-Admiral Morgan-Giles: In view of all that has happened and is happening in Saigon, would not it be correct and decent for Her Majesty's Government to express sympathy to the Americans for what has happened to their efforts there and to express recognition of the moral right of what the Americans have tried to do throughout their time there?
    Mr. Ennals: I saw a statement which was made yesterday, I think, by Dr. Kissinger, and perhaps I might quote from it. He said that one lesson to be drawn from the Indo-China experience was that the United States must be
    "… very careful in the commitments we make but that we should scrupulously honour those commitments we do make … I believe the experience can make us more mature in the commitments we undertake and more determined to maintain those we have."
    I believe that that was a very balanced judgment by Dr. Kissinger.
    Several Hon. Members rose—
    Mr. Speaker: Order. This Question relates to the safety of individuals and not to the general situation.
    Mr. Cryer: Will my right hon. Friend assure the House that, once peace is finally restored, the British embassy will be reopened, and will he undertake to examine the possibility of recognising the PRG and see to it that the British embassy assists in every possible way in the reunification of Vietnam?
    Mr. Ennals: The closure of the embassy was clearly, and was announced to be, only a temporary measure. The ambassador is in Singapore at present. As soon as possible, it will be the intention to reopen the embassy. As I said in answer to the original Question, the Government are looking carefully at the changing situation in Saigon, and the question of recognition is uppermost in our mind.
    Mr. Tugendhat: In view of the rapidly changing situation in Vietnam, I hope that I shall be forgiven for extending the Question slightly by asking the right hon. Gentleman to say how he has responded to the request from the South Vietnamese ambassador in London and his staff for asylum here and to express the wish that he will behave in a tolerant and hospitable fashion to that unfortunate gentleman?
    Mr. Ennals: I have not seen that application. However, as I said earlier, and as my right hon. Friend the Home Secretary has said, if anyone applies for refuge in this country it will be very surprising and not in accordance with our principles if we do not look very sympathetically at such an application.

    EUROPEAN COMMUNITY (BUSINESS)
    3.37 p.m.
    The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): With your permission, Mr. Speaker, I will make a statement about business to be taken in the Council of Ministers of the European Community during May. The monthly forecast for May was deposited yesterday.
    At present three meetings of the Council of Ministers are proposed for May. Foreign Ministers will meet on 5th May, Finance Ministers on 20th May, and Agriculture Ministers on 26th and 27th May. Dates for Council meetings of Energy and Research and Development Ministers are still under consideration. It is not yet known whether they will take place in May.
    At the Foreign Affairs Council, Ministers will resume their consideration of a Commission report on negotiations with the Maghreb, and on raw materials in relation to developing countries. They are also likely to review prospects for an international conference on energy, and to have a first discussion on preparations for the next meeting of EEC Heads of Government. The President of the Council may report on his contacts with the Assembly over the classification of the supplementary budget for the Regional Development Fund.
    The agenda for the Finance Ministers Council has not been finalised; but Ministers are expected to discuss, among other

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    things, the economic situation in the Community and prepartions for the June meeting of the IMF Interim Committee in Paris.
    Agriculture Ministers are likely to deal with sugar imports from ACP countries, the proposed revision of the basic wine regulations and various veterinary matters.
    Mr. Eldon Griffiths: I am grateful to the right hon. Gentleman for that statement about an important series of meetings. Since the House is to go into Recess on 23rd May and a number of those meetings will take place either immediately before or during the Recess at a time when the referendum campaign will be reaching its culmination, what arrangements are to be made by the Government to make objective statements about what is achieved, especially at the Agriculture Ministers' meeting and, of course, at the Finance Ministers' meeting because of their obvious repercussions on the very large question which will then be in debate across the country?
    May I put one specific matter to the right hon. Gentleman? In view of the fact that the Foreign Ministers are to consider raw materials—a subject which is already under discussion among the Commonwealth Heads of Government in Kingston—will the right hon. Gentleman make some arrangement to keep the House rather better informed on this important topic, which affects commodity agreements on raw materials all round the world?
    Mr. Hattersley: As regards raw materials, I think that there is already the opportunity for the House to be better informed and, indeed, to express its opinion, since the Scrutiny Committee examined this issue on 8th April and thought it a proper subject for debate. I have no doubt that my right hon. Friend the Leader of the House will be announcing when that debate will take place.
    On the more general issue of keeping the House notified, I think that we must behave in the next five weeks as we do in any parliamentary period, including those covering Recesses. There will be the usual processes for scrutiny. Where appropriate, papers will go to the Scrutiny Committee. Statements will be
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    made when it is thought right. At the end of each Council meeting—and the relevant one is the Agriculture Ministers' meeting on 26th and 27th May—the Minister in charge will hold some sort of Press conference at the conclusion of the meeting. The hon. Gentleman asked me to ensure a continuation of objective measures. We shall behave as always by being scrupulous to the needs of objectivity.
    Mr. Spearing: Will my right hon. Friend ask the Ministers to discuss regulation 836/1 of 1975, which is a regulation from the Commission requesting member States not to sign the United Nations Convention on a code of conduct for liner conferences? As this deals, among other things, with the carriage of goods from the Third World and as, according to my right hon. Friend, the EEC is so concerned, will he find out why this is and report to the House?
    Mr. Hattersley: My hon. Friend will recall, partly because of his assiduity in these matters, that it is never my policy to comment on documents, whose numbers are so obscure that I am not sure of their contents before being required to reply. I will look at document 836/1 of 1975 and give my hon. Friend an answer later.
    Mr. Grimond: How do we stand over fishing limits and quotas, which were to be discussed in April? Are those matters to be discussed in May, particularly with the Danes?
    Mr. Hattersley: My information is that fishing limits and quotas and all those matters which relate to EEC fishing policy, in conjunction with the Law of the Sea Conference, will not be discussed on 26th and 27th May. They were discussed at the last Agriculture Ministers' meeting on the initiative of the British Government, as I told the right hon. Gentleman. Discussions at other official levels are now continuing. I assure the right hon. Gentleman that we are conscious of the need to solve the problem in a way which is acceptable to the British fishing industry. I promise him that we shall continue to try to do that.
    Mr. Biffen: Regarding the veterinary items which will be on the agenda of the proposed meeting of Agriculture

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    Ministers, may I ask whether it is the right hon. Gentleman's hope and expectation that at that meeting his right hon. Friend the Minister of Agriculture, Fisheries and Food will be able to resolve the present difficulties whereby the French are effectively preventing any exports of British cattle and sheep livestock?
    Mr. Hattersley: This is the sort of matter which will be discussed under that heading. The Community has a number of health regulations governing the exportation and importation of livestock which we hope to resolve at that meeting. It is impossible within the rules on my statement and wrong in terms of order for me to describe our hopes and prospects for the meeting. However, the hon. Gentleman is right to say that a resolution of the problem of health circumstances on the importation and exportation of livestock is what will then be discussed.
    Mr. MacFarquhar: Will my right hon. Friend confirm reports that at the next meeting Ministers concerned with development will discuss the possible allocation over the next five years of £380 million to India and other Commonwealth countries? Will he also deny allegations that the next meeting is being held up by Her Majesty's Government?
    Mr. Hattersley: I can confirm the first of my hon. Friend's questions with the greatest ease and pleasure. That is the subject which is next to be discussed. If it is discussed successfully, substantial Community funds will go to the Asian Third World.
    I can be equally categoric about the second question. There is no suggestion, and no Community capital suggests, that this meeting is being held up by Her Majesty's Government. Suggestions that I read in the newspapers at the weekend that the meeting was being specifically held up by my right hon. Friend the Minister of Overseas Development are wrong. I very much regret that that suggestion has been put about.
    Mr. John Davies: When the Minister looks at the instrument on liner conferences, will he particularly look at that part which has such a beneficial effect on employment in our own shipping industry? Will he also tell the House at what
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    time the Agriculture Ministers will be resuming their discussions on the stocktaking paper prepared by the Commission?
    Mr. Hattersley: I take note of the right hon. Gentleman's point on liner conferences, which was perhaps a point not so much of business as of clarification.
    It was thought that Ministers might resume their examination of the stocktaking paper in May. But it now seems appropriate, if we are to have a successful pursuit of the objective of that policy, that it should be examined for a little longer by experts of one kind and another. That will continue in May, and it is possible, though not certain, that the Ministers will return to it the following month.
    Mr. Crawford: Regarding regional development, will the Minister inform the House when the Common Market will honour the commitment to establish a regional fund of £1,500 million?
    Mr. Hattersley: It will establish that commitment, as was always intended, at the end of the year. The last problem, which was how the fund should be designated in Community law between obligatory and non-obligatory expenditure, has, I understand, been resolved, and the decisions taken at the Paris summit before Christmas can be implemented. I agree that the Community has been a long time implementing its Regional fund. I hope that it can be implemented quickly, that it will expand, and that Britain will continue to benefit from it for many years to come.
    Mr. Hooley: Is my right hon. Friend aware that I welcome his assurance that the United Kingdom Government are not holding up the discussions on aid and trade with India and other countries? Will he explain what is delaying the discussions? I understand that they were supposed to begin on 20th March.
    Mr. Hattersley: I think it is the normal processes of requiring nine, if I may use the word non-contentiously, sovereign Governments to come together to make an agreement which involves some of those countries paying substantial sums to a mutually agreed goal. A great deal of preparation and consultation are necessary if the Community is not to ride

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    roughshod over individual member States. The normal processes are now going on.
    Sir John Gilmour: If the Agriculture Ministers are not to discuss fishing at the meeting in May, will the right hon. Gentleman ensure that an early date is fixed so that the matter can be discussed with the results of what the officials are now talking about, because delay in coming to a conclusion on the fishing interests is of supreme danger to us?
    Mr. Hattersley: I understand the point very well. In practical terms I could argue, though I do not, that we could delay the solution of the problem until the end of the decade since Britain has a derogation from the Community fishing policy until 1980. I do not make that point, because the hon. Gentleman is right to point out that the fishing industry is entitled to a good deal more security than it feels at the moment. That requires us to solve the problem appreciably before the end of the derogation. We shall do that as quickly as we can.
    Mr. Fernyhough: On the regional fund, to which my right hon. Friend referred, I was under the impression that the figure had been fixed at £150 million for the next three years. My right hon. Friend referred to £1,500 million. Will the figure of £1,500 million apply, or am I right in assuming that for the time being the figure is £150 million over the next three years, of which Britain will probably get £20 million a year?
    Mr. Hattersley: I hope that I did not refer to the higher figure. I did not intend to do so. Reassuring voices behind me tell me that I did not. If I am wrong and I did refer to that figure, then it was a mistake. The smaller figure will apply.
    Mr. Costain: Does the right hon. Gentleman appreciate how much we agree with the statement, which gives this House the greater degree of sovereignty that we all expect? During the referendum campaign, if any wild rumours are established which are incorrect, will he take the opportunity of correcting them in the Press if the House is not in session?
    Mr. Hattersley: I promise the hon. Gentleman that I shall do my best to
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    correct wild rumours. But he must understand that objectivity is not indivisible in these matters. Some of my hon. Friends and others outside this House may believe that my corrections are wilder than the rumours that I am trying to correct.

    EMPRESS COTTON SPINNING MILL, INCE
    3.48 p.m.
    Mr. Michael McGuire: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration; namely,
    "the imminent closure of the Empress cotton spinning mill in Ince"
    I submit that the imminence of the closure is specific. It is important because, as the last cotton spinning mill in my constituency and in the Wigan area, its closure would mean that the workers' skills would be lost, as there is nowhere else for them to go, and they will be thrown on the scrap heap of mounting unemployment in an area which already has unemployment well above the national average. The loss to the area generally will be most damaging.
    It is urgent because only an announcement that at long last the Government will take immediate action on textile imports can save this mill and prevent its closure. At the end of this week, the statutory notices to workers will be issued unless such an announcement is made. Nothing could be more urgent than this. For all these reasons, I beg to ask leave to move the Adjournment of the House.
    Mr. Speaker: I am obliged to the hon. Member for Ince (Mr. McGuire) for his courtesy in having let me know yesterday of his intention to raise this matter today. I have listened carefully to what he has said. He has also written to me on the matter.
    I accept at once the importance and urgency of the case as he has put it, and it is not for me to pronounce on the facts. I have to make a procedural decision as to whether or not I think it proper to disrupt business already arranged in a very full programme to permit a debate on this matter.
    I am directed by the Standing Order not to give the reasons for my decision.

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    In spite of that, I have from time to time referred to general considerations which I have to take into account. If I were to accept this application, however well-founded it may be, where would I ever draw the line? Nevertheless, for many obvious reasons, I take this matter very seriously. If the hon. Gentleman will consult me privately, that might be helpful; I might be able to suggest ways in which the matter could be further ventilated in the House.
    So I am afraid the answer to this particular application must be "No".

  BILL PRESENTED

    AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
    Mr. Secretary Benn, supported by Mr. Secretary Foot, Mr. Secretary Shore, Mr. Secretary Mason, Mr. Secretary Ross, Mr. Secretary John Morris, Mr. Secretary Rees, Mrs. Judith Hart, Mr. Edmund Dell, Mr. Gregor Mackenzie, and Mr. Michael Meacher presented a Bill to provide for the establishment of two bodies corporate to be called British Aerospace and British Shipbuilders, and to make provision with respect to their functions; to provide for the vesting in
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    British Aerospace of the securities of certain companies engaged in manufacturing aircraft and guided weapons and the vesting in British Shipbuilders of the securities of certain companies engaged in shipbuilding and allied industries; to make provision for the vesting in those companies of certain property, rights and liabilities; to provide for financial assistance to British Aerospace and its wholly owned subsidiaries; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 151.]

  PUBLICATION OF WILLS
  Sir Anthony Meyer: I beg to move,
  That leave be given to bring in a Bill to amend the existing requirements for publication of wills.
  What my Bill proposes to do is to amend Section 170 of the Supreme Court of Judicature Act 1925 so as to provide that wills, though open to inspection at the Probate Registry, shall be restricted as regards publication in the Press to the name, address and date of death of a testator, plus information as to where an interested person, be he a potential beneficiary or a creditor, can obtain details of any will which may concern him.
  I have been struck, as I am sure many other hon. Members have, by the real distress caused to individuals by the publication, particularly in the local Press, of full details of exactly how much their recently lost and dearly loved husband, wife or parent was worth and just what he did with his money. I have had a large number of letters on this matter, some of them very moving. They tell how to the pain of bereavement is gratuituously added the embarrassment of unwanted publicity.
  It may be embarrassment caused by the large size of the estate, bringing a small and unwelcome army of fortune seekers and others scenting easy prey. Just as much embarrassment may be caused when someone who has played a prominent part in the community turns out to be worth much less than people had supposed and the widow has to put up with much patronising pity. Whether the estate is small or large, it is a matter of keen curiosity for all who love to pry into their neighbours' affairs.
  But is this piece of knowledge something that the public has either a need or a right to know? Is not this really something between the deceased and his family? I cannot accept that the public has a right to such information. Morally it seems that the general public has no more right or need to know the size of a man's estate than it has to know the size of his bank balance or the details of his tax returns. Both these matters would be of great interest to potential creditors and perhaps to those hoping day to be legatees, but bank balances and tax returns are not published and I hope
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  that we are a long way from suggesting that they should be.
  Of course I accept that, legally, there is a difference and that a way must be found to make it no harder than it is now for those who think that they may benefit under a will or who may be owed money from an estate to get the information they need to pursue their claim, but this genuine need can easily be met if, when probate has been granted, an announcement is made, which can and should be carried in the Press, giving the name, address and date of decease of the testator and the name and address of the solicitor concerned, if appropriate, or other information showing where the will can be inspected. Indeed, it might be stipulated that this notice should be published more than once—perhaps at monthly intervals. There is no need, however, for any sum of money to be published, or the details of any bequests to individuals.
  It will no doubt be objected that wills have been published in detail for a long time now—since 1598, to be precise—but we live in an age when privacy is every day subject to fresh intrusion. We all know far too many facts about one another—perhaps that is why we understand one another so little. What the Press likes to call "investigative journalism" and what the rest of us call "snooping" is on the increase. That is why it has become much more important to push back the frontiers of privacy from the individual's doorstep.
  People have a right to keep something of themselves to themselves, however much the mass media would like to have us all—themselves, of course, excepted—exposed to the full glare of X-rays at all times. Just because it has been accepted in the past that the publication of wills should be allowed as an exception to the normal rules of privacy, that is no reason why, in the very different circumstances of today, this encroachment among a thousand others should be tolerated, unless it is absolutely necessary—and that it cannot, by any stretch of the imagination, be held to be.
  This proposal has the support of the National Federation of Business and Professional Women's Clubs, which passed a resolution at its annual conference in 1970 asking the Government of the time

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  to introduce legislation to stop publication of the wills and estates of deceased persons. Members of the federation have assured me of their support for the present Bill.
  Question put and agreed to.
  Bill ordered to be brought in by Sir Anthony Meyer, Mr. Daniel Awdry, Mr. Wyn Roberts and Mr. Michael Roberts.

  PUBLICATION OF WILLS
  Sir Anthony Meyer accordingly presented a Bill to amend the existing requirements for publication of wills: and the same was read the First time; and ordered to be read a Second time upon Friday, 11th July and to be printed. [Bill 150.]
ORDERS OF THE DAY

  PETROLEUM AND SUBMARINE PIPE-LINES BILL
  Order for Second Reading read.
  3.56 p.m.
  The Secretary of State for Energy (Mr. Eric Varley): I beg to move, That the Bill be now read a Second time.
  This is a historic week for Britain and the British people.
  Mr. Patrick Jenkin: A disastrous week.
  Mr. Varley: This is the week which will see the start of the passage through Parliament of measures which will place in the hands of the British people control of the last two basic resources the use and deployment of which are not answerable to the British people and their Parliament.
  In a speech at Oxford in the October General Election last year, my right hon. Friend the Prime Minister spoke about these two resources:
  "God gave the land to the people, he gave the seas to the people and the treasures beneath the seas. There is no record that when God made the firmament and the seas he ordained that the profits from the wealth beneath the seas should accrue in full to private investors or rich multinational oil companies."
  Yesterday, the House gave a Second Reading to the Community Land Bill which deals with the first of these resources. Today, we ask the House to give a Second Reading to this Bill, one of the most important ever to be brought before Parliament—
  Mr. T. H. H. Skeet: Nonsense.
  Mr. Varley: It is a Bill which helps to fulfil our manifesto pledge—
  Mr. Skeet: Rubbish.
  Mr. Varley: I hope that I shall not be the object of continual barracking, particularly by the hon. Member for Bedford (Mr. Skeet). I like him a great deal, but such barracking gets a little tiring. I hope to speak for about half an hour, so I hope that he will wait to express his abuse until he makes his own speech.

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  The Bill helps to fulfil our manifesto pledge to
  "Take majority participation in all future oil licences and negotiate to achieve majority State participation in existing licences. Set up a British National Oil Corporation … Take new powers to control the pace of depletion, pipelines, exploration and development".
  The discovery of oil in quantity on our Continental Shelf is one of the most important events in our economic life since the Industrial Revolution. By 1980 the annual saving to our balance of payments, and the annual increase in Exchequer revenue, will both be running at thousands of millions of pounds a year. There will be unprecedented new opportunities for our offshore supplying industry. Our production in the 1980s will be 100 million to 150 million tons of oil a year.
  At this level of production we shall be producing all the oil we need for our own use. We shall be producing it on the same scale as the present production of Kuwait, Libya, Iraq and Nigeria. We shall become one of the world's leading producers.
  But the arrangements we inherited from the Tory Government gave the British people totally inadequate control of their oil, and a totally inadequate share of the benefits flowing from it. The purpose of the Bill is to ensure that the British people will exercise their due rights over their oil in a proper and mutually acceptable relationship with the oil companies.
  The first offshore licences were issued in 1964. The first discovery of gas was made in 1965, and during the following few years further big discoveries were made. These finds were all of gas.
  All gas for use as a fuel had to be offered for sale to the nationalised gas industry at reasonable prices. In this way we could ensure that a fair share of the profits came to the nation.
  In 1969 the Ekofisk oilfield in the Norwegian sector was discovered, and in 1970 Forties was discovered in the British sector.
  Mr. Patrick Jenkin: I am grateful to the right hon. Gentleman for giving way so early in his speech. When he said that the arrangements for gas were devised to ensure that the British nation benefited properly, it would have been fair to
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  add that the arrangements were made under legislation passed by a Conservative Government.
  Mr. Farley: I acknowledge that. In those circumstances I know that when I come to the more controversial section about the British National Oil Corporation and participation, the right hon. Gentleman will agree with it, because some of those proposals are comparable to what was done under the Conservatives.
  As I was saying, the first oil was the Forties oil, discovered in the British sector in 1970. It was clear at that time that the North Sea was a major oil province. But what happened then? In 1971–72, the Tory Government issued a big new round of licences. The emphasis in this round was on the areas in the northern North Sea which had recently been shown to have oil potential, and most of them were in fact licensed in this round.
  But in this new round of licences there was no change in the terms on which the licences were offered. They were virtually the same as those fixed when the North Sea was an unproven area, generally thought to contain only gas.
  This was first brought to light by the Public Accounts Committee in 1972. Much of the credit for the fine report of that Committee belongs to my right hon. Friend the Chancellor of the Duchy of Lancaster and my right hon. Friend the Paymaster-General. I am sure that both my right hon. Friends acknowledge, as I do that my noble Friend the Minister of State for Energy is not without credit himself in this context. As the Public Accounts Committee showed, not only were the terms unchanged but the Tory Government did not even consider changing them.
  Then, having let the horse out of the stable, the Government decided to inspect the stable door. Once the licences had been issued, in early 1972 a review of licensing policy began. But by the time that Government left office, two years later, no conclusions whatever had been reached—two years of inexcusable delay and uncertainty.
  This Labour Government were returned to office determined to put that right—and with a mandate to put it right, the mandate we are fulfilling in this

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  Bill, together with the Oil Taxation Bill, which is awaiting Royal Assent. Four months after we took office we announced our policy in the White Paper of 11th July last year, "United Kingdom Off-shore Oil and Gas Policy".
  Those proposals came under three headings: first, Government take; secondly, special measures to assist Scotland, Wales and the English regions in need of development; thirdly, the real core of our proposals, Government control and participation.
  The major part of our fiscal proposals was incorporated in the Oil Taxation Bill, which was introduced into the House in November. The remaining part is in the current Finance Bill.
  As part of our policy to assist Scotland, Wales and the regions, my Department's Offshore Supplies Office has been moved to Glasgow, 40,000 jobs have been created in Scotland, with more to come, and recently my right hon. Friends the Secretaries of State for Scotland and Wales published their proposals for Scottish and Welsh Development Agencies.
  Now the legal framework for State participation and control is embodied in the Bill. Together with the Petroleum Revenue Tax and ring fence, the Bill completes our proposals for offshore oil. All concerned—our own Parliament, together, with the oil companies—can now go ahead in full knowledge of the Government's plans and intentions.
  The Bill's objective is to ensure that the British people derive maximum benefit from their offshore oil and gas resources. It provides the means for public participation, makes possible greater public control, and provides powers to facilitate development.
  First I should like to say something about participation. The oil offshore is already the property of the nation. Lord Home, as he once was and now is again, nationalised it in 1964 during his period as Sir Alec. But as soon as the oil is produced by a licensee, it becomes his property, and the nation has no further title to it. Except for the United States, every major oil-producing and gas-producing nation in the world has taken participation in the producing industry. I am not referring only to the OPEC countries, but also to Norway. Canada, Australia, New Zealand, and all the EEC
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  members with substantial oil and gas production or prospects—France, Italy, Holland, Ireland and Denmark.
  Only last month groups including most of the international majors accepted licences for Greenland—a much more expensive and risky area than the North Sea—on extremely tough participation terms. The House may also have read only this morning that the Irish Government have just announced tough new terms, including provision for 50 per cent. participation.
  Mr. Skeet: Is it not fair to say that in that list many of the countries have not abrogated the existing terms under the existing licences? Why is the Minister seeking to do it here?
  Mr. Varley: Because most of those Governments had already made provisions, the sort of provisions that should have been made before the fourth licensing round. France, Italy, Holland and New Zealand participate in finds already made. Their provisions are comparable to the provisions that we are making.
  The Opposition's bluster against State participation is only synthetic. The right hon. Member for Sidcup (Mr. Heath) made this clear in a speech in the House 13 months ago, when, as Leader of the Opposition, he declared that he regarded carried interest for existing licences as a major option and added that a Government could do what they liked with future licences. If the Opposition Front Bench seek to repudiate their former leader on this issue, as they have on so many others, they can hardly repudiate, just yet at any rate, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), who, a year ago to the day, admitted in a burst of candour in Oslo that
  "the last Conservative Government had by no means ruled out" participation.
  I do not yet know the views on the subject of the right hon. Lady the present Leader of the Opposition. It is a hard choice for her. If she agrees with her right hon. Friend the Member for Wan-stead and Woodford she has the unpalatable task of agreeing also with the right hon. Member for Sidcup.
  We believe that participation, is the best way of ensuring that the nation shares fully in the benefits of North Sea

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  oil. Participation gives the nation a direct title to the oil produced. It creates a partnership between the people of this country and the oil companies. Further, only through participation can the nation acquire its own direct knowledge of, and capability in, oil and gas production.
  As a result, our policies will be much better informed than were those of the Tory Government. The Public Accounts Committee Report pointed out how the previous Government had misunderstood the profits and costs of oil production. It went so far as to say that Government calculations were "misleading". By sharing risks and responsibilities with the oil companies, we shall be able to understand their problems better as well.
  But, of course, our policy does not consist only of participation. When the British National Oil Corporation is fully established, it will be able to hold licences as sole licensee. For commercial fields on such licences, all net revenues will come to the nation, not the 70 per cent. in the case of royalties and tax alone.
  The establishment of a complete capability under national control will reduce our dependence on the oil companies. We value their expertise. They have been pioneers in one of the most difficult projects ever known, requiring immense technical skill and great individual personal courage on the part of the men who work in some of the most dangerous and inhospitable waters on earth. We want to continue to attract their expertise, and to work in partnership with it. But no other major producer outside the United States has thought it wise to be completely dependent on the oil companies, and all over the world the companies have accepted that.
  Participation has yet another advantage. It provides the framework in which the State can help licensees to raise the very heavy costs of development. A field of Forties size starting now would cost about £1,000 million to develop. The sums required are colossal. The Tory Government in their last licensing round let in some small licensees—with no special contribution to make—who would be out of their depth in a children's paddling pool.
  But costs of development are now so high that only the biggest companies can
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  expect not to meet difficulties in raising money. This is not because the North Sea is no longer profitable—far from it—but because they have to borrow the money, and any prudent lender is bound to compare their resources with the scale of their borrowings.
  The development of offshore oil requires resources on such a massive scale that it is difficult for the private sector alone to provide them. That is why I am sure that if the Conservatives had remained in office they, too, would have had to put into practice their readiness to consider participation to which I have referred. Indeed, what else could they have done if they had been in office and licensees had come to them, as they have come to us, for help in raising money? Would they have provided the money, with no compensating stake for the British people, who really provide the money?
  The Bill provides the means for participation by setting up the BNOC. But it does not by itself bring about participation in future licences. This will be laid down in the conditions under which future licences are awarded. For existing licences it will be achieved through free and voluntary negotiation.
  A number of major oil companies have shown readiness to discuss our participation proposals. In this connection, the House will wish to know that during the last few days the chairman of British Petroleum has told me that his company is prepared to enter into discussions with the Government with a view to agreeing terms for majority State participation in BP's North Sea oil holdings. Deminex has agreed in principle, and we shall have 51 per cent. of Burmah's stake in Ninian and Thistle. I am glad to be able to inform the House that two further companies, Tricentrol and Blackfriars Oil Company, have accepted the principle of participation in their shares of the Thistle and Argyll fields, and Blackfriars accepts it for any further commercial finds it makes. The benefits to be secured through participation agreements and future licences will be held by BNOC on behalf of the people.
  Mr. Peter Emery: Before the right hon. Gentleman leaves the subject of financing, which he appears to be about to do, will he draw a specific line between the rather misleading figures he

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  gives the House? He has spoken of a cost of £1,000 million for the exploitation. The cost of exploration is not in the same league. Once discoveries have been made, the raising of capital is nothing like as difficult as the right hon. Gentleman is trying to imply.
  Mr. Varley: I have not left the subject of financing. I shall be returning to it shortly, and some of the points the hon. Gentleman mentioned will be dealt with then. I entirely agree with him that there is a great difference between development expenditure and exploration expenditure, but our proposals in the Bill will help both types of expenditure to a great extent. We shall look extremely critically at the proposals that come before us if some of the licensees ask for our help.
  I have been describing some of the functions of the British National Oil Corporation. I can tell the House that its headquarters will be in Glasgow. If the House gives the Bill a Second Reading tonight, I hope in due course to nominate an organising committee, including a chairman and chief executive.
  The House will understand that pending passage of the Bill it may be necessary for my Department to enter into commitments on behalf of the corporation. Any expenditure incurred after Second Reading as a result of such commitments, and the costs of the organising committee, will be met in the first instance from the Contingencies Fund and will be recovered from the corporation in due course.
  I want to make it clear that BNOC will not be the means by which the Government exercise control over private licensees. It will be the Government who continue to issue licences, and to administer all the licence controls, both those in existing licences and those added to them by the Bill as well as those laid down for new licences. For its part, BNOC will hold licences issued by the Secretary of State and will be subject to licence controls like a private sector licensee.
  The BNOC's job will be different and distinct. It will hold the Government's participation interest in production licences, in partnership with private sector companies. In these cases it will, of
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  course, act commercially. Its future partners need have no fear that it will try to force the consortium to act contrary to ordinary commercial criteria.
  But BNOC may also become sole licensee and operator in some future licences. In this rôle it will not necessarily act commercially. It might be in the national interest, for example, for it to explore and locate reserves and yet not develop them. Therefore, the BNOC can play an important and unique rôle, and one of a non-commercial character.
  Again, BNOC will be available to give the Government advice on oil matters generally and to perform other services for them, normally on repayment. It can, for example, be asked to take over management of the Government's pipeline and storage system, which is maintained for defence purposes. It could act for the Government in any future barter deals such as that arranged with Iran in 1973, although I want to make it clear that none is at present in prospect.
  Oil is of enormous importance in modern life. It is impossible to predict the uses to which a public sector body with expertise and knowledge about it might, in the national interest, be put. The BNOC will have powers to go into oil refining and distribution, with the consent of the Secretary of State.
  It will take time to acquire the necessary resources and expertise and its clear priority must be to establish itself in oil production. But, subject to Government approval, it will have maximum flexibility to make use of the oil and the knowledge of the oil industry which it will have gained from participation in production. When it extends into refining and distribution it will, of course, do so on a commercial basis. It will not be used to compete unfairly with private sector companies.
  The BNOC, then, will have a mixture of functions. In some—the holding of production licences with private sector partners, and in downstream activities—it will act commercially. In others—exploration to establish the size of our reserves, the performance of services to the Government—it will act in effect as an agent of the Government. Its actions will be of enormous importance

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  to this country and the sums of money flowing through its accounts will be vast. Assuming 51 per cent. participation in all oilfields, its gross revenue in 1980 could amount to between £2,000 million and £3,000 million.
  Its circumstances are unique and it will therefore have a structure unlike that of any existing nationalised industry. In particular, we want it to have a specially close and intimate contact with the Government. The Bill therefore provides for the appointment of two official members, for the issue to the corporation of specific and general directions, and for the payment of its revenues into a National Oil Account under the Government's control, from which its needs will be met.
  Mr. Peter Rost: The right hon. Gentleman said a moment ago that the BNOC will not trade unfairly against existing companies. Can he explain why, therefore, this nationalised oil company is to be exempted from petroleum revenue tax?
  Mr. Varley: I dare say that this subject will attract a good deal of attention when the Bill goes into Committee because I have received comments on the matter already. I can assure the hon. Member that there is nothing unusual in this arrangement. If it were a device to put the BNOC into a better position vis-à-vis the other companies, it would be a very clumsy and ham-fisted way of going about that. There is no secrecy attached to the National Oil Account. It would he under the control of the Government, subject to the scrutiny of the Public Accounts Committee, audited by the Comptroller and Auditor-General, and, if necessary, debated in this House. The hon. Gentleman therefore need have no fears about the National Oil Account or the way in which it will operate under these controls.
  I have already said that the first purpose of the Bill is to provide for public participation and that the second is for greater public control. Parts II and III of the Bill are designed to bring about greater public control of the oil industry. The controls which we inherited are hopelessly inadequate at the moment.
  Mr. Arthur Palmer: The first part of the Bill seems to describe very sensibly a fairly standard classic public corporation. There is no provision, for instance, for 50 per cent. of workers' participation as favoured by my right hon. Friend the Secretary of State for Industry. Is this accidental or deliberate?
  Mr. Varley: The BNOC will have workers' representatives on it in the same way as other public corporations that fall under my responsibility. My hon. Friend will have seen that overall responsibility for worker participation in the public sector, as well as in the private sector, is being considered by my right hon. Friend the Secretary of State for Employment. I know, of course, that my hon. Friend put his question only to be extremely helpful, and I take it in that spirit.
  As I was saying, the present controls are totally inadequate and I should like to go into detail to show how. At present there is no control over the rate of depletion in the national interest. Even Opposition Members recognised in their proposals before the last election that such control was essential, but those proposals—suggesting a cumbersome body which would have been powerless to achieve the objectives set for it—were inadequate when it came to depletion.
  At present there is no requirement for continuing exploration. A licence may last for 46 years. Exploration programmes are required for the first six years. A licensee then surrenders half the territory—he chooses which half—but on the area he keeps he need do no more exploration for the remaining 40 years.
  At present there is no control over the ownership of the licensees. The ownership of the licensee company can determine its technical competence and its financial standing, and yet we have no control over it through the licences. Under the terms we inherited, the Government could give a licence to a company owned and operated by one person or group A and then find that it had been turned into a company owned and operated by quite another person or group B who may be of a different nationality—and all this could be done without the Government's knowledge.

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  At present there is no effective control over dealings in the profits or production from licences. Much of these dealings are, of course, entirely legitimate and we would not wish to prevent them. But at the moment there is nothing to stop a smart operator, with no interest in actually producing oil or gas, from getting a quick profit, and such profits can be shifted outside the United Kingdom corporation tax net.
  At present there is no control over the development of pipelines to avoid proliferation, and to minimise damage and inconvenience to other interests and the risk of pollution. Nor is there any control at present over the safety of pipelines and those working on the laying of pipelines in these dangerous conditions. There is no means of preventing the North Sea from becoming, in the graphic phrase of the oil industry, like an "upturned plate of spaghetti". The Bill closes all these gaps. It is astounding that they have not been closed before.
  There is another important new control contained in Part IV. It will ensure that national policy on oil is taken properly into account in decisions on refinery construction. To obtain maximum benefit from the exploitation of North Sea oil we need to have the right sort of refining capacity, in terms of both quantity and sophistication.
  Refinery projects are, of course, subject to the usual planning procedures, and will continue to be. The main purpose of these procedures is to assess the implications of the project in terms of land use and the local environment. But in a field as important as this, it is right that there should be a separate evaluation of the oil policy considerations. Part IV will assist the planning authorities in their task, whilst in no way infringing on their prerogatives. It will be possible for projects which are clearly undesirable from the national point of view to be turned down at an early stage.
  The powers to facilitate North Sea development are contained in Clause 42. This clause makes it possible to give oil companies guarantees of up to £600 million, or make them loans of up to £50 million, where it is desirable to maintain development. We shall use these powers only in special cases where need is demonstrated. Where we do use them, we shall require proper terms for taking
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  on a share of the risk. And we shall normally insist on acceptance of participation as a condition of giving the financial help.
  In accordance with normal practice, we shall, in exceptional cases, and where it is necessary to avoid delays in development, be prepared to give loans or guarantees up to the limits in the Bill once the House has approved it in principle by giving it a Second Reading.
  The main purpose of this Bill is to give the British people rights over their own oil, and to do it while retaining the interest and resources of the oil companies. Everything in the Bill is directed towards achieving this balance. On the one hand, we have sought to put right the results of the unregulated scramble for our resources which the previous Government allowed. On the other, we seek continued investment here by the companies on terms which recognise the interest of the British people in their own oil.
  We are trying to get a reasonable reconciliation of all interests which will last. I am sure that the oil industry recognises that the anarchy which we inherited could not be allowed to continue and that it will be willing to accept our offer of a durable partnership with the British people. Our oil resources are a precious asset which must be explored, exploited and at the same time husbanded to meet the nation's needs. We must be prepared to implement a sensible and prudent depletion policy.
  Exploration today is going on at a record rate, confounding the doom-laden pronouncements of Tory right hon. Gentlemen opposite. Despite the slippages of which I warned a year ago, exploitation is going ahead satisfactorily. Huge resources are being committed daily. This year oil will start to flow bringing to fruition the first stages of this great enterprise. This Bill will ensure that all these activities are conducted not for the benefit of a few but in the interests of all the people of all of Britain. This is a practical Bill, a patriotic Bill, a Socialist Bill. I commend it to the House.
  4.31 p.m.
  Mr. Patrick Jenkin: The truest words in the Minister's speech were uttered at the end of it when he said that this was a Socialist

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  Bill. In my speech I shall show how damaging the Bill will be if it goes through in this form—damaging to the interests of the people of this country.
  The right hon. Gentleman devoted a considerable part of his speech to some wide-ranging personal and political abuse. I do not propose to follow his example but rather to talk about the Bill. There was one part of his speech which took my breath away. It came when he said that the oil industry could now go forward "in full knowledge of the Government's plans and intentions". All I can tell the right hon. Gentleman is that from my discussions with the industry—and I do not suppose I have had as many as he or the Treasury—it seems that the industry is in a state of complete confusion about the Government's intentions.
  Last January Government policy was stood on its head. We learned from the Chancellor of the Duchy of Lancaster that participation would take some novel form in which the companies would have the same profit earnings as they would have had if they had not surrendered 51 per cent. of the oil. I do not know what the right hon. Gentleman's view of this is. He seems to live in a cocoon of complacency which entirely divorces him from what is going on in the real world of the oil industry.
  The Chairman of BP may have told him that he is prepared to negotiate for 51 per cent. participation, but he told me and a number of my hon. Friends that he had not the slightest idea what the Government's offer means. No doubt he will talk to the Government, but he has yet to know what is the Government offer. That goes for every other company that has engaged in these participation talks. I have not found one company which has had any offer of any sort made to it in writing. Of talks there have been quite a lot, but there has not been one single word in writing about what arangements are to be made, what the terms of the participation are to be, and how the companies will participate, becoming partners of the Government. No doubt we can explore these details in Committee.
  It is nonsense for the Government to continue pretending that the programmes are going forward with full confidence and momentum, which was the case a
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  year ago. The Under-Secretary is often touring the country—he is left to pick up all the dirty work—telling people that the number of drilling rigs in the North Sea is more in 1974 than it was the year before. I will put to him and to his right hon. Friend the truth of the matter from a senior managing director of British Petroleum, Mr. "Monty" Pennell, who is quoted in the Financial Times earlier this month rebutting politicians' claims that:
  "the companies are bluffing when they talk of reducing exploration drilling in the North Sea."
  He suggested that:
  "the actual rate of drilling could fall by as much as 60 per cent. in the next year. 'Politicians who look to the current rate of drillling', he asserts, 'appear not to understand that rig activity today results from decisions taken a couple of years or more ago and that decisions taken over the past few months will largely determine the rig activity next year'."
  If the Minister takes the trouble to ask his hon. Friend the Member for Dudley, West (Dr. Phipps), he will be told that today, as opposed to a year ago, any company can hire a drill rig for the asking at any time. The drillings are very nearly a drug on the market. I hope that we shall hear no more about confidence in the industry being unimpaired. The Government have thrown the industry into chaos. This was done first with the petroleum taxation Bill. We got most of that put right, and now we have this Bill. The Government must face up to the consequences.
  As for the canard that the Government inherited anarchy—that is a ridiculous statement. They inherited an industry which has grown from nothing to a point at which we can become self-sufficient in oil by 1980. It is the most remarkable story of exploration, discovery and development in offshore oil that the world has even seen. To describe that situation as anarchy is comparable to the famous remarks by Mr. Attlee when he described the position found by his Government in 1945 as the "mess of centuries". That is what the right hon. Gentleman makes of the triumphs and achievements of the North Sea.
  I turn to the Bill and the British National Oil Corporation, together with

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  the proposals for the 51 per cent. participation. We are told t hat these are necessary to ensure a proper return to the Exchequer and proper control over investment, production, depletion and so on. The Secretary of State merely repeated what he has said before. What is abundantly clear is that Part I whatever else it does has nothing to do with such factors. It is irrelevant to participation and control.
  We know, because we have been told by the Chancellor of the Duchy, that the Government are not looking for any further increased financial return from participation. He told this to the oil companies in the Carlyle Hotel in New York in January. At the beginning of February he was quoted in The Times as saying that—
  "the key point that had to be appreciated was that the British Government had no intention of adding to their take from the North Sea through participation plans designed to give the Government majority control over the oil resources. He believed that the only way the Government should obtain revenue from the North Sea oil was by means of the new oil tax and through corporation taxes."
  I wonder whether the Secretary of State ever talks to the Chancellor of the Duchy. We had a great deal more about the need for participation to raise revenue. I am content to rely on what the Chancellor of the Duchy says.
  Dr. Colin Phipps: Would the right hon. Gentleman not accept that that statement referred specifically to licences already given out and not to future licences?
  Mr. Jenkin: With respect, it does not do anything of the sort. It is a statement exactly as I quoted it; there is nothing about being confined to existing licences.
  The Secretary of State said last November:
  "There is the question of making sure that the British people get a proper share and that cannot be done by taxation."—[Official Report, 25th November 1974; Vol. 881, c. 5.]
  He has been flatly contradicted by the Chancellor of the Duchy of Lancaster. We have had the Oil Taxation Bill. The Opposition agreed that it was proper to increase taxation. We did not vote against that Bill, as we were committed to introduce taxation when we were in office. The statement by my then right hon. Friend, now Lord Barber, as long ago
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  as March 1973 made that abundantly clear. We argued for an excess profits tax. Happily, we were able to change the Bill into a form in which Lord Balogh was able to say in the House of Lords,
  "In fact, of course, this tax represents an excess profit tax".—[Official Report, House of Lords, 10th April 1975; Vol. 359, c. 205.]
  We won, and we shall win again on this Bill.
  As I shall show later when I deal with the National Oil Account, so far from adding money for the benefit of the British people, the Bill extracts it from the taxpayer and uses it for the Socialist purposes of the right hon. Gentleman.
  I come to the second alleged reason, which is that the Bill is necessary for control of production and depletion. As the right hon. Gentleman made clear, the Bill shows that participation and the BNOC have nothing whatever to do with the control of production and depletion. Those powers are contained in Part II of the Bill and in Schedules 2 and 3. The BNOC and participation are in Part I.
  The controls exist entirely independently of the BNOC; they bear no relation whatever to participation. The BNOC has no rôle, and the Secretary of State was good enough to make that clear. The powers stem from the model clauses in the Bill that are imported into the licences. They are administered not by the BNOC but by the Secretary of State, and they are enforced by penalties. When the Secretary of State said
  "… we can have an effective depletion policy only on the basis of public participation".—[Official Report, 25th November 1974; Vol. 881, c. 5.]
  he was again talking complete rubbish. The Bill makes it clear that what she said then was totally untrue.
  If the reasons are neither revenues nor controls, what are they? The Secretary of State gave us the answer today. The Government have a political commitment. That is what it comes down to. In other words, majority State participation is no more than the ugly unacceptable face of Socialism.
  But if they are committed to some form of State corporation, what form should it take? There are two broad possibilities. Either the Government could take on the rôle of an investment banker, or

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  one could have a new nationalised State oil company. The former rôle would be like an investment holding company—passive, watchful, steering, monitoring and supervising, but not itself climbing down into the arena. Such a body would advise. It could sponsor research and it could invest selectively if the Treasury had spare resources to enable it to do so. However, it would leave the active exploration and development of the oilfields to the industry which understands the work and knows how to do it. Such a body might have fairly loose terms of reference. It could be a departmental agency—an extension of the Department of Energy. Its powers would, rightly, be heavily circumscribed.
  The alternative rôle, and the other possibility, is the active, entrepreneurial body which would aim to compete fairly with existing companies. It would be subject to similar rules to those for the rest of the industry. It would pay taxes like the rest of the industry. It would have a good deal of commercial freedom. It would look to the Exchequer for its capital. And it would be answerable to the House of Commons for its results.
  I suppose that is perfectly possible though I am bound to say that the recent cry of despair that we heard from Sir Monty Finniston about trying to run such a corporation in the steel industry does not inspire much confidence that it would work in the oil industry.
  As it is, the BNOC tries to be both. The result is a hopelessly confused mishmash of vague objectives, sweeping powers, fiscal privileges and stultifying ministerial constraints.
  The Bill gives to those who are to run the BNOC no clear purpose. It sets no objectives. It establishes no commercial criteria. It makes the BNOC a privileged body by exempting it from PRT. It retains for the Minister not only strategic control but detailed control over the day-to-day operation of the company. The BNOC may not actually be part of the Department of Energy, but from the outset it is to be tethered hand and foot to the Ministers and officials in the Department.
  I shall give some illustrations of this. There are 70 specific examples of minis-
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  terial controls and powers in the Bill, but I shall take just three.
  The Paymaster-General (Mr. Edmund Dell): When the right hon. Gentleman said on going out of office that the Conservative Government had not ruled out participation, which of the two alternative forms of BNOC did he have in mind at that time?
  Mr. Jenkin: When I said that, I mentioned "carried interest", which is not necessarily quite the same thing. I believed that it was a possible alternative to taxation. Now that we have the tax we see no reason for participation.
  The BNOC is, apparently, to have no responsibility whatever for its own finances. Instead, it has to transfer all its revenues to the National Oil Account, itself under the control of the Secretary of State. Clause 40(2)(a) is astonishing It says:
  "There shall be paid into the Account…
  (a) all sums received by the Corporation from any source or standing to the credit of the Corporation in any bank account."
  There is an exemption for petty cash, so I suppose it will be allowed to buy the matches for the boardroom table. It is not allowed to incur serious expenditure, because under subsection (3) of that clause it may pay
  "such sums as the Secretary of State considers are needed to enable the Corporation and any relevant subsidiary to defray expenditure properly chargeable to revenue or capital account."
  The whole of the operating expenses have to have the sanction of the Secretary of State. So the BNOC has no financial autonomy whatever. The Secretary of State retains complete command of the purse strings.
  It has no managerial autonomy either, because the Secretary of State, in addition to settling general lines of conduct for the undertaking and having the usual power to give general directions, can give this body specific directions of any kind whatsoever. Clause 4(1), which sets out that power, must be one of the most sweeping assumptions of dictatorial power by any Government in this country outside wartime. The Bill reaches a point of complete absurdity, as was stated in the Financial Times in its

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  somewhat critical leader of 10th April. It said:
  "Now it turns out that the Minister is not prepared to trust his own creature; the Minister can himself give directions not only to the National Oil Company itself, but to the operating companies in which it has a controlling interest. The robot cannot even be trusted to transmit its master's messages."
  The third point is perhaps the most astonishing of all. The whole thing can be hidden from the gaze of Parliament and the public under a cloak of secrecy. Not only are the directives to be secret—the chairman is not even to have the right of publishing ministerial directives for self-protection, which is bad enough—but in one of the most astonishing clauses ever to find its way into a Bill, Clause 10(2) empowers the Secretary of State to direct the BNOC to prepare its accounts in such a way as to hide whether it is making a profit or a loss.
  I find this absolutely breathtaking. In the context of the Government's Industry Bill, which imposes rules of disclosure upon the private sector going far beyond anything that has gone before, it is not only breathtaking; it is shocking. It must be changed.
  The National Oil Account is to have huge resources. The Secretary of State has power to hand them all over to the BNOC up to the limit, and he has power to tell the BNOC exactly what to spend them on. Then he has power to conceal the whole thing from the gaze of public and Parliament. I cannot believe that for one moment the Secretary of State thinks that he is going to get away with it. He is sometimes accused of assuming the mantle of a modern oil sheikh, but here he looks like a sort of 18th century Middle Eastern despot, with BNOC as his pampered, privileged eunuch.
  One goes on—who is the Secretary of State going to get to serve on such a body? One may well ask. The right hon. Gentleman, who is not above being frank on occasions, gave an interview to the Daily Telegraph last July which resulted in this report:
  "He agrees that there will be difficulties in recruiting management to build up BNOC but I would hope we can talk to British Petroleum about co-operation'."
  The Secretary of State has talked to British Petroleum. He knows just how much co-operation he will get there.
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  But there is another clue. Two civil servants are to be on the board of BNOC. But we have had ministers' verdict of putting civil servants in charge of running commercial operations, and it was given admirably by the Minister of State, Department of Energy—Lord Balogh. In an article he wrote in the Daily Mail just before the February General Election he said this:
  "The Civil Service has in no way shown itself fit to supervise the admirably run multinationals a relatively easy job. I shudder to think what might be the result if they took over the running of the operation."
  Who else will they get? Who will they find who will swap the challenging disciplines of the private sector for this dreadful mess of pottage where he will be doing nothing but be, in the words of the Financial Times, the Secretary of State's robot?
  I am told that the Government have been head hunting for some time and that they are now considering amending the terms of reference. It is not the terms of reference to the head hunters which need to be amended. It is the whole concept of BNOC as embodied in the Bill which must be radically changed.
  The Government must decide. Is this to be an agency of the Government, a mere extension of the Department of Energy, or is it to be a genuine commercial enterprise? At present, it seems to be intended to be both, and it ends up by being neither.
  We must come back to the reality of what this body will do. The dreadful thing is that this hairless wonder will be a majority partner of every operating enterprise in the North Sea. This is the body which must take part in every major investment decision to be taken in the development of offshore oilfields. Some of these oilfields require as many as 16 operating, technical and financial committees; and this body must be represented on all of them. No wonder the oil companies are fearful of the appalling bureaucratic delays this will set up. If the Bill means what it says—We must assume that it does—BNOC will have to go cap in hand to the Secretary of State for every penny it needs to spend. There are prodigious opportunities for delay and muddle.
  It is also the body that the Minister can direct to invest in downstream activities—all the way from bitumen to plastic

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  buttons, all the way from naphtha to nylon stockings. The House will have no say at all in these things. It will all rest with the Secretary of State. Like Petrobras in Brazil and ENI in Italy, BNOC could end up by becoming" a State within a State "and the creature of the Secretary of State.
  But it is all unnecessary. There is no advantage to be gained for the British people by the existence of this corporation that cannot be gained by the taxation and licensing powers in the Bill.
  It is a dreadful comment on the priorities of the Labour Party that it is prepared to risk the momentum of the exploration and development of North Sea oil by creating this faceless, flabby, purposeless BNOC.
  I turn to the regulatory provisions—Parts II, III and IV—the licence terms, pipelines and refineries. Here, as the Secretary of State fairly said, the Opposition have some sympathy for the broad objectives of proper depletion control and orderly development policy. But we see serious and damaging defects in the methods chosen, in particular in relation to paragraphs 14, 15 and 16 of Schedule II, which are major new powers over exploration, appraisal and development, and which relate to depletion control.
  As I say, we do not challenge that there must be effective powers, but this Bill departs from all previous European practice, in that these changes are retrospective and represent a unilateral abrogation of existing rights without compensation. The Netherlands, Denmark, Norway—none of those countries changed the terms of licences already issued. There the new legislation applies, with very minor exceptions, solely to future licences.
  In Committee we shall want to test whether it is vital that existing licences should be subject to this retrospective provision. It should be recognised for what it is—a form of compulsory expropriation by the State just as any form of outright nationalisation.
  On this matter international law is quite clear. This can be done only if it is accompanied by fair and adequate compensation. The Government's view on this principle was affirmed at the Sixth Special Session of the General Assembly
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  of the United Nations only last winter. A draft put forward on behalf of the British Government and a number of other Community Governments, while acknowledging the right to expropriate, says that these rights
  "shall be exercised in accordance with the applicable rules of international law, in particular with regard to the payment to the owners of prompt, adequate and effective compensation."
  On 12th August my hon. Friend the Member for Blackpool, South (Mr. Blaker) asked the Secretary of State for Foreign and Commonwealth Affairs whether that draft—the amendment in question—represented the position of Her Majesty's Government. The Minister of State said "Yes, Sir". My hon. Friend asked:
  "May we assume that that applies to North Sea oil licences?"—[Official Report, 12th March 1975; Vol. 887, c. 488.]
  The Minister of State then went on to refer to participation.
  It is not only participation. The abrogation of existing contractual rights is just as much expropriation as the acquisition of property. So, if the powers are to be exercised, compensation must be paid, and it is a matter of high principle which touches on the Government's whole honour and integrity.
  The Under-Secretary of State for Energy (Mr. John Smith): The right hon. Gentleman has attacked the depletion provisions which are retrospective in the Bill. The retrospectivity is necessary because no depletion controls were put into the 1971 licences. Will he explain why the last Conservative Government took no powers of depletion control in the 1971 licensing round?
  Mr. Jenkin: That matter was examined by the Public Accounts Committee. In Committee we shall want to examine the case for this in full, because it represents a very serious step indeed and it has done perhaps as much as anything to undermine the faith of foreign investors in the integrity of this country. Therefore, if it is to be done, let it be examined thoroughly, but, above all, it must be done for compensation.
  If it is said that more effective depletion powers are needed, let it be made quite clear, as I made it clear last year,

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  that compensation should be paid. I made a Press statement on 11th September. This report appeared in The Guardian on 12th September:
  "Some compensation for this might well have to be paid by the Government, said Mr. Jenkin."
  Mr. Emery: Does not my right hon. Friend agree that every oil company operating in the North Sea has made it crystal clear that it would be delighted to co-operate with the Government in a proper depletion policy and is more than willing so to do?
  Mr. Jenkin: My hon. Friend is absolutely right. I have not spoken to every company engaged in this—there are a great many—but all those to whom I have spoken recognise that.
  But the powers in the Bill and the discretion of the Secretary of State go a good deal further. Unilateral abrogation without compensation could have unfortunate repercussions on British investments overseas. British Petroleum has huge assets in Alaska and Ohio. Shell has a big stake in the Gulf of Mexico, California and elsewhere. I could quote many references to American opinion which I have read in the past year, but I will quote only one, from a distinguished Senator, Senator Dole of Kansas, who said this two months ago in a Press release:
  "As I look at the billion of barrels of American oil which the British Petroleum Company is sitting on in Alaska, when I consider the holdings of the Shell Oil Company in the United States, it seems to me that these and similar holdings must be considered as the British programme to nationalise the petrol contracted for by American companies in Great Britain goes forward."
  It is sheer nonsense for the right hon. Gentleman to say—as he said in the House the other day—that all this is totally irrelevant to anything that the Government are doing. This unilateral abrogation of rights has to be met by compensation. If a civilised, developed country abandons the principle pacta sunt servanda, the consequences could be extremely damaging for the credibility of the country.
  Mr. John Smith: As I suggested, the need for retrospectivity arises only because in 1971 no depletion powers were taken in the licences. Will the right hon. Gentleman tell the House why in 1971
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  the Conservative Government took no powers to control depletion?
  Mr. Jenkin: As I say, that was examined. Officials were examined on that by the Public Accounts Committee. It is important that we should look forward to the future under the Bill. In 1971 if anybody had said that by 1980 this country would be in the position of having to exercise depletion control he would have been regarded as being very far sighted indeed.
  Mr. John Davies: It might be helpful to the debate to recall that the first ascertained commercially exploitable resources of North Sea oil were declared in the autumn of 1971.
  Mr. Jenkin: I am grateful to my right hon. Friend. I hope that he may be able to catch Mr. Speaker's eye, because he speaks on these matters with great authority.
  In addition to the question of principle there is also the practical application of the controls. Depletion control raises complex technical and economic issues. Claims for conservation may conflict with the economics of investment and there is room for real differences of opinion on geological and geophysical factors. It is essential that these issues should be argued out fairly in a properly constituted forum.
  Here I come to another major defect in the Bill. Under the Bill, these important powers rest, almost unfettered, in the hands of the Secretary of State. There are limited rights to be heard and very limited rights of arbitration, but they do not apply to the most onerous of the obligations.
  In this area other countries which have oil provinces and a long experience have found that the independent, impartial, regulatory authority has an important rôle to play. The Alberta Energy Resources Conservation Board is the best known and most widely respected body. Several of my hon. Friends and I made a study of the board when we were in Canada recently. The annual report of the board has just come out, and it contains this passage:
  "Under the Alberta Statutes the Energy Resources Conservation Board is charged with certain energy resource management and environment management functions with

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  regard to oil, gas, oil sands and so on. The functions include the appraisal of reserves, regulation of exploration and the development of pipelines and transmission lines, insurance, safety, prevention of waste"—
  and so it goes on. The functions are performed by a properly constituted, impartial, regulatory authority before which all parties can make their case, which can be heard fairly by experts, and the issues decided. The same applies to the United States Interstate Oil Compact Commission.
  I do not challenge that it is for the Goverment to determine the overall rate of depletion and the overall rate of production across the board, which will be governed by balance of payments objectives, objectives of repayment of debt and so on. But translating an overall policy decision into detailed directives on production, development and investment, field by field, company by company, where we are dealing with extremely complicated matters such as the development of secondary and tertiary recovery, and so on, calls for patient expert analysis, and the parties must be able to deploy their arguments before a highly qualified tribunal which can adjudicate on these issues.
  Compared with the open and proven systems in Canada and the United States, the arrangements in the Bill are primitive, arbitrary and dictatorial. They put the companies entirely at the mercy of the Secretary of State's discretion, with virtually no redress against the abuse of power. This country must have a properly constituted regulatory authority on the same lines as the Alberta board and other boards.
  The same goes for pipeline control. Here, too, there are often difficult technical and economic factors to consider. It should not just be left to the Secretary of State to decide who is to share which pipeline and how much he is to pay. There should be controls to ensure sizing, sharing, routing and so on, but they need to be impartially regulated, with proper compensation paid where appropriate. As it is, it all depends on the Minister's dictat, and that is wrong.
  One asks what is the rôle of BNOC? The Secretary of State gave us some reassurance that the BNOC would have
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  no rôle in this. But is that right? According to the Explanatory Memorandum, the Civil Service is to increase by no more than 10 to 15 to administer the controls under the Bill, whereas the Under-Secretary of State said recently in Glasgow that BNOC will have 800 headquarters people by 1980. Is it true that the Department will administer all the detailed controls, get all the returns and make all the decisions with only 10 or 15 extra people? I find that difficult to believe, and we shall need to probe it in Committee.
  We shall move amendments in Committee, first, to establish the right of compensation for the abrogation of existing rights; secondly, to establish firm criteria on which depletion control must be based; and thirdly, to establish, as we said in our manifesto, a United Kingdom oil conservation authority to administer the regulatory functions which the Bill gives to the Secretary of State, and to act as a watchdog for the people.
  Finally, I come to the financial provisions of the Bill which are perhaps most shocking of all. The National Oil Account is a very rum bird. It operates as BNOC's current account—revenues in, expenditures out. It is also the repository of all the royalty revenue that would otherwise flow to the Exchequer, the proceeds of sale of any royalty oil, the receipts by way of licence fees and other income.
  There has been no official estimate of the royalty revenue, but one estimate that I have seen shows it rising to perhaps £755 million a year by 1980. In addition to the £900 million borrowing requirements that goes into the NOA, it will have a further £750 million a year by way of royalties.
  It does not stop there. BNOC is free of PRT and, assuming that the Chancellor of the Duchy's offer means that there will be a buy-back provision for the 51 per cent. of oil the Government take, and that that goes back to the companies at a price which gives the companies the return post-corporation tax and PRT which they would have had, because BNOC is not liable to PRT, BNOC will make a substantial additional profit on that oil, post-corporation tax but free of PRT. My calculations suggest that there might be anything between £500

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  million and £750 million a year by 1980 flowing to the National Oil Account. So, in addition to the £900 million borrowing requirements under the Bill, there will be anything up to £1½ billion a year going into the NOA.
  What the Labour Party has to realise—perhaps it does—is that not one penny of this is new money arising from the Bill. It is all revenue hitherto earmarked for the Treasury which is being siphoned off before it ever reaches the Treasury in order to provide the Secretary of State for Energy with the resources for investment through BNOC. Not one additional penny will reach the Exchequer as a result of this measure. On the contrary, anything up to a billion and a half pounds will be taken away from the Exchequer and siphoned off into the National Oil Account. In the context of our present economic situation, that is a very strange proposal.
  Money which goes to the National Oil Account will not be available for normal Exchequer purposes—for example, for reducing the borrowing requirement, for repayment of debt, for investment in the social services or the Scottish and Welsh Development Agencies, or even, dare I mention it, for reductions in taxation. The Prime Minister said before the last General Election that the British people would see the results in either cheaper oil or lower taxation. In fact, they will see neither of those results—not a bit of it.
  But the position is worse than that. I hope that the Secretary of State for Energy and the Paymaster-General are listening. I believe that these arguments are desperately important. The new money that will go to the National Oil Account will replace private investment which would otherwise have taken place. That private money will be freed for investment elsewhere. For instance, if the Government take a 51 per cent. holding in the Brent Oil Field, Esso and Shell will have to find that much less investment in the North Sea and will have that much more to invest elsewhere in oil development, for example, in the United States Outer Continental Shelf or off South Africa or Spain. That may seem a rum result, but that will happen.
  But it goes further. Companies such as Esso and Shell have a high credit
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  rating on the American bond market. In fact, Esso has a triple A rating. At present Esso can borrow more cheaply than the British Government. So we shall lose out as a result of exchanging private investment for public investment. We shall get the worst of all worlds. We siphon off revenue from the Exchequer and force up the Exchequer's borrowing requirement. We use the money to replace private investment, much of which could be financed more cheaply than Exchequer borrowing. At the same time we massively increase public expenditure. We do so just when the Chancellor of the Exchequer has at last begun to realise that many of his problems are caused by an excess of public expenditure. We cannot even have the excuse of loss of jobs that applies in the Leyland case.
  These are the economics of bedlam. The Chancellor of the Exchequer is rightly worried about his £9 billion borrowing requirement this year yet his five-year forecast of public expenditure contains not one penny of the new public investment through BNOC. That investment might be as much as a billion and a half pounds a year. In fact, I do not expect that it will be as much as that because of lack of manpower. Not one penny of that investment is included in the five-year forecast. The Government could not put any figure on it, so they left it out.
  Apart from the debilitating effect of all this on the pace of development in the North Sea, the effect of the Bill will be to put a further millstone around the neck of future Chancellors in their efforts to manage the United Kingdom economy and to balance their budgets.
  All this must be changed. There must be proper financial disciplines established. Revenues earmarked for the Exchequer must go to the Exchequer and compete with other expenditure priorities. The BNOC must pay tax like any other oil company. The power of the Secretary of State to hypothecate revenue must be abolished. That must be done in a decent, open and democratic manner and not under the cloak of secrecy that the Bill provides.
  This Bill is a total disaster. Its objectives are muddled and obscure. The

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  institutions that it proposes are irrelevant or misconceived. The powers it confers on the Secretary of State are vast, wide ranging and abitrary. They offer little or no protection against dictatorial abuse. The financial provisions are an outrage. Huge revenues destined for the benefit of the Exchequer and for the benefit of the people will be siphoned off into wild Socialist schemes of nationalisation and expropriation. The retrospective, unilateral abrogation of agreements without compensation strikes yet again at the rule of law and may well put British assets overseas at risk.
  Finally, the huge new public expediture commitments, which go far beyond the borrowing requirement, are not only largely unnecessary but will do grave damage to our economy. In short, it is a devastatingly bad Bill and we shall vote against it.
  5.15 p.m.
  Mr. Peter Hardy: Yesterday I was given cause for sadness while reflecting on the political maturity of those occupying the Opposition benches. Yesterday morning, in Committee, I heard a Conservative Member say from the Front Bench in the Committee that the present Government were determined to bring pleasure to Hanoi and Moscow. Yesterday afternoon we heard a spokesman from the Opposition Dispatch Box condemn Government legislation. He suggested that it should be described as Communist. He was so extravagant in his comments that he tried to suggest that the only way to escape the tentacles of Marxism is to be cremated.
  When the right hon. Member for Wanstead and Woodford (Mr. Jenkin) described the Bill's proposals as Socialist I thought we were having a little less of the silly extravagance that we so often hear. Unfortunately the right hon. Gentleman's speech had two defects. First, it was very long and, secondly, it was slavishly devoted to detail. The right hon. Gentleman never lifted his eyes so that he could see the wood from the trees. His metaphors were largely taken from the Middle East. We had references to messes of pottage, harems and eunuchs. T1r, right hon. Gentleman's assessment of the world situation seems to suggest that
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  he understands the Middle East as pre-Mohammedan rather than post-OPEC. Sometimes one feels like commiserating with the Opposition rather than arguing with them.
  The right hon. Gentleman did the House less than justice. He seems to be so devoted to detail in a finicky sort of way that he was rehearsing his Committee speeches and looking for tiny matters to criticise. He drew attention to provisions in Clause 10, but in his eagerness he forgot to inform the House that whilst the corporation may not have to draw massive attention to its profit or less during a short-fall it will have to keep proper accounts and records to be laid before Parliament.
  If the right hon. Gentleman is saying that the provisions of the Bill have to be criticised because of the protective arrangements of a temporary character which my right hon. Friend may insist upon, he is also confessing that the serried ranks of the Opposition, with all the business experience which they proclaim, are unable to understand the balance sheets of public corporations.
  Mr. Patrick Jenkin: I do not know whether the hon. Gentleman has read Clause 10(2). I am sorry that he criticises me for talking about the Bill. That is what I understood Second Reading was all about. Perhaps he will read the last four lines of Clause 10(2). They read that
  "a notice … may provide that the statement of accounts to be prepared by the Corporation … shall not be required to show the Corporation's profit or loss."
  That seems to make it clear that the profit and loss can be concealed. It is no use my hon. Friends being able to read a balance sheet if the figures are not there to be read. The figures will be hidden.
  Mr. Hardy: The right hon. Gentleman does his hon. Friends much less than justice. The accounts will have to be presented to Parliament. They will have to be subject to parliamentary scrutiny. If the right hon. Gentleman's hon. Friends cannot understand the balance sheet of a public corporation they are not fit to hold the company directorships which they hold in such abundance.
  Mr. John Davies: Is the hon. Gentleman really saying that the failure to understand the total profit and loss and

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  reserve position of a banking institution, which is by statute entitled to reserve part of the facts so far as its public declarations are concerned, demonstrates the inadequate capacity of our business acumen? I should have thought that was wrong. What is proposed in the Bill is precisely analogous to the British National Oil Corporation.
  Mr. Hardy: I am delighted that the right hon. Gentleman is bringing me to my next point. Since the Industry Bill has been in Standing Committee we have been receiving repeated complaints that the Government are seeking to insist upon the disclosure of information. Many of us feel that those complaints are utterly overstated. That is illustrated by the attitude taken by my right hon. Friend. We know that the people who will be employed in auditing the accounts of the board will be properly qualified and reputable professional people.
  The right hon. Member for Wanstead and Woodford, in seeking to condemn the Bill, did not use the word "Communist", but certainly suggested that it was a Bill of an extreme Socialistic character. He overlooked a number of points. His search for detail did not lead him to the thoroughness that would have been appropriate in such an undertaking.
  For example, the duration of existing licences has not altered and that will provide no impediment to private sector progress. While PRT and certain stamp duties may not be payable, the proper accounts will have to be kept, and it will be obvious whether the corporation is acting in a competitive and financially healthy way. It would be ludicrous, and would lead to excessive expenditure to have an increase in bureaucracy merely to enable the corporation to pay PRT to the Treasury as a notional bookkeeping exercise.
  The right hon. Gentleman seemed to overlook the fact that the oil account is a useful way of being able to show to the nation how its assets are being maintained. If the right hon. Gentleman is to be believed, his approach seemed to suggest that the Secretary of State for Energy will be keeping money from the North Sea in an old sock in Chesterfield. There is little likelihood that that will be
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  the case—and I am not suggesting that the crime rate in Chesterfield is any higher than it is in Opposition constituencies. That is not the way in which the system should operate but it is right that we should keep the accounts in the way proposed by my right hon. Friend so that the nation can see how much more effective are the present Government's policies in regard to the North Sea than were the indolent policies pursued by the Conservative Government in the wasted years 1970–74.
  I was particularly pleased that my right hon. Friend took a sensible attitude over pipelines. Far from any Communistic or totalitarian approach the present proposals will be most helpful because they will prevent monopolistic and restrictive practices by those who own and control pipelines around our shores. Perhaps even more important, it gives my right hon. Friend the capacity to act in a helpful way in regard to refinery programmes. He can make sure that the refinery programme will encourage the promotion of a viable petrochemical industry in Great Britain. The right hon. Gentleman did not comment on the fact that the petrochemical industry could be developed within the public and private sector, as an example of the mixed economy which could also be maintained off our shores.
  I am pleased to welcome the Bill and to emphasise that it is not a revolutionary concept. The right hon. Gentleman did not refer to ENI in Italy, Erap in France, DSM in the Netherlands, the Algerian oil company, or to Statoil in Norway. Statoil has been operating for three years —and it is a great pity that the BNOC was not established three years ago.
  It is true we may have missed some of the pitfalls experienced by a large number of other countries with national corporations, but many of those pitfalls have been due to lack of experience or too little control, the sort of control which my right hon. Friend will exercise over his child in its early and formative years. Some of these pitfalls have come about because of involvement in overseas divisions. The West German corporation went astray in its investments in Libya. I hope that that kind of mistake will not occur in BNOC. I shoulld emphasise that the Statoil concern in Norway has exercised a stimulating effect on the Norwegian economy. One hopes that the

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  British National Oil Corporation will exercise a similar effect in this country.
  I was pleased to see—some of my hon. Friends will not agree with me—that my right hon. Friend did not include British Petroleum as one of the organisations to be taken under the umbrella of the corporation. I believe that my right hon. Friend is right to ensure that BP remains independent, because its rôle as an international company could otherwise be embarrassed, if it were brought into the tight State control involved in an internal offshore oil division. I hope that BP will continue to exercise its world rôle to the benefit of this country and the many other regions in which it operates.
  Given that sensible approach, I believe that the criticism offered by the right hon. Gentleman was tedious in its adherence to detail. Unfortunately, there are Opposition Members who are opposed to any intervention, whether by this means, or by the investment bank approach, or by the entrepreneurial approach urged by Opposition Members, although the right hon. Gentleman did not say which one he would choose, That is a pity, because it is up to an Opposition to offer concrete alternative proposals. Unfortunately, the right hon. Gentleman floated all sorts of ideas and failed to commit himself to any one of them. The Opposition should be honest enough to say whether they oppose this arrangement or any arrangement in which the nation's interest is superimposed on the offshore industry around Britain.
  It is right that my right hon. Friend will be careful to ensure that experience in the private sector is not lost. I do not think it will be lost. My right hon. Friend is right to ensure that there will be vigour and vision in our policy. Certainly, inadequate vigour and little vision were displayed by the Opposition in the years in which they were in office, when so much advance could have been made and so much protection brought into the situation to the benefit of the British people.
  There have been a number of minor anxieties, and I should like to ask the Minister who is to reply to comment on one or two of these points. I do
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  not object to the takeover by BNOC of the National Coal Board's oil assets. The decision some years ago by a previous Labour Government to ensure public involvement was right, it was the correct page on which to start the story; but we know a little more now and are writing a new chapter, and BNOC should be in charge of the nation's oil resources. However, I am a little anxious about the British Gas Council's oil reserves which, it is suggested, could be left out of consideration by BNOC. I hope that my hon. Friend will be able to comment on that matter.
  A further matter which needs to be cleared up relates to the legislation on health and safety at work. Happily, that legislation is now assisting land-based industry, but, unfortunately, it does not apply to offshore oil employees. I should like my hon. Friend to look at that matter. Perhaps he will give some reason why that legislation has been omitted from the provisions of this Bill.
  I feel that the value of the Bill to the nation will be enormous. At the same time, there is a real danger of looking at the trees rather than at the wood. That was clear from the right hon. Gentleman's speech. We are in danger of allowing people to believe that, by some miracle, offshore oil will ultimately mean great affluence for the British people—indeed, unlimited affluence. Anybody who contributes to that idea is acting against the national interest. Offshore oil presents for Britain a breathing space. It provides us with a substantial opportunity and give us the capacity to face the problems of our trade deficits and our international imbalance and the indebtedness which we have incurred as a result of the weakness and misfortune of the Tory Party.
  The Bill gives an opportunity to Wales, to Scotland and to England. As Scottish and Welsh oil is exhausted, we hope that we shall find oil off the English shores. That will allow us once more to subsidise the Scottish people as we have done since the days of Culloden. I am sorry at this stage of my remarks to see that the hon. Member for Dundee, East (Mr. Wilson) is the only member of the Scottish National Party present. I am sorry that he is on his own and neglected by his hon. Friends. I hope that in due course

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  the proceeds from English oil will once more enable us to help the Scottish people.
  Mr. Gordon Wilson (Dundee,East): The hon. Gentleman must have known that that point was sure to provoke me into action. Does he not agree with the point I have made before, that oil resources are likely to be found off the southern coast of England? Is it not fair that Scotland should rely upon the oil resources off its coast, just as England is entitled to rely upon resources off the coast of England? What would be wrong with that?
  Mr. Hardy: I did not give way to the hon. Gentleman to indulge in an argument with him. Since all his hon. Friends were absent I thought it right that he should have the opportunity to identify himself so that he could present his alibi to the Scottish people.
  The economic problem is vast. Our trading indebtedness is serious. The offshore oil will allow us, temporarily at least, to take ourselves out of pawn. It gives us a breathing space. I am delighted with the Bill, which will strengthen and enhance that breathing space. It will help to promote Britain's new industrial capacity, which must be developed. I am delighted that my right hon. Friend is not seeking to serve the needs of the AAA companies which may be able to obtain money cheaper than the Government. Those companies will be able to obtain that cheap money since great profits will leave Britain. Therefore, people abroad are prepared to invest their money so that they can share in the profits, of which we seek to retain a large proportion in Britian. This vehicle will go a great deal of the way towards giving us that capacity. I commend the Bill. It is a Socialist Bill, which seems to me to be of service to Britain. I commend it to the House.
  5.33 p.m.
  Mr. John Davies: The hon. Member for Rother Valley (Mr. Hardy) echoed what was said by the Secretary of State. They sought to condemn the former Conservative Government for having failed to take action in a variety of ways, while the Secretary of State seeks to give birth to this new State hippopotamus. It would have been ridiculous in 1971 to do other than issue licences with a view to the earliest pos-
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  sible prospecting of the North Sea. Anyone who imagines that the state of knowledge in 1971 was adequate to foresee the effective developments in the North Sea is mistaken. That should be fully realised. These charges are ridiculous beyond words. They demonstrate the fact that the Secretary of State understands very little of the nature of this industry.
  I find that many industrialists complain that Ministers without previous knowledge of their activities are brought into Departments and are expected almost overnight, to master these extremely intricate problems. I contend that generally Ministers are very good at doing that. However, today's performance by the Secretary of State undermines my argument.
  Mr. Varley: The right hon. Gentleman was responsible for giving away licences like detergent coupons. It was not I who first brought that to light. That was done by the Public Accounts Committee. the majority of whose members belonged to the Conservative Party.
  Mr. Davies: That makes no difference. The state of knowledge at the time was totally inadequate to develop a different and more constraining form of licence. It is ridiculous in the aftermath to try to pretend otherwise.
  Dr. Phipps: Does not the right hon. Gentleman accept that depletion practices and depletion controls are a standard part of the legislation produced in respect of a good number of countries throughout the world who have no oil production but who are merely trying to encourage exploration? I can think of at least three countries, where my own company is involved, where such controls have been incorporated in legislation for the past six years.
  Mr. Davies: My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) touched on that point. Oil companies having licences to prospect in the North Sea made it abundantly clear that some form of control of production would be totally within their understanding of the reasonable activities of Government when appropriate. The point as to when they are appropriate is important in a country which foresees production, because it should know the quantity with

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  which it will have to cope. It is idle to make theoretical provisions for such matters. It is important to make practical provisions.
  I must declare an interest. Although I am no longer a member of the oil industry, that is where I spent the greater part of my industrial life. That declaration of interest goes a little further. For a considerable number of years I worked in a company, 51 per cent. of whose partner firm was owned by the State, whereas 49 per cent. of the company which I represented was similarly owned. I hope that I have some practical experience of what State ownership is like. I gained experience at that time because the form of the company was the inverse of what the Secretary of State is now proposing, since ENI, the company involved, in Italy, was an enormous power which dominated the Government. That is the opposite of what the Secretary of State wishes—which is a tributary concern which he shall dominate.
  My experience of the constraints and privileges which such a mixed form of company can bring led me to the conclusion that the system of such associations was basically inept because the uncertainties of the needs of the State, which were extraneous from those of the industry it sought to operate, acted constantly as an element of confusion. I fear that the same will occur in this case. It will be much accentuated because of the almost ridiculous level of power which the Secretary of State seeks to arrogate to himself.
  Of the concerns of a State character which have been developed in one country after another, I have never known one which was able to develop a valid international capacity. It is interesting that not one such company—even ENI, which was the nearest to doing so—was able to develop an effective international capacity.
  We are dealing with the oil industry, which is the most international of all industries. The principle of the multinational company is greatly criticised these days. Everybody can earn a cheap round of applause at the expense of the multinationals. The only time when multinational companies are praised is when they cause investments to be made,
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  offer jobs, pay taxes, earn profits, or invest in developing countries. They are always condemned until the time when they appear in developing countries. At that moment, they are the most beneficent of arrivals. It is slightly misguided to persist in this terrible criticism of multinational companies, which on the whole contribute to the economies of this and other countries.
  The oil industry is perhaps the prototype of the multinational concern, and for very good reasons. It deals with an extremely complex international situation. It deals with a multiplicity of different qualities and locations of crude oil, an extraordinary variety of tanker routes, great differentials, the location of refining capacities and the unending variety of demands of the market, the quality of products, the nature of the products and the constraints of the pricing systems which are developed.
  As a result, by its very nature, the oil industry has to develop an international aspect to the control and operation of its problems. It is interesting to reflect that it was a British company, British Petroleum, which was the great pioneer in devising integral programmes for the worldwide operation of its extraordinary complex of activities in order best to advantage its consumers.
  It is a dangerous proposition to imagine that in real terms an organisation—even a perfectly devised one of the kind that the Secretary of State seeks—can contribute validly to the efficacy of this industry. My experience is that it is not so. It serves nationalistic purposes at times. It serves other causes in any State which creates it. But I have never noticed such an organisation contributing to the efficiency of the industry, to the cheapness and quality of its products and to its service to its consumers. Therefore, I must dissociate myself from and condemn the purposes of this Bill, which is designed to establish just such an organisation in this country.
  If we had had three or four years ago a British National Oil Corporation of the kind that the Secretary of State wants today, can anyone believe that it would have contributed to developments in the North Sea? Would it have produced a new fund of geological, technical or engineering skills? I wonder. It would surprise me to know from where such

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  an organisation would get its fund of knowledge. Perhaps it would come from the Secretary of State himself, but I rather doubt it. In my view, it would have contributed nothing.
  In all his condemnation of the past, what does the Secretary of State believe that such an organisation would have brought to our affairs? I register the thought that it would have brought literally nothing. I register the further thought that in the future, as envisaged by the Secretary of State, it will still bring nothing. It will prove continually to be an element of deterrent and of retrogression and not an element in the development of our industry. The only possible valid contribution that the right hon. Gentleman can find in it is a political one.
  My right hon. Friend the Member for Wanstead and Woodford dealt fully with the financial considerations involved in the Bill, and apparently the Chancellor of the Duchy of Lancaster takes the view that, whatever may be the financial advantages in this great find, for the British people they should be ensured by other means. My right hon. Friend was right to point out that the requirement for the control of production and depletion was a matter which by any standards could be dealt without any BNOC. There is no evidence to support the belief that the BNOC will play any part in this operation.
  I am sorry to discover that we are now involved in taking steps which unfortunately will cause still greater confusion in all these activities. That would not matter so much were it not for the fact that the proper development and administration of this enterprise is crucial to our affairs. I am very much afraid that the results of what is now proposed, coupled with the uncertainties which unfortunately have arisen in the past 12 months, will cost us dear in the years to come.
  There is no question of making modest amendments to these proposals. In my view, they are intrinsically bad and should be rejected.
  5.45 p.m.
  Mr. Fred Evans: Like my hon. Friend the Member for Rother Valley (Mr. Hardy), I found, on returning to the House after a long absence, the
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  debates of both yesterday and today altogether fascinating. Yesterday, the Opposition Front Bench spokesman painted lurid, apocalyptic pictures of what would happen if the community dared take control of some of its land. He had us fleeing from the Chamber terrified for the next decade of walking past cemeteries in case we heard the lugubrious groans of those who had nowhere to go because the State had stolen their graveyards.
  I cannot pay tribute to the skill of the right hon. Member for Wanstead and Woodford (Mr. Jenkin) in his use of metaphors, but his powers of alliteration are remarkable. At one stage he described this Bill as a myopic morass of a mish-mash, whatever that may be. Yesterday's descriptions were applied to the Bill before the House solely because the community was waking up to the fact that it should share in its national assets. Today, we have a Bill which has been described as catastrophic, disastrous, shocking and a mish-mash. The reason once again is that the assets of the nation are being considered as a legitimate function of operation for those governing on behalf of the nation.
  As one who comes from a mining area, I think that it is in order for me to remind the House of the experience which brought a great industry to its knees and which would have resulted in its death without the intervention of the State. I ask whether it is safe to leave to the same type of economic philosophy the exploitation of this great find in the North Sea, and to run the risk of seeing our oil industry become a replica of what happened to the mining industry until the State stepped in and rescued it.
  My right hon. Friend the Secretary of State is right to regard this as one of the most significant discoveries since the Industrial Revolution, since the discovery of how to harness steam, and since the growth of the coal industry. Like my hon. Friend the Member for Rother Valley, however, I do not want to overestimate the importance of the find and to dangle before our people the myth—and I regard it as such—that we shall be transformed from a struggling economy which has seen great travail ever since the First World War into a country suddenly blessed by a thousand fairy godmothers. It will take very hard work and much constructive thinking to

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  get our country on to something like an even keel once more.
  Having said that, I agree that in a modern economy the key which unlocks the door is energy. In a world which is increasingly short of energy, Britain has been given several significant blessings. We have this enormously important discovery of oil round our coasts. Almost synchronised with it, we have explorations for coal fields which have discovered areas such as the vast field in Selby. We have natural gas. We have as yet paid too little attention to the possibilities of harnessing the power of our tides and estuaries. I hope that we shall at least begin to explore them. I regard our energy situation as a God-sent bridge over a gap when, for the most part, the world is becoming increasingly short of energy and when we are seeking our way to the exploitation of nuclear energy, and possibly, later, that of solar energy. That is why my right hon. Friend's remarks about depletion are so important.
  Again, I pose the question arising from the history of the past: can we safely leave the rate of production and exploita-to laissez-faire economics?
  We have seen what happened in too many other industries. There must be proper, fairly detailed control to ensure that the rate of production and of depletion are carefully guarded. I am not taken into the confidence of the Government. Therefore, I do not know whether any objective assessment has been made of the likely period, at fairly advanced rates of extraction, we can expect our present reserves to last. Because of the difficulties of assessment in any extractive industry—cost, rates of production, extraction, and so on—there must be a wide margin of calculation.
  We do not know how much oil we shall find off the Welsh coast or off the South-West coast of England in the Irish Sea. Therefore, we cannot prognosticate possible likely finds with any reasonable degree of certainty.
  I suggest that if we have unfettered extraction in a world which is increasingly short of energy, the pressures will build up so much that we are likely to see a 40-year potential, without a proper conservation policy, reduced to extraction lasting for only 10 years. That happened in the past in some of our richest
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  coal mines, and I suggest that it is likely to happen again if we do not take proper steps to safeguard the situation.
  I hope that a reasonable argument can be put forward for participation by the people of Britain in their own future and that there will be proper and reasonable control over rates of production and of depletion.
  Wales has been promised an agency. Scotland already has one. Through that agency the benefits which will accrue from Celtic Sea oil, when it is found—we know that it will be found; it is largely a question of when it can be fully developed—will be used for the economy of that region. Therefore, in an area which has been traditionally underprivileged regarding incomes and the degree of industry, apart from its two basic industries, we must diversify to try to bring some kind of reasonable, not necessarily affluent, standard of living to the people. We therefore welcome the assurances that have been given by my right hon. Friend.
  I want to make my remarks as brief as possible. I have one great fear which I suspect is shared by many people who have a little knowledge of the situation. It would probably be shared by a great many more people if they had been allowed, through the mass media or other means, to acquire that knowledge. I am afraid that the energy situation can create a massive shift of economic power from the continent of Europe to the British Isles. Therefore, I have serious misgivings about our entry into the EEC and its impact on our energy resources and policy. This is not outside the scope of the Bill. I hope that the Secretary of State, in winding up the debate, will ensure that some answers are given.
  If world pressure on energy is increasing, how much more will that pressure be on a limited number of countries? There has been only a fumbling towards any kind of energy policy. If we are to derive maximum benefit out of North Sea oil, out of our energy situation in toto, we must not behave like a man who at cards has a grand slam in his hand and then grouses because he does not know which card to lead. We must use the situation to secure for ourselves the most favourable terms. If we operate the Bill in the way in which I think it is the earnest intention of the Secretary

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  of State to operate it, the people of Britain can not only share intelligently in the exploitation of their own national assets but ensure a significant contribution to our general energy situation. I welcome the Bill.
  5.57 p.m.
  Mr. J. Grimond: In the Secretary of State's otherwise lucid speech explaining the Bill, I thought there was some confusion between the will of God and the propaganda of the Labour Party at the General Election. It may be that God gave the sea to the people, but he did not necessarily give it to bureaucrats any more than he is insisting that farmers should be civil servants.
  The hon. Member for Caerphilly (Mr. Evans), in an interesting speech, said that the people are entitled to share in the benefit to be derived from North Sea oil. I agree. But the issue before the House is whether that can best be done through taxation or the kind of measure that is now before us.
  I wonder what the Chancellor of the Exchequer thinks about the Bill. By far the most urgent and dangerous threat facing this country is inflation. I should think that this week we have added considerably to inflationary pressures in this country by increasing still further the top hamper which has to be carried by our productive forces.
  We on the Liberal bench, and no doubt the Scottish Nationalists behind me, are glad that the headquarters of the BNOC are to be in Glasgow. Nevertheless, I consider the Bill as damaging to Scotland. Of course, it makes it clear that it is United Kingdom oil. I do not protest about that. But there can be no question of its being Scottish oil. This is another example of Scottish industry being tightly tied into the United Kingdom framework of nationalisation before we get an assembly in Edinburgh which can at least discuss what we want to do about our own economic affairs.
  The first question that I want to ask relates to the timing of the Bill. Some years ago I pressed for steps to be taken by the then Conservative Government for better control over North Sea oil and all that went with it. I take the point made by the right hon. Member for Knutsford
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  (Mr. Davies) that when licences were first issued in 1971, it was difficult, if not impossible, to see what the future might be, but by 1972 and 1973 it was apparent to anyone with any common sense, let alone whether he knew anything about the industry, that it would create a new situation and that, quite apart from pipelines in the sea, licences and conservation, there was also the question of the important alterations needed in our planning procedures. I was not the only person who thought that. That view was held by Shetland and Orkney County Councils which passed Bills through the House, but now, years later the pipeline to Flotta is almost at Flotta.
  What is the situation now? The Secretary of State can give a direction to the Occidental Oil Company to do something which for good reason it may feel disinclined to do, and if it does not do it, he can withdraw the licence for further operations. It is a serious position, because the whole situation is now thrown into uncertainty.
  I do not believe that we can afford more nationalisation of this type. We have learned the dangers of creating enormous conglomerates of one sort or another. It was the Secretary of State for Industry himself who pressed the British motor industry into a pattern which has proved so disastrous, by amalgamating the efficient with the inefficient into British Leyland.
  From where do we get the staff? Where are these experts in oil who are not already employed in the oil industry? Who will the 800 people in Glasgow be? What will they contribute to that increase in productivity in this country which is so essential, as is the need not only to invest but to use our current investment better? Where will the money come from? The answer is that it will come from the Arabs, because there is already a £9 billion borrowing requirement on the Government's shoulder.
  I speak as no expert in this industry, but it is a difficult one. Let me give two examples from my experience in my constituency. One oil company tried from the middle of November to the middle of January to do something to a rig. During that period it had only two working days, and it costs the company £40,000 a day to keep its equipment at the ready.

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  The cost of building platforms has risen from £12 million to £85 million.
  Consumption of oil is down 40 per cent. on the estimates. So far from this country needing more refining capacity, it has unused capacity. All the prognostications about this industry are highly speculative and require tremendous expertise, and they are not likely to be undertaken by a new organisation in Glasgow.
  I sympathise with the views of the hon. Member for Caerphilly about conservation, and so on, but I suspect that before long the Government may be pressing for an increase in the rate of extraction in the North Sea. At the moment the rate of explorations is falling, as is the consumption of oil, and no one can tell what will happen in the North Sea fields for more than a few years ahead. The idea that by planning now we shall be able to make certain predictions about what will happen is extremely optimistic. The price of oil in the Middle East is 17 cents to $1 a barrel, whereas in the North Sea it is well over $2. In this situation we are at the mercy of the Middle East. If the countries there bring down their price, the whole calculation about the North Sea is set at nought.
  Our current problem is that we are creating too much government with too little ability. I think that nationalisation should be brought back under the control of Parliament. That is the opposite of the Bill, which removes the control of Parliament over nationalisation. If it is impossible to do what I have said, corporations should be subject to economic criteria.
  There is no doubt that this is a civil servants' Bill. It has two extraordinary provisions. I regard this not as a revolutionary Bill, but as a bureaucratic one. I doubt whether normally west of the Communist countries there is a provision in a public Bill which says that the profit and loss account may be concealed. Further, the Bill appoints commissars. The civil servants on this board are in a similar position to commissars in the Russian system. They are there as Ministers' narks to keep an eye on what the management does.
  Mr. Varley: I attempted to interrupt the right hon. Member for Knutsford (Mr. Davies) when he made this point in an
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  intervention during the speech of my hon. Friend the Member for Rother Valley (Mr. Hardy). If the real complaint of the Opposition is that this is concealing —though of course it is not—I should point out that the provisions of Clause 10(2) are the same as those in the Gas Corporation Act 1972, and they were put in that measure by the right hon. Member for Knutsford when he was Secretary of State.
  Mr. Grimond: I have enabled the Minister to make a point against the right hon. Member for Knutsford, so my speech has not been wasted but I do not feel that I need necessarily reply on the right hon. Gentleman's behalf. I absolve myself from any responsibility for any gas Bill. It is an extraordinary provision that two civil servants are appointed, one of whom, unless expressly excluded by the Minister, must be present at all meetings of the management. The chief executive will be hampered in every direction. Is this the way to set up a viable industry of any sort?
  I am interested in the history of British Petroleum. The Government had the right to appoint two directors to that company, but they allowed one post to remain vacant for 18 months. So important do they regard the representation of the national interest in a nationalised industry that they did not bother to fill the vacancy for 18 months. I find it difficult to see how the Government can argue that they must have a new corporation when they do not bother to use the machinery that they have.
  The question of compensation and the position of the oil companies must be further examined in Committee.
  What sort of people will be appointed to this corporation? Will they be representatives of the areas concerned? Will they be experts in industry, or a mixture of both? Or will they be trade unionists? Who will they be? There are some indications in the Bill, but we shall need to know more about that.
  The powers in the Bill are nearly out of this world. The Secretary of State can do almost anything, or nothing. I suspect he could set up a motor car industry if he wanted to, on the grounds that this was related to petroleum. For the House to give him a white sheet, as it may be, or a black cloak, seems extremely risky.

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  Further, the Secretary of State can demand every conceivable form of information. It will mean that companies will have to supply immense quantities of paper and this corporation will be able to go in for the most risky undertakings. It will be able to dabble in tankers. Burmah Oil dabbled in tankers, and we know what happened to that organisation, and its expertise is much greater than that of BNOC. Of course it is the civil servants who will make the decisions.
  Mr. Varley: It came to the Government.
  Mr. Grimond: No doubt it did, and so will the BNOC for money.
  It is said that certain things are necessary, for instance, to get the oil companies to combine. We did this in Shetland without a Bill of this kind and without the bureaucrats. There are 17 companies combining at Sullom Voe. The Government should get hold of Mr. Clark, the chief executive of the county council. He gets the oil companies to feed out his hand without 800 civil servants in a building in Glasgow.
  The oil companies are interested in getting oil. I do not say that they are not interested in profits, but they are co-operative and they are interested in making a success of this extremely difficult and expensive operation in the North Sea.
  Most of the profits of the oil industry—I speak subject to correction by the right hon. Member for Knutsford—are made downstream. Will this corporation go into that element of the operation or not? [HON. MEMBERS: "Yes."] I know that it can, but do we know whether it will? If it does, I see no reason why it should he exempted from tax.
  I have a very interesting letter, for which I should like to thank the Lord Advocate, about rights in the sea, which he agreed are both complicated and important. What will be the effect of the Bill on the rights of ordinary people in the North Sea and on the division of the North Sea between England and Scotland? The Bill seems merely to make the matter more complicated. I beg the Government to consult the Lord Advocate on this matter, which is of great impor-
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  tance to fishermen and others in my constituency.
  There is a good deal of detail in the Bill which can be examined at length in Committee. I should like to raise only two points, which are relevant to the Acts promoted by my local authority. First, there is the obligation to follow the methods and practice customarily used in good oilfield practices. One can see the point of that, but in Shetland it is important that the oil companies and others should be able, for instance, to experiment with new ways of storing oil underground. I trust that the Bill will not prevent such developments.
  Schedule 4(6)(c) covers mineral exploitation. Should there not be a similar provision designed to cover the rights of fishermen, which in my part of the world are just as important as minerals? It is one thing for the Government to take a share in landward operations concerned with storage and the handling of oil and quite another for them to take a share in retailing the oil or getting it from the bottom of the sea.
  We are now late in the parliamentary year. I wholly agree, as I have said for many years, that there is a need for fresh controls and so forth in connection with the oil industry and the planning Acts. I am not wholly unsympathetic, therefore, to the purpose of the Bill, but it is far too big, far too late, far too vague and far too bureaucratic. It is extremely unlikely that there will be time for proper parliamentary consideration of the mass of detail in this Bill, let alone the others that we have considered this week, by the end of July.
  Why do not the Government withdraw it and see how much they can do under existing legislation? They can do a great deal under the licensing system, under measures they have already passed and by means of taxation. If, at the end of the day, they find that there is a legitimate gap in the control of oil, let them then come to the House again. But this Bill will do nothing but hold up the industry and damage the economy.
  6.13 p.m.
  Dr. Colin Phipps: I must begin as usual by declaring my interest in oil matters, in which connection I would refer right hon. and hon. Members to previous oil debates.

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  I am particularly pleased today that the Labour benches are so populous. On the last occasion on which I spoke on these matters, on the petroleum revenue tax, I rose in splendid isolation. It is an illustration of the enthusiasm in the House for energy matters that there is today such a splendid attendance on both sides. Seriously, attendance at energy debates on both sides is deplorable when one considers that this subject is one of the most important things which we have considered this week and in many other weeks.
  I particularly welcome my colleagues on this side because they can give me support in those matters by which I tend to be led astray. The synthetic indignation of Conservative Members about many aspects of Bills like this seduces me occasionally into the party fray. I am glad that my colleagues can take that duty on their shoulders, because I want to concentrate on the more technical aspects of the Bill.
  I shall come later to the subject of the BNOC, which concerns me particularly, but I should like to begin with Part II, and particularly Schedules 2 and 3, which incorporate what I take to be an accumulation of experience by the Department of Energy over the last two or three years. Many of the additions that, to present controls, have been put into the Bill are important and necessary, and much of what has been said, particularly by the right hon. Member for Wanstead and Woodford (Mr. Jenkin), about the nature of the controls is misplaced. Many of the controls are extremely necessary. I believe that it has been the direct experience of the Department of Energy, not just under this Government but under the previous Conservative Government—The Government, after all, who stopped the transfer of licences and themselves became aware of various malpractices under existing legislation—That serious changes in our controls were required. Schedule 2 brings many of these into effect.
  I cannot accept the apocalyptic statements of the right hon. Member for Wan-stead and Woodford, particularly his Draconian interpretation of the nature of the controls. It does not follow that the Secretary of State will use his controls to the full detriment always of the oil com-
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  panies. Indeed, as I see them, the controls will exist for the benefit both of the companies and of the State. We need such controls. I should like to consider one or two of them in detail, because I believe that the Department needs to pay particular attention to the way some of them are operating.
  I begin with the question of the transfer of licences. There has been an effective moratorium on the transfer of licences ever since, I think, November 1973, when the previous Government stopped future transfers. They were properly stopped, in my opinion, because there was developing a market in licences and in participations which arose basically from the 1972 allocations. Small firms and sometimes even individuals took a licence, bartered it and pocketed the money on their way back to Houston or Calgary. That was recognised as an improper practice and it was properly stopped, but we should not lose sight of the fact that farm-ins and farm-outs are part of the lifeblood of the oil industry. They represent one of the ways in which the industry has always operated. It would be wrong to prevent that type of activity, certainly if it were within the control of the Department.
  I should like to make a particular plea for some of the smaller British companies. In the period, particularly 1972, when there was the last round of licences given out, a number of smaller British companies got licences which they could fund at the time. However, exploration costs have soared since then and many smaller companies are now finding that the money which could have drilled three wells in 1972 can drill only one and a quarter today. So they have to seek farm-ins to be able to fulfil their commitments. It would be a pity if they could not fulfil their commitments for want of being able to bring in reputable partners. We should also appreciate that in some cases it is to this country's benefit when farm-ins—transfers—are arranged internationally. On occasion one may exchange a participation in a licence in the United Kingdom for a participation in German or Dutch waters. These arrangements are not necessarily detrimental to the United Kingdom, and it would be a great pity if they were stopped.
  Another small point on Schedule 2 is the power taken by the Department to

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  publish data after five years. So far as I know, this is a completely new power, one of which I have always been much in favour. I should even like to argue that the period of five years should be shortened. In Canada, for instance, it is one year. The availability of data to the industry at large is one of the major influences in increasing and giving impetus to exploration. People can then make the kind of studies which enable them to spot where the good blocks and prospects are.
  The arguments against this suggestion always come from the major companies which want to keep the data to themselves, which do not want them spread about and which want the advantage of knowing where to drill. For the development of the United Kingdom industry, five years is too long. I notice that this is merely a discretionary power. The Bill does not specify that data will be made public after five years, but I hope that the Minister will ensure that it is. Indeed, I should like to see that period shortened.
  On the control of depletion rates which is dealt with in Schedule 2, I have heard expressions of disquiet from a number of oil companies. There is no country which does not control its depletion rates. In North America there are the Railroad Commission in Texas and the Alberta Commission. Depletion rates always have been controlled in the national interest. I think, for example, of proration in Texas. Control over depletion rates is esentially a North American invention. It started in North America long before it was introduced to the Middle East or anywhere else.
  The companies are concerned about the high cost of development in the North Sea, and this concern has been recognised by my right hon. Friend. These high costs arise not merely because of the environment but because of the element of risk inherent in deciding whether to proceed on what is normally the bare minimum of data.
  If one were exploring in shallow waters or on land, it would be possible to drill numerous wells to outline a discovery. Those wells could then be used for production. This is not possible in the North Sea. An exploration well in the North Sea cannot normally be used for production. II becomes an abortive
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  expense. Production wells have to be put on platforms, and naturally there is a tendency to try to establish the reserve at the earliest posible stage, from the lowest possible number of wells, before deciding to invest in the platform.
  The companies have a genuine reason for being disturbed by the thought that this large capital expenditure may not give the return that it should, because of powers vested in the Government. What is required is not a diminution of the Government's powers but a statement from the Minister that he fully recognises the importance of this situation, and that that is certainly not the intention of the Bill.
  Part V contains one of the most important provisions, which gives the Government the power to make loans and to guarantee loans to oil companies that are developing discoveries in the North Sea. I was astonished when the hon. Member for Honiton (Mr. Emery) said that finding money for a development was easy. I do not know whether he has spoken to many British banks recently, but I have. Many of them, including the merchant banks, say that they are not used to non-recourse borrowing in the way that banks in, for instance, Texas are. They are unwilling to take these risks and to raise these sums of money.
  What is more important is that when banks say that they will raise these sums they want participation. They want it in the form of a royalty if they are to lend money on a non-recourse basis. They want exactly what my right hon. Friend is asking for on behalf of the British National Oil Corporation.
  Mr. Emery: I was saying that the figures that the Secretary of State quoted to the House were misleading, because once exploration, which is far less costly than exploitation, has resulted in the discovery of oil it is simpler to raise money. I am a banker and I speak from first hand experience. I do not have to talk to anyone else. To raise money for the North Sea is now six times more difficult than it was a year ago, because of the threat of the Bill.
  Dr. Phipps: I am grateful to the hon. Gentleman. Perhaps he could arrange for

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  me to visit him sometime on behalf of some of the companies I represent. I assure him that for many of the smaller British companies this aspect of the Bill is the most welcome. It has taken away one of our greatest difficulties, namely, that because we did not possess a balance sheet which could justify borrowing these amounts we could not borrow them against the asset of the discovery.
  Mr. Tim Renton: Does not the hon. Gentleman agree, from the depths of his experience in the oil industry, that recently British Petroleum merited only a double A rating from a company in the United States when raising an American loan? One of the reasons given was the possibility of a British Government majority holding in British Petroleum. The company was told that if the threat of a British Government majority holding were removed it would receive a triple A rating.
  Dr. Phipps: I am not responsible for threats which may be held over this country by the United States. I am concerned to tell the House how many of the smaller British companies are for the first time able to go ahead confidently with the development of their fields. The banks that I have spoken to since publication of the Bill welcome the guarantees that the Government are prepared to give and the size of those guarantees.
  The main provision of the Bill concerns the British National Oil Corporation. I declare an interest, because in 1967 I was co-author of a document which I believe sent shudders down the spines of all the international oil companies. The document, entitled "North Sea Gas", proposed the formation of a National Hydrocarbon Corporation. I have always had a sneaking preference for that title—rather than British National Oil Corporation. However, I am prepared to accept it in whichever guise it comes. We followed that document with another, called "The National Hydrocarbon Corporation", in which we set out the form of the corporation. At that time we felt that the arguments for having a National Hydrocarbon Corporation were strong.
  Hon. Members on both sides of the House have discussed the principle of nationalisation or national participation,
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  not as it applies to oil but generally. I do not wish to spend time discussing whether the principle of national participation in any industry is valid. If one accepts, as Labour Members do, that it is a proper function of the nation, there is surely no better case than that of oil for national participation. Oil is one of the major sources of our future prosperity. If there is a case for nationalisation or national participation, it is certainly in oil.
  Mr. Tim Renton rose—
  Dr. Phipps: I want to get on. If the hon. Gentleman wishes to raise a point on nationalisation, I do not wish to discuss it. I want to deal with the positive effects.
  Mr. Renton: I want to deal with the specific point that the hon. Member has just made. His report stated that
  "Nationalisation would therefore be likely to delay the exploitation of the new wealth of energy which lies under the North Sea."
  Has he changed his mind?
  Dr. Phipps: If the hon. Gentleman reads the document in full, he will discover that our conclusion was that participation by the National Hydrocarbon Corporation with the industry was the best possible result. I am delighted to say that my right hon. Friend has now accepted that conclusion and that that is the form of the Bill. It is because, as my right hon. Friend has pointed out, we wish to keep the international oil industry here that we have taken this particular form of national participation. I stress that the present Government are in no way opposed to the multinational oil companies and their participation in this country The Oil Taxation Bill has illustrated the extreme solicitude that my right hon. Friends in the Treasury have shown towards the oil companies. The real point about having a BNOC is the positive—in a public enterprise sense—aspects that flow from it. It is not just a question of our controlling 51 per cent., or whatever percentage it is, of the oil in the North Sea. It is also a question of those matters that flow from it.
  The right hon. Member for Orkney and Shetland (Mr. Grimond) asked whether the BNOC would be able to indulge in downstream activities. The Bill specifically provides that it may, with

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  the permission of the Secretary of State. It is in the downstream activities that many of the companies make their largest profits. That is the area in which the Opposition would specifically prohibit the BNOC operating.
  Apart from being able to operate in that area, BNOC will be able to operate internationally. The right hon. Member for Knutsford (Mr. Davies) may not believe in that. ENI has been an enormous international success, as has ELF. Those companies have also taken with them wherever they have gone Italian and French industry engaged in the oil business. It is no surprise to me that French and Italian companies have succeeded in obtaining orders for the North Sea ahead of British companies. It is because they have been supported for many years by an indigenous national oil company. The way in which Italian expertise has followed ENI and AGIP is remarkable. We have had Italian and French pipelines and refineries.
  This promotion of the national interest in its totality is an essential feature of BNOC. We see it not as a narrow tax-gathering company but as the nucleus of something much more important, something much larger and international. It may be that Opposition Members do not share that vision, but I hope that they will allow us to work to see its fruition.
  6.33 p.m.
  Mr. Peter Emery: What concerns me about the debate is that there is nothing more important for the economy and the industrial expansion of this country than the successful and rapid exploitation of the North Sea. The North Sea and the oil industry should not be a political plaything. For them to become a shuttlecock for political dogmatists would be extremely damaging.
  Mr. Varley: They need not.
  Mr. Emery: While I am delighted to hear the Minister mutter that, the Bill makes them exactly that. It is for that reason as much as for anything else that I condemn what I believe to be a terrifyingly politically dogmatic Bill.
  Wittingly or unwittingly, the Secretary of State said in the last sentence of his speech that the Bill was pure Socialism. That is so. But I remind him that pure, untrammelled Socialism is exactly the
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  same as pure, untrammelled Communism. I am not trying to score party points, but when we look at their philosophy we see that the two are identical.
  The Bill takes us along the road to complete governmental control of a major industry which is operating very successfully. That is why I am particularly worried about it.
  I have one other point to make on the political side. The Goebbels-like repetition, nearly a ranting, that the years 1970–74 were wasted years in the North Sea is flagrantly untrue. Labour Members believe that if they say it often enough they will get the country to believe them. The success of the exploration in and exploitation of the North Sea is a modern industrial miracle. That is what we should be repeating.
  Mr. John Smith rose—
  Mr. Emery: I shall not give way, because I promised to speak for only 10 minutes.
  Ministers talk about speed and they say that we have more rigs operating in the North Sea than we have ever had. That is quite correct, but so we should have. If oil companies are to meet the commitments they have given for the three rounds of licences, there should be a minimum of 36 rigs operating in the North Sea, not 29. We still have exploration borings for the second round of licensing unfinished. Are we ahead of schedule or behind it on the exploration borings according to licences? I can give the Minister the answer, and he knows that it is right. We are behind schedule. Therefore, for him to suggest that everything is well is highly misleading.
  I turn to the question of staff. The Secretary of State has an excellent Department. Some of the civil servants in it are second to none. But there will have to be a mirror-image Department to monitor what the BNOC is doing. The right hon. Gentleman will not get that done with 15 or 16 staff, as is suggested in the preamble to the Bill. Where are the Murrays and the Mongers coming from? In the whole history of the Civil Service we have had only one Angus Beckett. Will the Minister recruit the men from the oil companies? He will have to pay a much better salary than the poor Murrays and Mongers

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  are being paid, and he will have to provide a top-hat pension scheme which the Civil Service Department will not allow.
  I come to the question of the capital structure. When I consider the totality of the money that the taxpayer will be asked to put up, I immediately ask "Why?" Are we saying that it cannot be raised in the market under private enterprise? We have so far proved that it can be provided by private enterprise in the market. I understand what the hon. Member for Dudley, West (Dr. Phipps) said, but the money is being provided. It is wrong to have a Bill to increase the capital burden of the country by the printing of money—that is what it will be—and increasing the inflationary pressure just because of party political polemics.
  Do the Government intend to suggest to the BNOC that it goes into the refining and marketing of oil on a retail basis? If so, the capital estimates in the Bill are wildly out. The amount of capital that will need to be raised will be nearly double the figures in the Bill. Until a company has a chain of about 300 petrol stations it does not begin to make a penny. In view of the capital cost of that, which the country will be asked to meet, I suggest that some of the advice that the Minister is receiving is foolish.
  It is suggested that one of the major reasons for the Bill is to ensure a proper policy of depletion. I accept the Government's view that with the advance which has taken place since 1970 some techniques need to be improved. To believe that everything done in 1970 or in the 1972 round does not need improving is nonsense. However, I believe, that an agreement led and structured by the Government could be obtained with the oil companies on a depletion policy, and that this could be done without the need for legislation. That the Government should have rejected that is nonsensical.
  I am worried more by this Bill than I think I have been by any other because it is so unnecessary. The industry is operating well, the capital is there and there need not be a charge on the taxpayer. The Government are bringing in this Bill purely for political and dogmatic reasons, and that is unforgivable.
  6.42 p.m.
  Mr. J. M. Craigen: I know how you welcome brevity, Mr. Speaker, and having caught your eye earlier this week. I shall show my appreciation by confining myself to three main points. Unlike the hon. Member for Honiton (Mr. Emery), I think it is right to have public participation in and oversight of this major source of energy which surrounds our shores.
  This is an important Bill for Scotland in particular and for the United Kingdom as a whole. We in the Scottish Labour group welcomed last summer's assurance by my right hon. Friend the Secretary of State for Energy that the BNOC would be located in Scotland. As a Glasgow Member, may I say how delighted the city will be that the decision has been taken in accordance with that assurance. There were strong claims from the Aberdeen area, which has been the centre of the operational side of the oil exploration business. In view of the possible future state of the Scottish economy, the decision to locate the corporation in Glasgow will help to provide a balance, because otherwise there would have been very little industrial inspill into West Central Scotland.
  The decision to locate this major public corporation in Scotland is in itself indicative of fresh thinking in the corridors of Whitehall. This important measure of decentralisation indicates that no longer are we prepared to see the headquarters of any major public corporation having to overlook Hyde Park.
  My second point concerns the control and enterprise which the corporation will exert. I agree with some of the sentiments that have been expressed in the debate and would suggest that a crucial area in our society today is management, whether one is managing private or public capital. From reading the Bill one might gather that there could be a serious problem for the Government over the shortage of expertise which must exist in these activities. Since the Government must always keep a careful eye on the governed, we would need two sets of experts, one set in the Department of Energy and an important set in the BNOC itself.
  Unlike some other hon. Members, I worry about the trend of what one might call the international concentration of power in the oil industry. It seems to

  541
  me right that Britain should garner together people who know their stuff in this business and not be subjected to the decision taking and advice that may well be proferred by a small number of international companies. The way the world is going, I think that there will be 300 or 400 companies in the world taking most of the major investment decisions, decisions which will concern every one of us.
  I do not know why the right hon. Member for Orkney and Shetland (Mr. Grimond) should get so agitated about the fact that nationalised concerns should start to want to manufacture saccharin or the like. There are a number of major public corporations which see nothing wrong in extending the area of their activities—
  Mr. Tim Renton: Look how much money they are losing.
  Mr. Craigen: That is an interesting remark coming from the benches opposite.
  My third point concerns the rate of depletion. I gather that the Secretary of State anticipates that this will be somewhere between 100 million tons and 150 million tons by the beginning of the 1980s. I thought that the figure for self-sufficiency by 1980 would have been a little higher than the 150 million tons mark.
  There is not only the question of dealing with a major resource of energy, but we are adding significantly to Britain's armoury. It may be more a matter for my right hon. Friend the Secretary of State for Defence, but I wonder whether we should not be paying more heed to the problems of overseeing from a defence point of view our very considerable investment in the North Sea.
  I am concerned about the livelihoods of those who earn their living by the sea, not least the fishing community. I believe that a public body is more likely to show concern for their interests than any private concentration would be. After the scars left by the mining industry in the course of its exploitation in the last century in the west-central part of Scotland, it is most important that we should not now be creating oil slag heaps on the bed of the North Sea.
  I confess that it is easier for all of us when we talk about North Sea Oil to say
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  how the profits should be spent, and I have no doubt that in Committee we shall be looking more closely at the whole husbandry of this, the greatest of all our assets.
  6.49 p.m.
  Mr. John Hannam: The hon. Member for Glasgow, Maryhill (Mr. Craigen) succeeded an old friend and a near namesake of mine, Mr. William Hannan, in representing the constituency of Maryhill. I think that the hon. Member made certain important points, and one of them particularly concerned the question of staffing, which will cause great concern in the future. The right hon. Member for Orkney and Shetland (Mr. Grimond) made an admirable speech, especially when he referred to whether we were dealing with the will of God or the will of the Labour Party, and the push being given to the inflationary spiral by nationalisation measures. He stressed the dangers of bureaucracy creeping into oil exploration, and in that sense he was expressing fears that many of us feel.
  The Bill represents yet another plank in the Government's programme of out-of-date manifesto commitments, and I confess to becoming sick to death of the repetition of the expression from the Treasury bench "This legislation fulfils another of our election manifesto promises." At this stage in the nation's crisis I would prefer to hear that the Government's legislation represents the country's best interests and requirements at this time.
  Mr. Ted Leadbitter: I hope that the hon. Member will bear in mind that we are asserting from the Labour side of the House statements made in two General Elections.
  Mr. Hannam: They are still wrong and they are out of date. The country is suffering because they are out of date.
  We are sinking into the worst economic crisis in my memory and yet we have an administration drifting aimlessly with no tight controls on the economy and no productivity incentives. Yet the same Government seem hell bent on ignoring these facts of life. They continue to bring before us such irrelevant and damaging proposals as those for the National Enterprise Board and this Bill, with its State oil company.

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  What is interesting about the Government is that they give the impression that they always listen to advice and to warnings given by the experts. It is only when a Bill appears that—presto—we realise that all of the sensible representations have been ignored and that we are presented with a dangerous piece of legislation. We have seen this in recent weeks through the representations made to the Chancellor of the Duchy and to Treasury Ministers. Delegations representing the arts, owners of boatyards, small businesses, shipbuilding firms have pressed their case against a multi-rate VAT or State takeovers of their industries. They left those meetings with a sense of well-being, feeling that they had had a pleasant chat with the Ministers concerned. Then, crash! On the day the Bill is presented it is found to be as tough and as hard line as the Left wing wanted and as the rest of us feared.
  In Committee we battle through days and weeks of detailed amendment and debate. Sometimes, as with the recent Oil Taxation Bill, we achieve substantial concessions from the Government and a more satisfactory measure emerges. During those sittings we have had to endure accusations of being hand in glove with the oil industry. If any piece of legislation affects a part of the economy of our society it is surely right to expect the Opposition to express the views of that group, to express its fears and to try to produce the arguments necessary, if the case is not to go by default. I found that that was what happened when I was sitting on the Government side in Committee.
  This five-part Bill proposes to alter another major sector of the British economy, probably in the coming decade our most vital economic sector. The fascinating aspect of the Labour Party's approach to our present economic crisis is the totally contradictory element in its legislative programme. At a time when our nationalised industries are under severe financial strain and the burden of producing real industrial and balance of payments profits is falling on private industry so the greatest attacks on the investment and profit confidence of these industries are being made by the Government.
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  No one can deny that the oil crisis of 1973 has presented the oil-consuming Western nations with the need to restrain demand for high-cost imported oil as well as with the need to pursue the maximum exploration and development of their own energy-producing resources.
  The immense discoveries in the North Sea appeared to be our salvation for the 1980s. It was a stroke of unparalleled good fortune that in our hour of need Britain should find herself surrounded by a potentially rich area of oil and gas. It appeared that all we had to do was to tap the riches by attracting the oil experts from outside and the necessary investment through the oil companies which would be able to raise the colossal sums of money required to provide the rigs and the pipelines.
  The previous Tory Government's policy ensured such rapid development. In contrast, today we see declining activity, and confidence gradually ebbing away from the oil sector. All seemed well a year ago. Exploration continued to gather speed, and there was a high rate of success in productive wells with good reserves. The high, world oil prices revolutionised the economics of offshore production. Even the small, marginal field seemed attractive enough to commercial investors and bankers.
  Then we had this love-hate relationship developing between the Labour Party and the oil companies. It meant that the companies were easy meat for political or populist attacks during two elections last year. Labour was certainly able to harvest a certain number of votes by promising all sorts of tough action to sort out the wicked oil barons—Who happen to be millions of small investors in this country and abroad.
  First we had the Oil Taxation Bill with its PRT and field by field restrictions. Now there is this 51 per cent. participation and the coming into existence of the State oil company. As usual, the "divisive" Ministers and their Civil Service advisers are basically a year behind in their thinking, because all dreams of the bonanza profits which were to be attracted have burst.
  The past year has seen an unprecedetented escalation in capital costs. If we add to those the uncontrolled inflation which the Government have

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  allowed we can see a totally different picture emerging in the North Sea. The Government's tax terms and control regulations combined with the threats and uncertainties of participation have, in addition to soaring costs, produced a sharp decline of confidence and interest on the part of the oil industry.
  Mr. John Smith: If it is such a dreadful thing, is it not surprising that, in the latest round, 50 per cent. participation was insisted upon and accepted by the international oil companies? Is it not also surprising that, if this is such a desperate, Socialist measure, the Irish Republic proposed such a measure yesterday?
  Mr. Hannam: It is acceptable that in the area of future exploration, where vast sums of money are required, Governments should produce such amounts, but there should not be majority participation, the taking over of a whole range of activities upstream and downstream, which is what we are faced with here.
  The Government's tax terms and control regulations have contributed to the sharp decline in confidence in the industry. That cannot be denied.
  The queries which the oil companies, large and small, are asking are: will world oil prices fall or remain where they are? Can the industry raise the cash to finance offshore projects? Can it achieve any profits from the fiendishly expensive costs in the North Sea? All of these worries are bad enough, but if we have the totally unnecessary political interference which this doctrinaire Socialist measure will introduce we have a receipe for withdrawal and contraction on the part of the risk-taking firms engaged in the North Sea.
  We have had some brave assurances given repeatedly by Ministers to the effect that their participation and tax policies are having no effect on oil developments and that all the vital indicators show a continued expansion. This came out in the exchanges between the hon. Member for Dudley, West (Dr. Phipps) and my hon. Friend the Member for Honiton (Mr. Emery), one of whom is engaged in the oil industry and the other in the banking industry. It is the case that banks are no longer providing non-
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  recourse finance. They were providing it up to a year ago, certainly on larger fields. Possibly such finance was not so forthcoming for the smaller, marginal fields. Small companies are now looking forward to selling out their interests. There is a sharp reduction in drilling activity. This was mentioned by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) who quoted Mr. Monty Pennell of BP who estimated a fall of 60 per cent. in the coming year.
  What a time to be stepping in with the kind of irrelevant and unnecessary nonsense which the Bill proposes. It appears to go even further than the horrendous Industry Bill. Incidentally, that piece of legislation provides sufficient powers for the kind of majority State investment in energy companies. On that score alone there is no need for any further legislation.
  For a country as near bankrupt as ours, which is having to borrow vast sums from overseas to sustain the multibillion deficits on our balance of payments, it seems madness to be embarking on an unnecessary exercise in State intervention on the pretext of safeguarding supplies of oil which were already ours, and of ensuring control of depletion of the oil which can be done through licensing controls. An authority could be set up completely separately from this side of exercise.
  The first major criticism I have of the Bill is that Part I, which relates to the setting up of the BNOC, is unnecessary and contains dangerously wide powers for the Secretary of State.
  Part II seeks to amend the terms of petroleum production licences and has worrying implications in the retrospective nature of the model clauses.
  Part III, dealing with oil pipelines, is relatively uncontroversial. It seems sensible to have an orderly and national plan of the seabed pipelines. It is fair to say that in the past the oil industry has played a constructive rôle in setting up such plans. The Brent system, involving 17 oil companies and serving five oilfields, is an example of the constructive approach the oil companies have shown to this problem.
  Part IV deals with refinery controls, and these seem basically sensible. They

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  avoid wasteful investment and overcapacity in the future. The Secretary of State has shown that he is aware of the dangers of this, and, although he has made one or two wild promises in Scotland about possible new refineries, I am reasonably confident that this part of the Bill will work fairly well and that we can avoid launching into unnecessary expenditure on new refineries, except, perhaps, in the area needed to deal with the special high quality North Sea crude which we shall be producing.
  Part V introduces the bizarre National Oil Account which will provide the Secretary of State with a fund worth hundreds of millions of pounds quite separately from the Treasury. With this money, which could be coming in at a rate of £700 million to £800 million a year by the end of the decade, the Secretary of State, without reference to Parliament, can acquire companies, petrol stations and refineries, and operate in any activity connected with the oil and petrochemical industries plus exploring and developing oilfields anywhere in the world.
  The whole concept of financial discipline as it should apply to the BNOC is completely kiboshed by this strange beast of a National Oil Account. The use by the BNOC of funds from this oil account and the fact that, unlike competitor oil companies, the BNOC will not pay PRT, means that there will be no way of comparing that corporation's operating efficiency with other companies. The right hon. Member for Orkney and Shetland made this point.
  Therefore, we have, not a mishmash of a Bill but a "mic-mac" of a Bill—I prefer the French term which, I believe, stands for "organised chaos". This is what it is. The Bill is half a monster of the outdated Left wing 1974 manifesto and half an amalgam of depletion and control measures which could easily have been provided by such an authority as Conservative Members proposed—a United Kingdom oil conservation authority which would deal with licences for pipelines and depletion.
  On particpation and the creation of the BNOC it is difficult to understand why the Government feel it is necessary to engage in creating such a monster. Some views have been expressed that the
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  corporation, with its estimated tiny staff and the as yet mythical oil genius at its head, presents no threat to the industry. Like the monster lying asleep in its coffin, although slightly terrifying, it causes no real terror—till it awakens one day, when the Secretary of State of the day decides to activate it. Then look out, because the powers it will have, the strength of interference in oil industry affairs, from the oil well, through refineries, on to the forecourt of the nearby national petrol company pumps—all these powers of direct involvement by the BNOC are in the Bill. And for what? Not for increased finance, for the Chancellor of the Duchy has stated "no gain, no loss" for the oil companies. There fore, it represents a switching of oil income from the Treasury to the new oil account.
  Given that the nation's share of the income from the North Sea has already been secured under the Oil Taxation Bill and that the need to control North Sea development will be met by the powers vested in the Secretary of State under this Bill, participation is meaningless unless the BNOC is intended to become involved in the day-to-day decision-making processes of developing a proven commercial field. This decision making must, therefore, involve all the partners concerned. The fact that one participator has demanded and secured a majority shareholding does not undermine the rights and obligations of the other partners in the licence, particularly as one of them is likely to be the operator of the field concerned.
  So begins the introduction of the bureaucratic State monster into this highly commercial and highly competitive area of oil development. This must result in the slowing down of these developments, just when the emphasis should be on getting the oil and natural gas from the North Sea on to land as quickly as possible.
  There are in the Bill many other points which, no doubt, will arise in Committee. This is a Bill that comes from a shaky administration. It is a political Bill and we must oppose it tooth and nail. I welcome the tough and uncompromising line taken by my Front Bench, and I hope that the House will refuse to give this damaging piece of legislation a Second Reading tonight. At some time

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  the Government have to be brought to their senses and govern for the country and not for Transport House.
  7.05 p.m.
  Mr. Gordon Wilson: I regard the Bill as something of a mixture. One of its principal parts is acceptable to the Scottish National Party, namely, its proposals for participation, which we have supported for many years. I intend to deal with that first before criticising other aspects of the Bill. It has been our view that participation is an essential element for the taking over of a national resource for the benefit of the people as a whole.
  Although there may be matters of interpretation, it is generally agreed, as the initial legislation which came from a Conservative source made clear, that oil which is discovered offshore lying within the Continental Shelf sector and which is applicable either to Scotland or Great Britain, whichever standard is taken, belongs to the people of the countries concerned. We have started from that viewpoint and support it.
  However, we regard participation as a question of partnership. We have always disputed the case for a complete 100 per cent. nationalisation of the oil industry. We should certainly argue that in the initial stages it would be impracticable to suggest that 100 per cent. nationalisation or any immediate form of nationalisation could prove workable.
  The establishment of a national oil corporation, which has been indicated by the Secretary of State, is not a strange beast in the international oil bestiary. It is found in many other countries. I do not want to refer to the Middle East in particular. The excellent reference sheet produced by the scientific section of the Library makes it clear that countries like Finland, France, Austria, Italy, Spain, Germany to a minor extent, Ireland and the Netherlands are all involved in forms of participation, either existent or emergent. I do not think we have to be frightened or need explain why the United Kingdom is taking this step.
  An analysis of the benefits which could accrue from oil, should immediately lead us to the conclusion that it is a necessary buttress to the Oil Taxation Bill. It would appear from the reference sheet
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  that Norway is hoping for a 90 per cent. overall take of the profits with up to 75 per cent. participation, the Netherlands is hoping for an 80 per cent. overall take with 40 per cent. participation, and Greenland is hoping for an 80 per cent. overall take with 50 per cent. participation.
  Mr. John Smith: A small population.
  Mr. Wilson: I am talking from the Scottish point of view and I have no objection to the argument about small populations because we have a small population. Nevertheless the principle is the same.
  We accept that participation is a necessary adjunct to the Oil Taxation Bill. This is particularly so on the contentions made by myself and my colleagues that the figures which the Government eventually negotiated with the oil companies produced a deficit of about £7,600 million which might well have come to the United Kingdom over the lifetime of the oilfields. If the Government are claiming, as they have claimed, that they are going for a 70 per cent. take, the new figure for Norway, with participation added, brings out some interesting information. In his reply I ask the Minister to estimate what the overall take will be for the United Kingdom from PRT, royalties, corporation tax and participation.
  I do not think that we need to be hesitant about the steps which are being taken, because participation has been largely accepted throughout the world. The North Sea, despite the rise in costs, is still a very productive and profit-making area for development. It is estimated that in 1974 the United States of America, through the oil companies, spent 8 billion dollars on domestic exploration and drilled 33,000 new wells, but only 2 per cent. of those produced commercial fields. There is a significant number of commercial fields offshore the United Kingdom.
  The Bill is establishing a framework for participation. We do not yet know what negotiations are proceeding in the voluntary fashion referred to by the Secretary of State or, indeed, in any other fashion. I hope that better terms will be obtained by the Paymaster-General or whichever Minister is dealing with the question than were secured in relation to oil taxation.

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  My colleagues and I strongly object to the proposals in the Bill for United Kingdom control over what will be Scotland's oil resources. This is a well-known argument to which I return with no limit to my enthusiasm. The Government must quickly make up their minds on this point, because they propose to set up the Scottish Assembly. If they are to have the Scottish Assembly, United Kingdom Governments being what they are I have no doubt that they will ensure that there is no reference to direct funding from oil revenues going to the Scottish Assembly.
  The United Kingdom Government will be mistaken if they think that that will be the end of the matter. As soon as there is a directly-elected Scottish Assembly and as soon as Scotland has its own chief executive, whether he be called Prime Minister or something else, his very first action will be to telephone the Prime Minister of the United Kingdom and say, "Prime Minister, I should like to see you soon to discuss the question of Scotland's share of oil resources". If we have any say in that matter in the Scottish Assembly, we shall be pressing for it.
  Such disputes are occurring throughout the world. Difficulties are emerging in Australia between the federal and state governments over control. Western Australia has, regardless of the views of the Federal Government in Canberra, renewed licences recently on terms suitable to Western Australia, although the Federal Government claim that they had the right to do so. In the United States of America litigation has arisen from time to time between the states and the federal government over the ownership of oil resources. According to the reference sheet supplied by the Library, this has led to endless complications.
  In Canada not only is there the dispute which has continued between Alberta and the central Government, but there is also the fact that the offshore provinces, particularly those on the east coast which are poorer than some of those in central Canada, now have the opportunity to obtain oil and have raised the question of their share.
  The Government must recognise that, whatever happens, the Scottish people have their eyes fixed on the oil resources off the Scottish coast and will not take their eyes off those resources now.
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  I thank the Minister for keeping his promise to bring the headquarters of the oil corporation to Scotland. Leaving aside my rôle as spokesman for the Scottish National Party on oil matters, I have a constituency interest which has caused me a twinge of disappointment. Dundee, which I consider to be Scotland's second industrial city, sometimes feels left out of things. We have high male industrial unemployment on Tayside. Having lost this morsel which has been thrown to placate Scottish national feeling over the oil revenue, I ask the Government to consider my own area more sympathetically and not to be put off by the unfortunate reputation which Dundee Corporation has within the Labour Party.
  The principal benefits which I see arising from participation are the equity share it will give in oil and the fact that it can lead to an audit of expenditure, because the Government will be involved through BNOC in what is happening and, therefore, checks will be made and so remove the chances of arrangements being made for diminution of profit by accounting methods so as to reduce petroleum revenue tax, corporation tax and so on.
  Participation will also be effective in bringing pressure to bear on the placing of orders with Scottish industry for various types of equipment connected with the offshore industry. This point should be stressed more than it has been.
  I want to enter a caveat on the question of downstream development. The refining and petrochemical industries throughout the world are in a state of flux. In the Middle East in particular, the OPEC countries are switching over fairly rapidly to using their own sources of crude for refining to build up their product and industrial base in their own countries. There is nothing wrong with that, but it could lead to an over-supply of petrochemicals.
  I do not wish to put forward too doctrinaire a point, but in December the Minister made a statement about the proportion of North Sea oil which might be refined in the United Kingdom. Little mention was made of Scotland's rôle. Obviously we in Scotland would not want our coastline to be littered with refineries. However, the Scottish Council has strongly argued that there is room for the development of some refineries in

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  Scotland and for Scottish industry going more into chemicals than has been the case. I accept that the overall world market situation has a bearing in Scotland, as it would in the rest of the United Kingdom.
  Another reservation I have about the Bill—here I shall be approaching it throughout its various stages with a very open mind—is that the BNOC in its operations should be made as comparable as possible with other operating oil companies so that a comparison can be made of its activities. This would be good for the corporation, because a comparison would be available and a check could be made on the profits it was earning for the country.
  One of the principal arguments for the corporation is that it will have an equity share. It should be there to produce more for the State than would otherwise be the case. We do not want a loss leader in a sector which should do very well.
  My second point, which I make strongly, is that in its early days the BNOC with its staff should adopt a very humble posture. It should recognise that staff, particularly skilled staff, may be difficult to obtain. It should recognise that there are special problems in relation to development in the North Sea and should be willing to listen to operators who have been active before it. If the BNOC were to get off to a jet-propelled start without having obtained sufficient experience, it could well lose a lot of money instead of earning it.
  I could go on for much longer—[HON. MEMBERS: "Hear, hear."]—but I shall now give the sugar on the pill. Many of the points I should like to make can be made either in Committee or on Report. My colleagues and I propose to vote for the Bill on Second Reading, but unless substantial amendments are made in Committee, particularly on the principle of the Scottish control of operations, we may well have to reconsider our vote on Third Reading.
  7.20 p.m.
  Mr. Dennis Canavan: Since October, when I first became a Member of the House, this is the third Bill which has been introduced by the Department of Energy dealing with
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  North Sea oil. I know that high work rate causes envy to the Opposition, particularly among part-time politicians who spend most of their day in business or in legal practice and who may be kept in the House until perhaps five o'clock in the morning. But I congratulate my right hon. Friend on producing this third Bill. If the oil companies reciprocate by attaining a rate of exploitation which is commensurate with the rate of the introduction of legislation, we need not have much fear of failing to reach the target by the 1980s of between 100 million and 140 million tons of oil a year.
  The keystone of the Bill is the BNOC. Along with my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen), I was delighted to hear confirmation that the BNOC is to be based in Scotland. The headquarters are to be in Glasgow. I well understand the disappointment felt by the hon. Member for Dundee, East (Mr. Wilson), because Dundee is also an area of relatively high unemployment, even by Scottish standards. I was aghast to hear cries of "Shame" from the hon. Member for Aberdeen, South (Mr. Sproat). He must realise that although Aberdeen may be the oil capital of Scotland there are other more underprivileged areas of Scotland, and as a Socialist Government our job is to direct industry and jobs to the underdeveloped and under privileged areas. The establishment of the BNOC in Scotland will go some way towards achieving that by introducing an element of industrial devolution.
  We hear a lot from the Liberal Party about devolution, yet the right hon. Member for Orkney and Shetland (Mr. Grimond) said that we were going a little too fast and should wait until we get our Scottish Assembly before we think about how much industry can be devolved in the Scottish context. I do not agree that we should do that, because urgency is required. I congratulate the Department on siting in Scotland the BNOC as well as the Offshore Supplies Office.
  Doubts were expressed by Opposition Members about the presence of civil servants on BNOC. There are to be only two. Even if their incompetence is such as was described by Opposition Members—and I do not think it is because many finance companies and banks are only too pleased to get the services of retired civil servants who know

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  more than a little about finance and industry—
  Mr. Patrick Jenkin: The hon. Gentleman will remember that the comment was not mine but that of Lord Balogh.
  Mr. Canavan: Whether the comment was made by the right hon. Gentleman or Lord Balogh, it was inappropriate to quote it. The right hon. Gentleman took the opportunity to quote it in support of his argument, and I take the opportunity to demolish it. Even if the civil servants are incompetent, they will be in a minority on BNOC because there are to be only two.
  What Opposition Members are confused and annoyed about is the element of public participation. They seem to have an allergy to public ownership and public participation. I am grateful to my right hon. Friend for pointing out that it was that great "Socialist" Sir Alec Douglas-Home who nationalised the oil under the sea bed. It is a pity that he did not extend public participation or public ownership further when the Conservatives were giving out the licences. They seem to have been given out almost like Green Shield stamps.
  I ask the Minister why it is proposed that the public stake should be the magical figure of 51 per cent. Public participation in the oil industry is nothing new. In British Petroleum there is a public stake of 48 per cent. already, and if we were to take into account the former BP shares in Burmah which now rest in the Bank of England the State share would be about 70 per cent. The total estimated Government take by the 1980s is about 70 per cent., which takes into account participation, royalties, PRT and corporation tax. When I consider what is done in other countries I wonder whether we cannot do a bit better.
  For example, in Norway it is estimated that eventually the State's take will be 90 per cent. plus participation up to 75 per cent. The take in Greenland is 80 per cent., in Greece it is up to 80 per cent., in Libya 81 per cent. and in Malaysia up to 85 per cent. Although we are grateful for small mercies, perhaps the 51 per cent. should be seen as a starting step rather than a finishing step in participation.
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  I am glad that the Bill contains a reference to the safety of workers. When we talk of high finance we often forget the people whose careers are tied up in the industry, the men who have to leave their wives and children to work for months at a time away from home in dangerous circumstances. Why is there no specific reference in the Bill to workers on oil rigs and in other parts of the industry being covered by the Health and Safety at Work etc. Act?
  The preservation of the environment is also important. I hope, however, that the Secretary of State will not look upon the giving out of certificates to refineries as being conditioned only by the preservation of the environment. Employment prospects, too, are important. There is a refinery in a neighbouring constituency, Grangemouth, and many of my constituents are grateful to the refinery and the ancillary petrol-chemical industries surrounding it for the employment prospects which are offered. In giving out certificates I hope that the Secretary of State will bear in mind the prospect of enlarging the Grangemouth refinery or possibly constructing another refinery in Scotland, either at Hunterston or elsewhere.
  The Bill also deals with pipelines. I recently had the privilege of visiting the site at Cruden Bay in the North of Scotland where the BP pipe from the Forties field comes ashore. I was impressed by the environmental conservation work which has been done by BP. One is hardly aware of the enormous amount of work which has been put into laying a pipeline under the sea and from Cruden Bay about 100 miles down to Grangemouth. It is a remarkable piece of work for which I praise BP. I hope that the Secretary of State will see that other companies live up to those high standards.
  The more I read the Bill, the more I wonder why both sides of the House cannot give it unanimous support. I understand the doctrinal opposition of the Tories, with their commitment to private enterprise and their hatred of public participation. I was more pleased by the contribution made by the hon. Member for Dundee, East. I hope that he was speaking on behalf of his party, because he showed much more co-operation than the SNP did in November when

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  it voted for a Tory amendment on the Queen's Speech which condemned public participation in North Sea oil. I hope that the presence at Westminster of SNP Members and the arguments that have been presented by Labour Members have been educational experiences that have contributed somewhat to their change of heart.
  I would also encourage the SNP to remove its disturbing slogans which deface the Scottish landscape. The slogans read "Scottish oil—but whose hands on the money?" It is significant that the slogans end with a question mark. That is the same as many pieces of SNP propaganda. The SNP seems to pose many questions but does not give many answers. Perhaps if it has its way the hands that will be on the Scottish oil will be those of Sir Hugh Fraser or other capitalists involved in the multinational oil companies.
  I hope that the SNP will manage to muster its full first eleven and that it will come into the Government Lobby tonight. If that does not happen, and if by some chance the Government are defeated, I hope that SNP Members will remember that they are placing Scottish jobs at risk. I hope they will remember that if they stop the BNOC from coming to Scotland, which will happen if the Bill does not get a Second Reading, they will be hampering the employment opportunities of many Scottish workers.
  Mr. Gordon Wilson: If the hon. Gentleman is so keen to support the interests of Scottish workers, how much pressure will he bring upon his own party to ensure that the oil revenue from the development of Scottish oil will go to Scotland to produce more and better jobs for Scottish workers?
  Mr. Canavan: I shall bring every pressure to bear on the Government—and my colleagues will support me—to ensure that working people in Scotland and in underprivileged areas in other parts of the United Kingdom receive the full benefit of the oil exploration. I exhort hon. Members to remember that there are already 40,000 jobs in Scotland that are bound up directly or indirectly in the oil industry. That is a lot of jobs and there are certainly more on the way. I exhort SNP Members to support the Govern-
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  ment tonight and to ensure that further jobs come to Scotland.
  But the selfishness of SNP Members is apparent not only in their cheap advertising but in their references to Scotland's oil. If they consider the oil in a Scottish context, they should remember that if Shetland and Orkney were to declare UDI a huge slice or possibly even most of Scotland's oil, as they put it, would be taken away from Scotland. I remind SNP Members that there are vast coal reserves in Selby and that 95 per cent. of the gas which is used in the United Kingdom is English gas. Let us not be silly and selfish about this Scottish dimension.
  Of course we want to see the people of Scotland benefit, but there is no room for selfishness. We must ensure that there is an equitable distribution of energy resources. That should apply not merely at national level. We must remember that there is an international shortage and maldistribution of fuel.
  I shall quote from a recent publication produced by two economists, one at least of whom is a Scot, called Mr. Philip Connelly and Mr. Robert Perlman. I refer to the publication entitled "The Politics of Scarcity", which concerns itself with the international scarcity and maldistribution of fuel and resources in general. After making an exhaustive study they did not come to the same conclusion as Malthus, who made the forecast that the human race could run out of resources and virtually destroy itself. They are a bit more optimistic than that but they point out that the resources that we have require careful handling.
  They write:
  "In the end, we believe that there must be an underlying political basis for constructive reciprocal relations between the proprietors of resources and the proprietors of markets and technology. But"—
  this is the important part—
  "market forces will not alone be sufficient to bring about such harmony."
  I echo what has already been said by one hon. Member that there is no room for the politics of laissez-faire and the silly private enterprise system which has been preached from the Conservative benches. This is a very serious business. I think that the Bill will go a long way towards showing that the benefits from North Sea Oil will go to the people of

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  Britain and, perhaps, some of it even to people in underdeveloped countries.
  Mr. Deputy Speaker (Sir Myer Galpern): On coming into the Chair at this time of the evening I sometimes use my limited knowledge of arithmetic to tell hon. Members just how many Members wish to take part in the debate and how long they should take. Hon. Members will be aware that the wind-up speeches will begin at 9 o'clock, which leaves hon. Members with an hour and a half. There are about 12 Members who are anxious to take part in the debate and they can all do so if some consideration is shown by those who are called by the Chair. I hope that they will each take roughly seven or eight minutes. As I have told the House before, a great deal can be said in eight minutes. My wife tells me that quite often.
  7.36 p.m.
  Mr. David Lane: I will not enter into the Scottish controversy, except to say that I agree with the hon. Member for West Stirlingshire (Mr. Canavan) in the tribute that he paid to the people who work in the British oil industry. Many of them work in conditions of danger and discomfort. We do not often have a chance in the House to praise them.
  I declare a personal non-interest. Before I was elected to the House in 1967 I was employed by Shell. I now have no connection with them, and I have not discussed the Bill with them. It has never been my view that the oil industry is faultless. I hope, therefore, that the House will not accuse me of speaking from a partisan standpoint.
  Looking at it objectively, I fear that the Bill is ill conceived and irrelevant and that the country will pay dearly for the Labour Party's dogma. So far North Sea oil and gas have been one of the great post-war success stories of British industrial and commercial enterprise. Now that success may well turn sour. There may now descend on British oil operations the same dead hand of political control as is afflicting the steel industry, the Post Office and other sad examples in the public sector.
  I doubt whether the Secretary of State has his heart in the Bill. He was unconvincing today, and altogether too glib.
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  The arguments that he put forward were well demolished by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin). My right hon. Friend showed that the interests of the public are amply safeguarded without the extreme risks that the Bill will bring with it.
  In view of what has been said I must defend the part that my party has played in the development of the North Sea success story. I am thinking, for example, of my right hon. Friends the Members for Bridlington (Mr. Wood) and Knutsford (Mr. Davies) and of course Lord Barber who made it clear in his 1973 Budget that we were to introduce special tax measures for the oil industry. My right hon. Friend the Member for Wanstead and Woodford has shown clearly, time and again, how Conservative policy for the oil industry would be developed in the national interest. I contrast that with the doctrinaire approach of the Labour Party, which would put all this at risk.
  I have paid tribute to what has been done already in the North Sea. Some of the criticism of the oil industry that is made from time to time may be justified, but the industry does not receive enough bouquets. It deserves a particular bouquet from East Anglia and from my constituency. Cambridge was the first major city to receive natural gas supplies, thanks to the policy of quick development that my party introduced. The companies' care for local interests and amenities was well demonstrated in the way in which they organised the onshore part of the gas operation. They showed their willingness to consider the public interest and not only their private interests.
  My main criticisms of the Bill are that it will introduce uncertainty, extravagance and inefficiency. The uncertainty has been mentioned in a number of speeches already. As time is short I shall quote only an independent view contained in an article in The Times by William Gillen on 28th April. He wrote:
  "This setback in orders for platforms is seen by Edinburgh financiers as a direct result of the oil companies' increasing caution over North Sea operations."
  We shall have uncertainty and hesitation, when what we need is full speed ahead for the maximum exploitation of this national asset.

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  Secondly, in the matter of extravagance, I wish to put the obverse of the Secretary of State's argument. The provisions of the Bill represent a waste of scarce public funds when ample funds could be forthcoming from private sources. The Bill will be a further strain on the Exchequer when already the extent of borrowing is excessive and unhealthy.
  How much will these provisions cost the taxpayer? We have asked time and again, but have been given no satisfactory answer by the Government. One modest estimate puts the figure at £3,000 million—a figure which might eventually double. The Chancellor and the taxpayer will have to carry all this—and British Leyland, too.
  Thirdly, I believe that the new structure to be erected will certainly be inefficient in several respects. There is bound to be muddle between the Minister and the BNOC and the companies. We have seen an awful example in another industry of which I had some experience before coming into the House. I refer to the steel industry and to what has happened there as a result of interference and confusion. Incidentally, one person for whom the Bill provides no effective say in the whole area of nationalised operations is the consumer. The Bill also establishes the British National Oil Corporation. What chance is there of attracting men of high calibre for the sort of set-up that is to exist? The Secretary of State talked of flexibility, but it is far more likely that the corporation will suffer from the straitjacket of Whitehall control. There will be no fair measure of the corporation's efficiency because of its peculiar and privileged financial arrangements.
  Above all, there will be the Secretary of State who is giving himself frightening powers. He is taking a blank cheque, and is setting up a large separate fund quite distinct from the Treasury. There will be minimal parliamentary control. The Minister will be involved as an active operator in the oil business and there must be a risk of unfair competition. It would have been far better if the Secretary of State had stayed aloof and had held the balance over the operation by exercising detached supervision. It would have been far better if he had been satisfied with developing the present arrange-
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  ments with the companies—companies which have shown time and again that they are ready to meet the changing needs of Government and public interest.
  The Secretary of State thought this was a wonderful week. I say it is a sad week, when the shadow of nationalisation hangs over the House. We are observing the drama in the steel industry involving the Secretary of State for Industry and Sir Monty Finniston. Today we have seen introduced into the House the Aircraft and Shipbuilding Industries Bill—another distracting irrelevance. And now we are debating this Petroleum Bill.
  The Government are obsessed with public ownership and public control. The word "control" occurs with frightening frequency in the White Paper and in the Bill. The Government want public ownership and control for their own sake even when they are not justified by the facts of the situation. The Bill is a recipe for confusion and frustration. Contrary to the Government's claims, the Bill will bring to the public not benefit but detriment. The Secretary of State for Energy will be remembered for generating not energy but inertia.
  7.45 p.m.
  Mr. Ted Leadbitter: There should be no difference of opinion among hon. Members on the fact that North Sea oil should be exploited and utilised for the maximum benefit of the British people. At the same time we must make it abundantly clear that the companies engaged in oil exploration in the North Sea at present and companies that will come into the operations in future have a right to expect a reasonable and suitable return on the high capital investment risk. There can be no argument on that score. It will give no confidence to the industry if the feeling is allowed to go out from this House that nationalisation and public participation will introduce uncertainty and doubt. We in this House must make it clear that we believe confidence in the industry is of paramount importance.
  It is important that we do not inject into this subject any narrow doctrinal views on a party-political basis. That would serve no useful purpose. We must seek to scrutinise the Bill at all stages, in Standing Committee and in general

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  term here. We know that in that task this House can excel itself.
  It is clear that we have been rather late in coming round to the idea of public participation in the oil industry. There are 50 oil-producing and oil-exploration nations and, with one single exception, all have public participation. Some of the nations operate extremely successfuly and are commercially profitable with 100 per cent. public participation. Therefore, since such participation has worked in other countries, it is reasonable assumption that it can work in Great Britain.
  It is also true to say that for more than a decade the level of public participation in the oil industry in the United Kingdom has been of a minor kind. We have a 16 per cent. public participation in the oil industry, 14 per cent. public participation in the gas industry, and a 48 per cent. national shareholding in British Petroleum. That is not the work of greedy Governments—and that applies to both Conservative and Labour Governments in past years. That small degree of participation is now to be changed, and, in my view, not too radically changed. The Bill will enable BNOC to take over the 16 per cent. oil holding from the National Coal Board. The Labour Goverment do not intend to take anything from the British gas industry nor from British Petroleum. There could be a case for taking over the latter because the Burmah shares in BP are now in the Bank of England. If we could take those shares into account the 48 per cent. Government holding would amount to 70 per cent. However, the Government have turned down that suggestion and I believe that their judgment is right. The Bill declares that no existing companies will be taken over.
  The aim in our highly industrialised country—a country where the North Sea and the Channel are congested by traffic—is to seek to deal with the proliferation of pipelines in an orderly way. We hope to be able to protect the fishing industry in a proper manner. We seek to control pollution, and we hope to take action in the construction of pipelines and other installations in such a way that the national interest is very much considered.
  Secondly we must have a "take", which is the term, from our own
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  resources. We must take the initiative in affording to the older industrialised regions of the United Kingdom, including Scotland, the North-East of England, and Wales, the employment opportunities which they desperately need. There should be no conflict about general principles, so that confidence outside the House is maintained.
  My constituency is in an important region which has suffered greatly from unemployment. We are pleased to have a stake in the oil industry in building an oil rig. Some of that work is nearly finished. Although it will take some time before the Bill becomes law, I hope that the Minister will reciprocate our special interest in the Bill's success by giving work to that area within the next few months. Otherwise in Committee I may have to carry out a job not of conciliation but of challenge.
  7.52 p.m.
  Mr. Peter Blaker: I believe that Part II of the Bill is dangerous, because it is likely to harm this country's overseas interests. There has been no indication from the Government that they realise that what is done in Parliament is observed by countries overseas in which we have large investments. The House may not be aware that we are the world's second biggest overseas investing country.
  The details of such Bills are reported to overseas countries not only by the Press but by the embassies and high commisions of those countries in London. A significant number of junior members of embassies and high commissions in London will have gained kudos by pointing out to their ambassadors the fact that the British Government have adopted for the first time the principle of expropriation without compensation. I think that that will be noted by many countries.
  In his admirable speech my right hon. Friend drew attention to the remarks of Senator Dole of the United States in which he pointed out that he thought the United States Government should take a look at British oil interests in the United States in view of what the British Government intend to do to United States oil interests here. Those remarks were made before the publication of this Bill. I have no doubt that Senator Dole and other senators will be interested to note

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  that in Part II of the Bill we have adopted the principle of expropriation without compensation. That will be noted by countries on every continent. There is no doubt that Part II of the Bill involves expropriation without compensation.
  I do not propose to take the House through Clauses 14, 15 and 16 of Schedule 2. They give virtually unlimited power to the Minister to limit the rate of depletion. The criteria which they impose on him are totally inadequate, consisting principally of his interpretation of the national interest. We know what it means when a Minister defines the national interest.
  I have heard a senior Minister say that the national interest included the survival of a Labour Government. There is no doubt that the unilateral alteration of existing contracts with retrospective effect involves expropriation. It involves, in international law, a taking of property.
  In a Written Answer on 6th December the Secretary of State gave certain assurances to the House about what he would not do in changing the rules. That is not good enough. If that is his intention, he should write it into the Bill. He should also include in the Bill the provisions for compensation. I do not dispute the right of the Government to expropriate in the way intended under Part II, but I do not think that that is wise. However, I do not dispute the legal right of the Government to do so according to international law, because States have sovereignty over the property within their territory.
  The Under-Secretary of State for Energy (Mr. Alex Eadie): It is distressing to hear the Opposition always talking about foreign comments in relation to this matter. Does not the hon. Gentleman agree that it is about time he and some of his right hon. and hon. Friends started to speak up for Britain when we are under criticism from people abroad?
  Mr. Blaker: I am sorry that the Under-Secretary has wasted the time of the House, because clearly he has not been listening. I am speaking up for the interests of Britain. I am saying that the Bill will do serious damage to those interests.
  In the past Britain took the lead in asserting the importance of international law and its observance. In December
  566
  the Under-Secretary of State for Foreign and Commonwealth Affairs, when answering a Question about the expropriation of assets of British subjects in Uganda, said that we were pressing for prompt, adequate and effective compensation. Those are the classic words which have always been used in the past. I was glad that the hon. Lady used them. There are strong pressures in the world to reduce the strength of the recognised rules of international law, to devalue them and to create a situation in which compensation does not have to be paid. There are strong influences in the United Nations. It is very much in the interests of this country, of its prosperity and its overseas investments to see that the traditional rules are upheld as far as possible.
  In May 1974 the Socialist Government of the United Kingdom put forward a joint resolution during the Special Assembly of the United Nations which upheld two main points—the right to compensation in the event of expropriation and the importance of or the necessity for an impartial observer to assess it. In December 1974 at the United Nations the Labour Government put forward a further draft which upheld those points. My right hon. Friend quoted a passage from that draft. In March I asked the Secretary of State for Foreign and Commonwealth Affairs whether the position then taken by the representative of the United Kingdom at the United Nations represented Government policy. I was told that it did.
  Part II of the Bill, however, pulls the rug right out from under the Government. It destroys their case. I see no evidence that the implications of what the Government are doing have been considered by the Department of Energy. Indeed, I wonder whether the Department even consulted the Foreign and Commonwealth Office before drafting Part II in its present form. It is not worthy of Britain's reputation for fairness and for upholding international law—
  Mr. Eadie: Denigrating Britain again.
  Mr. Blaker: I am not denigrating Britain. I am denigrating this Government, and they deserve it. This is the kind of legislation that we would expect

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  from General Idi Amin. It is not the sort of legislation that we expect from a British Government, of whatever colour. Britain's example in international law is still widely followed across the world. I wonder what the advisers to the rulers of Dubai and Kuwait are saying. British companies are negotiating with them at present, and it may be that it is being pointed out to those rulers that we have imported into our law by this Bill this new principle of expropriation without compensation.
  But it is not only unfair and contrary to our tradition. It is very much against our interests. To illustrate what I mean, let me mention some of the cases of the expropriation of British property in the past few years. In Libya, since 1969, more than £250 million worth of British property has been expropriated, and we are still negotiating for compensation. In Uganda, in December 1972, 34 British firms were expropriated, and we are still negotiating compensation. The value of the property involved may be as much as £500 million. In Tanzania we are still negotiating, and in Ethiopia recently there were nationalisation measures. The value of the British property involved there is not known.
  In answer to a recent parliamentary Question the Government gave a list of 20 countries receiving aid from Britain against which we have outstanding claims for compensation for British property which has been expropriated. That is only the tip of the iceberg, because it takes no account of the property of British subjects and companies round the world which has not been expropriated, and it is about that that I am extremely worried.
  Of all the countries least suited for the production of a proposal of this kind, it is Britain. I hope that the Government will agree to incorporate in the Bill some provision for compensation, otherwise I fear serious loss and damage to our interests.
  8.3 p.m.
  Mr. Joseph Dean: Surely this debate is about the best way to exploit this new-found wealth in the North Sea, and to do so in the best interests of the British taxpayer. It is about that that
  568
  the Government and the Opposition differ fundamentally.
  This is an excellent Bill because it will allow the maximum participation in the exploitation and development of these resources under the guiding hand of Government policy which will see that the right priorities are observed.
  I am glad to see that the right hon. Member for Orkney and Shetland (Mr. Grimond) has returned to the Chamber because he, like the hon. Member for Honiton (Mr. Emery), seemed to go overboard in favour of the existing national and multinational oil companies if we are to get the best value for money and exploit these rich resources to the maximum for the benefit of the people. I fail to see how they can make that deduction if they care to look back only 12 months at the record of some of the multinational companies and their activities during the energy crisis brought about by the last military flare up in the Middle East. On that occasion no one could accuse the multinational oil companies of showing that they were at all that conscience stricken about Britain, or, in the case of the national companies, at all patriotic. Responsible circles in both America and Italy made accusations at the time that in order to make a killing, the multinational companies actually kept millions of tons of oil at sea rather than bring it ashore. I do not recall any of those accusations being answered adequately, and I, for one, do not believe that we should place the future development of such a priceless asset in the hands of such people.
  This country elects a Government, be it Conservative or Labour, to act in the best interests of the people. That is why we are here debating this Bill. However, the hon. Member for Blackpool, South (Mr. Blaker) went out of his way to put this present Government in the category of those of some countries which have not been elected by a free vote. I resent that, because, if nothing else, I am a democrat. I live by the ballot box, as does my party and the present Labour Government. To put the Government in the same category as people like General Amin and the dictator of Libya is to hit below the belt, and I expected the stature of this debate to be a little higher than that that type of remark should be made.

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  I want now to comment on the speech of the hon. Member for Dundee, East (Mr. Wilson) who, as usual, treated us to a few minutes of diatribe and then left the Chamber. The Scottish National Party seems to be attempting to light some peculiar fires, which may have devastating results for the nation if we are not careful. I was born and bred in and I represent a constituency which can hardly be described as over-privileged. Some of us are becoming a little tired of listening to representatives of the Scottish National Party constantly parading the so-called poverty of Scotland and suggesting that Scotland should have priority over everyone else. I know many parts of England that would love to be designated a development area, as all Scotland is, but no such privilege is allowed. We have to take our turn, and we have to struggle for what we can get.
  The hon. Member for Dundee, East also said that his party did not want to see the over-development of the industrial side of the industry in Scotland. He made special reference to processing plants. I take that to mean that his party does not want any of the dirt in Scotland. All that it wants is the money.
  The issue is a broader one than that. The oil and gas and the subsequent products of those two substances have to be used to the best of our ability on behalf of all our people. Earlier in the debate it was argued—and I have heard this line of thought put forward before—that we should not put all our eggs in one basket and gear our economy to this wealth in the North Sea because it could be destroyed completely overnight by the oil sheikhs of the Middle East. That is nonsense. In a world where there is no limitless amount of oil, and in which it is only because of the existing world recession that there is a small percentage decrease in the demand for oil, no one can say that the Middle East sheikhs who suddenly found themselves sitting on a bonanza and began to realise it are likely to depress the price of oil because Britain has discovered oil in the North Sea.
  It is almost certain that oil will be found elsewhere in the world as exploration techniques improve. It may well be found under the ice caps in almost unlimited quantities. At present the oil sheikhs of the Middle East are in a strong
  570
  bargaining position, but no one will convince me that the position will change when the oil begins to come ashore here.
  One important aspect which should be studied carefully is the industrial side of the oil development. I myself have come from industry, although not from one noted as being accident prone. However, in the past we have seen alternating at the top of the league of industrial distress, because of deaths and injuries, the coal mines and, in latter years, the building industry. What is becoming apparent now is the number of injuries and deaths being caused in our exploration and exploitation of North Sea oil and gas. In the interests of humanity, because some of these people being killed and maimed are highly qualified—for example, it costs a great deal to train a deep sea diver—we must do better than we have been doing. We must use the knowledge that we have already gained regarding safety precautions and apply it most rigidly. One life lost in this area is one life too many.
  I commenced by saying that the two sides of the House differ on ideologies. The Conservative Party thinks that the best way to exploit this new asset is to allow the multinational companies to come in and to give them the major stake, and for the recoupment to be made by taxation. That sounds very good, but it will not solve the problem at base.
  I consider that the case was overwhelmingly proved just over 12 months ago in the last energy crisis. I believe that the energy policy which has become so vital to our economic success should be in the hands of those who are answerable to this Parliament. We must have control of our energy resources, and that can best be achieved with a publicly owned corporation such as that proposed in the Bill. I welcome the Bill.
  8.12 p.m.
  Mr. T. H. H. Skeet: The Under-Secretary of State for Energy indicated that new licences were being issued by the Irish Republic. What he did not indicate was that Marathon, which has a subsisting licence, is not having its licence altered. We are arguing that unilateral abrogation of the industry's accrued rights with no offer of compensation is wrong. Why do not the Government pursue the policies followed in the Irish Republic, Norway, the

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  Netherlands and Australia where existing rights are respected?
  The tenor of the argument put forward by the Opposition has been that the situation would be mitigated to a certain extent if compensation were agreed to be paid. I have a Written Answer which I received from the Secretary of State yesterday in which he said:
  "There is no provision for compensation in the Bill, but in exercising the powers proposed in Part II I shall take into account the likely effect on licensees."
  It is unlikely that people operating in America or the Far East will read that chance observation by the Secretary of State in Hansard.
  We are saying that if compensation is to be paid for a diminution in rights, it should be stated in the Bill which is now before the House. But the Secretary of State indicated in his answer to me that there is no compensation provision in the Bill. Is he prepared to give an assurance that when the Bill is in Committee he will put that provision in as a separate clause?
  It is extraordinary that arbitration should be so limited when the obligations being foisted on companies will be considerable. Regulation 40 provides limited arbitration rights. The Minister, again in an answer to me yesterday, said that:
  "Arbitration has not been available in respect of matters directed by the Secretary of State under the terms of any petroleum production licence granted since 1964. The Petroleum and Submarines Pipe-lines Bill proposes no change in this position."
  Why go back to 1964. If the right hon. Gentleman is pushing on the companies onerous obligations which could prove totally uneconomic, have they not got the right to go to some independent authority or court to test whether the obligations are reasonably or unreasonably imposed?
  The increased penalties or obligations under Regulations 14 to 16—these have already been mentioned—can often be exceedingly heavy. If a company falls down on any of the conditions, its licence may be revoked under Regulation 39. That may be because perhaps one out of 10 companies in a consortium has defected on the arrangements.
  The Minister is on to this point. If he looks at Regulation 39(b) he will see
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  that it refers to non-observation by the licensees of any of the terms and conditions of the licence. The obligations imposed on a company may be totally uneconomic. If the company fails to fulfil those obligations, its licence will be revoked and its investment will be lost.
  What apparently has missed the attention of many hon. Members is that Part II provides for retrospective alteration of conditions in subsisting licences. According to the Bill, the licence terms may be further amended by means of a statutory instrument at any time without the need for new legislation. It is taken beyond the control of this House.
  I listened intently to the Secretary of State when he said that the BNOC need not act on commercial principles, particularly when acting alone as the agent of the Government. It is not surprising, flowing from that, that when I asked what the rate of return of the corporation would be, in another answer to me the Secretary of State said:
  "This will depend on the financial duties laid on the corporation under Clause 5 and these have not yet been determined."
  The right hon. Gentleman knows that over the last 20 years all the nationalised industries have had nil returns on capital investment in the United Kingdom. Why have another corporation which is also likely to have a nil return?
  It might be interesting if I read—the Minister must have looked into this matter carefully, because this is the font of his experiment for the BNOC—what is said about ENI and all its ramifications, reported in The Times on 5th April. One hundred senior executives of ENI got together and prepared a document which states:
  "The document regretted that the politicians' sharing out of spheres of influence had affected state-owned industry, with the 'negative consequence that the primary requirement has become that of safeguarding and consolidating power balances'. Management strategies had thus lost vigour. The capacity to identify and pursue strategic objectives had been progressively diminishing."
  That is precisely what the right hon. Gentleman is asking the country to do. He is setting up a body on which he can impose his own patronage, which does not have to operate on commercial principles, does not have to pay PRT which all the other companies have to pay, and is to get certain preferential advantages.

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  I suggest that 51 per cent. participation, the raison d'être for BNOC, is irrelevant, and I can give some reasons for that. The Secretary of State asked for control over the oil and its disposition. If he looks at his own amended regulations he will see that the licences are as comprehensive as any in the world, and therefore he has full control.
  If the right hon. Gentleman is concerned about the control of oil exports, I suggest that they are already sufficiently protected by existing legislation, particularly the Fuel and Electricity (Control) Act 1973. According to Regulation 27(1) of the new regulations,
  "all petroleum … shall be delivered on shore in the United Kingdom unless the Secretary of State gives notice of his consent in writing to deliver elsewhere".
  The ownership of the oil is vested in the Crown under Section 61 of the Continental Shelf Act 1964. Oil profits are dealt with in the Oil Taxation Bill.
  Participation is particularly expensive for the State as vast sums would be required for development expenditure and they would aggravate the Government's borrowing requirement. This expenditure would otherwise be found by private participants or from the open market. If the Minister wants control he has it under Part II, and if he has it there why is he asking for 51 per cent. participation? This is not being asked for in America or in Canada. I am aware of Petro-CAN, but the Government in that case are not asking for 51 per cent. participation in EXXON Gulf subsidiaries or in any of the others. They have set up one company and there are a number of different areas which are challenging the authority of the central body.
  Control of depletion can be covered by independent authorities, as my right hon. Friend said. There is the Texas Railway Commission and there is the Energy Resources Conservation Board in Canada. Pipelines under Part III could more suitably be covered by amendments to Sections 9, 10, 20 and 24 of the Pipe-Lines Act 1962 which covers the proliferation of pipelines on land.
  Refinery expansion, in my judgment—and this is a personal view—is covered by planning control. It should be left to the market. If the control of refineries is to prove as effective as the regulation
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  and assessment of production platforms and sites, the Government had better abandon the attempt. The National Oil Account is a matter primarily for the Treasury and is outside the Bill.
  We have been told that we must have BNOC, but if Britian has two international majors in the United Kingdom why have a separate company? We have BP and the Royal Dutch Shell group. The two countries to which the Secretary of State inevitably refers are Italy and Norway, but they have no international majors. There is, therefore, no reason why they should be brought into the argument.
  It is not as though the State has no interest in this matter. BP, in which the State holds a 48 per cent. interest, has the Andrew, Forties, Magnus and Ninian fields in the north North Sea. The British Gas Corporation has an interest in the Beryl, Hutton, Montrose and southern gas fields. In fact, it has an interest in 20 production licences. The National Coal Board, which is wholly State-owned, has an interest in the Dunlin, Hutton, Statfjord and Thistle fields. In fact, there are 15 production licences.
  If the Government were astute they could consolidate all their assets in the British Gas Corporation, but that has been kept separate and they have not bothered about anything else. If the Minister must set up BNOC, why does he not offer the public participation in the equity of the concern? In other words, the State would have 35 per cent. and the public and others would have the balance. They would be able to contribute and participate, and the public would be able to share in that. A similar experiment has been tried by Alberta Energy Company Limited, and it has proved quite successful.
  The Secretary of State says in his rather glib way that the public will own these assets. He should ask the commuters of Bedford whether they own British Railways when their trains come in late. They have no more ownership of them than flying. If the trains do not run on time and commuters try to take them over, they find they are committing a crime.
  Perhaps I may mention the extraordinary idea—
  Mr. Deputy Speaker: I am sorry to interrupt the hon. Member, but I remind him that some of his hon. Friends are still anxious to take part in the debate.
  Mr. Skeet: I am always observant of the time and your wishes, Mr. Deputy Speaker, and I shall conclude my speech with one or two final observations.
  It is extraordinary—I give this for the Minister's guidance and benefit—that Esso would doubt the feasibility of establishing an Arab network in the United Kingdom. It is unlikely that BNOC will get off the ground. AGIP and Occidental have vacated the United Kingdom market. Is BNOC to spend £400 million on establishing a marketing and refining network in the United Kingdom? If so, where is the money to come from for establishing what is required and carrying out the obligations to develop in the North Sea? Is all this to come from the taxpayer or is it to be added to the nation's debt? Perhaps the Minister will consider these things when he next faces the electorate.
  8.26 p.m.
  Mr. William Small: An old Greek philosopher used to say "I grow old learning many things", and that has been my objective today in listening to the history of the case. A Scottish minister used to say "Poverty is no disgrace, but it is confoundedly inconvenient", and that is the position of the Government.
  The track record starts with the Esso Petroleum Bill of 15 years ago when a private company desired the power of a public authority. The process has continued, and the style now is to deprive the people of information. What is happening is that, on behalf of the public interest, we are building up a degree of technical and legal expertise.
  Clause 2 sets out the new corporation's powers and says that it can, among other things
  "search for and get petroleum … in any part of the world; move, store and treat petroleum … buy, sell and otherwise deal in petroleum and anything derived from it."
  That is the value of what is being entered into in the national interest.
  For those who are anti-nationalisation and anti-public ownership I draw attention to what was said in the Financial Times last week. It was a
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  case of whether we took over British Leyland in the public interest, or the Iranian Government bought the company from under our noses.
  As all that is the pattern of life today, and as there are these transnational arrangements, I hope that BNOC will build up all the background, legal, technical and commercial knowledge which is available so that it can serve the nation properly. That is the great virtue of what this is all about. We are creating a new situation which I fully support.
  I am glad that the headquarters of this new organisation will be in Glasgow, which is a very different place from the South-East of England. The brains of Scotland will be associated with an international endeavour. It is the international element on which this whole notion depends. Those who are interested in currency matters as they might be affected by our membership of the EEC might take note that we shall need a complement of experts in the changing values of currencies which are used for oil dealings. I hope that we shall have a bank of such knowledge in Scotland. We then shall not have to be at the mercy of the atmosphere of mistrust which surrounds the balances afforded us by the big multinational companies. This is not always a straight issue and we do not always have access to all the information.
  To that extent and for that reason I support the Bill.
  8.30 p.m.
  Mr. Alexander Fletcher: The headline in yesterday's Morning Star was:
  "Saigon surrounded by army of liberation."
  I got the impression from the Secretary of State's speech that that is how he regards his work, including this Bill, in the North Sea. He quoted the Prime Minister's comment that the oil belongs to the people. I do not see how the Bill will give anything to the people. What the right hon. Gentleman calls participation will involve not the people but only the Secretary of State and one or two of his political and Civil Service cronies in a secret hideout, in Glasgow of all places, well beyond the gaze of people or Parliament.
  There is more participation in and public scrutiny of the oil industry today

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  than is promised or is likely under the Bill, despite the protests of Labour Members. I wish that they would try to understand that this country is fortunate to have a substantial British presence in the multinational oil industry. The Secretary of State does not complain that private enterprise in the North Sea has let Britain down, that the oil companies are not making a proper contribution to the Exchequer or that there has been a lack of enterprise and initiative such as to require the setting up of a State oil company.
  The BNOC is the result of a few ill-chosen lines in the Labour Party manifesto. It is laughable for this Government, of all Governments, to pretend that a Bill like this could launch an oil company capable of operating alongside BP or Shell or Esso or any of the smaller companies. Ministers should know that with the best will in the world it would take a new oil company like this a generation to become an effective competitor within the oil industry. Its rôle is not to compete—that is the pretence. Its rôle is to dictate—and that is the danger. That is the threat to the development of our oil resources.
  The Bill does not set up a State oil company which will be free to operate with maximum independence as a publicly-financed entrepreneur charged with setting a fast and effective pace in exploration and development. The Bill sets up the Secretary of State as a TV-type tycoon, a "Mr. Mogul"—a rôle for which, with respect, neither he nor his Department is fitted.
  The Bill launches a new Ship of State which will be the slowest and most cumbersome vessel in the North Sea, firmly anchored to the Secretary of State and his Department. Proof of this is the enormous number of referrals that the corporation will be required to make to the Secretary of State. Particularly important is the fact that the Government's participation proposals will require the private part of the oil industry to proceed at the speed of the BNOC, the speed of the slowest ship in the convoy. The BNOC referrals to the Secretary of State do not just affect the pace of decision making in the new corporation. If the Government take a controlling interest in the oil fields as compulsory partners with the independent
  578
  companies, the private companies will find that their commercial decisions are being made by the Secretary of State. Such a position is unlikely to give a spur to new investment and lead to quicker results in the exploration of the North Sea.
  It is not just the sheer irrelevancy of the proposed State oil company that concerns those who wish to see the maximum benefit flowing from offshore oil into the British economy. The Bill sets up a board to do what is unnecessary, to do what the companies are doing at present—and doing extremely well. It fails to set up a board to concentrate on the regulations and that part of the Bill which is mainly in the area of Government responsibility and which requires Government action. It would be of great benefit to the House and the country if Ministers were required, when introducing legislation, to set up a new public authority to propose the winding up of an existing authority.
  If one considers the profusion of Government Departments and public bodies involved in offshore oil, it is not difficult to see the need for a more streamlined and effective approach. That is why Opposition Members argue for a conservation board and not for another oil company, because that is completely unnecessary.
  We should like a board to supervise the licensing, the depletion policy and the environmental aspects of oil developments. That is what Parliament should give its time and priority to, rather than the self-indulgence of Ministers playing the power game in a business they do not comprehend. The co-ordination of activities in the Department of Energy, the Department of Industry, the Department of Trade, the Scottish Office and local authorities requires the undivided attention of Ministers. Those are areas that are still being neglected by the Government.
  The hon. Member for Dundee, East (Mr. Wilson) and his Scottish National Party support the jargon of participation and partnership, the pretence that people feel involved as participants with the National Coal Board or the Gas Corporation, and would feel so involved with the BNOC, It is an insult to Scottish people to include them in this farce. I shall be happy to vote for

  579
  private investment in the oil industry and for public investment in the infrastructure of Scotland and England by voting against the Bill.
  8.37 p.m.
  Mr. Peter Viggers: As someone once said, a week can be a long time in politics, but this week has been an expensive time in politics. Some extremely important points have been made during the debate, but no one has yet referred to the sheer magnitude of the money with which we are dealing. The Bill deals with £600 million, perhaps rising to £900 million. Inflation being what it is, I feel that it is almost certain that it will be £900 million, and we should think of it as such.
  There have recently been proposals for a remarkably large amount, £1,200 million, to be spent on British Leyland. The Community Land Bill proposes expenditure of £300 million to £400 million a year, totalling over a 10-year period £3,000 million to £4,000 million. This Bill proposes expenditure of £900 million. In effect it comes to about £15 for every man, woman and child in the country. For every typical household of two and a half people, it comes to approximately £37.
  The Government have squandermania. They hear the Chancellor of the Exchequer reading the Treasury brief and talking about the need to contain inflation, but they do not listen. The squandering goes on because the Government do not care. They are happy to see inflation, because it allows them to deal with the money according to their own Socialist principles.
  What would happen if we asked everyone "Would you rather have £15, and your family £37, letting the Government raise revenue from the oil industry by taxation, or would you rather pay £15 or £37 to the Government in taxation, letting the Government pay that money to the British National Oil Corporation? The BNOC could invest and perhaps make money itself, and the Government could spend it or reduce taxation, and thus return it to the people who originally put up the investment" If that simple arithmetical proposal were put to most families, they would overwhelmingly vote in favour of keeping the £37. That is
  580
  the alternative. It needs to he put in those stark terms. The Government are full of ideas on spending but not so good at earning the money first.
  I should declare an interest. Before I came to the House I was an executive and director of a merchant bank involved in financing, particularly oil. I also became a director of a small independent oil company with its registered office in Scotland. I am still on the board of those companies. I have searched my conscience, and I can see no way in which I stand to gain or lose as a result of the Bill, except as a taxpayer.
  Parts of the Bill derive from a font of inspiration other than Socialism. For example, with small exceptions, the pipeline proposals are eminently reasonable. It is right that someone should have the right to arbitrate between institutions. A powerful company setting up a major pipeline might be in a position to exert pressure on smaller companies. It is right that the body to arbitrate between companies should be the Government.
  No one can say that the safety record in the North Sea is exemplary. The work done there is very dangerous. It is carried on in hazardous conditions, and the commercial pressures on those working in the industry are extreme. Britain leads in some areas, particularly diving, an area of particular danger. It is right that there should be extreme safety measures. The Government should take them, and we should back them.
  I turn briefly to Part V of the Bill, which contains miscellaneous and general provisions. They are a real rag-bag. It is extraordinary that the Government are so pressed for parliamentary time that they have to include in the Bill two measures which have nothing to do with its general purport. The first is power to pay money to the Bank of England in respect of the Burmah shares. The clause relating to Burmah should be cut out of the Bill. The Government should first explain their proposals in relation to the Burmah holding in British Petroleum. It is not right for them to suggest that the matter should be dealt with when their intentions have not been made clear.
  The second thing that should not be in the Bill is that extraordinary animal the National Oil Account. It gives the Secretary of State his own personal fund to

  581
  take all BNOC's revenue plus royalty payments. That cannot be right. There are huge problems of resources management at the Government-industry interface where State corporations and national organisations operate. It is one of the Government's most intractable problems to create institutions, public utilities and nationalised industries which are satisfactorily and dynamically controlled and properly commercially aware.
  Governments of both parties have wrestled with this problem. There does not appear to be a simple solution. But one that is utterly wrong is to immunise the Secretary of State, to cut him off from the commercial pressures that might be exerted if BNOC were allowed to operate as its own entity.
  There is an inherent difficulty in Government thinking because they are incapable of thinking long term. The right hon. Gentleman who now graces the Government Front Bench may well not be Secretary of State a year, two years or three years hence. He may not even be in the House. His successor may well have a different approach. Therefore, it is wrong that the Secretary of State should be in a position to dictate to the BNOC.
  Of the BNOC proposals generally, I can say only that the Left wing of the Labour Party wanted to nationalise the North Sea by majority participation, but some Ministers who have respect are aware of the immense cost of the nationalisation participation proposals, variously estimated at costing between £3,500 million and £6,000 million. What do we have in this case of difficulty? On this occasion we do not have a referendum. We have a compromise. We have a Bill which proposes the participation, but which fails to provide the money to carry through the proposals.
  The Bill therefore will not work. The arithmetic in it does not add up and the whole thing does not make sense. The Government's intentions have discouraged potential investors in the North Sea and it is right that the Opposition should oppose the Bill.
  8.45 p.m.
  Mr. George Park: I suppose it was only to be expected that in speech after speech from the Opposition we would hear expressions of worry and the view that the Bill
  582
  is completely unnecessary because it affects a highly successful industry in which the Government should not interfere. This is the natural order of things in this House and, therefore, we should not be surprised at such a reaction. When we talk of a successful industry, however, we are entitled to ask for whom it has been successful. In terms of the general population of the country, it has not been entirely successful.
  I gather from information we have been given that some 45 or more countries are already taking steps similar to those proposed in the Bill, and in some cases the action is much more stringent. Conservative Members, it seems, would have us adopt a policy of waiting, as other oil-producing countries have done, until the best profits have been creamed off, and going into the game very late in the day when the exploiters are ready to pack up and move out, leaving the community to clear up the debris left behind.
  We have seen this in the case of other natural resources. We have seen the spoil heaps which the community is expected to put right because the exploiters have long gone, as will be the case with these multinational companies which are so dearly loved by Opposition Members.
  More than one Opposition Member has said that my hon. Friends and I keep referring to our election manifesto commitments. We were elected to carry out that manifesto and we wish to show that we are trying to honour our pledges. This may sound strange to Conservative Members, but it is the pattern we wish to set as long as we are in government.
  I felt some sympathy for my right hon. Friend the Secretary of State while listening to the comments of the hon. Member for Dundee, East (Mr. Wilson), because it would seem that when it comes to the SNP my right hon. Friend is as bad burned as scalded. The hon. Member welcomed the fact that the offices of the BNOC are to be established in Glasgow, but in the next breath he said that the only reason for this was that pressure was brought to bear by his party. My right hon. Friend cannot win on that basis. Although I cannot welcome the fact that the corporation will not be established in my constituency, I am glad that it has been located in the city of my

  583
  birth. Like thousands of other Scots, I had to emigrate to England to find continual work.
  Conservative Members have repeatedly alleged that they are speaking on behalf of the public. Their interpretation of the term "public" differs from mine. It is quite clear that they are speaking for some of the public. This became clear when one hon. Member said that the Government should take a 35 per cent. interest and that the public would then invest in the remainder, and that this would allow participation. That type of participation was markedly absent in the case of British Leyland.
  Tory Members would have been prepared to see British Leyland go to the wall in spite of the chaos that would have been caused in thousands of homes. They were quite prepared to see a receiver move in. If I have to declare an interest, it is on behalf of the members of my union involved in British Leyland and in construction work in the oil industry. I am certain that the interests of my union's members would be much better protected under a Labour Government than under the conditions now applying on the rigs.
  The Government will have to pay much greater attention to working conditions. I know that this does not come within the Bill but it is a subject which demands serious attention. We are not speaking for some of the people. We believe that in introducing this measure we are introducing something which will be for the benefit of all the people.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. There are still four hon. Members who wish to take part in the debate in the 10 minutes remaining before the Front Bench speeches. I leave those hon. Members to sort that out among themselves.
  8.51 p.m.
  Mr. John Moore: With that inviation, Mr. Deputy Speaker, I will endeavour to be as rapid as I can. I hope that hon. Members will understand if I do not respond to the points they have made. Tonight sees the continuation of a national debate involving mythology and reality. The mythology reminds me of a nursery tale—not "Little Red Riding Hood" but "Little
  584
  Red Benn". We have been listening in this national debate to the discussion about the potential national bonanza beneath the sea. It is said that, "It is like gold on the ground, easy to scoop up" This is a nursery tale. I have a strong feeling that the "Jolly Woodcutter" is here now in the shape of "Tribune Eric" coming to "Little Red Benn's" rescue. Taxes, taxes followed now by stealing.
  What is the truth? It is that this vast treasure does exist, but in inhospitable waters, expensive to work. Not only that, they are waters from which we shall reap the benefit because of an investment by private industry of approximately £2½ billion. Those who deplore the activities of our international companies and international companies operating from other shores should note that is they who have taken all the risks and the potential losses. As a nation we have so far taken none.
  The Oil Taxation Bill removed the problem of Middle East posted prices by the creation of a ring fence. That was a problem accepted on all sides and answered in the oil taxation legislation. Where are we today? Do we need this extra legislation? The nation will have the oil at no cost and no loss even if we do not enact this Bill. There will also be, according to the Government, 70 per cent. of the profits for the nation. We know that the Government, thanks to the Conservative Continental Shelf Act of 1964, have strategic control of the oil and of the companies through licensing and through the new oil tax law. We know that the depletion argument is a snare and illusion. We know that that could have been done without the BNOC.
  Why are we having the Bill? The Treasury made it quite clear that no bonanza is involved in this exercise. They showed us that they learnt this in the debate on the petroleum revenue tax. The Government, like many politicians of all parties in the past—but today especially true of the Labour Party—will not face reality. They will not face the reality that the nation, because of their policies, is to be allowed to pretend that a bonanza will come. However, there is not to be a bonanza but meaningless participation.
  We are constantly told that Middle East countries have some form of partnership.

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  There are, tragically, some strategic and important differences between us and Middle East countries. Middle East countries have a developed resource, oil. The Government should remember that blackmail is possible with a hostage but difficult without one. There is also the comparison between high-cost North Sea oil and high-risk North sea oil and low-cost Arab oil.
  I remind the House of the huge capital requirements of the North Sea. It is estimated that a further £12·3 billion will be needed by 1985. There is thus one other key distinction between us and the Middle East—they have the capital and we have not. The Minister is looking puzzled. I make it clear that I mean capital. It is clear that our needs and weakness demand the help of the oil companies.
  With this structure, the BNOC, we shall create a nationalised oil industry in the United Kingdom in less than a generation. We shall destroy private exploration, refining and distribution, and we shall secure the eventual destruction of the private petrochemical and plastic industries. There is no question but that the cuckoo in the nest in the shape of the BNOC has no possibility of being competitive with private industry under the structure introduced by the Bill.
  I shall conclude the lengthy arguments I had hoped to make by suggesting that at the end of the day the ultimate corruption that this form of State socialism will create, as has been indicated by Labour Members, is a State monopoly of our energy supply and distribution. The conclusion is simple. The Bill will mean, in the short term, a cost of £900 million to the taxpayer. In the long term, it will mean subsidised, unionised monopoly control of another national asset by the uncontrollable forces of spendthrift Socialism.
  8.58 p.m.
  Mr. Iain Sproat: I am glad to see that the hon. Member for Glasgow, Garscadden (Mr. Small) is present. He welcomed the siting of the BNOC in Glasgow. I, too, welcome it coming to Scotland. However, I am infinitely depressed that the Government have decided to site it in Glasgow. They are flying in the face of commercial reality. Everyone knows that the international
  586
  headquarters of the oil companies is at Aberdeen. That is where the Government should have sent the BNOC if they had to have such an organisation. Many people in Scotland will think that the decision to site the BNOC in Glasgow relates more to the electoral support that the Government hope to gain than to the needs of Scotland and the rest of the United Kingdom.
  This is an unnecessary Bill, because we do not need a BNOC to secure the financial benefits and control of the oil industry which the Bill will secure. The BNOC is unwanted because the country does not want any more nationalisation. If a referendum were held, I am sure that the Government would find their views rejected.
  The BNOC is damaging, because it introduces into an industry that is facing considerable difficulties bureaucratic delay, interference and all the ills that we associate with the Civil Service trying to run a business.
  The BNOC will be cumbersome and dilatory and it will cause cumbersomeness and delays in others. It will be extremely expensive and will cost us between £3,500 million and £6,000 million to buy our way into the oil companies. On the Government's own estimate it will cost £3,000 million to develop the oil resources until 1977 alone. Taking half that figure, £1,500 million is an enormous extra burden to place on the taxpayer. It would be crazy to place such a burden on the taxpayer at any time, but to place it on a country like ours now when it is so near to bankruptcy is absolute economic lunacy without parellel.
  8.59 p.m.
  Mr. Hamish Gray: When the Minister started his remarks this afternoon he said that this was a historic and a great week for Britain. I concede that it is a historic week. I do not concede that it is a great week. Rather, I suggest that the Bill is the third in a week of undiluted Socialism.
  Although certain of the provisions of the Employment Protection Bill and particularly the Community Land Bill may seem to be obnoxious, in the long term it is in this Bill that there are to be found the proposals which are potentially the most damaging to our economic prosperity.

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  The right hon. Gentleman referred to a state of anarchy existing when he took over our policy for energy. A party which supports law breakers in the form of Clay Cross councillors and Clydebank councillors—I am sorry that the hon. Member for Bolsover (Mr. Skinner) has taken to his heels so quickly—should be the last to talk of anarchy in any shape or form.
  There are sections of the Bill which will have our support, but even those can be improved and in Committee we shall move amendments with that in view. We accept that it is desirable for the Government to have control over the rate of decline of our oil resources. We agree with the clauses in Part II which deal with licensing in an essential part of any legislation designed to control exploration and production. Whether the Government have got it right will be carefully considered in Committee. It is certainly arguable that a unilateral abrogation of existing licensing rights should be tempered by payment of full compensation. We shall certainly deal with that in Committee.
  I come to the wide powers which are to be taken in Part II. There is the situation where severe financial penalties could be inflicted on companies whose existing production licences enabled them to be financed for exploration and production and that finance based on the production profile of the field. It is reasonable that these companies should expect some assurances from the Government, at least in the short term.
  Neither Norway nor Holland has taken such steps. The Under-Secretary referred in an intervention to Ireland. I remind him that the policy of the Irish Government is not to inflict upon the company which has been exploring there already the terms which they are now introducing.
  My right hon. Friend the Member for Knutsford (Mr. Davies) went into detail about the situation when the licences were granted in 1971. The Minister said that the terms to which we took exception were contained in a previous Bill, and he made light of the whole affair. I assume that as the Minister makes light of this affair he will not be averse to accepting an amendment in Committee to delete the provision from the Bill. If it is of relatively minor importance and there is no
  588
  great snag involved, I am sure that he, being the reasonable man that he claims to be, will be prepared to concede this at a later stage.
  The more one studies the Bill the more one despairs of it. Closer study reveals that some of the arguments which might have been thought to be fairly innocuous in relation to some of the clauses become less and less desirable.
  The Bill requires careful scrutiny in Committee and a great deal of consultation both within and outwith the House. We shall wish to know a great deal more about Part III which deals with submarine pipelines and about the powers which are given to the Secretary of State.
  Let us for a moment look at those powers. The Secretary of State takes unto himself the power to authorise all pipelines and their use. In Clause 21(3) he takes power to have complete discretion over the terms of the pipeline authorisation. He goes on to take power to fix the sums to be paid by additional users and power to direct an increase in the capacity of the pipeline and even to change its route. In Clause 24 and 25 he takes power to terminate a pipeline authorisation, to cause it to be forfeited and to reallocate it if he so wishes. In Clause 33 he may designate ownership.
  Those are all major considerations for companies which are already involved. In those circumstances, I hope that the Minister will not contemplate putting the Bill to a Standing Committee before Whitsun. Consultations are essential for the benefit of those who have already invested million of pounds. It is easy to kick at multinational companies, but I remind the Under-Secretary of State that the thousands of new jobs in Scotland have not been created by the Labour Government or by the Conservative Government when in power. They have been created by companies which have invested in the area. The people in my constituency and, I am sure, in his who benefit from the jobs which have been created do not want those jobs to be put at risk, which is a possible result of the measures proposed in the Bill.
  We shall wish also to explore the effect on other industries, for example, on fishing. That, again, is a cause to delay the sending of the Bill to Standing Committee. Many consultations require to be taken.

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  On Part IV, I welcome the fact that the Government are to decide what is in the national interest. That has proved difficult for local authorities in the past and they should not be involved in it. If, however, the right hon. Gentleman takes as long to make up his mind on each adjudication as he has taken in giving guidance on this matter to local authorities in the past, the whole purpose of the provision will be defeated. In Part IV the Secretary of State has given himself even greater and more far-reaching powers.
  My right hon. Friend dealt in detail with Part V, particularly with the establishment of the National Oil Account. It is difficult to understand why the Government have opted for this method instead of decreeing that moneys should be paid directly into the Treasury. The Scottish Development Agency and the Welsh Development Agency will presumably receive their funds from the Treasury. If the Government are sincere in their belief that oil revenues should be spread evenly throughout the land, it is strange that they have not provided in the Bill that a percentage of the intake to the National Oil Account should be paid to the Scottish Development Agency. It may be that we shall want to have consultations on that matter in Committee.
  The Minister of State, Scottish Office (Mr. Bruce Millan): Is not the hon. Gentleman putting forward an extraordinary proposition? I understood that the Opposition were to vote against the Scottish Development Agency?
  Mr. Gray: The hon. Gentleman must not take anything for granted. He is at liberty to take whatever meaning he likes from what has been said. If the Conservative Party decides to vote against the agency it will make that decision for very good reasons. One reason which would weigh heavily with us would be whether there was a guarantee that a considerable percentage of the revenue taken by the national fund was automatically to be paid into the Scottish Development Agency and used in Scotland.
  Mr. Gordon Wilson: I have been following the hon. Gentleman's argument and his development, or vacillation, of Conservative policy with considerable interest. I ask him to state what percentage the Scottish Conservative Party would consider suitable to be devoted to the agency from the oil revenues or from its proposed Scottish development fund. I ask that question because the same question was asked of the hon. Member for Glasgow, Cathcart (Mr. Taylor) in the Scottish Grand Committee 11 months ago and he refused to give an answer.
  Mr. Gray: The hon. Member for Dundee, East (Mr. Wilson) must grow up. We all know that both he and his party are politically naive. I am rather long in the tooth to be taken in by an intervention of that sort. The hon. Gentleman should realise that the Scottish National Party is not the only group of people interested in Scotland.
  Mr. Gordon Wilson: How much?
  Mr. Gray: If the hon. Gentleman wants to know the sum let him table an amendment in Committee.
  Mr. Deputy Speaker (Sir Myer Galpern): If the hon. Member for Ross and Cromarty (Mr. Gray) would address the Chair there would be no need for me to pour water on troubled oil.
  Mr. Hector Monro: Does my hon. Friend agree that all the economic and financial advantages to Scotland under the Scottish Development Agency can now be provided under the Industry Act 1972 that was introduced by a Conservative Government, and that only thoroughly undesirable matters are in the Government's SDA programme?
  Mr. Gray: That is correct, but if the present Government were to make some percentage inclusion for the SDA that could well change our view. If we thought that there was to be a large amount of money specifically devoted to Scotland we could well take a different view. However, we shall be talking about that in Committee in greater detail.
  There are no real controls at present on the disposal of National Oil Account funds. There seems no safeguard or Treasury control on how it will spend its money. There is nothing to ensure

  591
  that it does not invest in uneconomic activities. It is all very well for the Government to say that under no circumstances will it enter into uneconomic activities, but how are we to know what the future holds? We have no guarantee that the right hon. Gentleman will be the Secretary of State for Energy for an unlimited period. We could see some more conjuring by the Prime Minister. No one is a better conjuror than the Prime Minister. He could decide eventually that the Secretary of State for Industry should become the Secretary of State for Energy. Nobody would wish that right hon. Gentleman on our debates. One never knows what ideas he might have and how he might wish money to be spent.
  It is, however, the creation in Part I of the Bill of a British National Oil Corporation and the enormous power which it will wield which causes us concern. This hallmark of doctrinaire Socialism may well prove to be a costly prototype for Government intervention in the oil industry. The cost of 51 per cent. participation in the present stake in the North Sea could be between £4,000 million and £6,000 million. Even if that investment were to be positive, it would mean delaying for many years any benefits to the long-suffering taxpayer, who may end up by being deprived rather than enriched by the activities of this money-consuming giant.
  I believe that the corporation, conceived by the Government as a sop to their Left wing, has all the heredity markings of a large dinosaur. It will move very slowly. It will swallow up the small. It will lean on the large. It will dig its huge claws into any organisation not agile enough to manoeuvre from its clutches. In the name of participation it will suck the life blood from the existing profit-earners until they are coerced into total submission.
  Unless we are able to make substantial amendments to the part of the Bill outlining the creation of this monster, it will, as time goes on, develop an insatiable appetite for money. It will be aided and abetted by the Left who will never accept that the NOA has reached a level at which its surplus should be transferred to the Treasury. The Government will always find something else in which the
  592
  BNOC should participate—some additional company in which they may wish to meddle, some further activity to which they wish to commit public funds.
  What is the Government's next move? A total of 51 per cent. participation is only the beginning. If private investors decide in future not to participate with BNOC, the dinosaur might find it will have to swallow more than it can digest.
  This afternoon I fully expected the Secretary of State, when opening the debate, to announce the name of the new chairman of the BNOC. Perhaps he will let the Under-Secretary of State for Energy announce the name when he replies to the debate. However, I very much doubt whether that Minister will be given the opportunity to make such a plum announcement. It is simply amazing that of all the people approached by the Minister, nobody will accept the job. Nobody wants it—
  Mr. Canavan: I will take it.
  Mr. Gray: The hon. Member for West Stirlingshire (Mr. Canavan) said he will take it. That is precisely the calibre we shall get.
  I think the Government may be embarrassed by the situation. The Minister may get out of it by saying "I shall be announcing in due course the name of the chairman". Well, they will have to find him first. Why does nobody want the job? The answer is simple. Nobody wants to be a mere pawn at the will of the Secretary of State. The Secretary of State is the person who is to be zoo-keeper in charge of this dinosaur.
  Mr. Park rose—
  Mr. Gray: No, I shall not give way. The hon. Gentleman was only in for a relatively short part of the debate—[HON. MEMBERS: "He made a speech."] He was whipped in from the Tea Room like most of the others. I am not giving way. Two of my hon. Friends were kept out of the debate because the Government Whips brought in people to speak on the Labour side. I must not allow the "Whips' union" to be led into disrepute by the Minister.
  The corporation will face a serious staffing problem. I join those who have welcomed the news that the headquarters will be situated in Scotland. I believe

  593
  that my hon. Friend the Member for Aberdeen, South (Mr. Sproat) prefers Aberdeen while the hon. Member for Dundee, East favours Dundee. I think that the Government are right, for once. Glasgow is the place where it should be situated because it is important that we should create a sense of rejuvenation in West Central Scotland.
  There will be considerable difficulty in obtaining staff. Where will the corporation find the trained professionals capable of taking the major decisions and of evaluating the problems? Large sums of money—all too often other people's money—will inevitably be Involved.
  I do not have to remind the Minister of the implications of delay in the oil industry. The BNOC will require a staff which is larger than even that of the greatest oil company, because theoretically it will be involved in dealing with all the proven fields and in each case with different sets of partners. A mammoth task lies ahead of it. I am worried about its capacity to attract the right calibre of staff to undertake those duties.
  The Opposition are agreed that the BNOC is unnecessary. Governments have many other ways of collecting revenue from the industry. At the end of the day they could obtain those revenues without the creation of this corporation at such vast expense, since £600 million or £900 million will only fill the tank to residue level. The main flow will come from royalties. That is money which should go directly to the Treasury.
  If the BNOC is to be created it must be made to operate in a fair and competitive way in an industry in which the criteria for success have always been efficiency and expertise. Those are hardly qualities for which the Government are renowned. It is wrong that the BNOC should not pay PRT. I hope that there will be no question of its receiving further disguised subsidies or hidden preferences. This corporation will be enormous. It will have tremendous power. It will have the ability to explore and to produce petrol, to transport and refine petroleum, to store, distribute and sell petroleum and its derivatives, to build, hire or operate refineries, pipelines and tankers. Yet despite all that the Secretary of State retains under Clause 10(2)
  594
  the power, if he so desires, of concealing whether the Corporation is making a profit or a loss. It is wrong that that power should be retained. Why should we put millions of pounds of taxpayers' money unnecessarily at risk?
  Oil companies have faced enormous cost escalation. Steel costs have increased by between 50 and 80 per cent., and, as one of my hon. Friends pointed out, production platforms account for 40p in every £1 spent on offshore development. The cost of these platforms has doubled and in some cases trebled. In BP's Forties field, the cost of development has risen from £350 million to £700 million plus, and Brent and Ninian look like costing approximately £1,000 million each to develop.
  Why should money be put at risk in this way when it can be provided by private concerns? But, of course, no one will invest this kind of money in such an area unless there is complete political stability, and in this regard there are those Government supporters who can take no credit from the fact that political stability in this country is not as strong as it once was.
  The Secretary of State can hardly wonder that there is apprehension within the industry about the likely situation if the Bill goes through in its present form since he is one of those prepared to tear up a treaty signed by this country. It is no wonder that there is apprehension in this area.
  The BNOC will be much more a creature of Government than any other nationalised industry. It is to be given much stronger powers of direction, and it will have two civil servants on its board. It was the right hon. Member for Orkney and Shetland (Mr. Grimond) who pointed out that there cannot be any other country west of the Iron Curtain where such a regulation exists.
  There is no economic case for establishing a downstream BNOC function since distribution facilities, for example, in this part of the industry are more than adequate, and there is plenty of competition in that market. We accept the need for legislation, but we do not accept the need for it in this form. Control by a regulatory body with the Government having their share through the tax system seems much more realistic.
  Dr. Phipps: Does not the hon. Gentleman accept that it is also in the national interest that BNOC and the public gain profits from the downstream activities which are currently denied the public?
  Mr. Skeet: Taxation.
  Mr. Gray: There are ways in which the Government can take their profit without this type of participation. This is not an activity in which the Government should participate directly—
  Dr. Phipps: Why not?
  Mr. Gray: Because there is no necessity to commit public funds to this kind of investment when those public funds can he so much better used in other directions. The Bill has already created doubts and fears in the industry at a time when continuing high investment is essential.
  My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) and, later in the debate, another of my hon. Friends referred to the recent statement by Mr. Monty Pennell, the managing director of BP, in which he put forward the view that drilling could be reduced by as much as 60 per cent. in the coming year. The interesting feature is that he gave that view within a week of the Under-Secretary giving quite the contrary view in answer to a Question on 7th April, which hon. Members will find in col. 795 off the Official Report. It might be that the Government would benefit greatly if they listened to the advice of such people as Mr. Pennell rather than to some of the preconceived ideas being fed to them at present.
  There is a great similarity between BNOC and NEB. It is interesting that the Paymaster-General should have given his opinion about the NEB in a letter to The Guardian on 6th June when he said:
  "This will be the most powerful body in the country, more powerful within its field of activity even than the elected Government."
  BNOC is going to be even more powerful than that. During the Committee stage on the Bill we shall oppose strongly the passages in the Bill which are wholly distasteful to us, but we shall provide constructive opposition and endeavour to improve those parts, the principle of which we accept. The duty of the Opposition is to oppose, and this we shall
  596
  do tonight. We cannot accept that Second Reading should be given to a Bill which includes a provision to establish a corporation which we believe to be wholly unnecessary, vastly expensive and completely undesirable. We shall vote against the Bill tonight.
  9.31 p.m.
  The under-Secretary of State for Energy (Mr. John Smith): It is my first pleasant duty to welcome the hon. Member for Ross and Cromarty (Mr. Gray) on his first appearance on the Opposition Front Bench in an energy debate. He said that the Opposition would look carefully at various matters in Committee. I noticed the difficulty that he got into in trying to argue with his hon. Friends whether the Conservative Party will vote for or against the Scottish Development Agency, but I hope we shall not waste time discussing that in the Committee stage of this Bill. The Government attempted to bring forward a Bill to set up the Scottish Development Agency but the Conservative Opposition stopped it from going to the Scottish Grand Committee. They had better make up their minds about their policy.
  The hon. Gentleman repeated some of the mistakes of fact which have characterised the contributions of Conservative Members. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) made one of his usual hyperbolic speeches this afternoon. One matter for which I had always given him credit was his careful attention to fact, but this afternoon he attempted to mislead the House by suggesting that Clause 10 contains an unusual and novel proposition about the non-disclosure of accounts showing whether there is a profit or loss. I remind him that precisely the same provision appears in Section 23 of the Gas Act 1972 which was passed by the Conservative Government at the time when the right hon. Member for Knutsford (Mr. Davies) was Secretary of State for Trade and Industry.
  The hon. Member for Ross and Cromarty repeated the allegation, which was mentioned also by the right hon. Member for Wanstead and Woodford, that nowhere west of Communist countries are there official members on the boards of publicly-owned industries. In fact they exist in the Netherlands, Italy and

  597
  Australia. In Norway, Statoil has Ministers on its supervisory board, and in France it is common practice to have civil servants on the boards of public corporations or companies in which the Government have a shareholding.
  Mr. Patrick Jenkin: Does the hon. Gentleman agree with the verdict of his colleague Lord Balogh that civil servants are not the right people to run this country?
  The Secretary of State for Scotland (Mr. William Ross): The right hon. Gentleman should stick to his own speech.
  Mr. Smith: The proposal in the Bill is that there be two official members on the board, without voting rights. The purpose of having them there is to allow for speedy communication between the Government and the board of the corporation. I should have thought that was a sensible proposal. We must never think that we have the structure of public corporations right. It is remarkable to hear the right hon. Member for Wanstead and Woodford putting forward arguments advanced by my noble Friend Lord Balogh in support of his argument.
  We have had many criticisms from Conservative Members, based principally upon their ideological opposition to the extension of public enterprise in any form. One of the things that strikes me as curious about this House is that when the Labour Party brings forward proposals for public enterprise it is regarded as doing that in the cause of ideology, and so it is—[Interruption.] We bring forward proposals for public enterprise because we are Socialists. The Conservative Party opposes our proposals root and branch because it is the Conservative Party and believes in private ownership and control, but somehow that is not regarded as ideology of any sort.
  A new obligation has come in. After listening to the speeches by Conservative Members today, as many hon. Members had to listen to them during the debates on the Oil Taxation Bill, one begins to wonder whether the Opposition properly understand that their rôle is that of Her Majesty's Loyal Opposition, not an Opposition promoted by the oil companies. We shall watch carefully when the Bill goes into Committee to see whether hon. Gentlemen opposite collect
  598
  their oil company briefs in the corridor or whether they will be handed to them in the Committee room while they are discussing the Bill.
  Mr. Alexander Fletcher: Will the hon. Gentleman tell the House whether it is the exclusive right of the Government to have secret meetings and negotiations with oil companies while Members of the Opposition publicly discuss these matters in the House and in Committee with representatives of the oil companies?
  Mr. Smith: The Government have had confidential meetings with the oil companies and considerable consultations. We are often told that we do not consult them enough. I am now informed, though I did not know it before, that the Opposition have had secret meetings with the oil companies. That is their business. What I object to is the repetition, tediously and at length, of oil company criticisms of legislation brought before the House. The function of Members of Parliament, when they receive representations from oil companies or other interests, is to pass them through the filter of their concept of the public interest before passing them on. That critical period is missed out by Conservative Members.
  Mr. Patrick Jenkin: If the Under-Secretary is referring to the debates on the Oil Taxation Bill, may I ask why the Treasury accepted almost every amendment that we put forward?
  Mr. Smith: That is a gross misinterpretation of what happened. The right hon. Gentleman knows that it was on that Bill that the present tendency of the Conservative Party to repeat every oil company criticism was first manifested. We hope that during the progress of this Bill through the House they will not be so slavishly addicted to criticisms shoved into their hands by oil companies and will not be so adept at repeating any criticisms they can make of any public enterprise in this country.
  It is surprising that Opposition Members should be so ignorant about what is going on in other parts of the world where there are offshore oil and gas resources. The impression seems to exist in the minds of some that participation is a feature only of OPEC countries. It is

  599
  true of Norway, Canada, Australia and New Zealand and of EEC members with substantial oil or gas production—France, Italy, Holland, Ireland and Denmark. I should be surprised, since the Irish Government yesterday announced terms of 50 per cent. participation, that they should be regarded as advocates of red-blooded Socialism. They would not be easily recognised as such. Some countries participate in territories already licensed—for example, France, Italy, Holland and New Zealand.
  The Government have to enter into negotiations with existing licence holders because such a botch was made of the 1971 licensing by the Conservative Government. The right hon. Member for Knutsford referred to this earlier. He was the Minister responsible for our policy at the crucial time between 1970 and 1972.
  Mr. Skeet rose—
  Mr. Smith: The right hon. Gentleman made what I thought was an offensive reference to my right hon. Friend the Secretary of State for not paying close attention to the interests of the oil industry, as he put it. The right hon. Gentleman prayed in aid of his own defence the lack of controls, particularly over depletion policy. He said that there was no existing knowledge on which one could make assessments in 1971. I see that he still sticks to that view. That is surprising, since the substantial Ekofisk field, not far from the British sector, was discovered in 1969 and the Forties field was discovered in 1970. The oil companies were prepared to bid a total of £100 million in the 1971 round of licensing. If the right hon. Gentleman did not know that there was a lot of oil there, the oil companies, about which he is supposed to know, certainly knew.
  Mr. John Davies: The Under-Secretary clearly demonstrates precisely the point I was making—that complete ignorance of the realities of the industry prevails in his Department. The truth is that the time from the point of discovery to the point of ascertainment of reserves is a long and arduous period. If the hon. Gentleman imagines that in 1971 the ascertainment of reserves was at a point at which
  600
  one could count on a major production from the North Sea, he is wrong.
  Mr. John Smith rose—
  Hon. Members: Withdraw.
  Mr. Smith: The right hon. Gentleman is rather unworthily suggesting that this is a party political argument got up simply to make a party political point. Let me remind him—[HON. MEMBERS: "It is your argument."] It is not only my argument. I am repeating an argument advanced by the Public Accounts Committee of this House. There were a large number of Conservative Members on that Committee—
  Mr. Varley: A majority.
  Mr. Smith:— a majority, I am told, on the Committee—who did not dissent from conclusion No. 15, in which the Committee said:
  "We are concerned that licences granted remain valid, without a break clause exercisable by the Department, for 46 years; and that there is no provision for variation or renegotiation of the financial terms, however, large the finds, or for obtaining a degree of government participation".
  That was the view of the PAC.
  Mr. Emery: If this is so obvious to the Under-Secretary, in the six years of licensing while the Labour Party was the Government why did they not alter the terms? What is certain is that they did not.
  Mr. Smith: Because all the rounds up until the fourth were thought to be concerned exclusively with gas. It was not until 1970 that there were substantial oil finds—
  Mr. Emery: That is untrue.
  Mr. Smith: The Conservative Party cannot have it both ways. The right hon. Member for Knutsford says that there were not ascertainable oil discoveries until 1971. I am quite happy to be in the good company of the Public Accounts Committee. The hon. Member for Honiton (Mr. Emery), a former Minister in the Department of Energy, raised today the fact that under the second round drilling had not been completed. In fact, it was completed in 1971 when he was a Minister in the last Conservative Government.
  Mr. Emery: I was not then.
  Mr. Smith: I am sorry that he was not. However, he should have discovered this fact after he became a Minister.
  Mr. Patrick Jenkin: It is important that the House should not misconstrue the paragraph that the Under-Secretary read from the report of the Public Accounts Committee. It has been perfectly clear all along—the Conservative Government recognised this and were about to act on it—[Interruption.] My right hon. Friend, the former Mr. Tony Barber, announced the proposals from the Government Dispatch Box. Taxation has always been reserved to the Government, and it would have been similarly reserved by the Conservative Government.
  Mr. Smith: We have heard this tale before. From 1972 until 1974 there was a remarkable period of inactivity. We are told variously that the Conservatives were moving towards the framing of their policy, moving steadily towards the framing of a policy, but we got no concrete proposals at all on taxation from the Conservative Party—
  Mr. Skeet: Talk about the Bill.
  Mr. Smith: I should like to, but I have been too indulgent in giving way to the hon. Gentleman's hon. Friends. I will now turn, if they will allow me, to the substance of the Bill—
  Mr. John Davies: Disgraceful.
  Mr. Smith: It will do not good the right hon. Gentleman shouting "Disgraceful"—
  Mr. Davies: But it is disgraceful.
  Mr. Smith: We are making up for the deficiencies of the right hon. Gentleman's policies when he was Secretary of State. He cannot shuffle off responsibility for the massive neglect which he and his colleagues showed and which we are now engaged in catching up in this legislation.
  At the very centre of our proposals is the establishment of the British National Oil Corporation, which I am glad my right hon. Friend was able to announce will have its headquarters in the city of Glasgow. This will be a practical example of the devolution of decision-taking and follows the decision of the Department of Energy some time ago to site the headquarters of the Offshore Supplies Office in Glasgow.
  Mr. Gordon Wilson: Since the Under-Secretary is pursuing the theme that Scotland will benefit from the Offshore Supplies Office and the establishment of the BNOC, would he care to follow through that argument to its conclusion and say here and now what proportion of the oil revenues will be going to the Scottish Development Agency, especially in view of the question which he was asked earlier?
  Mr. Smith: The hon. Gentleman is well aware of the Government's proposals about how the Scottish Development Agency is to be funded. He knows that it is to be funded by the Treasury. Since he raises the question of benefits to Scotland, let me remind him that 40,000 jobs in North Sea oil-related activities are already being launched in Scotland. If the hon. Gentleman has any concern for Scottish industry, he will stop advancing the argument that we should cut back production from 100 million tons to 40 million tons. That would kill stone dead the fast-developing offshore industry that exists at present in Scotland. [Interruption.]
  I hope that Scottish National Party Members will let me be heard. If they want to cut back and destroy our offshore supply industry, I hope they will take themselves round the module yards, the platform building yards and all the engineering works and tell all the Scottish people why they want to put them out of jobs.
  Mr. Gordon Wilson rose—
  Mr. Smith: Unfortunately there seems to be some misapprehension on the part of the Opposition about why the Government have moved towards participation. I should have thought that a look around the countries I have already mentioned would indicate that this is desirable. It seems necessary to spell out clearly to the Opposition why we are adopting a policy of participation, for which the British National Oil Corporation provides the framework. It is a pity that the Opposition are totally obsessed with the rights of private property, to the extent that foreign property rights become more important than British national interests. In their unreasoning aversion to public enterprise they cast out these proposals without examining them closely.

  603
  I shall spell out clearly the reasons why the Government wish to have participation through the British National Oil Corporation. First, it will give this nation a direct right to the oil extracted from our own sea bed. Oil underground belongs to the nation, but once it is extracted it becomes the property of the licensee. Under participation we shall gain a right in the property and a say in the disposal of our own oil. Through the British National Oil Corporation we shall acquire our own direct knowledge of the difficult techniques of oil and gas production. That will make our policies much better informed. Perhaps with that knowledge and information we shall avoid the mistakes made by the right hon. Member for Knutsford.
  Mr. Skeet rose—
  Mr. Gray: Will the Minister tell the House what figure the Government have put on the cost of 51 per cent. participation in the present investment in the North Sea.
  Mr. Smith: We have not completed the negotiations with the oil companies. The hon. Gentleman knows that very well. He knows what we are doing. My right hon. Friend has already announced those companies which have conceded the principle of participation. Negotiations are proceeding with these licence holders. [Interruption.] I should like to get on with the Bill. I have given way more than most closing speakers do.
  Through the British National Oil Corporation and participation, we can engage profitably as a nation in the exploitation of our own resources. In future licensing rounds it will be possible for the BNOC to be the majority holder and in some cases the sole licensee. In those cases the return to the nation and the benefit to our own citizens and to our own taxpayers will be that of the owner as well as that of the tax collector. Why our ratepayers and taxpayers would wish to miss the opportunity of gaining that extra profit for the nation, I cannot understand. Perhaps most important of all, we shall gain for this country an independent capability in oil and gas production which will reduce our dependence upon international and other oil companies.
  604
  Throughout the argument over the past year on the structure of taxation, excess profits and the wider question of how we advance the development of our own oil and gas resources, we have been constantly reminded by the Opposition that we must be extremely careful not to offend the major international oil companies. We have been told that if we taxed them too much, or if we advanced our proposals for participation with the self-confidence that we do, they might get up and go. We were given graphic descriptions of all the places in the world to which the major oil companies, if they did not approve of the policy of Her Majesty's Government, would go.
  The House has heard those arguments time and time again. Have Conservative Members not understood the real meaning of such an argument? Why did we get ourselves into such a position? The constant reiteration of the argument that we are not masters in our own house is eloquent testimony to the need to become masters in our own house. That is what the Government will achieve through majority participation.
  The form we have adopted allows us to enter into partnership with the existing oil companies. The skill and courage they have shown in tackling the immense problems in wresting oil and gas from one of the most hostile territories in the world demand universal praise. We shall continue to seek their assistance and expertise to develop our new-found wealth. We seek a partnership with them now and in the future, and we wish them to find a profitable outlet for their skills and resources. But we insist, as I should have thought any Government conscious of their responsibilities to the nation must, that we have effective control and secure national benefit. We want a partnership, but it should not be the partnership of the horse and the rider. We want co-operation with them both over the matter of the exploitation of our resources and in the sharing of the benefit.
  Opposition Members have suggested that it will not be possible to have effective co-operation between publicly-owned and privately-owned companies. That flies in the face of the facts about the North Sea. The National Coal Board is already a partner with Conoco and Gulf in a number of fields in the North Sea.

  605
  The British Gas Corporation, which has a very good record of exploration and development on our Continental Shelf, is in partnership with Amoco and some other American companies. Those companies have paid tribute after tribute, well-deserved, to the activities of the National Coal Board and the British Gas Corporation.
  Mr. Patrick Jenkin rose—
  Mr. Smith: I shall not give way. The right hon. Gentleman cannot complain that I have been ungenerous in giving way to him and his hon. Friends.
  An important part of the Bill is to be found in Parts II and III, in the additional controls which the Government propose. There has been constant criticism of the way in which these licences were left by the Conservatives in the 1971 licensing round. Let me remind the House of some of the defects, some of the gaps in the controls that the Government possess. First, we have no control over the rate of depletion. That is probably the most important issue we have to decide for future policy—the husbanding of our resources. There are no controls in licences which run for 46 years. If we made no changes we should not be able to affect them until 2018. That is a massive neglect of the national interest.
  There is no requirement for continuing exploration for 40 out of the 46 years of the licences' life. There is no control over ownership of licences. As the Public Accounts Committee pointed out, there is insufficient information on both the technical aspects of exploitation and the cost. There are gaps in the safety provisions for the laying of pipelines, for example, which were not covered in the Mineral Workings (Offshore Installations) Act 1971.
  We are closing those serious gaps in the Government's proper aspirations for control over development in the North Sea. The right hon. Gentleman does not want the Government to have these controls. We shall no doubt go into the matter carefully in Committee. The right hon. Gentleman wants a United Kingdom oil conservation authority, an independent body. Such an independent body would not be under Government control. For balance of payments reasons and all
  606
  sorts of other reasons, it is necessary for there to be Government control. If there were to be overall Government control, the independence of such a body would be greatly weakened. It is difficult for the right hon. Gentleman to have it both ways.
  Many points were raised which I hope will be examined in Committee. I hope that the Opposition will rise to the challenge in Comittee, not only looking from the point of view of the industry, legitimate though its interest may often be, but try to balance, in the presentation of their arguments, the public interest with the interest of the oil companies, their friends. That is certainly the view we are trying to take in creating a balance between the legitimate needs of the industry and the national interest.
  However, it is important in this major piece of legislation, which will bring in participation and additional controls, that we do not underrate the importance of the subject. North Sea oil and gas represent a massive increase in the nation's wealth. It has been properly said by hon. Members on both sides of the House that it is not a bonanza which will allow us to escape from our economic problems and difficulties, but it is a massive increase in our wealth and it could hardly have come at a better time.
  By our actions we are reversing the neglect of the Conservatives on the question of energy resources. It is not just a question of oil and gas. The Tories left the coal industry in a parlous condition, and we have now embarked upon a major expansion. They dodged taking a decision on nuclear policy for two years in exactly the same way as they dodged taking a decision on oil policy. Now we are the closest we have probably ever been to a co-ordinated energy policy. We cannot in these circumstances sit back and let the events over oil and gas take their course in the lazy laissez-faire manner of the Conservatives.
  We need to have guarantees of public control and public benefit over such a vital resource. One would have thought that it was obvious to every producer country in the world, except the United States, that participation should be followed. However the blinkered ideologues of the Conservative Party cannot

  607
  see past their own aversion to public ownership.
  In this important Bill we seek to assert the controls that will give the nation a real say in the development of its own resources. We also seek a fair return for the citizens of this country from their own assets. I hope that the Bill, together with the Oil Taxation Bill, which is awaiting Royal Assent, will be seen as the end of a period of neglect and negligence during which we allowed control over our most important oil and gas resources to pass outwith this nation and its elected Government and Parliament. I hope that this will be seen as the start of a new period in the development of our energy policy, in which the British people assert their proper right to full control over the assets under our seas and secure a fair return from those riches.
  We have listened today-[HON. MEMBERS: "So have we."] Hon. Members
  must recognise that there is a difference between listening and listening and learning. There is not much evidence that the Conservatives have done the latter.
  The Bill is an important feature of the Government's economic strategy because under its provisions the British Government will not be thought of as merely a passive tax collector: they will become the owner of a large share of this wealth. As such they will be able to harness the benefits and husband them, too, for the future of this country and its citizens. It is because of this important principle above all that I ask the House to be confident in giving the Bill a Second Reading tonight.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 286, Noes 258.

  Division No. 195.]

  AYES

  [10.0 p.m.

  Anderson, Donald

  Crawshaw, Richard

  Graham, Ted

  Archer, Peter

  Cronin, John

  Grant, George (Morpeth)

  Armstrong, Ernest

  Cryer, Bob

  Grant, John (Islington C)

  Ashley, Jack

  Cunningham, G. (Islington S)

  Grocott, Bruce

  Ashton, Joe

  Cunningham, Dr J. (Whiteh)

  Hamilton, James (Bothwell)

  Atkins, Ronald (Preston N)

  Davidson, Arthur

  Hamilton, W. W. (Central Fife)

  Atkinson, Norman

  Davies, Bryan (Enfield N)

  Hardy, Peter

  Bagier, Gordon A. T.

  Davies, Denzil (Llanelli)

  Harper, Joseph

  Barnett, Guy (Greenwich)

  Davies, Ifor (Gower)

  Harrison, Walter (Wakefield)

  Barnett, Rt Hon Joel (Heywood)

  Davis, Clinton (Hackney C)

  Hart, Rt Hon Judith

  Bates, Alf

  Deakins, Eric

  Hattersley, Rt Hon Roy

  Bean, R. E.

  Dean, Joseph (Leeds West)

  Hatton, Frank

  Benn, Rt Hon Anthony Wedgwood

  de Freitas, Rt Hon Sir Geoffrey

  Hayman, Mrs Helene

  Bennett, Andrew (Stockport N)

  Delargy, Hugh

  Henderson, Douglas

  Bidwell, Sydney

  Dell, Rt Hon Edmund

  Hooley, Frank

  Bishop, E. S.

  Dempsey, James

  Horam, John

  Blenkinsop, Arthur

  Doig, Peter

  Howell, Denis (B'ham, Sm H)

  Boardman, H.

  Douglas-Mann, Bruce

  Hoyle, Doug (Nelson)

  Booth, Albert

  Duffy, A. E. P.

  Huckfield, Les

  Boothroyd, Miss Betty

  Dunn, James A.

  Hughes, Rt Hon C. (Anglesey)

  Bottomley, Rt Hon Arthur

  Dunnett, Jack

  Hughes, Mark (Durham)

  Boyden, James (Bish Auck)

  Dunwoody, Mrs Gwyneth

  Hughes, Robert (Aberdeen N)

  Bradley, Tom

  Eadie, Alex

  Hughes, Roy (Newport)

  Bray, Dr Jeremy

  Edge, Geoff

  Hunter, Adam

  Broughton, Sir Alfred

  Edwards, Robert (Wolv SE)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Brown, Hugh D. (Provan)

  Ellis, Tom (Wrexham)

  Irving, Rt Hon S. (Dartford)

  Brown, Robert C. (Newcastle W)

  English, Michael

  Jackson, Colin (Brighouse)

  Brown, Ronald (Hackney S)

  Ennals, David

  Jackson, Miss Margaret (Lincoln)

  Buchan, Norman

  Evans, Fred (Caerphilly)

  Janner, Greville

  Butler, Mrs Joyce (Wood Green)

  Evans, Gwyntor (Carmarthen)

  Jay, Rt Hon Douglas

  Callaghan, Jim (Middleton & P)

  Evans, loan (Aberdare)

  Jeger, Mrs Lena

  Campbell, Ian

  Evans, John (Newton)

  Jenkins, Hugh (Putney)

  Canavan, Dennis

  Ewing, Harry (Stirling)

  Jenkins, Rt Hon Roy (Stechford)

  Cant, R. B.

  Fernyhough, Rt Hon E.

  John, Brynmor

  Carmichael, Neil

  Fitch, Alan (Wigan)

  Johnson, James (Hull West)

  Carter, Ray

  Flannery, Martin

  Johnson, Walter (Derby S)

  Carter-Jones, Lewis

  Fletcher, Raymond (Ilkeston)

  Jones, Alec (Rhondda)

  Cartwright, John

  Fletcher, Ted (Darlington)

  Jones, Barry (East Flint)

  Castle, Rt Hon Barbara

  Ford, Ben

  Jones, Dan (Burnley)

  Clemitson, Ivor

  Forrester, John

  Judd, Frank

  Cocks, Michael (Bristol S)

  Fraser, John (Lambeth, N'w'd)

  Kaufman, Gerald

  Cohen, Stanley

  Freeson, Reginald

  Kelley, Richard

  Colquhoun, Mrs Maureen

  Garrett, John (Norwich S)

  Kerr, Russell

  Cook, Robin F. (Edin C)

  Garrett, W. E. (Wallsend)

  Kilroy-Silk, Robert

  Corbett, Robin

  Gilbert, Dr. John

  Kinnock, Neil

  Cox, Thomas (Tooting)

  Ginsburg, David

  Lambie, David

  Craigen, J. M. (Maryhill)

  Golding, John

  Lamborn, Harry

  Crawford, Douglas

  Gould, Bryan

  Lamond, James

  Leadbitter, Ted

  Owen, Dr David

  Stott, Roger

  Lee, John

  Padley, Walter

  Strang, Gavin

  Lestor, Miss Joan (Eton & Slough)

  Palmer, Arthur

  Strauss, Rt Hon G. R.

  Lever, Rt Hon Harold

  Park, George

  Summerskill, Hon Dr Shirley

  Lewis, Arthur (Newham N)

  Parry, Robert

  Taylor, Mrs Ann (Bolton W)

  Lipton, Marcus

  Pavitt, Laurie

  Thomas, Jeffrey (Abertillery)

  Litterick, Tom

  Pearl, Rt Hon Fred

  Thomas, Mike (Newcastle E)

  Lomas, Kenneth

  Pendry, Tom

  Thomas, Ron (Bristol NW)

  Loyden, Eddie

  Perry, Ernest

  Thompson, George

  Luard, Evan

  Phipps, Dr Colin

  Thorne, Stan (Preston South)

  Lyon, Alexander (York)

  Prentice, Rt Hon Reg

  Tierney, Sydney

  Lyons, Edward (Bradford W)

  Prescott, John

  Tinn, James

  Mabon, Dr J. Dickson

  Price, C. (Lewisham W)

  Tomlinson, John

  McElhone, Frank

  Price, William (Rugby)

  Tomney, Frank

  MacFarquhar, Roderick

  Radice, Giles

  Torney, Tom

  McGuire, Michael Ince)

  Reid, George

  Urwin, T. W.

  Mackintosh, John P.

  Richardson, Miss Jo

  Varley, Rt Hon Eric G.

  Maclennan, Robert

  Roberts, Albert (Normanton)

  Wainwright, Edwin (Dearne V)

  McMillan, Tom (Glasgow C)

  Roberts, Gwilym (Cannock)

  Walden, Brian (B'ham, L'dyw'd)

  McNamara, Kevin

  Robertson, John (Paisley)

  Walker, Harold (Doncaster)

  Madden, Max

  Roderick, Caerwyn

  Walker, Terry (Kingswood)

  Mahon, Simon

  Rodgers, William (Stockton)

  Ward, Michael

  Marquand, David

  Rooker, J. W.

  Watkins, David

  Marshall, Dr Edmund (Goole)

  Roper, John

  Watkinson, John

  Marshall, Jim (Leicester S)

  Rose, Paul B.

  Weetch, Ken

  Mason, Rt Hon Roy

  Ross, Rt Hon W. (Kilmarnock)

  Weitzman, David

  Maynard, Miss Joan

  Rowlands, Ted

  Wellbeloved, James

  Meacher, Michael

  Ryman, John

  Welsh, Andrew

  Mellish, Rt Hon Robert

  Sandelson, Neville

  White, Frank R. (Bury)

  Mendelson, John

  Sedgemore, Brian

  White, James (Pollok)

  Mikardo, Ian

  Selby, Harry

  Whitehead, Phillip

  Millan, Bruce

  Shaw, Arnold (Ilford South)

  Whitlock, William

  Miller, Dr M. S. (E Kilbride)

  Sheldon, Robert (Ashton-u-Lyne)

  Willey, Rt Hon Frederick

  Miller, Mrs Millie (Ilford N)

  Shore, Rt Hon Peter

  Williams, Alan (Swansea W)

  Mitchell, R. C. (Soton, Itchen)

  Short, Rt Hon E. (Newcastle C)

  Williams, Alan Lee (Hornch'ch)

  Moonman, Eric

  Short, Mrs Renée (Wolv N)

  Williams, Rt Hon Shirley (Hertford)

  Morris, Alfred (Wythenshawe)

  Silkin, Rt Hon John (Deptford)

  Williams, W. T. (Warrington)

  Morris, Charles R. (Openshaw)

  Silkin, Rt Hon S. C. (Dulwich)

  Wilson, Alexander (Hamilton)

  Morris, Rt Hon J. (Aberavon)

  Sillars, James

  Wilson, Gordon (Dundee E)

  Moyle, Roland

  Silverman, Julius

  Wise, Mrs Audrey

  Mulley, Rt Hon Frederick

  Skinner, Dennis

  Woodall, Alec

  Murray, Rt Hon Ronald King

  Small, William

  Woof, Robert

  Newens, Stanley

  Smith, John (N Lanarkshire)

  Wrigglesworth, Ian

  Noble, Mike

  Snape, Peter

  Young, David (Bolton E)

  Ogden, Eric

  Spearing, Nigel

  O'Halloran, Michael

  Spriggs, Leslie

  TELLERS FOR THE AYES:

  O'Malley, Rt Hon Brian

  Stewart, Donald (Western Isles)

  Mr. Jack Dormand and

  Orbach, Maurice

  Stewart, Rt Hon M. (Fulham)

  Mr. John Ellis.

  Ovenden, John

  Stoddart, David

  NOES

  Adley, Robert

  Butler, Adam (Bosworth)

  Finsberg, Geoffrey

  Aitken, Jonathan

  Carlisle, Mark

  Fisher, Sir Nigel

  Alison, Michael

  Carr, Rt Hon Robert

  Fletcher, Alex (Edinburgh N)

  Amery, Rt Hon Julian

  Chalker, Mrs Lynda

  Fletcher-Cooke, Charles

  Arnold, Tom

  Channon, Paul

  Fookes, Miss Janet

  Atkins, Rt Hon H. (Spelthorne)

  Churchill, W. S.

  Fowler, Norman (Sutton C'f'd)

  Awdry, Daniel

  Clark, Alan (Plymouth, Sutton)

  Fox, Marcus

  Baker, Kenneth

  Clark, William (Croydon S)

  Fraser, Rt Hon H. (Stafford & St)

  Banks, Robert

  Clarke, Kenneth (Rushcliffe)

  Freud, Clement

  Beith, A. J.

  Clegg, Walter

  Galbraith, Hon T. G. D.

  Bell, Ronald

  Cockcroft John

  Gardner, Edward (S Fylde)

  Bell, Ronald

  Cope, John

  Gilmour, Rt Hon Ian (Chesham)

  Bennett, Sir Frederic (Torbay)

  Cormack, Patrick

  Gilmour, Sir John (East Fife)

  Bennett, Dr Reginald (Fareham)

  Corrie, John

  Glyn, Dr Alan

  Benyon, W.

  Costain, A. P.

  Godber, Rt Hon Joseph

  Berry, Hon Anthony

  Critchley, Julian

  Goodhart, Philip

  Biffen, John

  Crouch, David

  Goodhew, Victor

  Biggs-Davison, John

  Crowder, F. P.

  Goodlad, Alastair

  Blaker, Peter

  Davies, RI Hon J. (Knutsford)

  Gorst, John

  Body, Richard

  Dean, Paul (N Somerset)

  Gow, Ian (Eastbourne)

  Boscawen, Hon Robert

  Douglas-Hamilton, Lord James

  Gower, Sir Raymond (Barry)

  Bowden, A. (Brighton, Kemptown)

  Drayson, Burnaby

  Gray, Hamish

  Boyson, Dr Rhodes (Brent)

  du Cann, Rt Hon Edward

  Grieve, Percy

  Braine, Sir Bernard

  Durant, Tony

  Griffiths, Eldon

  Brittan, Leon

  Dykes, Hugh

  Grimond, Rt Hon J.

  Brotherton, Michael

  Eden, Rt Hon Sir John

  Grist, Ian

  Brown, Sir Edward (Bath)

  Edwards, Nicholas (Pembroke)

  Grylls, Michael

  Bryan, Sir Paul

  Emery, Peter

  Hall, Sir John

  Buchanan-Smith, Alick

  Eyre, Reginald

  Hall-Davis, A. G. F.

  Buck, Antony

  Fairbairn, Nicholas

  Hamilton, Michael (Salisbury)

  Budgen, Nick

  Fairgrieve, Russell

  Hampson, Dr Keith

  Bulmer, Esmond

  Farr, John

  Hannam, John

  Burden, F. A.

  Fell, Anthony

  610

  611

  Harrison, Col Sir Harwood (Eye)

  Marten, Neil

  Scott-Hopkins, James

  Harvie Anderson, Rt Hon Miss

  Mates, Michael

  Shaw, Giles (Pudsey)

  Havers, Sir Michael

  Mather, Carol

  Shaw, Michael (Scarborough)

  Hawkins, Paul

  Maude, Angus

  Shelton, William (Streatham)

  Hayhoe, Barney

  Mawby, Ray

  Shepherd, Colin

  Heseltine, Michael

  Mayhew, Patrick

  Shersby, Michael

  Hicks, Robert

  Meyer, Sir Anthony

  Silvester, Fred

  Higgins, Terence L.

  Miller, Hal (Bromsgrove)

  Sims, Roger

  Holland, Philip

  Mills, Peter

  Sinclair, Sir George

  Hooson, Emlyn

  Miscampbell, Norman

  Skeet, T. H. H.

  Hordern, Peter

  Mitchell, David (Basingstoke)

  Smith, Cyril (Rochdale)

  Howe, Rt Hon Sir Geoffrey

  Monro, Hector

  Smith, Dudley (Warwick)

  Howell, David (Guildford)

  Montgomery, Fergus

  Speed, Keith

  Howell, Ralph (North Norfolk)

  Moore, John (Croydon C)

  Spence, John

  Howells, Geraint (Cardigan)

  Morgan, Geraint

  Spicer, Jim (W Dorset)

  Hunt, John

  Morgan-Giles, Rear-Admiral

  Spicer, Michael (S Worcester)

  Hurd, Douglas

  Morris, Michael (Northampton S)

  Sproat, Iain

  Hutchison, Michael Clark

  Morrison, Charles (Devizes)

  Stainton, Keith

  Irving, Charles (Cheltenham)

  Morrison, Hon Peter (Chester)

  Stanbrook, Ivor

  Jenkin, Rt Hon P. (Wanst'd&W'dt'd)

  Mudd, David

  Stanley, John

  Jessel, Toby

  Neave, Airey

  Steel, David (Roxburgh)

  Johnson Smith, G. (E Grinstead)

  Nelson, Anthony

  Steen, Anthony (Wavertree)

  Jones, Arthur (Daventry)

  Neubert, Michael

  Stewart, Ian (Hitch'n)

  Jopling, Michael

  Newton, Tony

  Stokes, John

  Joseph, Rt Hon Sir Keith

  Normanton, Tom

  Stradling Thomas, J.

  Kaberry, Sir Donald

  Nott, John

  Tapsell, Peter

  Kellett-Bowman, Mrs Elaine

  Onslow, Cranley

  Taylor, R. (Croydon NW)

  Kershaw, Anthony

  Osborn, John

  Taylor, Teddy (Cathcart)

  Kimball, Marcus

  Page, John (Harrow West)

  Tebbit, Norman

  King, Evelyn (South Dorset)

  Page, Rt Hon R. Graham (Crosby)

  Temple-Morris, Peter

  King, Tom (Bridgwater)

  Pardoe, John

  Thatcher, Rt Hon Margaret

  Kirk, Peter

  Pattie, Geoffrey

  Thomas, Rt Hon P. (Hendon S)

  Kitson, Sir Timothy

  Percival, Ian

  Townsend, Cyril D.

  Knight, Mrs Jill

  Peyton, Rt Hon John

  Trotter, Neville

  Knox, David

  Pink, R. Bonner

  Tugendhat, Christopher

  Lamont, Norman

  Prior, Rt Hon James

  van Straubenzee, W. R.

  Lane, David

  Raison, Timothy

  Vaughan, Dr Gerard

  Langford-Holt, Sir John

  Rathbone, Tim

  Viggers, Peter

  Latham, Michael (Melton)

  Rawlinson, Rt Hon Sir Peter

  Wainwright, Richard (Colne V)

  Lawrence, Ivan

  Rees, Peter (Dover & Deal)

  Wakeham, John

  Lawson, Nigel

  Rees-Davies, W. R.

  Walker-Smith, Rt Hon Sir Derek

  Le Marchant, Spencer

  Renton, Rt Hon Sir D. (Hunts)

  Wall, Patrick

  Lester, Jim (Beeston)

  Renton. Tim (Mid-Sussex)

  Walters, Dennis

  Lewis, Kenneth (Rutland)

  Rhys Williams, Sir Brandon

  Warren, Kenneth

  Lloyd, Ian

  Ridley, Hon Nicholas

  Weatherill, Bernard

  Loveridge, John

  Ridsdale, Julian

  Wells, John

  Luce, Richard

  Rifkind, Malcolm

  Whitelaw, Rt Hon William

  McAdden, Sir Stephen

  Rippon, Rt Hon Geoffrey

  Wiggin, Jerry

  McCrindle, Robert

  Roberts, Wyn (Conway)

  Winterton, Nicholas

  Macfarlane, Neil

  Ross, Stephen (Isle of Wight)

  Wood, Rt Hon Richard

  MacGregor, John

  Rossi, Hugh (Hornsey)

  Young, Sir G. (Ealing, Acton)

  Macmillan, Rt Hon M. (Farnham)

  Rost, Peter (SE Derbyshire,

  McNair-Wilson, M. (Newbury)

  Royle, Sir Anthony

  TELLERS FOR THE NOES:

  McNair-Wilson, P. (New Forest)

  Sainsbury, Tim

  Mr. Cecil Parkinson and

  Madel, David

  Scott, Nicholas

  Mr. Michael Roberts.

  Marshall, Michael (Arundel)

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  BUSINESS OF THE HOUSE
  Ordered,
  That the Lotteries Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Walter Harrison.]

  PETROLEUM AND SUBMARINE PIPE-LINES [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to establish the British National Oil Corporation (hereafter in this resolution referred to as `the Act'), it is expedient to authorize—

  (1) the payment out of the National Loans Fund of sums required to enable the Secretary of State to make loans to the Corporation and the payment out of the Consolidated Fund of sums required to fulfil guarantees given by the Treasury in respect of loans to the Corporation where all the loans are in accordance with provisions of the Act providing that (apart from loans

  613
  between wholly-owned subsidiaries of the Corporation and between the Corporation and such subsidiaries) the aggregate of the amounts outstanding at any time in respect of the principal sums borrowed by the Corporation or such subsidiaries and the sums of which the repayment is guaranteed by the Corporation or such sudsidiaries shall not exceed £900 million;

  (2) the payment out of moneys provided by Parliament of—

  (a) any sums payable out of such moneys under provisions of the Act authorising the Secretary of State to make, or guarantee the repayment of, loans to oil companies in order to facilitate or maintain the development of the United Kingdom's petroleum resources up to amounts outstanding at any time of £50 million in the case of the principal of
  614
  loans by the Secretary of State and £600 million in the case of repayments of principal guaranteed or made and not recovered by him;

  (b) any sums payable out of such moneys under provisions of the Act authorising the Secretary of State to make payments of up to £350 million to the Bank of England;

  (c) any administrative expenses of the Secretary of State or a government department which are attributable to the Act and any sums payable out of such moneys under provisions of the Act relating to costs of inquiries;

  (3) the payment into the Consolidated Fund or the National Loans Fund of any sums falling to be paid into that Fund by virtue of the Act—[Mr. Varley.]

LOTTERIES BILL
As amended (in the Standing Committee), considered.
New Clause 1

  ALTERATION OF PENALTIES FOR OFFENCES UNDER PART III OF BETTING, GAMING AND LOTTERIES ACT 1963
  (1) After section 52(1) of the Betting. Gaming and Lotteries Act 1963 (penalties and forfeitures) there shall be inserted the following subsection:
  "(1A) A person guilty of an offence under section 42, 43, 44 or 47 of this Act shall be liable—

  (a) on summary conviction, to a fine not exceeding £400; or

  (b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both".

  (2) The amendment made by subsection (1) above shall have effect only in relation to offences committed after the commencement of this Act.—[Dr. Summerskill.]
  Brought up, and read the First time.
  10.13 p.m.
  The Under-Secretary of State for the Home Department (Dr. Shirley Summer-skill): I beg to move, That the clause be read a Second time.
  Mr. Speaker: With this we are to discuss Government Amendments Nos. 63 and 64.
  Dr. Summerskill: Following discussion in Committee, other Government amendments which will be proposed—that is, Amendments Nos. 52 to 56 inclusive—will bring the penalty provisions in Clause 12 in respect of offences under the Bill into line with modern practice. The new clause will similarly update the penalty provisions in Section 52 of the Betting, Gaming and Lotteries Act 1963 relating to offences in connection with the other categories of lottery permitted by virtue of Part III of that Act and also to the offences in connection with lotteries which are not lawful in any circumstances. Together, the amendments to Clause 12 and Section 52 of the 1963 Act will produce a consistent set of penalty provisions in relation to lotteries and also to the closely related offences under Section 47 of the 1963 Act, which relates to the promotion of prize competi-
  616
  tions in newspapers or in connection with the sale of goods.
  Subsection (2) will ensure that the new penalties apply only in relation to offences committed after the Bill comes into operation. The existing penalties under the 1963 Act will continue to apply to offences committed before that date.
  Amendments Nos. 63 and 64 are consequential upon the new Clause to modernise the penalty provisions in Section 52 of the Betting, Gaming and Lotteries Act 1963 in relation to lotteries and prize competitions.
  10.15 p.m.
  Mr. Graham Page: I am grateful to the Minister for taking up a point which was raised in Committee. In Committee we were worried that the clause was rather fierce, and the Minister pointed out that if we altered it it would be inconsistent with the offences under the betting and gaming law. The amendment satisfactorily brings all the offences into line and I am grateful to the hon. Lady for taking up that point.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

Clause 1

  POWER OF CERTAIN SOCIETIES AND OF LOCAL AUTHORITIES TO PROMOTE LOTTERIES.
  Mr. Graham Page: I beg to move Amendment No. 1, in page 1, line 18, at end insert—
  ('b) hospital services and medical research'.
  Paragraphs (a) and (b) of subsection (2) apply to lotteries for charitable purposes and purposes in support of athletic sports or games or cultural activities, whether or not private gain is involved. Paragraph (c) applies to anything in which private or commercial undertaking is not concerned.
  To the public, hospitals and medical research are among the most attractive objectives. In other countries the public have become accustomed to hospital sweepstakes and support them strongly. No mention of that purpose is contained in subsection (2) but it could come within paragraph (c) as a purpose in which no

  617
  private gain or commercial undertaking was concerned. Hospital services, however, may be for a private nursing home in which one could scarcely say that there was no question of gain or commercial undertaking, and research work in medical matters might be undertaken by a consultant to some extent for his own profit.
  I should like to see those two purposes expressed in an early paragraph of subsection (2) so that although private gain or commercial undertaking may be concerned, hospital services and medical research work can still be the subject of lotteries run by societies or local authorities under the Bill. That is the purpose of mentioning it specifically as a separate paragraph in the early stages of the list of items which can be the subject of lotteries.
  Mr. David Weitzman: I support the amendment. As the right hon. Member for Crosby (Mr. Page) rightly says, hospitals and medical research are very important in this context. He has pointed out that it might well be that this category will not come within Clause 1(2)(c) because of the question of private gain or a commercial undertaking. I hope that my hon. Friend will accept the amendment.
  Mr. Eric Ogden: With respect to my hon. and learned Friend, I take a completely different point of view. My hon. Friends and I have been opposed in principle and in practice to any private gain from sickness but attempts are now being made to finance the National Health Service by lotteries. I hope that the House has not reached that stage.
  Mr. Graham Page: Does the hon. Gentleman object to the League of Friends running lotteries for hospital services or medical research?
  Mr. Ogden: Yes. I believe that such matters should be financed honestly and openly. That should be done for the sake of the service itself. The element of winning a prize should not enter into the matter. I hope that my hon. Friend will resist the amendment.
  Dr. Summerskill: If the purpose of the amendment is to permit a society established to help provide services in a hospital or to encourage medical research to promote lotteries, I can tell the right hon. Member for Crosby (Mr. Page) that the amendment is unnecessary as it is already covered by Clause 1(2) (c). That is the situation provided that the society is not operating for private gain or as a commercial undertaking.
  The effect of the amendment would be to authorise lotteries for medical purposes where there is an element of private gain or profit. We would find that unacceptable. It would be outside the spirit of the Bill to allow, for example, a drug firm to promote a lottery to finance its own private research with a view to marketing a new commercial medical product.
  I can assure the right hon. Gentleman that medical research or hospital services can be assisted through lotteries under Clause 1(2)(c) provided that the society is not operating for private gain.
  Amendment negatived.

Clause 2

  ORGANISATION AND PURPOSES OF SOCIETIES' LOTTERIES
  Mr. Michael Alison: I beg to move Amendment No. 3, in page 3, line 5 after "with", insert
  "the Secretary of State for the Environment, in cases whore the total value of tickets or chances to be sold is less than two-thirds of the relevant sum as specified in section 9(9) below, and in other cases with'.
  Mr. Deputy Speaker (Mr. Oscar Murton): With this we may discuss the following amendments: No. 2, in page 3, line 4 leave out "£5,000" and insert "£10,000".
  No. 4, in Clause 3, page 3, line 15 after "with", insert
  "the Secretary of State for the Environment, in cases where the total value of tickets or chances to be sold is less than two-thirds of the relevant sum as specified in section 9(9) below, and in other cases with".
  No. 62, in Schedule 2, page 15, line 22 leave out "£5,000" and insert "£10,000".
  Mr. Alison: The effect of the amendment is to relieve the Gaming Board of the necessity to scrutinise the great bulk of the schemes which have to be registered

  619
  with it under Clause 2. This is an important point. I briefly remind the House of what will be involved for the Gaming Board if the Bill is passed as matters now stand.
  The Gaming Board has a number of important functions. It has the task of investigating the trustworthiness of all applicants for licences for commercial gaining. It has to advise the Secretary of State on regulations to be made under the Gaming Act 1968. It has to advise the licensing authorities on public demand for commercial gaming facilities, the suitability of premises to be used by licensed clubs, and so on. It has an inspectorate whose task is to supervise clubs licensed under the Gaming Act, and it has to provide an annual report to the Secretary of State. In other words, the board is the custodian and administrative organ of the Gaming Act 1968, with all the important ramifications of that Act.
  At present the Gaming Board discharges its functions with four board members, 40 staff known as the administrative group staff, and an inspectorate whose members do not stay on the premises at the board's headquarters but who move around the country. The inspectorate at present numbers 30, although the complement is 31. This small group of 70-odd staff, only 40 of whom are involved in administration at headquarters, get through their task on the basis roughly of an average 41-hour week in terms of administration staff and a slightly longer week, with overtime, in terms of the inspectorate.
  I ask the House to imagine what will happen to the Gaming Board if as a result of Clause 2, and particularly subsection (2)(b) as it stands, every scheme which may be promoted as a result of this legislation with a ceiling in respect of tickets or chances of over £5,000 must be registered with the board. The prospect is simply incredible. I worked out the figures a short time ago and I should like to give an idea of what will happen.
  My hon. Friend the Member for Har-borough (Mr. Farr), in a classic statement at an earlier stage of the Bill, reminded us that there are 8,600 local authorities which will be entitled to promote lotteries under the present Bill. They will be empowered or entitled under the Bill to
  620
  run a weekly lottery. If those 8,600 local authorities each run a weekly lottery, the total number of lotteries which might have to be registered comes to a total of 447,000 per annum. That means that on a 365-day year, even if one does not allow for Saturdays or holidays, 1,250 schemes may fall to be registered every day with the Gaming Board. This would mean that each of the 40 administrative officers would have to scrutinise, assess, probe and investigate 30 separate schemes each day.
  It is not surprising that the Bill as originally presented to the House modestly stated that the manpower provisions were such that some staff increase would be necessary. But we believe that it is not right to transform the Gaming Board, of its present rôle of policing the Gaming Act, into a registration authority to cope with the vast number of new schemes which may come forward following this legislation.
  The amendment seeks to provide that the bulk of schemes—those whose values amount to less than two-thirds of the ceiling amount permitted under Clause 9—should be registered with the Department of the Environment. This is in accordance with the recommendation of Churches Council on Gambling, and of course the Department of the Environment already has a substantial number of clerical staff. Therefore, there will be no problem in processing these schemes through the Department of the Environment. Only the higher level schemes will be left to the Gaming Board. This will take a considerable burden of scrutiny and investigation off the Gaming Board shoulders and will enable it to concentrate on its traditional rôle. It will increase the burden of administering the Act. I hope that the Under-Secretary of State will look sympathetically at this amendment and bear in mind the very serious burden which otherwise will accrue to the Gaming Board as matters now stand.
  10.30 p.m.
  Mr. L W. Rooker: While listening to the hon. Member for Barkston Ash (Mr. Alison) I thought that the House should be made aware of what is behind the amendment. The Conservative Party opposes all increases in public expenditure. As the situation exists now, if the Gaming Board

  621
  takes on this duty it will increase its staff. That will not put a burden on the taxpayer. If the amendment is passed the job will be given to the Department of the Environment, which has enough staff to do it—which presupposes that there are at present plenty of people there with nothing to do.
  The amendment would result in an increase in the staff of the Government about which the Opposition are always bellyaching day in and day out. I therefore think that we should chuck out these amendments straight away.
  Mr. Clement Freud: In his admirable summing up in favour of the Gaming Board the hon. Member for Barkston Ash (Mr. Alison) forgot to mention the most important reason for the board's existence. In the United Kingdom before the Gaming Board was set up—and at present in other countries—one of the great dangers was that people who did not want to gamble were seduced into gambling. Before the Gaming Board was set up there were clubs in which people had to pass by the roulette, chemmy and black-jack tables before they could obtain a drink. In many ways it is a good precaution to involve the Gaming Board since it has a great deal of experience in preventing the public being conned by too many lotteries.
  Although only one parish council lottery can take place in one week, many societies of all kinds can hold lotteries. It is not at all a bad idea for the Gaming Board, with its vast experience, to be involved in preventing more than a certain number of lotteries taking place at any one time.
  Mr. Graham Page: The hon. Member for Birmingham, Perry Barr (Mr. Rooker) misunderstood the amendment. He accused the Opposition of increasing the number of civil servants or local government servants employed in looking after lotteries. By means of this amendment we are trying to reduce the number of people involved. As the Bill stands, the number of employees in the Gaming Board must be greatly increased.
  There is no need for the registration of many of the minor schemes with the Gaming Board. We are talking only about registration. I believe that the hon. Member for the Isle of Ely (Mr. Freud) is looking at the matter from the
  622
  point of view of policing. The registration of schemes involves a considerable amount of administration. A judicial judgment of the schemes is not involved. I think that the present provisions of the Bill will cause the Gaming Board to be overburdened. We should reduce the Gaming Board's burden of registering the smaller lotteries.
  Mr. Ivor Clemitson: The hon. Member for the Isle of Ely (Mr. Freud) argued that one of the purposes of the Gaming Board was to prevent people from being seduced into gambling. At the least the Bill will not reduce gambling. Almost certainly it will increase gambling. This argument is rather like giving a patient a hefty dose of poison, making sure there is a doctor on hand to case his passage into the next world.
  Mr. Michael Brotherton: I am a little puzzled by what the hon. Member for Luton, East (Mr. Clemitson) said. This amendment increases the limit from £5,000 to £10,000. But what will be the effect on the Gaming Board, whose members are to oversee how much money is spent?
  Are we saying that every county council or other council is to be limited to £5,000 or £10,000? Eventually, will all the thousands of councils be limited in this way?
  If we say that each council is to spend only £5,000 like this, we much remember that that may involve 500,000 individual gambles, and the figure could reach as much as a million, provided that every lottery permissable takes place. If that happens, how can the Gaming Board control a million different lotteries?
  This proposal is quite wrong, and I cannot believe that this House will accept it.
  Mr. Weitzman: There seems to be a complete misconception about what the amendment does and about what the Bill says. We are dealing with registration only. We are not dealing with policing. There is no question of the Gaming Board having to adopt police methods. We are concerned simply with the registration of schemes.
  I appreciate that there may be administrative difficulties and that the number of schemes which will have to be registered

  623
  will be far greater if the amendment is rejected. But it is better for one authority to deal with all of them and, as it is merely a matter of registration, the difficulties should not be exaggerated.
  Mr. W. R. Rees-Davies: I am afraid that I cannot support the amendment. However, I take a slightly different view about it. As the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) said, we are concerned entirely with registration and with whether we are to overburden the Gaming Board with a lot of small, pettifogging lotteries which are no part of its concern.
  The right way to deal with this matter is simply to increase the value of the societies' lotteries which do not require to be registered with the board. There fore, an amendment designed to increase the sum from £5,000 to £10,000 for these lotteries without their having to register with the board would involve quite small schemes. They will still have to be registered with the local authority, as before. They must be registered and must comply with the law. When the Government bring in the necessary regulations later, they will be able to tighten up that control.
  The effective way of controlling small lotteries is over printing. If the Government introduce a regulation which controls the number of tickets to be printed and keeps control over the printer, they will have complete control over the numbers of tickets and the distribution. If local societies are kept up to the mark and are made to comply with the Acts, which they have not done in the past, we will get effective registration.
  I share with the hon. Member for the Isle of Ely (Mr. Freud) some knowledge of gaming. But I suggest that he is on the wrong tack because he has not applied his great mind to the amendment. We are not at the moment concerned with the policing of the Bill or the power or control of supervision which the Gaming Board should exercise. It is debatable whether it should exercise control of lotteries. It was not set up for that purpose.
  I was concerned with the proposals to set up the original Gaming Board. Indeed, I was directly concerned in the
  624
  representations made both to Lord Gardiner and to Lord Hailsham in another place, both of whom were very interested in its setting up and the strong dictatorial powers that have been given. Those powers were given to deal with hard gaming and to give effective control against the insidious operations of speculators of an undesirable nature. Those powers were given so that the board should have effective control over serious abuse. I agree that large lotteries could lead to serious abuse. I support bringing in the Gaming Board to ensure that there is no such abuse in large lotteries. However, I do not think that it is necessary for small lotteries.
  It is undeniably right, as was said by my hon. Friends the Members for Barkston Ash (Mr. Alison) and Louth (Mr. Brotherton), that there will be a vast amount of—dare I use the word—bumph. I do not know whether that is an unparliamentary word. There will be an enormous quantity of paper and applications which will have to be processed by a very small staff. In Committee the Under-Secretary said that possibly another 30 staff—she did not commit herself, very wisely—might be necessary for that purpose. I do not think that is necessary. The hon. Gentleman who spoke with such passion, but with an equally infinite lack of knowledge, said that we were suggesting more civil servants. I certainly am not. I believe that many of these small lotteries operated by local societies can be conducted perfectly properly. As we go on to produce regulations which will later have to be laid, I am sure that we can lay the necessary regulations.
  I should like lotteries of up to £10,000 to be subject merely to ordinary registration, as before, without being registered with the Gaming Board. However, I accept, with some reluctance, that the large lotteries of £10,000 or more should be registered with the Gaming Board.
  I hope that the Gaming Board will take general cognisance of the scheme. It will be important for the Government to make plain what they mean by the word "scheme". A lottery has to be laid down in the form of a scheme, but there is perilously little guidance on what the scheme is supposed to be. That will come later in the regulations to be laid under Clause 11.
  Mr. Freud: The hon. and learned Gentleman, who spoke about my great mind, has gone on a bit about the difference between a small and a major lottery. Is he aware that if somebody bullies someone into buying a lottery ticket, that person does not realise whether it is for a small or a large lottery because the price of the ticket is probably very similar in both cases? Surely the idea is not only registration, but, in a way, policing, so that the public are prevented from having to buy a large number of lottery tickets every day.
  Mr. Rees-Davies: The hon. Gentleman has never in his life been bullied into buying anything without knowing precisely what odds he was to get. But leaving that question aside, people know when they are buying a ticket in a lottery. The public will know the precise object of each lottery, and it will be limited to 25p at the maximum. I do not think there will be any difficulty there. The small lottery will be limited both as to the number of tickets to be sold and the maximum amount of money that can be invested. I do not think that people will be conned into doing anything that they do not fully understand.
  I have said all that I need to say on this matter. I am fearful of the fact that the Gaming Board may be overburdened with unnecessary prolixity. That is the basic issue upon which the Opposition are united, and I hope that the hon. Lady will recognise that and find a way to get over the difficulty.
  Mr. Albert Roberts: What consultations has my hon. Friend had with the Gaming Board? Many of us are not in favour of this kind of gambling, but this is a Government Bill and we have to deal with it in a practical way.
  I want to see this measure work efficiently and well, but I want to be assured that the Minister has had consultations with the board and that it will be able to cope with the immense amount of work that it will be called upon to undertake.
  Dr. Summerskill: I realise that the hon. Member for Barkston Ash (Mr. Alison) is concerned to relieve the Gaming Board of some work, but I feel that his solution of transferring this matter
  626
  to the Secretary of State for the Environment is both unwise and rather drastic.
  I can tell my hon. Friend the Member for Normanton (Mr. Roberts) that I have been in touch with the Gaming Board about the additional functions that it will have to perform if the Bill becomes law. The board, like everyone else, is unable to say exactly what will be the result when this measure is enacted, but it is of the opinion that substantially more than a 50 per cent. increase in staff will need to cope with the extra work involved.
  One cannot say now how many societies will prepare schemes for lotteries with a turnover exceeding £5,000, or how many local authorities will promote lotteries and thus have to register their schemes with the board, but clearly regard will have to be had to the board's new functions in assessing its staffing needs.
  I do not feel that there is any justification for involving yet another Government Department in this area. The Gaming Board is an experienced and highly respected body, and it, not the Department of the Environment, is clearly the appropriate body to examine lottery schemes, which are a form of gambling.
  The amendment proposed by the hon. Member for Louth (Mr. Brotherton) is similar to an amendment tabled in Committee. It would raise the level of turnover at which a society needs to register a lottery scheme with the board from £5,000 to £10,000.
  The general pattern of the Bill is that schemes for local lotteries and societies' lotteries with a turnover of £5,000 or more must be registered with the board. A turnover of £5,000 far exceeds the present permitted figure of £750. It seems right that schemes for and the accounts of these larger lotteries should be subject to examination by the Gaming Board. It is there to control gambling and prevent fraud and abuse, among other functions.
  It is not possible to say how many societies will wish to promote lotteries with a turnover of £5,000 or more. Such information as we have suggests that many societies are not yet thinking of lotteries in this higher band. In the circumstances, therefore, it seems best to leave £5,000 as the dividing line for the

  627
  registration of schemes. If in the light of experience we find that the figure has been pitched too low, the Secretary of State has power to vary it by order under Clause 11(1)(a).
  Amendment negatived.

Clause 3

  LOCAL AUTHORITY SCHEMES
  Mr. Graham Page: I beg to move Amendment No. 5, in page 3, line 23, at end insert:
  '(3) A scheme approved by a local authority under this section may be varied or revoked by resolution of the authority at any time before any tickets or chances have been sold in a local lottery to which the scheme applies'.
  Clause 3 provides for the registration of local authority lotteries or the schemes for local authority lotteries. The amendment is a minor and simple administrative point. If a local authority registers a scheme and then wishes before the lottery is put into operation to alter it by resolution of its own council, it would have under the Bill to re-register the whole scheme. This seems a little piece of unnecessary red tape. Provided that the lottery has not started, that no one has sold any tickets, there can be no harm in the local authority registering with the board an amendment to its scheme, provided that the scheme is amended in this way, without having to go through all the palaver of having to register the whole scheme all over again slightly amended.
  I hope that the Minister will find the amendment acceptable.
  Dr. Summerskill: The amendment seeks to confer power to "amend" a local authority lottery scheme at any time before tickets are sold. Perhaps the right hon. Member for Crosby (Mr. Page) will bear with me while I explain the administrative arrangements under the Bill as it stands. His proposal is misconceived because every case of amendment is a case of making anew, but with changes. Every amended scheme is therefore, in the nature of things, a new scheme; and a local authority can make a new scheme at any time.
  What is wrong about this amendment is that it makes no mention of registration with the Gaming Board. Registration is the essence of the matter. No
  628
  tickets are to be sold in a local authority's lottery unless and until the relevant scheme has been registered. If the purpose of this amendment is to allow a scheme to be registered one day, amended the next, and acted upon the day after, without re-registration, that is quite unacceptable in principle.
  If the purpose of the amendment is to oblige the Gaming Board to accept for registration a catalogue of amendments to a registered scheme without the courtesy of a clean copy, that is unacceptable on practical grounds. The Gaming Board cannot be expected to maintain an index of amendments to schemes.
  Where one is dealing with the legality of an undertaking affecting large sums of money and any number of people, and the legality of the whole affair depends upon the fact of registration before a particular event, there is only one orderly way in which to deal with the matter. That is for each registration to consist of a complete document identified by name, number, and date of registration. On that basis everyone knows where he stands, and copies of registrations can be supplied without risk of error.
  Afterthoughts about an unregistered scheme can be dealt with by registering the scheme only in its amended form. Afterthoughts about a registered scheme should be dealt with by a new registration, complete in itself.
  I think that the right hon. Gentleman will agree that this arrangement is not only simple but makes for accuracy, and makes the possibility of a mistake far less likely than under his scheme.
  Mr. Alison: What the hon. Lady has said merely troubles us further with regard to the Gaming Board's work load. If every change, every crossing of the t's and dotting of the i's, has to be reregistered as a separate scheme, as the hon. Lady seems to have said, the scope that the measure offers for schemes to be registered could be doubled, trebled or even quadrupled.
  There are bound to be times when circumstances change in the gestation period before a scheme is launched upon the public, yet every amendment must be reregistered. The scope of the work for the board grows more gargantuan at every step we take in the Bill.

  629
  Is the Minister confident that the procedures she envisages will not prove oppressive and impossible for the board to carry out, even with a 50 per cent. In-crease in staff? That will only raise it from 70 to 105, of whom 30 will continue to be employed as inspectors outside.
  Mr. Weitzman: If a scheme is revoked it will not require registration. If it is varied in any essential part it must require registration. That makes the amendment unnecessary.
  Mr. Alison: Unfortunately, a scheme that is revoked will have been registered earlier. Therefore, the task of registration has already been carried out by the board. The revocation and the substitution of a new or amended scheme will simply add an enormous burden. I share with the hon. Member for Normanton (Mr. Roberts), who made an important contribution earlier, the fear that the board will be inundated with schemes.
  My right hon. Friend has tried to introduce a bit of flexibility and common sense. A vast scrutinising and surveillance of the schemes will not be practicable. There will be far too many of them, possibly 20 to 40 a day coming to the board. It will not be able effectively to police them all.
  The hon. Lady should seriously consider accepting the amendment, because the flexibility and common sense that it proposes are essential. Even if schemes have to be re-registered, the board will not be able to process them effectively. It will be a rubber-stamp, automatic affair.
  Dr. Summerskill: I re-emphasise what I said on Second Reading, that lotteries are a form of gambling. This is a serious Bill, involving large sums of money. Many people will be handing over money in a gambling enterprise. It is very important that the whole affair should be properly organised on a legal basis. Registration is essential.
  Amendment negatived.

Clause 4

  >PURPOSES OF A LOTTERY
  11.0 p.m.
  Dr. Summerskill: I beg to move Amendment No. 6, in age 3, line 25,
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  leave out 'purposes' and insert 'purpose'.
  Mr. Deputy Speaker: With it we shall also take Government Amendments Nos. 9, 10, 12, 13 and 15 to 24 inclusive and Amendment No. 8, in page 3, line 32 at beginning insert:
  "to determine a specific object for which they are to promote a local lottery, and then".
  Dr. Summerskill: We undertook following discussion of the clause in Committee to look at its wording with particular reference to the repeated use of the word "purposes" in various places. The Government amendments would have the effect of drawing a clearer distinction between the purposes for which a local authority may promote a lottery and the purposes for which a particular lottery is promoted. It is the latter of which the local authority must give notice under subsection (2).
  The amendments achieve this aim by introducing the expression "object of the lottery" as meaning the particular purpose or purposes for which the particular lottery is promoted, and that expression is substituted where appropriate throughout the clause: The opening words of the clause will therefore now read
  "A local authority may promote a local lottery for any purpose for which they have the power to incure expenditure under any enactment",
  so that the clause as a whole will serve to point the distinction between the very wide statutory powers and functions of the local authority on the one hand and the limited object of the particular lottery on the other.
  Mr. Alison: I wish to speak to Amendment No. 8 which appears in the name of my right hon. and hon. Friends and myself. We wish to thank the Minister for her group of amendments and for the fact that she listened to the debate in Committee and came forward with the refining phraseology which will make clear this distinction between the general purposes and specific objects of lotteries.
  My amendment serves merely to embellish and perhaps refine still further the phraseology in the Bill. The wording of it was provided by the representations made to hon. Members on both sides by the Churches Council on Gambling and the effect is to add a touch of additional logic to a logical progression of the duties

  631
  of a local authority under the clause. As a result subsection (2)(a) would start with the words
  "It shall be the duty of a local authority … to determine a specific object for which they are to promote a local lottery, and then"
  to give it publicity.
  It seems reasonable to spell out in the Bill not only the logical step of a local authority having to determine quite clearly the specific object, not just a general purpose—and here we take the Minister's point—and reach a clear, determinate conclusion about the specific object of a specific lottery, giving the name of it, but thereafter taking the second logical step of publicising it.
  This is a refinement which in no way complicates the Bill, but spells out in the context of the Minister's changes the necessity for a local authority to be quite clear for itself about the object of the lottery, thereby to determine and specify it and to give it publicity.
  The amendment goes much in the same direction as the Government amendment. I hope that gives a nod in the direction of the Churches Council on Gambling, which is an important and enlightened body in these matters, the Minister will consider accepting the amendment.
  Mr. Albert Roberts: A local authority could do what the hon. Member for Barkston Ash (Mr. Alison) suggests, in any case. If a local authority wishes to sell tickets in a lottery and make a success of it, it will publicise the lottery as much as possible, particularly if it is something that appeals to the public. If I had anything to do with such a lottery I would make sure that it had a good purpose so that the public would buy the tickets.
  Mr. Rees-Davies: What the Minister has done goes a bit further than has been suggested, I am glad to say. The essence of the matter we were concerned with in Committee was two-fold. The first point was that these lotteries have a variety of purposes and the second was that there was no obligation to state the object of the lottery. We all recognised that it was immensely desirable that people should know what was the object of a lottery. They should know that they are putting up money for a local sports ground, a local arts society, a new parish hall or whatever.
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  It stands to reason that they might want to know the area involved. This particularly applies in the great conurbations of the Midlands and the North where hon. Members might be prepared to subscribe to a lottery in one constituency but not to one held in another constituency. I am glad to see that in Amendment No. 13 it is said:
  " 'object' means the particular purpose or purposes for which a local authority promote a local lottery."
  I am also pleased to learn that the objective will be carefully and clearly laid down.
  I find that particularly attractive and important because I was basically arguing that the objectives which local authorities should pursue should not concern the general rate fund but should be to do with the cultural-amenity aspects. I did not succeed in that argument but it was a concomitant part of the argument, and most pertinent to it, that we should be quite sure what was the objective of each local lottery. I am glad that the hon. Lady has been able to find a way in which to make the necessary change.
  Dr. Summerskill: I must point out to the hon. Member for Barkston Ash (Mr. Alison) that Clause 4 (2) (a) is concerned to ensure that people buying tickets in a local lottery know the object of the lottery, whereas Clause 4 (1) is concerned with the purpose under statute for which a local authority may promote a local lottery. Amendment No. 8 would attempt to run together a local authority's duty both to decide the object of a local lottery and to publicise that object. The amendment is unnecessary.
  In any case, it uses the expression "specific object". These words, taken with the definition of "object" which has been introduced by Amendment No. 13, would make no sense in the Bill. Amendment No. 8 would be unnecessary and confusing if taken together with Amendment No. 13.
  Amendment agreed to.
  Mr. Graham Page: I beg to move Amendment No. 7, in page 3, line 30, at end insert
  'and further including the purpose or purposes of a society or societies as described in subsection (2) of section 1 of this Act, the funds of which are to a substantial extent expended or utilised (or to be expended or utilised)

  633
  within the district of the local authority in question'.
  Mr. Deputy Speaker: With this we can discuss the following amendments:
  Amendment No. 11, in page 3, line 35, after 'chances', insert
  'and in that publicity to name any society to which a share of the proceeds will be allocated'.
  and Amendment No. 14, in line 38, at end insert—
  'Providing only that not less than one-half thereof is applied for the purpose or purposes of a society or societies as specified in subsection (1) of this section, and as selected at the local authority's discretion'.
  Mr. Page: The words in Amendment No. 7 are an addition to subsection (1) of Clause 4 which sets out the purpose for which a local authority may promote a local lottery. The purpose is described as including those powers of a local authority given it by the statute mentioned in the clause.
  The amendment would add further power—
  "including the purpose or purposes of a society or societies as described in subsection (2) of section 1 of this Act, the funds of which are to a substantial extent expended or utilised (or to be expended or utilised) within the district of the local authority in question".
  The underlying purpose of the amendments is that a local authority should be entitled to promote a lottery for the purposes of a society operating within its district—a cultural society, an athletic society or whatever it may be.
  In 99 cases out of 100 the purposes of such a society would be within the powers of the local authority to assist and finance. I want to go further. It will be within the recollection of the House that I had the honour to present a Bill to the House in an earlier Parliament which had a Second Reading and a Third Reading and which went to another place. That Bill dealt only with local authority lotteries. There was concern lest, if local authorities were permitted to promote local lotteries, there might be overpowering competition with societies which already had the power to promote small lotteries. Very wisely, the Government in their Bill have included power for the societies to run lotteries on a level with the local authorities.
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  There is no doubt that the local authorities will have the edge on a society in running a lottery. Local authorities have greater resources with which to run lotteries. They may hog the market against the smaller societies which wish to run lotteries for their own purposes.
  The purpose of the three amendments is to secure that the local authorities devote a certain part of the proceeds of their lotteries to the purposes of a society or societies in their district, whether it be a local society operating only in that district or the branch of a national society situated in the district of the local authority.
  In this respect I do not think that the local authority would be going outside the normal functions of a local authority in supporting sports or cultural activities in its district. If the House were to accept the amendments, it would allay the societies' fears that local authorities will encroach on even the present activities of societies in raising money by means of lotteries. Under the Bill as it stands the societies would have exactly the same legal rights and be subject to the same legal limits as local authorities. They would be able to run lotteries in the same way as local authorities would be able to run them. There is a fear that local authorities, because of their greater resources, would be much more efficient at it and would swamp the societies' desire to raise money for their own purposes.
  That difficulty would be solved if we obliged the local authorities to devote a certain part—in Amendment No. 14 I have put one-half—of the proceeds to societies operating in their district. This would be of great assistance to the societies throughout the land which look to lotteries to raise funds.
  I mentioned Amendment No. 7 being an addition to Clause 4(1). Amendment No. 11 requires the local authority to name the society which the lottery is assisting. That amendment could stand on its own without the other two. If a local authority is assisting a society in a lottery it is promoting, it would be wise for that fact to be mentioned plainly as it would attract the public to buy tickets. Amendment No. 14 sets an obligation on the local authority to devote 50 per cent.

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  of the proceeds of each lottery to the objects of societies within its area.
  11.15 p.m.
  Mr. Ogden: Some hon. Members opposed those parts of the Bill which gave powers to local authorities for the promotion of local lotteries because they were afraid that local authority lotteries would be a threat to society lotteries. Some hon. Members opposed the idea of local authorities indulging in lotteries at all, as I did, but there was a second voice which said that the running of lotteries by local authorities would pose a threat to lotteries run by charities and voluntary societies. There were two threads—the rights of societies and the new rights for local authorities.
  In earlier debates it was said that local lotteries organised by local authorities were not a threat to charities and that the two types of lottery were separate. It was argued that the two types should have equal rights. Now, the right hon. Member for Crosby (Mr. Page) says that local authority lotteries may be a threat and in so doing he confirms the fears of those of us who thought that was so.
  If the amendment is accepted, instead of two types of lotteries—charity and sports club lotteries and local authority lotteries—there will be a third tier of lotteries organised by local government for the purpose of charities or sports clubs. This will cause confusion. Who will decide which charity is to benefit? Will it be the local authority? Would it not be better not to allow local authority lotteries if they pose a threat to society lotteries, as the amendment suggests they do? Having created the difficulty, the right hon. Gentleman is trying to remove part of it. It would have been better if it had not been created in the first place.
  Mr. Clemitson: Clause 4(1) is widely drawn. A local authority can raise money through a lottery for any purpose. It was said originally that the raising of money through lotteries was not to be a substitute for a proper system of local taxation, yet Clause 4 enables a local authority to raise money for any purpose on which it can spend money. If I understand the amendment correctly, it pushes the bounds even further to include purposes for which societies in the neighbourhood exist.
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  On 22nd April I sought leave to introduce the Local Government (Enabling) Bill, the purpose of which is to encourage local authorities in trading and commercial activities, which is a much more sensible proposal because the local authority would be able to provide useful services to the citizens and also be able to earn money, rather than raising it through gambling. Yet the provision was opposed by Opposition Members and went to a Division.
  It seems ironical that this amendment displays a desire to push out the boundaries in using money from gambling in the form of lotteries but when we suggest that the power of local authorities should be increased to do something that is worthy and worth while, we find there is opposition to such a move.
  Mr. John Farr: I shall not raise all the points which were raised on this matter in Committee, but I merely wish to point out that there were some Opposition Members who made it clear that they regretted the participation of local authorities in the lottery business in any way whatever. These points were made at length in Committee, but invariably were voted down.
  I do not see that the efforts of my right hon. Friend the Member for Crosby (Mr. Page) in this group of amendments improve the situation in any way whatever. I believe that the Bill is bad because it permits local authorities to concentrate a good deal of their scarce manpower and resources on promoting lotteries, which I do not regard as either needed or desirable in Great Britain. But at least the provisions set out the matter fairly clearly since in Clause 4(2)(a) and (b) specific requirements are laid on local authorities to promote lotteries.
  Again, I do not see that my right hon. Friend improves matters by stating in Amendment No. 14:
  "Providing only that not less than one-half thereof is applied for the purpose or purposes of a society or societies …".
  I prefer paragraph (b) as it is. It clearly states that the local authority must
  "apply money accruing from a local lottery only to purposes specified under paragraph (a) above."
  Therefore, I repeat that my right hon. Friend's amendments do not improve a bad Bill, but make it rather worse.
  Mr. James Lamond: The right hon. Member for Crosby (Mr. Page) mentioned the resources which local authorities would have behind them to promote lotteries and suggested that the resources available to voluntary organisations did not compare with, and certainly could not compete with, the resources that would be available to local authorities.
  I find it difficult to understand what he means because the resources which matter in the context of the ceiling on lottery tickets are those at the point of sale. A voluntary organisation has the same resources to order the printing of tickets as does any local authority. Presumably, a voluntary organisation sells tickets through voluntary salesmen or saleswomen. Some local authorities will probably be forced to pay some sort of commission on sales to encourage people to sell tickets. I object to the institutionalising of gambling in that way, but I do not object to tennis clubs trying to raise money from their members.
  Contrary to what the right hon. Member for Crosby has said, the resources available to a voluntary organisation are greater than those available to a local authority, because those who do this work for the former will at least have the motive of assisting the organisation and will work voluntarily, but some sort of payment will have to be made by the local authorities to those who sell tickets, and so those proceeds will be smaller.
  Mr. Alison: I want to defend my right hon. Friend the Member for Crosby (Mr. Page) and to support his amendments. The House owes my right hon. Friend a debt of gratitude for having himself basically constructed the Bill, which the Government took over. As he rightly said, he took it through practically every stage before the end of the last Parliament caused it to founder and the present Government to take it over.
  My right hon. Friend was right to limit his original Bill to local authorities. I do not share the view of the hon. Member for Liverpool, West Derby (Mr. Ogden) that there is anything wrong in principle in public authorities using gambling as a basis for raising money. After all, the principle of the premium bond has long been established and accepted by Governments of both parties. [Interruption.] If the hon. Member for Luton, East (Mr.
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  Clemitson) will sit still for a moment, I shall give way to him.
  The principle has been long established. The potential interest is the gambling element. It is exactly the same as an ordinary purchase of a premium bond. If there is to be a net outflow of £800 million on gambling as a result of the British gambling instinct, it is much better that public authorities should step in and divert some of it from Littlewoods and others` into potential public services.
  But it is the hon. Lady's Government who have attempted to change the fundamental basis of my right hon. Friend's original and logical proposal that this should be a local authority lotteries Bill, the local authority counterpart of the premium bond. They have done so by introducing the voluntary societies. Our objection is that the hon. Lady has put a sharp limit on the scale of the permitted prizes offered by local authorities. The hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) will know what I am talking about.
  The GLC has made it plain that it believes in the value of local lotteries, but regards the level set by the Bill as ludicrous. It says that big authorities will not go in for lotteries for the permitted uses, that they may be of use to the small authorities, but that they will be the direct competitors of the voluntary societies. It is therefore only rational in the context of what the Government have done that some attempt should be made, if local authorities are to be disadvantaged by the fact that most local authority lotteries will be at their level, that is, on a rather small scale, on the hon. Lady's own principle of bringing in the voluntary societies to allow local authorities automatically to cream off a certain percentage for local charities, local voluntary organisations, local football clubs and so on. There is no difficulty about determining which they shall be. Local authorities, particularly their social service departments, are always having to work out which local voluntary organisations are in special need of support and yet locally effective and active. It can be decided on a straightforward administrative ad hoc basis.
  My right hon. Friend's amendments strengthen and underpin the very principle that the hon. Lady has introduced

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  —that it is valuable to associate voluntary organisations. Without these amendments, the Bill will disadvantage voluntary societies and for that reason the amendments should be accepted. I promised to give way to the hon. Member.
  Mr. Clemitson: I am grateful to the hon. Member. I intended to comment on his peculiar doctrine that longevity confers rightness.
  Mr. Alison: If the hon. Gentleman is referring to the premium bond principle—I do not know whether that is the longevity that he has in mind—I have found nothing objectionable or wrong in the principle of premium bonds, and nor have many other hon. Members on either side of the House.
  11.30 p.m.
  Dr. Summerskill: I appreciate that since he first started taking an interest in the subject of lotteries the right hon. Member for Crosby (Mr. Page) has moved very far towards sympathy with the voluntary societies, and he shows this in his amendment. Fundamentally, however, it is more satisfactory, as the Bill proposes, both to local authorities and to societies, that the administrative arrangements for raising money by lotteries, whether for local authorities or for societies, should be separate.
  Local authorities that were reluctant to promote lotteries to help societies in their area could be subjected to a great deal of pressure to do so. As one of my hon. Friends has pointed out, local authorities could be placed in an invidious position, wondering whether to respond to pressures from individual societies, some of which might be better at lobbying than others, and wondering whether, if they responded to pressures, to which one they should respond. There would be jealousy between individual societies as to which one was chosen by a local authority for a particular lottery and they would be vying with each other.
  The Government have no evidence to suggest that societies generally want the arrangement proposed by the right hon. Gentleman, which I think would restrict within the financial limits laid down in our Bill the help that an individual local authority or society could derive from a lottery. I also remind the House that it is already possible under the Bill for a
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  local authority to apply lottery proceeds for the benefit of voluntary organisations, ones which the authority can assist under its statutory powers. There would be objection to further arrangements of the type proposed in the amendment. As I say, however, it is already possible under the Bill for a local authority to apply its lottery proceeds to voluntary organisations in certain circumstances.
  Amendment negatived.
  Amendments made: No. 9, in page 3, line 32, leave out 'purposes for which they are promoting' and insert 'object of'.
  No. 10, in page 3, line 34, leave out 'them' and insert' it'.
  No. 12, in page 3, leave out line 38 and insert
  'the object of the lottery'.
  No. 13, in page 3, line 38, at end insert—
  '( ) In this section "object" means the particular purpose or purposes for which a local authority promote a local lottery'.
  No. 15, in page 3, line 42, leave out 'purposes specified in relation to that lottery under subsection (2)(a) above' and insert 'object of the lottery'.
  No. 16, in page 4, line 3, leave out 'specified purposes' and insert 'object of the lottery'.
  No. 17, in line 4, leave out 'have' and insert 'has'.
  No. 18, in line 6, leave out 'specified purposes provide' and insert 'object provides'.
  No. 19, in line 12, leave out 'specified purposes were' and insert 'object was'.
  No. 20, in line 13, leave out 'they were' and insert 'the object was'.
  No. 21, in line 18, leave out 'specified purposes' and insert 'object'.
  No. 22, in line 18, leave out 'have' and insert 'has'.
  No. 23, in line 19, leave out 'they were' and insert 'it was'.
  No. 24, in line 26, leave out 'the specified purposes' and insert 'its object'.—[Dr. Summerskill.]

Clause 5

  PROCEEDS OF LOCAL LOTTERIES
  Mr. Graham Page: I beg to move Amendment No. 25, in page 4, line 33, after 'authority', insert
  'in trustee securities other than securities issued by that authority'.
  The Clause provides that the proceeds of a local authority lottery shall be paid into a separate fund and that those proceeds shall be invested. It gives no particular direction as to the kind of investment to be made.
  I think that it would be repulsive to the public who had subscribed to a lottery if the fund were invested in the very same local authority. If a local authority intended to retain the funds for any length of time—I hope that it would be a very short time, but it might take a month or two to settle up the prizes, the expenses and so on and the funds would be held for that length of time—I would hope that during that period the local authority would neither invest in anything speculative nor purchase equities in some way with those funds but would put them in something very sound and make it clear that it was not using those funds for its own purposes. That is why I have suggested in this amendment that the fund should be invested in trustee securities other than securities issued by that authority.
  Mr. Weitzman: I hope that my hon. Friend will accept this amendment. It is similar to one with which we dealt in Committee. It is important that the words should not be left at large. Clause 5(1) says that any money in such a fund shall be invested by the local authority. Surely it is necessary that the precaution should be taken upon the lines set out in the amendment.
  Dr. Summerskill: This amendment would require a local authority to invest any money in a lottery fund in trustee securities. I realise from what the right hon. Member for Crosby (Mr. Page) said that this amendment is designed to ensure that lottery proceeds are not invested speculatively. But the amendment would have an unnecessarily restrictive effect on the investment discretion of a local authority. I explained in Committee that money in a lottery fund is likely to be
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  directed to short-term investment, until sufficient has accrued for the chosen purpose to be undertaken. Lottery fund money is suitable for deposit in banks and for internal borrowing by the local authority itself. Such investments would be excluded by the amendment; the existing provision in the clause is adequate bearing in mind the nature of lottery fund money and the sense of financial responsibility exhibited by local authorities in these matters.
  I should add that the expression "trustee securities" has, in any case, been inappropriate as a term of act ever since the Trustee Investments Act 1961, which repealed section 1 of the Trustee Act 1925 from which the expression "trustee securities" or "trustee investments" derives.
  Amendment negatived.

Clause 8

  FREQUENCY OF LOTTERIES
  Dr. Summerskill: I beg to move Amendment No. 26, in page 5, line 9, leave out
  'Subject to subsection (2) below,'.
  Mr. Deputy Speaker: With this amendment we shall take Government Amendments Nos. 27 to 31 and No. 58.
  Dr. Summerskill: These amendments have two aims. In the first place they will enable societies or local authorities to count their permitted maximum number of lotteries in relation to any period of 12 months. The Government undertook to look at this following discussion of an amendment put down by my right hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman) and my hon. Friend the Member for St. Pancras, North (Mr. Stallard) which would have related local lotteries to the local authority financial year. The Government have also taken account of the point raised by the right hon. Member for Crosby (Mr. Page) who wanted a similar provision for societies working to the financial rather than the calendar year. By replacing the term "year" by the expression "period of twelve months", societies and local authorities are bound by neither the calendar nor the financial years. The definition of "year" in Clause 15(1) thus

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  becomes unnecessary and a later amendment is designed to remove this definition.
  Otherwise, these amendments are only drafting amendments designed to improve the general layout of Clause 8 and in particular to remove the erroneous reference in subsection (4) to which the hon. Member for Hackney, North and Stoke Newington drew attention in Standing Committee.
  Amendment No. 58 will remove the definition of "year" from Clause 15 and is consequential on the earlier amendments to Clause 8. The word "year" is no longer used in the Bill.
  Amendment agreed to.
  Amendments made:
  No. 27, in page 5, line 10, leave out from 'any' to end of line 13 and insert 'period of twelve months, but—'.
  No. 28, in line 24, leave out
  'Subject to subsection (5) below,'.
  No. 29, in line 27, at end insert:
  'except that the date of a lottery promoted for the purpose of selling tickets or chances wholly or mainly to persons attending a particular athletic or sporting event may be seven days or less after the date of a previous lottery promoted on behalf of the society'.
  No. 30, in line 28, leave out
  'Subject to subsection (5) below'.
  No. 31, in line 31, leave out subsection
  (5).—[Dr. Summerskill.]

Clause 9

  RULES FOR AUTHORISED LOTTERIES
  Mr. Graham Page: I beg to move Amendment No. 33, in page 6, leave out lines 18 and 19.
  Mr. Deputy Speaker: With this, it will be convenient to consider the following amendments:
  No. 34, in line 20, at end insert:
  'promoted by a parish council, or in Wales, a community council'.
  No. 37, to leave out lines 29 and 30.
  No. 38, in line 31, at end insert:
  'promoted by a parish council or in Wales, a community council'.
  No. 41, in page 7, line 5, at end insert:

  '(11) (a) The total value of the tickets or chances sold in all society's lotteries promoted in a year by the same society shall not exceed a sum equal to the gross income of the society during its preceding financial year or £5,000,000 whichever is the less.

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  (b) No prize in a society's lottery shall exceed one-fifth of the total value of the tickets or chances sold or £25,000 whichever is the less'.

  No. 42, in line 5, at end insert:

  '(11) (a) The total value of the tickets or chances sold in all local lotteries promoted in a year by the same local authority ether than a parish council, or, in Wales, a community council, shall not exceed a sum equal to one-tenth of the aggregate of the rateable value of the hereditaments (within the meaning of the General Rate Act 1967) in their area (including any hereditament which, by virtue of any enactment, any body is treated as occupying in that area) or £5,000,000 whichever is the less.

  (b) No prize in a local lottery promoted by a local authority other than a parish council, or in Wales, a community council, shall exceed £25,000.'

  No. 43, in line 8, at end insert:

  '(12)(a) The total value of the tickets or chances sold in all local lotteries promoted in any year by the same local authority, other than a parish council, or, in Wales, a community council, shall not exceed £5,000,000: and

  (b) No prize in a lottery promoted by a local authority other than a parish council, or, in Wales, a community council, shall exceed £50,000.'.

  Mr. Graham Page: I shall endeavour to explain how these several amendments fall into a group with very much a single purpose.
  Subsections (6) and (8) of Clause 9 restrict the prize money and the total proceeds in all lotteries to the figures set out in subsections (7) and (9). They refer to all lotteries.
  Amendments Nos. 33, 34, 37 and 38 would make those restrictive limits apply not to all lotteries but only to lotteries run by parish councils and community councils in Wales. Those four amendments restrict the limits to the small authorities.
  Amendments Nos. 41, 42 and 43 propose new limits for lotteries run by the larger local authorities—the counties and districts—and for societies' lotteries. Amendment No. 41 limits societies lotteries to a figure of the gross income of the preceding year or £5 million and brings the societies' lotteries up to a substantial figure for which it is worth running a lottery. It restricts the prize money to one-fifth of the proceeds or £25,000. These figures are not terms of art, of course. They correspond with the limits placed on local authority lotteries in the following amendments.

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  Amendment No. 43 is quite straightforward and imposes clear and specific limits on the total proceeds of lotteries run by a local authority during a year and a specific limit on the highest prize money.
  Amendment No. 42 has certain refinements in setting those limits. Instead of setting a high limit for all local authorities, be they districts or counties, it seeks to set a limit by reference to the rateable value of the authority, with a final limit of £5 million relating to the lotteries run in one year. Here, we have something fundamentally different from the provisions of the Bill. The limits of the Bill apply only to lotteries run by the small local authorities, and then new, substantial limits for both the societies and the local authorities which are counties or districts.
  There has been severe criticism from the local authority associations and from specific local authorities of the limits proposed in the Bill.
  11.45 p.m.
  Today I received a letter from the Association of District Councils which is very much on the point of the amendment. The writer, Mr. Rhodes, the secretary of the ADC, says:
  "I am pleased to see amendments in your name to Clause 9 of the Lotteries Bill. As you know, the ADC is firmly in favour of district councils having the power to promote local lotteries and their evidence to the Layfield Committee of Inquiry into local government finance advocates a discretion for local authorities to raise funds by this means for specific purposes; e.g., a new sports centre."
  I will not quote the whole letter. Skipping a paragraph, Mr. Rhodes continues:
  "We were extremely disappointed that your Local Lotteries Bill has been withdrawn in favour of the Government's Bill and although the Association is pleased to see that provision has been made in that Bill for local authorities to promote lotteries, we much regret that the Government's proposals limit turnover from weekly lotteries to a maximum of about £½ million per annum."
  Pausing there, the association is quoting the total which can be obtained over a year if weekly lotteries are run. The figure is £520,000 and the association quotes the figure of approximately £500,000.
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  The writer proceeds:
  "If, as is likely to be the case, the lottery was monthly or quarterly, the turnover might be in the region of £¼ million or £160,000 respectively.
  The limitations can, at best, be appropriate to the smallest authorities, and most district councils will just not find it worthwhile to promote lotteries on this small scale.
  The Association would like, therefore, to see Clause 9 of the Bill amended, as you argued in Committee, to provide a substantially higher turnover than at present proposed. Although the Secretary of State has power to vary these limits under Clause 11(1)(b) it is important, in the Association's view, that the limits should be pitched at a far more realistic level in the Bill itself.
  We therefore warmly welcome your amendments and hope you will be able to give this issue a further airing on Report."
  I apologise to the House if the airing has been to quote at length this letter from the Association of District Councils, but it shows that the representative body of district councils supports the kind of amendment that I am arguing. If we have decided that the Bill should be supported by both the Government and the Opposition, apart from some who feel that it is wrong for local authorities to run lotteries at all, the Government should ensure that it is made acceptable to those who will have to work it—the district councils in particular.
  The county councils may choose to run lotteries, but I feel that the district councils will be able to please their own public by seeing that money is raised in this manner, which is the least hurtful to people, for local purposes. Such purposes might not be realised if councils had to rely entirely on the general rates. Therefore, I call in support the Association of District Councils in moving the amendment for extending the limits on local authorities proposed in the Bill.
  Mr. Albert Roberts: It is not a question whether one's knowledge of gambling is more profound than someone else's. The Bill is being promoted by the Government, and if we are in for a penny we might as well be in for a pound.
  The great disadvantage of the Bill is that there is no flexibility. It would have been better to have debated the report on gambling before being presented with the Bill, but it is here now, it is a fait accompli, and we have to deal with it.

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  Let us consider the position of a local authorty dealing with, say, 4 million people. My constituency comes under the umbrella of the West Yorkshire Metropolitan County, as does that of the hon. Member for Barkston Ash (Mr. Alison). My local authority is Labour controlled, and it has been telling me that it wants something better than the Bill provides—something into which it can get its teeth. It does not want to play about with a few thousand pounds. It wants to play about with £2 million. Whether we like it or not that is the authority's opinion, and it has been agreed to by the appropriate committee.
  Montreal and Australia have made millions of pounds through lotteries, and I should have thought that something could be done to make the scheme worth while. A local authority which is responsible for 4 million people could make it worth its while to do the job of running a lottery. My authority wants to get its teeth into something substantial, and unless there is a change I can see some of the large local authorities not taking part in running lotteries. I think I heard someone say that that would be very wise, but I remember when premium bonds were introduced. I was a member of the Opposition then and we opposed the scheme, but they are with us now, and, as the hon. Member for Barkston Ash said, they are a form of gambling.
  Whatever may be the feelings of the Churches about gambling, if the scheme proposed in the Bill helps to cream off some of the £800 million that it is said is spent on private gambling and get it used to provide recreation facilities and other amenities, that will be a good thing, The Irish Hospitals Sweepstake has raised more than £100 million, and that is a considerable sum of money. I have been briefed by my, local authority, and I know that it wants something more than is provided by the Bill as it stands.
  I have a feeling that my hon. Friend the Minister will not give way on this, but her area comes under the umbrella of the West Yorkshire Metropolitan County and I can tell her that it wants to see some changes in the Bill. I do not know whether changes can be made, but it would have been better if we had debated the report on gambling and then been
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  presented with a new Bill. However, we have this Bill before us. I had to say in Committee and I am now passing on my opinion and that of my local authority.
  Mr. John Evans: I support the request to the Minister to accept the amendment. There is nothing in the Bill to force a local authority to run a lottery. It will be for each authority to decide what it wants to do, but we must recognise that local authorities differ tremendously, and therefore we should provide flexibility for them.
  I do not gamble, and I never have done so, but I do not oppose gambling in principle. I respect the views of some of my hon. Friends but there is nothing that Parliament can do to prevent gambling. If there is to be gambling, let the local authorities and the State enjoy some of the benefits. I support the suggestion about the nationalisation of the football pools, which would be a start on tackling the real issue.
  The Bill has given credence to the idea of local lotteries, so local authorities should be given power to operate them in the way they think best. Some local authorities govern the lives of millions of people. The responsible men and women elected to them should have the freedom to run lotteries which will benefit their people. In many ways they have more responsibility than Members of Parliament, certainly than back benchers. I am satisfied that they can run their affairs diligently. I beg my hon. Friend to accept the amendments, which would give local authorities the freedom that I should like them to have.
  Mr. Rees-Davies: In December 1974, in a search for alternative sources of revenue, this was said:
  "Apart from some possible new local taxes, there are undoubtedly some subsidiary sources of revenue which could ease the problems of financing local services without imposing involuntary burdens on the general public.
  One purely voluntary source of revenue for local authorities would be local lotteries. In some overseas countries, municipalities gain substantial financial benefits from public lotteries. They could only make a small contribution to financing the range of services provided by local authorities in Britain, but no source of revenue which is virtually painless should be ignored.
  We propose that local authorities should be empowered by national legislation to organise lotteries if they so wished. If there were strong

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  local objections on religious or other grounds, then any authority would be free to refrain from so doing.
  It might be considered helpful to the success of a lottery if its proceeds were declared to be geared to a particular public service to which the public felt especially well disposed. However, any pretence that one particular part of a local authority's general revenue is earmarked for one particular item of expenditure is a little unreal."
  That is the admirable statement of evidence given to the Layfield Committee by none other than the Labour Party Policy Group, and for once I endorse every word of it.
  We have heard recently that decisions of that group or of party conferences should bind the whole country and that money should be forthcoming to carry out those objectives. Since the group's views coincide with those of the Opposition, there seems to be a large measure of agreement, particularly in view of the somnolence of the Liberal Party, which is not represented here tonight. Neither, in fact, are the Scottish National Party, Plaid Cymru or the Ulster Unionists. It would be interesting to know their views on this issue.
  12 midnight
  Throughout the proceedings on the Bill I have referred to the good inter-departmental report on lotteries large and small, chaired by Mr. Witney and set up by a Conservative Home Secretary—[Interruption.] With the arrival of the hon. Member for the Isle of Wight (Mr. Ross) the Liberal Party has awoken once again. We have never debated that report. I hope that the Minister will press for us to have an opportunity to debate that report and to consider lotteries and those other subjects, such as pools competitions, spot-the-ball competitions and others, which should be debated by the House.
  The amendments seek to enlarge the scope of the Bill. We all know that none of the large local authorities will gain any benefit from the Bill. Some of the small societies—the football societies, athletic societies and cultural societies—the parish councils, and possibly some of the smaller district councils, will be able to use it to some degree. But those bodies that we feel should have fair and proper consideration—the large local authorities and the large national sporting bodies, such as the Olympic Association, the Football League and the MCC, will get
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  no advantage from the Bill. What is needed is an undertaking from the Government that they will carry out what they said would be their aim, but not their pledge, that next year they would introduce a measure dealing with the position of large lotteries and taking into account the position of the pools.
  I think that I should be out of order if I went too deeply into the question of the pools. I envisage that, with the arrival of the large lotteries and the use of the pools promoters and their staff as agents to enable those large lotteries to begin, there may well be a substantial effect on the big pools. They need not be nationalised, but at some stage the whole question of the moral principle lying behind the operation of large-scale lotteries will have to be considered by the House, which will have to consider, if it wants large lotteries, whether the money is to be diffused generally.
  At present a large measure of revenue is provided for the Treasury. The large lotteries will clearly have to be the subject of normal taxation, even if the benefit is to go largely to the local authorities and societies. But we want to draw the line between the large lottery, which is in a separate part from the small lotteries, and the small local society lotteries, to ensure that the latter are not taxed.
  That is the scope of the matter. The efforts of my right hon. and hon. Friends to enlarge this general scope are intended to hold the fort, to enable the matter to be further considered by the Government.
  Let us be frank about it. The Home Office is not proud of the Bill. The hon. Lady is not proud of it. Nobody here is proud of it. There is some reason for not being proud of it. The Bill was introduced, rightly or wrongly, to try to replace the Bill of my right hon. Friend the Member for Crosby (Mr. Page). It is difficult to cope with him. He is a very able Member, and he produced a very good Bill. It might not have been as good as one could make it, as he would be the first to concede, but it was a good stop-gap until the whole matter could be comprehensively dealt with. It has been taken over. The Minister has had to try to deal with it. I said in Committee and have said again since to the Minister that I had hoped the Bill would not have been brought forward in the circumstances of tonight.

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  My hope was that the Government would defer consideration of the Bill until July so that they could bring forward comprehensive amendments in a separate batch of provisions which could then have been passed. This would have avoided the necessity of further legislation next year. However, that is always a matter for the Government to decide and they decided not to adopt the more sensible course.
  They have decided to push ahead, not only late at night, but after a week in which we have had three most important Second Readings and at a time when the House is half empty, as the Government knew it would be, so that it is impossible to put on a whip.
  Mr. Deputy Speaker: I am sorry to interrupt the hon. Gentleman, but he is getting a little wide of the amendment when he strays on to the question of earlier business.
  Mr. Rees-Davies: I had to put the matter into perspective, Mr. Deputy Speaker. We are seeking by amendment on Report substantially to increase the limits, and the country is entitled to know why the Opposition want to take that course. We do not want to do it in isolation in respect of the Bill, but because we recognise that this is what the working party itself and hon. Members in all parts of the House want to do.
  Because of the time this Bill has come on and in view of the difficulty of getting a whip we are in the position of having to do what the Government want. We are, however, entitled to seek a firm undertaking from them that next year they will bring in legislation to deal with this matter in a much wider context, and that in the autumn or at some other suitable time they will give the House a chance to debate the whole of the wider aspects, of which these amendments form an integral part.
  Mr. Clemitson: Tributes have been paid to the skill of the right hon. Member for Crosby (Mr. Page), but no mention has been made of his incredible luck. I am not one to dissent from the judgments on his skill, but his luck should have been referred to. It has been said that the Bill was brought in to pre-empt the right hon. Genleman's Bill, and no one has dissented from that view. It is
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  strange that a Labour Government should in effect take over a Bill brought in by an Opposition Member when plenty of good Bills have been introduced by Labour Members, none of which the Government seem prepared to take over.
  We have heard about the creaming-off argument from my hon. Friend the Member for Normanton (Mr. Roberts) and my hon. Friend the Member for Newton (Mr. Evans). That argument has been dealt with repeatedly in the course of our debates about lotteries. Unfortunately our debate on Second Reading was restricted to little more than an hour. I do not want to talk about the creaming-off argument at length, but I wish to raise the question of where the revenue will be creamed off from—from which worthy causes. Or should the revenue be creamed off from commercial gambling interests, in which case these lotteries will be in competition with those interests? Since commercial interests tend to offer prizes running into six figures the clear logic is that the local authority lotteries will grow and grow.
  We suspect that far from gambling being transferred from one form to another the total amount will increase. Whatever moral stance we may take on the issue there are few hon. Members who, after examining the figures, would say that it was desirable that the total amount of gambling should increase beyond its present astronomical proportions.
  The hon. and learned Member for Thanet, West (Mr. Rees-Davies) talked about extra sources of revenue for local government and quoted various ways in which such revenue might be raised. I revert to the question of local authorities being engaged in trading and commercial activities. This seems to be a much more constructive way of raising money, or earning money, than by obtaining it through encouraging gambling.
  The questions are: how is the money to be raised by local authorities, and how is it to be disbursed? The criterion we should apply to the raising of money is the ability of people to pay. What is our criticism of the rating system? It is one that is coming increasingly from Tory Members, too. It is that it is unfair and not closely geared to ability to pay. We are demanding a system of local taxation much more closely geared to that ability.

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  What sense can it make to introduce a measure permitting local authorities to raise money when it has nothing to do with people's ability to pay, but is encouraging them to gamble?
  Mr. John Evans: Will my hon. Friend accept that while people's ability to pay is involved there is another important point, namely people's willingness to pay? I do not gamble, but there are thousands of people who want to do so. Provided that is so it is reasonable that local authorities or the State should have the right to participate in this way.
  Mr. Clemitson: I accept the point about willingness to pay, to a degree. There are a great number of people who gamble involuntarily. We should not encourage more people to move into the category of compulsive gamblers.
  As Socialists we often talk about a desirable goal being the redistribution of wealth according to need. Yet here we are proposing to enable local authorities to disburse considerable sums of money in prizes according to the principle of luck. We rightly criticise inherited wealth and want to tax it. Our criticism is that such wealth is based purely on luck. Here we are proposing to disburse large sums of money according to the same principle. Where is the logic of that? Tory Members not only want to approve the principle of prizes, they want to increase them.
  On each of these grounds I oppose any attempt to extend the bounds of the Bill and the amount of money to be received by means of lotteries and the extent of the prizes. It is wrong in principle and in practice for local authorities to raise money by means of lotteries. We must devise a fair and just system of local taxation.
  12.15 a.m.
  Mr. Ogden: I wonder if the right hon. Member for Crosby (Mr. Page) will give the House some information about Amendment No. 41—
  "The total value of the tickets or chances sold in all society's lotteries promoted in a year by the same society shall not exceed a sum equal to the gross income of the society during its preceding financial year or £5,000,000".
  Why is it £5 million? If this sum is related to some societies, which societies are
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  they? Why is not the amount £10 million?
  Mr. Graham Page: The figure is related to the figure for local authorities. The major local authorities such as the Greater London Council wished the figure to be £6 million. We suggested £5 million instead. As local authorities are to be subject to that limit, I thought it right that societies should be subject to the same limit if they are big enough. In this category might fall the national societies such as the Spastics Society.
  Mr. Ogden: I am grateful to the right hon. Gentleman. The figure was decided upon as a result of a deal done between two parties. Someone suggested £6 million. The right hon. Gentleman said "No. Let us round it off and make it £5 million". It was related to the local authority figure. In practice it has no relation to the experience of any society or charity, whether national or local. It is not related to the turnover of any society or group of societies. It is an arbitrary figure related to the sum which is to apply for local authorities.
  Mr. Graham Page: One must make one's own judgment. It was my judgment that £5 million is the right figure.
  Mr. Ogden: So the right hon. Gentleman cannot say if there are national societies engaged in charitable work which have an annual income of £5 million or if that is the average of the national societies. The figure has no relation to any existing charitable institution or organisation. The figure is chosen because of its local authority implications, not because of its charitable implications.
  I contrast the sum of £5 million with the title that the right hon. Gentleman chose for his Bill, namely, the Local Lotteries Bill. Those who have argued for this Bill or for the right hon. Gentleman's Bill have asserted that, even if one did not like the Bill, it was a small Bill and was limited to small authorities. The argument was that if it did good it did little good and if it did harm it did little harm.
  Now we are up to the figure of £5 million. Apparently some of my hon. Friends and local district councils are converted to the slogan "Big is beautiful". It does not matter whether something is right or wrong. The sum of £5

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  million is not a matter of no consequence. We have moved from a small matter to a matter of some consequence.
  I agree with the hon. and learned Member for Thanet, West (Mr. Rees-Davies) that we are taking the subject of gambling and lotteries piecemeal.
  Mr. Hector Monro: Having had strong reservations about the Bill at the outset, and having voted against it on Second Reading, I now want it to be made better. The hon. Member for Liverpool, West Derby (Mr. Ogden) contrasted the large and small amounts of prize money turnover. My view is that the prize money turnover is too small. If the Bill is to be of any use it is better for it to err on the side of a large figure rather than a small one.
  The Safety of Snorts Grounds Bill has been lying derelict since the election in February 1974. Rumour has it that when the safety code for sports grounds is brought in either the Home Office or the Department for the Environment will argue that the Bill which we are discussing now will provide the opportunity to raise money for the improvement of sports grounds. We all know the cost of building operations today, and the cost of minimal improvements to large sports grounds used by First or Second Division clubs in England and premier clubs in Scotland would be substantial. The money which the Bill permits to be raised by lotteries is nowhere near adequate to enable such improvements to be made.
  It would be unwise for the hon. Lady or the Minister who is responsible for sport to argue that the Lotteries Bill will prove to be a salvation for sports clubs. It certainly is not. For the hon. Lady to acept the amendment would be a step in the right direction, and that is why I support it.
  Mr. James Lamond: I was surprised, not to say disappointed, when I heard my hon. Friend the Member for Newton (Mr. Evans) support the amendment. He has given on occasions an excellent Socialist analysis of other subjects, and I find it extraordinary that he should support gambling. He used his well-known persuasiveness in deploying two arguments that might have brought me round to his viewpoint. He said, first,
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  that we must give more freedom to local authorities and, secondly, that we must extend nationalisation to include football pools. Those are two arguments which would be likely to persuade me to change my mind, but my abhorrence of the principle of gambling being supported and encouraged by local authorities is too great even to be swayed by those two considerations.
  The hon. and learned Member for Thanet, West (Mr. Rees-Davies) and my hon. Friend the Member for Normanton (Mr. Roberts) referred to premium bonds. They argued that, because premium bonds had been introduced and supported, by some logic which escapes me, we should support the further extension of gambling. The logic of the argument is that those of us who object to the Bill should let these provisions go through without objection. That adds further to the fear that in two years' time when a similar measure is introduced to extend the scope of gambling, somebody will say "But we have allowed premium bonds and lotteries in local authorities —therefore, we have no moral right to object now". That is how one goes down the slippery slope.
  We shall no doubt be told that this Bill will open the way to small prizes only, and that nobody will be harmed by its provisions. But let us imagine that next year, or the following year, amending legislation is introduced suggesting a prize of perhaps £5 million. We may be told that there is a provision in the present legislation which allows the Secretary of State to change the limits.
  Mr. Albert Roberts: The great danger when people go into gambling clubs—and I know of people who have lost fortunes overnight—is that they stay in those clubs, not for an hour or so, but for 24 hours. However, if one buys a ticket, there is that limit on the gambling. I, like my hon. Friend, am opposed to any spread of gambling, but I believe that we should enable local authorities and sports organisations to benefit from these provisions. Let us be honest and face up to the situation.
  Mr. Lamond: What my hon. Friend just said should reinforce his objections to gambling, and therefore he should not support the amendments which are before us. My hon. Friend is seeking to say

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  that gambling is a natural instinct and there is nothing at all we can do about it. There is the implication that we should not positively try to discourage it but positively seek to encourage it. By the same token one might say, "In this acquisitive society there is a natural tendency to steal," We do not want to make it easier to steal, but it is a trend we want to try to correct.
  I find it sad that a Labour Government have introduced this Bill, especially at present when we are so short of parliamentary time and when the time we have had could have been spent on more laudable objects. How often have we been told by my right hon. Friend the Leader of the House that there is no time left for Parliament to consider legislation on a particular subject—yet we have had before us a Bill which we cannot even find in Labour's manifesto.
  Mr. Rooker: A point which was in the Labour Party's manifesto and which should be debated in this House, since so far we have had no time to debate it, is the question of the declaration of Members' interests. What is bringing this House into disrepute is that we spend hours discussing a piece of legislation on lotteries, and yet we cannot discuss other more important matters.
  Mr. Lamond: I thank my hon. Friend for reinforcing my point. I strongly object to this amendment. Furthermore, I object to the principle behind the Bill, and certainly object to any extensions in regard to the amount of money involved.
  One or two hon. Members have said that we should take advantage of this comparatively painless method of extracting money. My theory is that people who are poor tend to gamble more than do those who are well-off. There are exceptions, but in the main, what drives people to gamble is the hope of solving their financial troubles by some sort of win. That is what happens in bingo halls. That is why bingo halls are full of working-class wives. That is my theory, having been to bingo halls to see what happens, and others with the same experience support me. They are looking for a way out of their financial troubles. Yet they are the least able to pay extra money towards local authority services.
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  My advice to my hon. Friend the Under-Secretary is not only to resist the amendment, but, on behalf of the Government, to withdraw the Bill to make room for a measure that is much more worth while and that will have far greater support from our supporters in the country.
  12.30 a.m.
  Mr. Stephen Ross: I apologise to the right hon. Member for Crosby (Mr. Page) for not being here when he moved his amendment. I was outside the Chamber and I missed the timing. As he knows, I have supported him since he first introduced his Bill. We have heard these arguments time after time.
  Does the hon. Member for Luton, East (Mr. Clemitson) support his own party's evidence to the Layfield Committee? That evidence suggested that local authorities should be able to run lotteries. That was said by the Labour Party in evidence on the reform of the rating system. If the hon. Member dissociates himself from it, he should say so.
  Mr. Clemitson: I dissociate myself from it. I fought two elections last year, in February and in October, on manifestos that the Labour Party adopted for those elections. In neither of those manifestos and in neither of the Queen's Speeches that I have heard since coming to the House has there been one mention of introducing a Bill to enable local authorities to run lotteries. Therefore, I am not at all committed to supporting the Bill.
  Mr. Ross: It is interesting to hear that. I am certain that the Government introduced the Bill because the right hon. Member's Bill went practically completely through largely with the support of Labour Members. The fact that they are not here to support him tonight is something of a disappointment and may have something to do with the lateness of the hour.
  I imagine that in Luton there are plenty of sports grounds and swimming pools. I am sorry that Luton Town is dropping down into the Second Division and will no doubt need a lottery to get back up

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  again, although a well-known comedian supports the team financially.
  But there are many rural areas that desperately want to be able to provide sporting facilities, swimming pools and so on. I have repeated ad nauseam the experience of my own constituency where we do not even have a heated indoor swimming pool. We have managed to raise £20,000 through lotteries and hard work. Nobody lost a great deal of money and nobody went over the edge and nobody has gone drinking. That sum of £20,000 was raised over 10 years, but now it is just about enough to meet the cost of the architect's fees.
  As has been said, the cost of providing these facilities has soared and the cost of providing a sports centre now approaches £1 million. An indoor swimming pool such as we want, not of Olympic standard, costs about £750,000. Of course the figures in the Bill are therefore totally inadequate. That is why I thought the right hon. Member for Crosby was right originally. He suggested the figure of £5 million in the original Bill. At one time he was prepared to reduce it, but we dissuaded him and our view was carried in Committee with the help of Labour Members.
  We have heard a great deal of righteousness about people who go to bingo. They go there not hoping for a big win, but to enjoy themselves, because they like bingo. They do not go expecting to make a great fortune.
  Mr. James Lamond: Does the hon. Member think that they would go if there were no money prizes?
  Mr. Ross: It is only a minor consideration. It is ridiculous to suggest otherwise. To talk in that sense is to go back to the last century.
  I am disappointed by the Government. The evidence from the local authorities to the Layfield Committee was that if the lotteries were made worth while, they would run them. It would be a good idea for money to go to costly projects such as sports grounds, extra facilities for youth clubs, and the disaster fund that we so badly need.
  I remember vividly that disastrous air crash in which half the women of a Somerset village were wiped out over-
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  night. If we could raise disaster fund money by a lottery, would not that be worth while? If it is suggested that we can put these things on the rates, we are not likely to do it for another 10 years, even if then. Let us give people encouragement to do things for themselves.
  scribe to a disaster fund from making a straight financial contribution. If the hon. Member's constituents are desperately in need—that was the word he used—of swimming pools and so on, does it not flow from that that they would
  Mr. James Lamond: There is no suggestion that a disaster fund must either be raised by a lottery or be subscribed by the local council. There is nothing to prevent anyone who wishes to sub-be prepared to make the proper financial contribution to obtain these things without having to be encouraged by the promise of something for nothing from a lottery?
  Mr. Ross: We have responsible local authorities. As I happened to serve on one for seven years, I can perhaps recall that twice we were on the point of signing a contract for a swimming pool but we came up against a financial crisis, when the Government asked local authorities to cut back. We obeyed those instructions. We were not one of the authorities which ignored Government requests and had a spending spree. We are law-abiding and we play the game, and therefore we have lost out. Hence the chance to do something has been denied us because of the niggardliness of the Government. It is ridiculous to have to wait for another Bill in a year's time. I beg the Government to accept the amendment.
  Mr. Edwin Wainwright: I am surprised at some of my hon. Friends who appear to be of the opinion that no lotteries take place. Of course they take place. If my hon. Friends wanted to stop them taking place throughout the country, I could understand their attitude tonight. Our people have an innate spirit of gambling, whether we like it or not. How are we to control it? Shall we allow those who want to derive benefit from that innate spirit of theirs to gamble?
  When we talk about gambling, what do we mean? If people buy a 5p ticket

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  in the hope of winning £5,000, is that gambling? There is no such thing as gambling on that sort of money. It is something quite different.
  If we want to prevent our people entirely from what is termed gambling, let us stop all lotteries, all the pools and everything. Let us stop all our religious organisations from taking advantage of our people. They sometimes make a contribution to a wonderful effort.
  Mr. Rooker: Come to the point.
  Mr. Wainwright: I am coming to it. My hon. Friend need not interject.
  When it comes to increasing the amount of money from £1,500 to £3,000, what does that mean? It has been announced this week that someone has won £500,000 on the pools. We are not talking about anything like that. But nobody says that we should stop the pools—at least, I have not heard it said tonight. If my hon. Friends said that, I would back them 100 per cent. We must expound what we believe. The people of this country do not buy tickets just for the sake of winning. They do so to make a contribution—[Interruption.]
  Mr. Deputy Speaker: I must remind the hon. Member that he is speaking to an amendment which has not yet been reached. With respect to the hon. Member, he is also going a little wide of Amendment No. 33.
  Mr. Wainwright: I beg your pardon, Mr. Deputy Speaker. The noise being made by my hon. Friends prevented me from making my point.
  It is sought to increase the figure of £1,500 to £3,000, which is puerile.
  Mr. Deputy Speaker: That is the point which I made before. The hon. Member is speaking to Amendment No. 35, which we have not yet reached. We are dealing with Amendment No. 33.
  Mr. Wainwright: I beg your pardon, Mr. Deputy Speaker. I am looking to the future. I believe that it is time for us to control gambling, not for the benefit of individuals but for the benefit of society as a whole. The sooner we do that the better.
  Mr. Alison: In supporting the amendment I do not wish to be drawn by the hon. Member for Oldham, East (Mr.
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  Lamond) and the hon. Member for Luton, East (Mr. Clemitson) into the great philosophical question of whether gambling is right or wrong, and whether the Conservative Government were right or wrong to introduce premium bonds. Those are two fundamental points. In this country we have premium bonds. The principle of a national lottery to raise funds for the national exchequer is now established and has a respectable pedigree. My right hon. Friend acted logically in this context to try to extend the scope of the fund raising, by the same methods, from national to local government. In doing so he put reasonable limits on the ceiling figures commensurate with the modern size of local government.
  The Bill accepts the principle that local government should be able to raise money by lotteries in the same way as the Government. The imbalance in the treatment of local government and the Government is scandalous. The maximum premium bond prize is £50,000. The Greater London Council which has charge, in local government terms, of one-seventh of the population of England, Scotland and Wales, amounting to 7 million souls, is entitled, as its share of the principle of running lotteries, to offer a maximum prize of £2,000 or £1,500, compared with the first prize of £50,000 offered by the national lottery. It is ludicrous.
  The Under-Secretary of State said that she would introduce another Bill in one year's time. She is trying to torpedo the principle.
  Dr. Summerskill indicated dissent.
  Mr. Alison: I withdraw my remark. I put words into the hon. Lady's mouth which she does not accept. However, the Government have said that the introduction of bigger lotteries is best done by means of a separate Bill. Let us leave the matter there.
  The Bill sets out to torpedo the principle of local lotteries by allowing this difference between what the national premium bond lottery and local lotteries can do. The Greater London Council must run one local lottery per week to produce £500,000. That is derisory, and it has said so.
  The hon. Member for Normanton (Mr. Roberts) spoke eloquently on behalf of

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  Yorkshire, especially the West Yorkshire Metropolitan Council. I suspect that if the Under-Secretary looks round she will see some frowning Yorkshire faces. She finds one facing her. The hon. Member for Normanton and the hon. Member for Newton (Mr. Evans) are frowning. I am not certain of the position of the hon. Member for Dearne Valley (Mr. Wainwright).
  Mr. Edwin Wainwright: Although I have admired the hon. Member for Barkston Ash (Mr. Alison) on previous occasions, I now find it disgraceful that he should speak about lotteries and prizes, whereas the Conservative Government, during their five years in office, never dreamed of introducing such a Bill.
  Mr. Alison: My right hon. Friend the Member for Crosby (Mr. Page) had his Bill, and it had made considerable progress, with the assistance of a number of his right hon. and hon. Friends.
  If he were able to speak, I am sure that the hon. Member for Pontefract and Castleford (Mr. Harper) would also support the amendment on behalf of the West Yorkshire Metropolitan Council. The hon. Lady must take careful note of the feelings on this matter of hon. Members representing Yorkshire constituencies.
  In the light of this extended debate, in which the majority of hon. Members on both sides of the House have been in favour of the amendment, I hone that the other place will take careful note of the views which have been expressed to night and will make appropriate amendments on which we shall be able to vote when they come back to this House.
  12.45 a.m.
  Dr. Summerskill: In case any hon. Member has forgotten the objectives of these amendments, I remind him that they would raise the limits on turnover and prizes to £5 million and £25,000 respectively for both societies' and local authority lotteries other than those run by parish or community councils. Under the Bill, the limits are £520,000 and £2,000 respectively. The Government do not accept that lotteries on the scale permitted by the amendments would be desirable.
  Mr. John Evans: Is my hon. Friend saying tha the Government accept that
  664
  local authorities have the right to run lotteries with small prizes but not with big prizes? If she is, is not that utterly ludicrous? Surely we must accept the principle that local authorities should be empowered to run lotteries and that the prizes should be fixed by them—not simply that they should be able to run lotteries with prizes which are infinitesimal.
  Dr. Summerskill: My hon. Friend is arguing like my hon. Friend the Member for Normanton (Mr. Roberts): in for a penny, in for a pound. I shall try to show why I think that that should not be the philosophy behind the Bill.
  This Bill is not only about West Yorkshire and the Greater London Council. I happen to live in the GLC area, and I represent the Halifax constituency, in West Yorkshire. But I am aware that there are other considerations which we must think of in the Bill.
  I must remind right hon. and hon. Members that the Bill is largely concerned with societies, which have received hardly a mention in this debate but which are a very important consideration in the Bill. The amendment would not accord parity of treatment to societies and local authorities in all respects.
  Mr. Alison: We have already tried to make provision for the societies. My right hon. Friend the Member for Crosby moved amendments which would have creamed off a third of the take of the big authorities' lotteries.
  Dr. Summerskill: But that amendment was not accepted. These amendments would put a society in a more restricted position than under the Bill, where any eligible society could promote lotteries with a total turnover in any one year of up to £520,000 and give single prizes of up to £1,000. The amendments would restrict the annual turnover to a society's gross income during the preceding financial year, which obviously in many cases would be far below £520,000, and the prize would be limited to one-fifth of that gross income, which might prevent a society offering a prize of as much as £1,000.
  I remind the House that the Bill will involve competition between the larger authorities like West Yorkshire and the GLC—about which we have heard so

  665
  much—the medium size authorities, the smaller ones and the societies. All these bodies would compete with each other. On the scale proposed, I suggest that the lotteries would cease to be local. They would go outside their own areas. The bigger the scale of lotteries, the more competition there is, and the wider the area the organisers would have to cover in order to try to compete with each other.
  Mr. Graham Page: This is a big debating point—that the societies would not be able to raise as much as under the Bill. If the hon. Lady wants to increase the amount in the amendment, I am willing that that should happen. I have given the large national societies a limit of £5 million. Does the hon. Lady agree to that? If not, let us have something else in the Bill.
  Dr. Summerskill: I have always said —and I think that the right hon. Gentleman accepts this—that there should be parity of opportunity between authorities and societies. With the enormous scale now being proposed, we would have authorities competing with each other and with societies in an effort to get money from different areas, not just their own.
  Control by the Gaming Board, which is not mentioned in the amendment, would be infinitely more difficult. Sir Stanley Raymond, the chairman of the Gaming Board, has told the Home Office that these amendments, if passed tonight, would create a chaotic situation of overlapping lotteries, and it would be impossible for the Gaming Board to control it in a proper manner. The right hon. Member for Crosby (Mr. Page) and other hon. Gentleman should bear that conclusion in mind before pressing the amendment.
  Mr. Rees-Davies: In that case, when the matter comes to be considered in another place, will what we said earlier about overloading the Gaming Board be considered? I can well believe that there may be criticism if we make this change. But at some stage we shall have to consider large lotteries. I am sure that the hon. Lady will deal with that matter shortly. When we consider the whole question of the Gaming Board's function, the question of decreasing the amount of work that the Board has to do will have to be reviewed.
  Dr. Summerskill: I will come to the subject of large lotteries later. I support my hon. Friend the Member for Luton, East (Mr. Clemitson) who said that once we increase the scale here it will automatically cause a massive increase in gambling expenditure. Local lotteries would be competing against those of societies on a very large scale, with the result—as the Gaming Board predicts—that competition throughout the country would be greatly increased and would tend to get out of hand. The small societies would suffer and go to the wall. The Greater London Council and West Yorkshire would benefit from these amendments. The small societies, which would not be able to stand up to the competition of the big authorities, would be the hardest hit.
  I certainly note what was said about large lotteries. I will ask the Leader of the House about facilities for a debate on large lotteries. I agree that it is a complex and controversial subject, which could not be covered in this Bill—it would need to be debated separately.
  We have received word that many sports clubs welcome the Bill and feel that it will be of great help to them. The Football League clubs have estimated that they will get an additional income of £2 million a year from lotteries which they could operate under the Bill.
  I ask the House, bearing in mind that the Bill is about not only large authorities, but also medium-sized authorities and local societies, to reject the amendment.
  Amendment negatived.
  Mr. Alison: I beg to move Amendment No. 35, in page 6, line 26, leave out '£1,500' and insert '£3,000'.
  Mr. Deputy Speaker: With this we are to take the following amendments:
  No. 36, in page 6, line 27, leave out '£2,000' and insert '£6,500'.
  No. 39, in line 36, leave out '£20,000' and insert '£42,000'.
  No. 40, in line 37, leave out '£40,000' and insert '£130,000'.
  Mr. Alison: These amendments become all the more relevant after the rejection of the higher level of lotteries as proposed in the last two amendments

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  and they seek to rectify an illogical anomaly in subsection (9).
  Lotteries are split into three categories—the short-term lottery which can be held weekly, the medium-term lottery which can take place up to 12 times a year, and the other lottery which can be held four times a year.
  The sums provided for each category of lottery are such that the largest sum can be raised by the short-term lottery. If there are 52 weekly lotteries at the rate of £10,000 per lottery, the total sum is £500,000. With the medium-term lottery, of which there can be 12 a year, a limit of £20,000 multiplied by 12 produces only £240,000, which is half the sum that can be raised by weekly lotteries. The maximum level for the quarterly lottery is £40,000, with the result that only £160,000 can be raised in a year.
  It seems ludicrous that there should be a built-in incentive for both societies and local authorities to have the maximum number of lotteries to raise the maximum permissible sum. There will be an incentive for local authorities and societies to peddle around week after week canvassing, knocking on doors, worrying people and using postal services—this may or may not be a good thing—to secure the maximum yield which the Bill permits.
  The purpose of the amendments is simple. We have altered the figures so that whichever kind of lottery is used—short-term, medium-term or quarterly—there is still the same potential total yield. This seems likely to be an incentive to use the medium-term rather than the short-term lotteries, or the quarterly lottery which will be the most satisfactory of all.
  In order to remain in step logically with the new scale for medium-and long-term lotteries we have altered the maximum prizes pro rata to correspond with the original proposals for the prizes as a proportion of the total yield of each lottery.
  The wording of the amendment and the calculations of the figures may not be perfect, but I hope that the hon. Lady will, nevertheless, take the point that there is no sense in having a built-in incentive in yield terms to go for the smallest lottery. If the amendments are imperfect, and if the hon. Lady says that the other place can make the necessary adjustments to
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  produce uniformity and constancy, I shall be happy to withdraw the amendment, but something needs to be done on the lines of what we propose.
  Dr. Summerskill: These amendments would increase the maximum permitted prizes and levels of turnover for medium-and long-term lotteries beyond the scale which is acceptable. I spoke about the question of scale on the previous amendment.
  The maximum single prize for a lottery held at intervals of three months or more would be £6,500, and the maximum permitted turnover £130,000. This would mean that a society or local authority could promote a quarterly lottery with the same turnover as the aggregate of 13 weekly lotteries each with a turnover of £10,000. The scheme of the Bill is that if a society or local authority chooses to promote lotteries not more frequently than monthly, a turnover of more than £10,000 is permitted. But the turnover does not increase proportionately. A prize of £6,500 and a turnover of £130,000 are quite out of keeping with the philosophy of the Bill.
  1.00 a.m.
  Mr. Graham Page: What an extraordinary philosophy. What is the philosophy of the Bill which encourages local authorities or societies to hold lotteries weekly rather than quarterly, six-monthly or annually? It will not appeal to certain districts to have people canvassing them for lotteries every week. It will appeal to them to have a larger lottery, perhaps quarterly. Has the Minister no faith in the ability of local authorities to run their lotteries?
  If they run them weekly, the hon Lady says that they may raise over £500,000 a year, but if they run them quarterly it must be only half that sum. What is the logic of that? We are not arguing the last amendment again. This is within the hon. Lady's limits: we are only asking her to be consistent. If the lotteries are to be able to raise £500,000 a year let it be weekly, monthly, quarterly, six-monthly or annually. Let us, for Heaven's sake, be logical.
  Mr. Rees-Davies: The Minister has spoken of the "suffocation" of the Gaming Board by the papers produced week after week by the weekly schemes.

  669
  There is every ground for encouraging local authorities to hold lotteries quarterly or biennially rather than weekly. We were always worried about the idea of having them weekly, on grounds of control and regulation—whether door-to-door canvassing should be allowed, whether people would be irritated by weekly canvassing, and so on. If anything, the hon. Lady should have allowed quarterly lotteries to raise £500,000 and kept the lower figure for the weekly lotteries.
  Mr. Clemitson: It ill behoves the right hon. Member for Crosby (Mr. Page) to talk about lack of faith in local authorities, when he spoke so vehemently the other week against local authorities being involved in trading and commercial activities.
  Mr. Graham Page: I only complained about their being given the right to run funerals and taxis.
  Mr. Clemitson: I fail to see the logic of that. We were talking about having faith in local authorities—whether to run lotteries or to provide funeral services. The two activities, on reflection, that seem to call for similar skills.
  I can see some logic in saying that the total turnover should be the same in each case, but surely the same logic does not necessarily apply to the amount of prize money. If we extended this logic even further, we could think in terms of an annual lottery, when presumably the maximum prize would become £25,000. When we get into that sort of realm in talking about the dispersal of large sums of money by pure luck, I am completely opposed to the principle.
  Amendment negatived.
  Dr. Summerskill: I beg to move Amendment No. 44, in page 7, line 20, leave out '5' and insert '15'.
  Mr. Deputy Speaker: With this amendment we are to take Government Amendment No. 45.
  Dr. Summerskill: The first of these amendments will raise from 5 per cent. to 15 per cent. in the case of lotteries with a turnover exceeding £5,000 the maximum percentage of turnover which may be appropriated for expenses without the authorisation of the Gaming Board.
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  An amendment designed to raise this expenses limit to 15 per cent. was tabled in Committee by the hon. Member for Harborough (Mr. Farr). The amendment was withdrawn on the Government's assurance that they would later introduce an amendment proposing what seemed to be the most appropriate percentage higher than 5 per cent. I am satisfied that to increase this to a level of 15 per cent. would retain a safeguard against excessive expenditure and at the same time eliminate the necessity for any application to the Gaming Board, as regards expenses, save in exceptional cases.
  The second amendment is purely drafting, and has no purpose but to simplify the language of the Bill in relation to the powers of the Gaming Board to authorise a larger percentage than 15 per cent. for expenses in the case of a particular lottery.
  Amendment agreed to.
  Amendment made: No. 45, in page 7, line 21, leave out from 'percentage' to end of line 28 and insert
  ', not exceeding 30 per cent., as the Board may authorise in the case of a particular lottery'.—[Dr. Summerskill.]
  Mr. Graham Page: I beg to move Amendment No. 46, in page 7, line 28, at end insert—
  '(15) Where the costs incurred by any local authority in promoting any local lottery exceed the proceeds thereof the excess costs shall be a charge on the general rate income of that local authority but so far as such costs do not so exceed the said proceeds but do exceed the proportion of such proceeds which by virtue of the foregoing provisions of this section may appropriate on account of expenses the excess costs shall be a charge upon the said proceeds'.
  The Bill is the worst lottery I have ever taken part in. I have not drawn a winning ticket the whole evening. Perhaps I have drawn one now, because I cannot see how the Minister can refuse an amendment of this sort, which deals with something she has left out of the Bill. I gather that one of my hon. Friends wants to know what are the odds.
  I think that the odds are pretty fair.
  The hon. Lady has talked about the limit of expenses which can be set against the proceeds of a lottery. If those expenses are exceeded, who is to bear the excess?

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  I have not tried to deal with societies in the amendment. I suppose that if the promoter of the lottery exceeds the expenses limit he will have to bear the excess personally. But what about the ratepayers of the local authority? If the expenses exceed the limit in the Bill, will they have to pay from the general fund of rates? That would seem very unfair.
  I believe that the right thing to do is to say that the excess comes out of the proceeds. If the local authority fails to keep within the limit on expenses, it seems unfair that it should be the general ratepayers and not the lottery fund that bear the cost.
  We go on to the deal with the unfortunate position when the lottery fails and the expenses exceed the proceeds. Who pays then? It must be the general ratepayers. The lottery is being run by their elected councillors, responsible to the ratepayers. I have tried to solve the problem by a logical and simple amendment saying that if the limit in the Bill is exceeded in expenses in local authority lotteries the money comes out of the lottery fund until the expenses exceed the whole of the proceeds, and that the excess is then borne by the general rate fund.
  If the drafting is not correct, no doubt it can be corrected in another place. But we have not heard what the solution is to be if no such amendment is made.
  Dr. Summerskill: I am advised that where the costs of a local authority lottery exceed the proceeds, the excess costs shall be charged to the general rate fund of that authority. Should these unfortunate circumstances ever obtain, and should an authority have made no alternative provision, such as insurance, the general financial requirements of local government legislation are such as to make the general rate fund liable.
  If the right hon. Gentleman would like chapter and verse I would refer him to Section 148 and 150 of the Local Government Act 1972. It does, therefore, seem that his amendment is unnecessary.
  Mr. Graham Page: Is there any risk of the councillors themselves being surcharged if the expenses go over the limit of the Bill? If there is no provision in the Bill to cover that point, there seems
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  to be some danger of a surcharge being made on the councillors for exceeding the limit set down in this legislation.
  Dr. Summerskill: My information is that any excess shall, in any circumstances, be a charge upon the general rate fund and not upon the councillors.
  Amendment negatived.

Clause 10

  REGULATIONS
  Mr. Alison: I beg to move Amendment No. 47, in page 7, line 37, at end insert
  'including provision for the promotion of joint lotteries, by local authorities amongst themselves, by societies amongst themselves, or between local authorities and societies'.
  Mr. Deputy Speaker: With it we shall also discuss the following amendments:
  No. 48, in page 7, line 43, at end insert
  'and the means, including the use of postal services, appropriate for the effecting of such sales'.
  No. 49, in page 8, line 2, at end insert
  'including the method of door-to-door visitation or canvassing to effect such sales'.
  No. 50, in page 8, line 7, leave out 'may' and insert 'and the object thereof must'.
  Mr. Alison: We come now to the regulation-making section of the Bill. There are three regulations where we should like additional powers to be taken because they could be valuable. The first is in Amendment No. 47. Because it is set in the context of making regulations, there is no need to be too specific or to spell out all the precise mechanical details of how it would be effected.
  We believe that there should be provision for joint lotteries. We are referring here to the situation which might affect, for example, the Greater London Council and the other authorities in the metropolis. Instead of each running a separate lottery, each having to produce a separate canvass, the organisation, promotion, printing, sales and all the other administrative functions which a single lottery would require, they should be given the power, if necessary by order or regulation, to agree that one of them on behalf of all the others should provide the servicing and that the others should merely contribute while enjoying

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  the right to a proportionate share in the selling and in the total prizes. Therefore, if it were a minimum-term lottery operated jointly by four authorities, the lottery would be four times £20,000 which would mean a ceiling of £80,000, and the prizes could be proportionate to that amount. The yield would be distributed among the four contributing or cooperating authorities.
  The sole benefit would be that expenses as a proportion of yield or turnover would be very much lower, efficiency would be maximised and there would be co-operation instead of competition. It might be possible to have joint lotteries along these lines as the Bill stands. If not, the amendment should be accepted. It should also be possible to have lotteries operated jointly by local authorities, by societies or by a combination of each.
  1.15 a.m.
  Amendment No. 48 refers to the use of the postal services. It may be appropriate on occasions for the Minister to lay down by regulation that local authorities should, or should not, make use of the rate demand notice by sending notice of lotteries with the demand. It is important that the postal aspect of lotteries should be mentioned in the regulation-making powers. It may be, for example, that door-to-door canvassing will become so intolerable that it will be necessary to have a collateral power under regulations to direct local authority promotional lotteries through the postal services.
  That leads on to Amendment No. 49 where specific reference is made to the likelihood of door-to-door canvassing. We do not take a decision one way or another on the effect of this. We simply think that the Minister should have the regulation-making power to intervene, to permit canvassing or to scale it down. The last amendment is No. 50 which tightens things up to lend some emphasis to the Bill. These are steps which ought to be considered and we hope that the Minister will accept the amendments.
  Mr. Clemitson: The hon. Member for Barkston Ash (Mr. Alison) is trying to sell us this idea on the grounds of efficiency. saying that if we have a consortium of local authorities the administrative costs will be reduced. What would also happen is that the total turnover allowed would be increased, along with
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  the total prize money. This is yet another of a series of amendments aimed at increasing the size of the lotteries and therefore of the prize money and consequently the incentive for people to gamble.
  Mr. Alison: The hon. Member has missed the point, as he missed it earlier when he referred to the £25,000. We specifically said that annual or quarterly lotteries should have a maximum prize of £6,500. His point was mistaken then and it is equally mistaken now. All we are providing for is that the administration should be done by one authority but the prize money should be divisible into the proportion of the number of authorities involved. The prize money might be £8,000. If four local authorities took part they would each have the proportion as it is in the Bill. There would be no scaling-up.
  Mr. Rees-Davies: I want to deal with the circumstances under which the tickets may be sold, dealt with in Amendment No. 49, which covers door-to-door canvassing to effect such sales. It is one of the matters which must be considered by the Minister with a view to restriction. These regulations will be laid before the House subject to negative resolution. When will they be laid'? We were told that we might have an opportunity of considering them and being consulted about these restrictions before Report. That has not happened. I would like the Minister's assurance that we shall have the opportunity to consider these matters
  The question of the sale of tickets is of fundamental importance and has not been referred to very much except in a short speech I made in Committee. If many of the 8,600 local authorities conduct 52 lotteries a year, the question how the tickets are to be sold is fundamental. The method will vary according to the object of the lottery.
  The interdepartmental committee went wrong in one respect, for I believe that it would be wrong for a specially selected team, working on overtime, to go knocking on doors attempting to sell tickets. That would soon become unpop0ular. I do not think that people would like it.
  The Government must face up squarely to what local authorities must be entitled to do. They must be entitled to sell

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  through kiosks—for example, tobacconists' kiosks. They must clearly be entitled to send tickets to local golf clubs and other clubs. If they are fortunate enough to have a racecourse situated in their district, they must be entitled to send tickets to the local racecourse, where perhaps there could be a sponsored race.
  The manner in which the tickets can be sold needs careful consideration. The hon. Lady has not considered an amendment which was discussed in Committee as to how a local authority will pay people who sell tickets and whether sellers are to be entitled to free tickets in lieu of money.
  I hope that the hon. Lady will give an assurance that, if the amendment is not to be added to the Bill, every word of it will be taken into account and that we shall be able to know that the Government do not propose door-to-door canvassing by local authority members or officials but will find another way of proceeding.
  Dr. Summerskill: As regards Amendments Nos. 48 and 49, I am aware of the concern about these aspects of the regulations—postal services and what is called in the amendment "visitation". I thought that was seeing ghosts. It is canvassing as we generally know it. I shall be laying in the Library a consultative document about regulations. I assure hon. Members that I will consider both these propositions with a view to introducing an amendment in the other House to extend the regulation-making power on these matters, if that is likely to be of value.
  Amendment No. 47 purports to confer power to make provision for the promotion of joint lotteries by means of regulations. To make provision for joint lotteries, I am advised, the whole Bill would have to be revised and some means would have to be found for dividing the net proceeds amongst the interested parties. This is not something which could possibly be done by regulations.
  Since the Committee, I have considered whether it would be advisable to enable joint lotteries to be held, but I can see great difficulty in overcoming the problems of the separate responsibility of authorities and the division of the proceeds. Furthermore, if the intention
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  were that the permitted turnover should be multiplied proportionately to the number of participating authorities, no assurance could be given that such joint lotteries would be exempt from pool betting duty. I have established that since the Committee stage, and it might be of interest to those who think that a joint lottery would be economically worth while. There would be only limited advantages from joint lotteries which would not offset the undoubted difficulties which would arise.
  Mr. Graham Page: I am puzzled by the hon. Lady's reference to pool betting duty. I cannot see why this should apply in any different way if there is a joint lottery from the way in which it applies to single lotteries.
  In rejecting any regulation or amendment to the Bill to provide for joint lotteries, the hon. Lady must leave the Bill as it stands, and it contains no prohibition of joint lotteries. Is she saying that it would be illegal to run a joint lottery? If so, it would be a simple matter for the 30 or so London boroughs wishing to hold a Festival of Britain to run concurrent lotteries and to keep 30 or so separate funds, which seems a nonsense, when they could join together and have a reasonable joint lottery. I am still puzzled whether the Bill authorises joint lotteries and, if it does, why the relief from betting duty applies to joint lotteries and not to others.
  Amendment No. 50 alters paragraph (e) so that it reads as follows:
  "the manner in which a lottery and the object thereof must be advertised;"
  We debated this point on an earlier clause, and to a great extent the hon. Lady met the points raised in Committee by using "object" instead of "purpose" throughout the earlier clauses. There fore, my view is that she should take power to make regulations providing that the object must be advertised. It does not necessarily follow if she has power to make a regulation about the manner in which a lottery is advertised that the regulation need say for what object the lottery is being held. It is of the utmost importance that the public should be well informed of the object of every lottery.
  Dr. Summerskill: The effect of Clause 10(3)(e) is to enable the Secretary of State to impose, by regulations, requirements and restrictions as to the manner

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  in which a lottery may be advertised. The effect of Amendment No. 50 would be to turn this on its head, so that regulations could be made under the power only so as to impose requirements and restrictions as to the manner in which a lottery and its object must be advertised.
  There will be many lotteries under the Bill, particularly those of the smallest societies, which will not be advertised at all. There are lotteries running at present which are not, and do not have to be, advertised. Generally speaking, provided the requirements of the Bill are met as to bringing to the attention of purchasers of tickets the object of the lottery, in the case of a local authority, and the name of the society and the promoter, in the case of a society's lottery, then the less advertising the better, since the very purpose of advertising is to stimulate demand, often at the expense of one's competitors.
  The Bill already makes it necessary for the purchaser of a ticket to be aware of the object of the lottery, whereas the amendment makes it obligatory for a local authority to advertise, which would not necessary be desirable.
  On the question of pool betting duty, I can only say that the Treasury have advised us that they cannot assure us that joint lotteries run within higher limits would be exempt from pool betting duty. I will let the right hon. Gentleman know the answer to his question about the general position of joint lotteries.
  1.30 a.m.
  Mr. Graham Page: I understand from the Minister that joint lotteries are permissible but that if they take place the Treasury will come down on those concerned with increased pool duty.
  Dr. Summerskill: We are advised by the Treasury that if the amendment makes joint lotteries for higher limits permissible, these lotteries would not necessarily—I cannot be 100 per cent. certain of this—be exempt from pool betting duty.
  Mr. Alison: That is not quite the point my right hon. Friend—and I earlier—dealt with. We were asking whether joint lotteries as such, whatever the penalty in tax terms for promoting them, are permissible under the Bill as it stands.
  Dr. Summerskill: No. Under the Bill as it stands they are not.
  Amendment negatived.

Clause 11

  ORDERS AND FEES
  Mr. Graham Page: I beg to move Amendment No. 51, in page 8, line 31, at end insert:
  '(5) Any order made under subsection (1) above may make different provisions in relation to different societies or local authorities or different classes of societies or local authorities'.
  It will be necessary for these provisions to be flexible to enable the Secretary of State to make the requisite orders. There may be some desire to alter the figure with regard to smaller authorities, but not in regard to larger authorities or vice versa. He might be satisfied that the limits on lotteries run by parish councils or community councils were enough, but greater limits could be given to lotteries run by counties and districts.
  As I read the Bill, it would not be possible for the Secretary of State to alter the figures as they apply to a society or to the classes of local authorities in the Bill. He can increase the figures but not change their application If I am right in interpreting the Bill in that way, the amendment would be beneficial to the Secretary of State in making orders. The power will not be man-certainly be a useful power in the Secredatory on him, but permissive. It will tary of State's hands when making orders.
  Dr. Summerskill: This amendment would enable the Secretary of State by order under Clause 11(1) to alter monetary figures and limits in the Bill in such a way as to make different provisions for different societies or local authorities or different classes of societies or local authorities. But it is an essential feature of the Bill that the same monetary limits should apply to all societies and local authorities and that there should be no discrimination as between societies as a category and local authorities as a category. There seems no convincing reason why some societies should be subject to different limits from those applying to other societies. It is fundamental to the Bill that local authorities should be allowed to promote lotteries only within the same limits as are societies.

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  In any case, if any system of discrimination is to be introduced as between some authorities and others, or as between some societies and others, that must surely be a matter which ought to be dealt with by Parliament. It cannot be left to be dealt with by subordinate legislation, without any indication as to the basis upon which the power to discriminate is to be exercised.
  Amendment negatived.

Clause 12

  OFFENCES
  Dr. Summerskill: I beg to move Amendment No. 52 in page 9, line 20 after "Act", insert
  "or regulations made under it".
  Mr. Deputy Speaker: With this we may also discuss Government Amendments Nos. 55 and 56.
  Dr. Summerskill: The amendments to lines 20, 23 and 30 on page 9 will amend subsection (5) to read:
  "(5) A person guilty of an offence under this Act or regulations made under it shall be liable—

  (a) on summary conviction—to a fine not exceeding £400.

  (b) on conviction on indictment—to imprisonment for a term not exceeding two years or to a fine or to both."

  The Government have reviewed the penalty provisions in Clause 12 following discussion of this matter in Committee, and the amendments now proposed will bring subsection (5) into line with modern practice in this respect. An offender will not be liable on summary conviction to imprisonment but will be liable to the usual maximum fine of £400. On indictment, there will be liability to an unlimited fine, or to imprisonment for a term not exceeding two years, or to both. The opportunity has also been taken to improve the drafting of the Clause so as to dispense with subsection (6).
  The amended penalty provisions will apply to persons convicted of offences under the Bill, and regulations made under it, while the Government new clause makes similar provision in relation to the lottery offences remaining in the Betting, Gaming and Lotteries Act 1963.
  Amendment agreed to.
  Amendments made:
  No. 53, in page 9, line 23, leave out from beginning to second 'or' in line 28 and insert:
  'to a fine not exceeding £400'.
  No. 54, in page 9, line 30, leave out from beginning to 'or' in line 35 and insert:
  'to imprisonment for a term not exceeding two years or to a fine,'.
  No. 55, in page 9, line 36, leave out subsection (6)'.
  No. 56, in page 9, line 38, after 'Act', insert:
  'or regulations made under it'.—[Dr. Summerskill.]
  Mr. Alison: I beg to move Amendment No. 57, in page 9, line 40, leave out from 'of' to 'any' in line 41.
  The effect of the amendment is to take out the poor suffering sheep from a lot of goats, if I may put it like that. Subsection (7) associates people who have committed offences with consent or connivance, in other words, wilfully, deliberately and maliciously, with those whose offence is attributable to neglect.
  It seems unsatisfactory that those who have been guilty of neglect should be classified with those who have been convicted of connivance or acting wilfully or deliberately. Neglect is quite different, yet the misdemeanour of neglect comes within the ambit of the penalties of imprisonment and so on specified in subsection (5) on exactly the same level and in exactly the same category as those more wilful and reprehensible acts.
  It is wrong that neglect should be treated in this way, and we ask the hon. Lady to consider deleting the misdemeanour of neglect and leaving the penalties to apply to wilful acts or connivance at misdeeds.
  Dr. Summerskill: Clause 12(7) enables a prosecution to be brought against the men controlling a company in certain cases where an offence under the Bill has been committed by the company. The language of the subsection is not apt in relation to a local authority, and is not intended to extend to it. The purpose of the subsection is to prevent wrong-doers from sheltering behind a company that has no assets. The provision is a common-form provision that has been used for many years and, so far as is known,

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  it has not given rise to any difficulty or injustice. A provision of this kind is never likely to be used where justice can be done by prosecuting the company itself.
  The purpose of the amendment is to prevent a director or other officer from being prosecuted for the company's offence where that offence is shown to have been attributable to his neglect. It is prompted, I suspect, by anxiety lest a person should be convicted who is not, in any sense, guilty.
  In fact, any such anxiety is misplaced because every criminal offence involves guilt and it is this which distinguishes a prosecution from a civil action. Accordingly, in the present case, before the director of a company could be convicted under the subsection, it would be necessary to prove, first, that the company had committed the offence and then that the director either consented or connived, or that that offence by the company was attributable to the guilty neglect of the director in question. In other words, the company must be shown to be guilty and the director in question must be shown to have been responsible for that offence.
  It would be a misconception to suggest that an offence could be "attributable" to the neglect of a person where that person could not have prevented it or be expected to prevent it. I hope that this explanation satisfies the hon. Gentleman.
  Mr. Graham Page: It does not entirely satisfy me. I should like to know whether the company can commit an offence by being neglectful and whether it is any offence to prove that there is simply neglect—not gross neglect, not wilfulness, but neglect by the company. I can find no such crime in the statute or anywhere in the Gaming Acts. I do not, therefore, sec why a director who is merely neglectful should be committing a crime when his company cannot be convicted of the same crime.
  Dr. Summerskill: As I understand it, the company can be shown to have committed an offence. Before the director can be convicted it must first be proved that the company has committed the offence and then that the director either consented or connived in it.
  Mr. Page: Or neglected?
  Dr. Summerskill: Yes.
  Mr. Rees-Davies: I think that the word "neglect" is rather strong. Subsection (7) states that
  "Where an offence … committed by a body corporate is proved to have been committed"
  —that is true, so the company must have committed the offence, but it is
  "with the consent or connivance of … any director".
  I have no worry about that. That is plainly right. It says:
  "or to have been attributable to any neglect on the part of, any director, manager, secretary or other similar officer".
  It is fairly harsh to bring some small neglect into an offence which will carry not only substantial fines but also imprisonment. I think that this goes rather further than most of the betting and gaming legislation hitherto.
  Dr. Summerskill: I can only repeat that the wording of the provision is a common form which has been used for many years and that as far as we know it has not given rise to any difficulty or injustice.
  Amendment negatived.

Clause 15
  INTERPRETATION
  Amendment made: No. 58, in page 11, line 17, leave out from 'lottery'to end of line 18.—[Dr. Suminerskill.]
Schedule 1

  REGISTRATION OF SOCIETIES
  Mr. Alison: I beg to move Amendment No. 60, in page 14, line 42, at end insert
  'and such other relevant accounts as may be specified by the registration authority and called for;'.
  Mr. Deputy Speaker: With this amendment it is proposed to take also Amendment No. 61, in page 14, line 47, at end insert—
  '(f) such other information concerning the lottery as may be specified by the registration authority, and called for'.
  1.45 p.m.
  Mr. Alison: These amendments constitute an attempt to effect control over

  683
  the running of lotteries and the way in which they work. However, a number of competent observers, including the Churches' Councsil on Gambling, take the view that if control is to be adequate, Schedules 1 and 2 should be strengthened.
  Schedule 1 of the Bill is substantially the same as Schedule 7 of the 1963 Act, which was taken from the Small Lotteries and Gaming Act 1956. I understand that many competent observers have shown that the wording in this provision is not adequate. It gives local authorities no power to call for or to examine the accounts of a lottery or for any other information concerning it. It gives no means of ensuring that all societies which promote lotteries render returns.
  It is in accordance with those criticisms that we have tabled these two tightening amendments. I hope that the Under-Secretary will be able to accept them.
  Dr. Summerskill: These amendments would enable a local authority to call for information about a society's lottery when the total tickets sold do not exceed £5,000. However, the information already required by the Bill seems adequate. There seems to be no necessity for a power to demand further information of this kind in relation to small lotteries.
  The functions and power of local authorities as registration authorities under Schedule 1 are similar to those under the Betting, Gaming and Lotteries Act 1963 and there is insufficient justification for adding to the responsibilities of local authorities in this area.
  All local authorities' and societies' lotteries with a turnover of more than £5,000 will be promoted under schemes registered with the Gaming Board. The Gaming Board will have power to require the provision of accounts and other information.
  Mr. Graham Page: These amendments deal with accounts. As these are the last amendments which we shall be debating—the others are pure formalities and will be moved formally—and as we shall not detain the House on Third Reading, may I congratulate the Under-Secretary of State on the good account she has given of herself in the course of her conduct of this Bill. I may be out of order. However, the hon. Lady has kept her
  684
  calm and serenity throughout our bullying and hectoring of her, both in Committee and on Report, when she produced the answers to the amendments. Of course, I am thoroughly dissatisfied, but the hon. Lady has been so successful in stonewalling every amendment we have proposed that nevertheless I congratulate her on the conduct of this Bill.
  Mr. Rees-Davies: I do not know whether the Under-Secretary has seen what the Churches' Council on Gambling said about the two schedules. Mr. Gordon Moody is highly critical of the effectiveness of Schedule 1 in relation to the societies. I do not go along with the report all the way. However, I think that the matter should be investigated.
  It would be nice to hear a final assurance from the hon. Lady regarding the further legislation on large lotteries. Before the Bill goes to another place, will the hon. Lady give us an assurance that the Government have in mind the revision next year of the Pool Competitions Act 1971 and that the Home Office is already preparing and stripping itself for action to complete this measure? If so, we thank the hon. Lady for her admirable effort as a first instalment. We happily await her returning to the Dispatch Box to deliver the full and effective measure which we wish to see.
  Dr. Summerskill: Before answering that point I should like to thank the right hon. Member for Crosby (Mr. Page) for his kind and gallant words. I shall return the compliment and say that I appreciated his co-operation—when he felt able to give it—in Committee and on Report.
  With regard to further legislation—when the House has recovered from this Bill—I cannot, of course, say exactly when the next Bill, if any, will be introduced. But, as a preliminary step, I believe that it is necessary for the House, the public, and all interested local authority organisations to have an opportunity to discuss the very complex issues involved. It would be a very complicated Bill. But I shall make representations to my right hon. Friend the Leader of the House that, as a first step, we should have a full debate on large lotteries and perhaps on gambling in general.
  Amendment negatived.

Schedule 3

  MINOR AND CONSEQUENTIAL AMENDMENTS
  Amendment made:
  No. 63, in page 16, line 40, at beginning insert:
  'The Betting Gaming and Lotteries Act 1963
  In section 52(2) of the Betting, Gaming and Lotteries Act 1963 (penalties and forfeitures) for the word "subsection" there shall be substituted the word "subsections"'.—[Mr. Harper.]

Schedule 4

  REPEALS
  Amendment made:
  No. 64, in page 17, line 36, leave out 'word "45" ' and insert:
  'words "42, 43, 44, 45 and 47"'.—[Mr. Harper.]
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Mr. James LomondOn a point of order, Mr. Deputy Speaker. Did not you hear me say, "No", when you put the Question?
  Mr. Deputy Speaker: I shall put the Question again. The Question is, That the Bill be now read the Third time.
  Mr. J. D. DORMAND and Mr. JOSEPH HARPER were appointed Tellers for the Ayes, but no Member being willing to act for the Noes, Mr. DEPUTY SPEAKER declared that the Ay eshad it.
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

PUBLIC ACCOUNTS
Ordered,
That, notwithstanding the Order of the House of 18th December relating to nomination of members of the Public Accounts Committee, Mr. Norman Buchan be discharged from the Committee and Mr. John Ovenden be added to the Committee for the remainder of this Parliament:
Ordered,
That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]

WELSH GRAND COMMITTEE
Ordered,
That, during the proceedings on the matter of the Economy in Wales, the Welsh Grand Committee have leave to sit twice on 7th: May and that at their afternoon sitting the Committee shall meet not later than Four o'clock and proceedings on that day shall not continue after Six o'clock—[Mr. Walter Harrison.]

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

M20 (SOUTH-EAST KENT)
1.55 a.m.
Mr. Keith Speed: I am glad to have the opportunity of raising, even at this late hour, the problems of a road which is of both local and national importance. The A20, which millions of people know as the London to Folkestone road, carries traffic to Kent and much continental traffic to Folkestone and Dover which proceeds on through France, Belgium, Germany and elsewhere.
My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) agrees with the remarks that I shall be making tonight and is sorry that he cannot be here, but he has to chair a Committee early tomorrow morning.
The A20, as the Under-Secretary knows, is already heavily overloaded. Apart from the Maidstone bypass, which is a motorway, and the Ashford bypass. which is a modern, dual two-lane-carriageway road, the existing road is for the most part narrow, poorly graded, busy and dangerous.
Perhaps I may give a personal experience. Two weeks ago, on a Sunday afternoon, it took me six minutes in my car to cross the A20 at the Smeeth-Aldington junction. That was well before the busy season had started. It was a Sunday afternoon with not too much heavy commercial traffic.
Villages along the A20, such as Charing in my constituency, Harrietsham in the constituency of my hon. Friend the Member for Maidstone (Mr. Wells) and Smeeth and Sellindge in the constituency of my hon. Friend the Member for Folke stone and Hythe, have to put up with growing heavy traffic by day and by

687
night, a large proportion of it being commercial vehicles proceeding to Europe. Along this section of road between Maid stone and Folke stone there are also too many accidents. The accident record there is deplorable.
When I was in the position which the Under-Secretary now occupies, dealing with problems in the South-East, I consistently refused the demands made by my hon. Friends the Members for Faver-sham (Mr. Moate) and Canterbury (Mr. Crouch) to extend the M2 beyond Faver-sham to Dover. I resisted them because at that time the wisdom in the Department was that the main traffic route to the South-East was the A20, and the M20 was planned to relieve that overcrowded road and to take the majority of the continental traffic. That is true with or without the Channel Tunnel. Instead, we were getting under way a series of bypasses such as Bridge Harbledown, now being built, and at the same time a general upgrading of the A2 was taking place. I am sure that that is still the policy of the Department. It was right two years ago, and I have seen nothing to alter that decision since.
However, I must tell the Minister that there is growing concern not only in my part of the country but in Folkestone about the apparent hiatus in progress and the lack of a starting date for the M20. As the Under-Secretary knows, the scheme was worked up during the period of the last Conservative Government. A public inquiry for the Maidstone to Folkestone section, which was only 29 miles, took place in Ashford between September and November 1973. I hoped that the result of the inquiry and the Minister's decision would be announced a year later. I believe that it was originally intended to be announced in the autumn of 1974. But the date slipped back, and finally the inspector's report was published at the end of January. The Minister's decision was essentially to go ahead with most of the road, subject only to looking at alternative routes at the northern end. Since then there has been a degree of silence.
On 3rd April the right hon. Gentleman the Minister for Transport wrote to me as follows:
"… we are at present considering the standards to which the M20 should be built and its phasing. Until this review is com-
688
pleted, I am afraid that I cannot forecast completion dates".
The road was envisaged at the planning stage and at the public inquiry as a three-lane dual carriageway. I know that last year the Department revised the road capacity standards, and that was right. We want to make the best use of money, modern vehicle braking systems, and so on, and I do not quarrel with that.
These new standards are set out in Technical Memorandum H6/74. If I may simplify a complicated document, I think the new standards mean that for a dual two-lane rural motorway there should be a minimum of 35,000 vehicles a day and a maximum of 45,700 to 48,000. For a dual three-lane carriageway the minimum is 45,000 vehicles a day and a maximum of between 68,000 and 72,000.
On 15th April the Minister told me that the predicted traffic flow figures for design year 1990–91 on the M2 were 43,000 vehicles per day on the Maidstone to Ashford section, and 42,000 on the Ashford to Stanford section. These forecasts are being reviewed for design year 1995. I do not think that the figures will be markedly altered. That was said in the Secretary of State's decision letter. I suggest that if they are to be altered, assuming that there are no major improvements to the A2, the figures might go up rather than down. Bearing in mind the heavy summer traffic and the high proportion of commercial vehicles using this road to go to the Continent, which can only increase, the motorway when built should be built as originally envisaged, a dual three-lane carriageway from the start, otherwise it will cost very much more in the long run.
I appreciate that there is much work to be done on the statutory procedures, but uncertainty and delay will delay the completion of the road. I am sure the Minister realises the importance, when making a start on any road of this kind, of taking advantage of the summer months. I appreciate that we shall not take advantage of the summer months of 1976—or, at any rate, that is unlikely unless the Minister is wildly optimistic tonight—but I hope that we can take advantage, in the construction phase, of the summer months of 1977, because if we lose the summer months that can put a road scheme back quite considerably.

689
The national and local need for this road goes without saying. In the report by the Secretary of State following the inquiry into the M20 he said that
"priority will be given to schemes aimed particularly at the needs of heavy lorries".
I am sure that the M20 is just such a road.
There are problems for local residents, and particularly my constituents, as a result of this hiatus. I recently met a group of residents from the Willesborough area of Ashford, mostly living in Lacton Way. I wrote to the Minister about this. These people will lose their homes, which have to be destroyed for this motorway. That is not a happy situation for them, but it is fair to say that they have accepted it philosophically, if not happily.
Many of those who realise that their homes will be destroyed want to move as soon as possible. They are on what is very much a dwindling asset, particularly if they see a property that is acceptable to them and at a reasonable price. We do not know what could happen to the price of new or alternative homes in the area. Unfortunately, until we make further progress my constituents will not receive home loss payment. They can receive something under the blight provisions, but if they do they do not receive home loss payment, which in many cases will amount to £1,000 or even £1,500.
But it is not just a question of money, though one cannot dismiss sums of £1,000 and £1,500. There is also the uncertainty which is making life miserable for these people who have acted responsibly, knowing that their homes—and some of them have lived in them for a considerable time—have to be sacrificed for the road. This is a human problem which is being caused by the uncertainties of the start of the further statutory procedures and of the construction date.
I should like to put three specific questions to the Minister. First, can the review of traffic flows which he and his right hon. Friends have mentioned now be concluded and can we get on with the various statutory procedures? I should dearly like to be given tonight a date when the Minister estimates—I realise that many hiccups may lie ahead—the construction can start and this most important road can be completed.
690
Second, my constituents who will lose their homes should be entitled to sell as soon as possible if they have to find alternative accommodation and not live with sword of Damocles hanging over them. They should also be entitled as soon as possible to home loss payments where they are eligible for them. This is an urgent human problem, so it would be helpful to have some idea when steps will be taken under statutory procedures so that they can do just that. I know the problem about blight. The Minister may say that they can sell at the moment, but he will appreciate the further problem of home loss payments.
Third, on the evidence that I have given of vehicle flows, I accept that this road is on the margin of a dual two-lane or dual three-lane carriageway. But it would be penny-wise, pound-foolish not to build the road as a dual three-lane from the start.
The Department, under both Governments, has consistently underestimated vehicle flows. I call in aid the Ml, the southern section of which is to be widened, the M5 in Worcestershire, and the M6 passing around the north of Birmingham, which already is carrying the traffic which was estimated for 10 years ahead. The record in general shows an underestimate. If the Minister bears that in mind and considers the vehicle flow situation, I think that he will agree that dual-three-ways are the answer. I hope that he can confirm that tonight, too.
I know from personal experience when I was doing the Minister's job the problems of the road construction units and sub-units in major schemes of this kind, but he will understand the frustrations and problems caused to local people, businesses, and councils by this apparent gap in the progress of the road. This has perhaps been compounded by the recent decision about the Channel Tunnel. A big question mark hangs over transport on this vital spine road through Kent, one of our key links with important ports and the continent. I hope that the Minister can give positive information so that we may end the uncertainty and get on with building and complete the M20 as soon as possible.
2.7 a.m.
Mr. W. R. Rees-Davies: I support my hon. Friend the

691
Member for Ashford (Mr. Speed), who has put his case clearly and his finger on the important points about the A20. The important thing to recognise about Kent is that the two parallel roads, the A2 and the A20, are friends. It is essential that both should be fully developed. That is why I particularly support this proposal on the A20. The flow from one road to the other will inevitably occur all the time. As an improvement is made to one road, so the traffic will move to the other.
Without close co-operation between the Department and the Greater London Council, we have an intolerable situation. The Dover radial route and the means of getting out of London on to the A20 and the A2 are equally important. I hope that the Minister will make every possible endeavour to see that the creation of the road for which my hon. Friend asks is accompanied by the facilities for reaching it. At present, there is an impossible situation when trying to get out on to this road at Blackheath.
I hope that the Minister can say something about what I understand are the present plans for the creation of the Dover radial route and about how the flow of traffic will be channelled out of London to the A20 and A2. On this the whole area depends. Now, without the Channel Tunnel, it is even more vital that we have first-class access roads to the Kent coast.
2.10 a.m.
The Under-Secretary of State for the Environment (Mr. Neil Carmichael): I am most grateful to the hon. Member for Ashford (Mr. Speed) for raising this subject and giving me the opportunity to speak about the M20 motorway. I am also grateful for what the hon. and learned Member for Thanet, West (Mr. Rees-Davies) said.
The hon. Gentleman occupied my present position for a long time, and knows the difficulties of trying to push ahead with the motorways that are required. He showed the correct amount of understanding of the problems that he once faced and that I now face. The hon. Member's main concern is with the section of the M20 motorway between Maidstone and Folkestone and, in particular, with that part of it which is planned
692
to pass through his constituency of Ashford. But it may be helpful to the House if I first say a word about the M20 in its wider setting.
The M20 motorway is planned to run from Swanley to Folkestone in Kent, and will provide approximately 50 miles of continuous motorway for road traffic to and from the Channel ports of Folkestone and Dover. It will provide much-needed relief for the existing A20 trunk road, which has a number of dangerous bends and poor forward visibility and which passes through urban development near Folkestone. The M20 forms part of the strategic highway network of the South-East of England and part of the proposed national network of routes for heavy lorries on which my right hon. Friend the Minister for Transport issued a consultative paper last year.
From Swanley, the A20 trunk road runs into London. From Addington near Wrotham, there will be a direct connection with the M25 south orbital route, which may help the hon. and learned Gentleman, and which, when completed, will provide a further 47 miles of continuous motorway to Egham in Surrey, together with connections with the M23 and M3 motorways. Planned extensions of the M25 northwards will provide connections to the M4 and M40 motorways. At Swanley the M20 will connect with a high-standard road, now being built, to the Dartford tunnel link—A282. North of the A282, the proposed north orbital route will provide a link with the M11 and M1 motorways. When this programme is completed, as I hope it will be in the early 1980s, there will be continuous motorway or motorway-standard road links between the Channel ports and the Midlands, the North and the West Country.
I understand the problem that the hon. and learned Gentleman raised, but part of it involves getting agreement with the GLC. The traffic flow from the proposed new M20 will be able to be diverted round London, instead of needing to go all the way through. Some 13 miles of the M20, constituting the Ditton and Maidstone bypasses, are already in use. The contract for the five-mile length of the motorway between Swanley and West Kingsdown was awarded last month. The inspector's report on the revised published proposals for the adjoining length

693
from West Kingsdown to Addington is under consideration. Subject to the satisfactory completion of the outstanding statutory procedures, I hope that it will be possible to start work on this length near the end of 1976. The western half of the M20 from Swanley to east of Maidstone should, therefore, be fully completed by 1980.
This brings me to the section with which the hon. Member is concerned. From Maidstone to Folkestone is about 28 miles, and draft proposals for the route, interchanges and consequential alterations to side roads for this section of the motorway were published in June 1972. As my right hon. Friend the Minister for Transport said in reply to a Question by the hon. Member for Folkestone and Hythe (Mr. Costain) on 13th November 1974, there were over 400 objections to these proposals. Some 24 main alternative routes were put forward for consideration by objectors and some 1,400 counter-objections were made to these alternatives. The proposals were considered in depth at local public inquiries held at Ashford between September and November 1973.
I am sure that the House will appreciate that the issues before the inquiries were complex and that they required very careful consideration both by the inspector and thereafter by the Secretary of State. This process inevitably took time but, because of the blighting effects of the alternative proposals and the uncertainty felt locally, it was completed as quickly as possible and the route between Lenham Heath and Folkestone, covering about 21 miles, was fixed without alteration in January this year.
At the same time my right hon. Friend the Secretary of State decided to defer his consideration of that part of the route which lies between Maidstone and Lenham Heath, so that those affected by two modifications to the route recommended by the inspector might have the opportunity to make representations about them. Several representations have been received as a result but the views of two local authorities are still awaited. All views received will require careful consideration and the Secretary of State's decision will be announced as soon as possible—I hope later in the year. I do not think that this consultation need delay completion of the motor
694
way, as it is the intention to start construction from the Folkestone end.
It was decided to announce decisions on the route of the motorway before completing the consideration of all the other matters considered at the inquiries in order to remove the uncertainty and blighting effects resulting from the large number of alternative routes to which I have already referred. Consideration of the objections made to the proposals for inter-changes and the necessary alterations to side roads, footpaths, bridleways and private means of access covering the entire length of this section is continuing and my right hon. Friend the Secretary of State will announce his decision on these matters as soon as possible.
Following his statement in the House on 20th January about the Channel Tunnel, my right hon. Friend said that the decision on the tunnel would have no effect on plans for the M20, which would go ahead as planned, but, as I explained in my Written Answers to the hon. Member's Questions in the House on 7th March and 15th April, following the decision not to proceed with the Channel Tunnel the Department is necessarily reviewing the standards to which M20 should be built and its phasing. This is on the basis of a review of traffic forecasts for a design year of 1995 to take account of the Department's latest projections for traffic growth, the revised predictions for the volume of cross-Channel traffic and the distribution of traffic between the M20 and A2-M2 corridors. Until this review is completed, I cannot forecast construction dates for the Maidstone to Folkestone length. Nor can I say at this stage whether the motorway will be constructed with dual three-lane carriageways.
The hon. Member has raised the question of the effect of the M20 on his constituents. This section of the M20, which, as I have said, is about 28 miles long, will not have a serious effect on property generally, although some properties will be affected. In the area of Ashford, however, there will be a greater effect and it will be necessary to demolish about 30 houses; 146 houses will be likely to suffer noise levels of the 68dBA range and above. My right hon. Friend the Secretary of State has given assurances that the Department would welcome the

695
opportunity of discussing the design and provision of noise barriers and the general scheme of landscaping with the local authority. He has also undertaken that earth barriers will be constructed at an early stage in the work to give house holders as much protection as possible from construction noise. Everything possible will be done to minimise noise and visual intrusion both during and after construction and the Department will take all appropriate measures in accordance with the provisions of the Land Compensation Act 1973.
The hon. Member has expressed concern about those of his constituents who wish to sell their properties to the Department at the earliest possible date. It might be helpful if I put on record the Government's policy.
It is our policy not to acquire land required for works until near the time when construction will begin. But, if a resident can meet the relevant provisions of the Town and Country Planning Acts. he can serve a blight notice on the Secretary of State requiring him to purchase the property in advance of requirements.
The Land Compensation Act 1973 provides, however, that, where a blight notice is accepted, the person concerned relinquishes his right to the home loss payment. This is a payment which is made in addition to normal market value compensation in recognition of the personal distress and inconvenience suffered by people who have become attached to their homes and who are obliged to move out. I very much regret that, until the review that I have referred to is completed and we have a realistic programme for construction, I cannot say when the normal negotiations for the acquisition of properties are likely to begin.
I know that the hon. Member's constituents are anxious about the amount of compensation they will receive and the manner in which it is calculated. It might be useful for his constituents if I explain the manner in which compensation is calculated and set out the basic principles. The district valuer, an officer of the Inland Revenue, negotiates with the persons concerned or their agents, on behalf of the Department, and he recommends an agreed compensation figure to the Department. If the vendor is dissatis-
696
fied with the figure of compensation proposed, he may refer the matter to the Lands Tribunal under the procedure indicated in Part IV of the Lands Tribunal Rules 1963. The compensation is actually paid when the conveyance or assignment takes place but, if the Department for one reason or another takes possession of the property before then, the vendor has a right to an advance payment of 90 per cent. of the estimate of compensation payable.
The compensation is based on the open market value of the property excluding any depreciation or appreciation brought about by the threat of roadworks. It also includes the payment of proper legal costs, agents' fees and a disturbance allowance for other reasonable expenses or losses which have been incurred as a result of the compulsory acquisition. Then there is the home loss payment which I have already mentioned. This amounts to three times the rateable value of the property, subject to a minimum payment of £150 and a maximum of £1,500.
May I conclude by saying that I am glad to have the support of the hon. Member for my right hon. Friend's intention to proceed with the construction of the M20 as quickly as possible. I am sure, however, that he will appreciate, with his recent experience of Departmental responsibilities, that it is necessary to bring the traffic forecasts up to date to be able to justify the substantial investment involved, and to ensure that the right decisions are made in both the national and local interest. The review which I have mentioned is, however, being carried out as a matter of urgency and an announcement on this and on the other matters following the public inquiries to which I have referred will be made as soon as possible.
The fact that the hon. Member has raised this subject tonight has also spurred me on to make sure that I have consultations on the matters I have described as being likely to hold things up. The hon. Member referred to the design standard of the road. It will almost certainly be a dual three-lane road, and I understand that design is going ahead on that basis. We are not waiting for the final traffic forecast figures before going ahead.

697
Because of the contentious nature of the road and the large number of different schemes put forward and the objections that have been raised, there have been these difficulties. I believe that it is the intelligent thing to proceed on the basis of a dual three-lane road. Very little will have been spent abortively if it is changed. I assure the hon. Member that careful note has been taken of the points he has raised. There is no undue delay on the part of the Department. We are
698
conscious of the considerable cost and the investment involved—
The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put pursuant to the Standing Order.
Adjourned at twenty-five minutes past
Two o'clock.

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PRICES AND CONSUMER PROTECTION
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Preamble
The House met at half past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Birmingham):
The LORD CHANCELLOR on the Woolsack.

REFERENDUM BILL: PERSONAL STATEMENT BY LORD WIGG
Lord WIGG: My Lords, I seek the indulgence of the House to make a personal statement, for yesterday, at column 1220 of Hansard, I am reported as saying:
"… I shall support the Common Market".
That is not so; I shall not support the Common Market, certainly so far as the referendum is concerned. I wish to put the Record straight, and I wish to make it clear that any fault in this matter is mine and not that of Hansard. It comes as a result of undue contraction on my part and the turning of "I will", which I said, into "I shall". I trust that the Record can be put right, and I owe the House an apology for troubling it on this occasion and for not being clearer yesterday.

CHEMICAL WEAPONS STOCKPILES
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they can give an assurance that their representatives in NATO will oppose any proposal that the United States Department of Defence should increase the stockpiles of chemical weapons delivered to NATO, including the new and deadly nervegas "binary munition".
Lord WINTERBOTTOM: My Lords, this is not a matter for NATO. If there are any stockpiles of chemical weapons in Europe, they will be the subject of bilateral arrangements between the countries concerned.
Lord BROCKWAY: My Lords, I thank the noble Lord for his Answer. Has the noble Lord's attention been drawn to the report in The Times and other newspapers, that the United States of America is proposing to make contributions of its stockpiles of these chemical weapons to NATO, and that the Pentagon has only said that it is not proposing to do this at present?
Lord WINTERBOTTOM: My Lords, since the noble Lord is quoting from newspapers, may I say that what I understand from the newspapers is that Congress has not passed the funds for this project.
Lord BROCKWAY: My Lords, while appreciating that fact, would the Minister agree that the production of these weapons is seriously affecting the negotiations for outlawing chemical weapons altogether?
Lord WINTERBOTTOM: No, my Lords.
Lord SLATER: My Lords, is my noble friend aware that this is more or less a repetition of what many of us from another place have heard regarding these weapons? Once again the subject is rearing its ugly head, and there is something to be said for the Question tabled by my noble friend. It is certainly hoped that these weapons will never be stockpiled.
Lord WINTERBOTTOM: My Lords, that is the hope of all of us.
Lord CHALFONT: My Lords, is the noble Lord aware that it is not good enough to say, "No" in reply to the question, "Is the noble Lord aware that stockpiling will affect the negotiations for outlawing chemical weapons?"? May I ask the noble Lord whether he is aware that it is the view of most people concerned that this stockpiling makes it much more difficult to arrive at a convention banning chemical weapons, on the lines of the one banning biological weapons in which Her Majesty's Government played such a significant part?
Lord WINTERBOTTOM: My Lords, at this moment it is a hypothetical stockpile of a hypothetical weapon.
Lord CHALFONT: My Lords, is the noble Lord aware that it is not hypothetical? Stockpiles of these weapons are

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known to exist. They are known to exist in Europe. Is the noble Lord aware that this is not a hypothetical question? May I ask the noble Lord whether Her Majesty's Government have any plans for making representations to the Government of the United States about this subject?
Lord WINTERBOTTOM: My Lords, the noble Lord should read the Question. I am not talking about chemical weapons —they exist. I am talking about the "binary munition".
Lord BROCKWAY: My Lords, is the noble Lord aware that this munition is now being produced in the United States of America? It is not the case that it is a hypothetical weapon. Surely, when he is giving answers from the Dispatch Box, he should be acquainted with the facts of the situation.
Lord WINTERBOTTOM: My Lords, I have stated the facts. Congress has not yet voted money for this project. I am sorry, but that is the case. I am also sorry that I cannot help the noble Lord in his indignation any further. May I also draw to his attention the fact that President Ford recently signed the instrument of ratification for the Geneva Gas Protocol of 1925. Surely this is a positive action for the President of the United States which exists, and not the hypothetical stockpile which worries the noble Lord.
Lord SLATER: My Lords, will my noble friend agree that it would be a dangerous procedure if we were guided at all times by what appears in the newspapers? Also, is it not true to state that my noble friend receives his advice through Her Majesty's Government and their plenipotentaries in regard to these issues, so he is in a better position to give Answers to Questions that appear on the Order Paper than noble Lords in various parts of the House?
Lord WINTERBOTTOM: My Lords, I am most grateful to my noble friend.
Lord CHALFONT: My Lords, I am reluctant to prolong this exchange, but may I ask the noble Lord whether he is aware that "binary munitions" are not gas weapons? They are a form of projectile in two halves which are sometimes used to carry chemical agents. Is
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the noble Lord further aware that stockpiles of these have existed in Europe for some time? If Her Majesty's Government are not aware of that, would they agree to make application to the United Nations which will give them full details of the stockpile?
Lord WINTERBOTTOM: My Lords, all the evidence I have is that these weapons, although potentially in existence, are not yet funded by Congress. If Congress has not funded them, then who has?

CRUELTY TO ANIMALS ACT CENTENARY
2.37 p.m.
Lord HOUGHTON of SOWERBY: 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 what preparations they are making to commemorate the centenary of the passing of the Cruelty to Animals Act 1876.
Lord WELLS-PESTELL: None, my Lords.
Lord HOUGHTON of SOWERBY: My Lords, while acknowledging that unimaginative reply, may I ask my noble friend to take into account another occasion which might be celebrated; namely, the fact that 10 years ago this month, the Littlewood Committee reported? Little or nothing has been done regarding that Report. May I ask my noble friend to take into account a practical suggestion to commemorate both events; namely, to support the Motion that I have today put on the Order Paper for the appointment of a Select Committee of this House to consider the law and the administration of the Act of 1876?
Lord WELLS-PESTELL: My Lords, I will take into account what my noble friend has said. I would remind your Lordships that the Explosives Act was passed in 1875 and has its centenary this year, but I do not think that we ought to be celebrating that. In 1879 we passed the Habitual Drunkards Act. I do not think that we should be celebrating that

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in 1979; but I will take into account what my noble friend has said.
Lord HOUGHTON of SOWERBY: My Lords, I am grateful to the noble Lord. May I ask him whether we could celebrate all these events together? If my noble friend can think of nothing else, perhaps he could distribute white gloves to the 16,000 licence-holders and commemorate the fact that an Act of Parliament has stood for 100 years without amendment and without a single prosecution for infringement.
Lord WELLS-PESTELL: My Lords, if I may be serious for a moment, the Littlewood Committee reported—as my noble friend said—in 1965. They thought the aim of legislation in the field of animal welfare should be to prevent objectionable activities, to encourage humane practices and to provide for accountability to the public of all concerned. It is felt, rightly or wrongly, that this Act —and the Littlewood Committee subscribed to this—has been effective, partly because it has commanded the support of those subject to it and partly because the Home Office have adopted a wide interpretation in insisting on humane standards and conscientious administration of the law. The Advisory Committee has recently been enlarged to the extent of four members, and if my noble friend has any comment to make he might well decide to use the Advisory Committee as a means of drawing attention to any matter.
Lord ROYLE: My Lords, despite the fact that we are all very concerned about animal welfare, would not my noble friend agree that there are still a few things that need to be done for human beings?
Lord PLATT: My Lords, while accepting most of what the noble Lord has said, may I ask whether Her Majesty's Government are aware that there is tremendous public concern over this matter and that there really are many things which need tidying up in the law on the lines of the Committee's recommendations? Would not the noble Lord agree that it is time something was done?
Lord WELLS-PESTELL: My Lords, I think Her Majesty's Government would
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be in substantial agreement with what the noble Lord has said. I believe that it was the noble Lord who drew your Lordships' attention to the fact that the Advisory Committee consisted in the main of medical and scientific personnel. This has, to some extent, been improved by the addition of four lay people. I suggest that we must give the Advisory Committee some further opportunity, in view of its new composition, to look at matters which are exercising the minds not only of your Lordships but of a large number of people outside your Lordships' House.
Lord PLATT: My Lords, as a member of the Advisory Committee on this subject to the Home Office, I do not remember that we were ever charged with the duty of considering whether the law was right or whether it should be amended.
A Noble Lord: Question!
Lord PLATT: My Lords, we were charged only with the duty of looking at certain applications.

BRITISH STEEL CORPORATION: MODERNISATION
2.43 p.m.
Lord CAMPBELL of CROY: 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 what recent discussions the Government have had with the Chairman of the British Steel Corporation about the 10-year modernisation plan announced two years ago and the review of it still not completed for Scotland.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, the most recent discussion was on the 17th and 18th April, when the Chairman of the British Steel Corporation led the Corporation's team at the tripartite conference on proposed closures in Scotland.
Lord CAMPBELL of CROY: My Lords, after the apparently congenial meeting last Monday between the Minister and the Chairman, and the Chairman's further statement that substantial

1249
reductions in manpower would be necessary, do the Government regard the responsibilities of the Chairman as including the latitude to tackle this matter— which will so much affect the success of this industry in the future—and, in particular, to keep the public informed, besides holding consultations with the unions?
Lord BESWICK: My Lords, I think the noble Lord should put that question down on the Order Paper if he wants a considered answer. I have answered the Question that was on the Order Paper. Referring to the meeting, which he describes as "congenial"—indicating that he has been roused by the Press to some extent—may I say that there was no discussion at all then. The Chairman received a considered letter and has gone away to prepare a reply.
Lord DOUGLASS of CLEVELAND: My Lords, I am rather bothered about this Question because it concerns redundancies. When redundancies happen in private enterprise, such as when AEI and GEC were amalgamated, or taken over —whichever way one likes to describe it —these are taken care of after consultation between the unions and the employers. When you come to deal with a nationalised industry—
SEVERAL NOBLE LORDS: Question!
Lord DOUGLASS of CLEVELAND: My Lords, I was coming to the question. When you are dealing with a nationalised industry, is not the situation very different? You are dealing with political considerations.
SEVERAL NOBLE LORDS: Question!
Lord DOUGLASS of CLEVELAND: My Lords, that is a question, is it not? I am going on to ask a question and I am not going to be interrupted. When you come to deal with nationalised industries, does not the difference lie in the fact that you get political questions entering into consideration as well as economic ones? Is it not a fact that on this occasion the Chairman of the Corporation made statements about redundancies which, while having a basis in fact, have been made without any consideration by the trade unions concerned in the industry? Is it not true that, if there are to be redundancies in the future, they will
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have to be dealt with in accordance with what the trade unions think? What will be the best way of dealing with these industries? Now, if—
SEVERAL NOBLE LORDS: Order!
The LORD PRIVY SEAL (Lord Shepherd): My Lords, I am sorry, but I hope my noble friend will appreciate that his question is directed more to the House than to the Government, and also it is slightly over-long. Perhaps my noble friend will allow the Minister to reply and then, if he wishes to put a supplementary question, I hope he will do so briefly.
Lord BESWICK: My Lords, I am certain that when one deals with a very large industry such as the steel industry, any decision taken has social and political overtones as well as industrial ones. I agree with my noble friend about that point. On the second part of his question, the best way of dealing with redundancies is by means of negotiations with the trade unions themselves. The difficulty arises in this case because the Chairman, instead of continuing negotiations with the trade union leaders as he was expected to do, made some public statements which many people think were unwise.
Lord BYERS: My Lords, did the noble Lord really say earlier that at the meeting on Monday there was no discussion and that the Minister merely handed a letter to the Chairman of the British Steel Corporation? Is it normal Government practice to send for a chairman of a nationalised industry to hand him a letter?
Lord BESWICK: My Lords, I am sorry to disappoint the noble Lord the Leader of the Liberal Party, the Opposition and, of course, the Press. There was not an excited discussion on that occasion. It was simply an occasion on which a considered letter from the Secretary of State was given to the Chairman of the British Steel Corporation.
Lord BYERS: My Lords, is this a result of the postal charges going up to such an extent?
Lord CAMPBELL of CROY: My Lords, is the noble Lord aware that I am sorry, and I am sure some of my noble

1251
friends will be also, that he was unable without notice to reply to my supplementary question which arose very directly from the Question on the Order Paper? May I try another? Do the Government approve of the Corporation's efforts to attract other industry to the areas where the redundancies are expected?
Lord BESWICK: My Lords, first may I say in answer to the noble Lord, Lord Byers, that this is not an issue about which Liberal-type jokes should be made.
Several Noble Lords: Oh!
Lord BESWICK: My Lords, we are dealing here with a very serious issue, which includes getting alternative work into those areas where there are closures, either expected or imminent. The Corporation is doing a certain amount, but the Chairman has made it quite clear that it is impossible for the British Steel Corporation to do everything. We are therefore doing a lot together. Much work is now being done and we have had considerable success.
Lord LEE of NEWTON: My Lords, can my noble friend say whether any progress has been made in discussions with the EEC, in order to regulate the increase in capacity of the private sector of the steel industry so that the public sector will not be disadvantaged?
Lord BESWICK: My Lords, as things are at the moment, it is difficult, if not impossible, to match capacity with demand because of the limitations placed upon us by the Paris Treaty. But Her Majesty's Government have indicated to the EEC that this is a subject to which further attention must be given.
Lord MAELOR: My Lords—
Several Noble Lords: Order!
Lord MAELOR: My Lords, I am not on the Bishops' Bench. Is the Minister aware that last Thursday I asked him to sack the Chairman of this Board. I should like to know what steps he has taken to give effect to my request.
Lord BESWICK: The answer is, None, my Lords.
The Earl of ONSLOW: My Lords, is the Minister able to tell us when our
1252
steel productivity is likely to be raised to the standard of either German or Japanese steel productivity?
Lord BESWICK: My Lords, this is a matter which gives serious cause for concern. The fact of the matter is that in the last year the output from the capacity in Scotland actually fell, although we are spending £100 million in improving the equipment at Ravenscraig. This is a matter which requires the utmost consultation between the Corporation and the workforce. It is because that consultation is not helped by certain Press interest and comment that I regretted the question which I thought the noble Lord put to me on the last occasion he raised this issue.
Lord SLATER: My Lords, may I ask my noble friend whether it is not true that the Minister or his Department is not responsible for the day-to-day administration of the steel industry?
Lord BESWICK: The answer is, Yes, my Lords.
Lord DOUGLASS of CLEVELAND: My Lords, maybe I shall be able to come to the question I wanted to lead up to in spite of the opposition from the Opposition in this House. Are not the four questions which have been posed by the Minister to the Chairman of the Corporation questions which should be answered by the Minister himself, and not by the Chairman of the Corporation?
Lord BESWICK: My Lords, if my noble friend wants to read the questions he will possibly see that they deal with the intentions from the point of view of the British Steel Corporation, and it is perhaps better to have a clear understanding here so that there can be no possible criticism in the future.

EEC COUNCIL OF MINISTERS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, a Statement is being made in another place today about business to be taken in the EEC Council of Ministers during May. With the leave of the House, I will, as usual, arrange for the Statement to be made available in the OFFICIAL REPORT.
Following is the Statement referred to :
"With your permission, Mr. Speaker, I will make a Statement about business to be taken in the Council of Ministers of the European Community during May. The monthly forecast for May was deposited yesterday.
"At present three meetings of the Council of Ministers are proposed for May. Foreign Ministers will meet on 5; Finance Ministers on 20 and Agriculture Ministers on 26–27 May. Dates for Council meetings of Energy and Research and Development Ministers are still under consideration. It is not yet known whether they will take place in May.
"At the Foreign Affairs Council, Ministers will resume their consideration of a Commission report on negotiations with the Maghreb, and on raw materials in relation to developing countries. They are also likely to review prospects for an international conference on energy, and to have a first discussion on preparations for the next meeting of EEC Heads of Government. The President of the Council may report on his contacts with the Assembly over the classification of the supplementary budget for the Regional Development Fund.
"The agenda for the Finance Ministers Council has not been finalised; but Ministers are expected to discuss among other things, the economic situation in the Community and preparations for the June meeting of the IMF Interim Committee in Paris.
"Agricultural Ministers are likely to deal with sugar imports from ACP countries, the proposed revision of the basic wine regulation and various veterinary matters."

PLYMOUTH CITY COUNCIL BILL [H.L.]
THE CHAIRMAN OF COMMITTEES (The Earl of Listowel): My Lords, as I have been informed that a noble Baroness wishes to speak on the Plymouth City Council Bill, I do not propose to move the Third Reading this afternoon.

SECURITY PROBLEMS IN THE FREE WORLD
2.53 p.m.
Lord HOME of the HIRSEL Lord HOME of the HIRSEL rose to call attention to the problems of security which face Britain and the other free and independent countries of the world; and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion which stands by my name on the Order Paper. I hope your Lordships will acquit me of being a Parliamentary chatterbox. I put this Motion on the Paper well before our European debate of last week, and did so for a very definite reason. I have always thought that a part of the value of this Upper House
1254
to the nation is that here we can ventilate great issues of domestic or international concern free from the curbs of Party alignment and without the compulsion of instant political decision. In other words, we can give ourselves, and perhaps others, time to think—a luxury increasingly rare in politics in these days. Therefore in moving this Motion I am not seeking any instant reaction, certainly not from the noble Lord, Lord Goronwy-Roberts, because it would be wrong that there should be an immediate reaction from the Government to some of the things I have to say.
One of the anxieties I have had—and no doubt this has been shared by others of your Lordships—is that the shape of international affairs in the Western World since the war has had to be fashioned as a reaction against the strong tendency of Communist Russia towards expansion. In other words, we have scarcely been able, either in the United States or in Europe, to have foreign policies which are positive in their own right. That applies to the great problems and issues which face the world. No one would deny the citizen of the Soviet Union the right to his own political philosophy and his chosen way of life, but in the last 30 years the trouble has been that Communism has been for export, and that behind the export drive is a doctrine of unending ideological conflict and confrontation, of ultimate victory over all the rest of the philosophies, whether the persons like it or not, while according to the Communist doctrine any means is justifiable to attain the end. This, my Lords, is called co-existence. Such a definition as I have given— namely, the continuation and intensification of the ideological conflict, the ultimate victory over all the rest, and the means as justifying the end—was given over Moscow Radio as lately as October 1974 as official Russian policy.
The concept of perpetual struggle is alien to the democratic mind. It does not appeal to us as a basis on which we can build the partnership with the Soviet Union which is the true meaning of co-operation, and therefore we find it difficult to conceive of real progress towards detente when co-existence is thus defined. We have therefore, as democracies, tried our hardest over the years to convert co-existence into co-operation.

1255
The text of partnership was of course originally written in the Charter of the United Nations, and the proposal was that the Western allies and the Soviet Union and China should jointly keep the peace. That fine ambition following the war was negatived by the non-co-operation of the Soviet Union in peace-keeping machinery through the United Nations. We were anxious to work with the Soviet Union through international institutions—the International Bank, the International Monetary Fund, the International Development Agency—and we wished to go into partnership with the Russians to try to prevent the division of the world between rich and poor and to remove the grievance of envy which can so easily lead to war. The Soviet Union preferred to go her own way; and not only that, but preferred to label the assistance given to the developing countries by the United States and Europe as "neo-colonialism".
In Europe I think we understood, and certainly in this country we understood better than anybody else, the fear of a renewed war which is undoubtedly genuine in the Soviet Union. We offered guarantees of non-aggression, and when that met with no response we contained Germany within the NATO alliance and within the European Community.—the surest guarantee we could give to the Soviet Union that there would not be a renewed attack from the West. It is not really accurate to say that over the years there was no response to all these advances towards the Soviet Union, for in sequence the answer was the Cold War, the Berlin Wall and the occupation of Czechoslovakia. As is well within the recollection of your Lordships, it was a Socialist of international reputation, Mr. Ernest Bevin, who had to recognise—he had no alternative—that so strong was the trend of Soviet Communism towards territorial expansion that there was no alternative for the Europeans and the Americans but to organise "collective security" if our way of life was to survive.
After the creation of the NATO Alliance we persevered in seeking co-operation through some barren years. At intervals there have been flashes of hope. There was the Austrian Peace Treaty; there was the Nuclear Test Ban Treaty—
1256
not disarmament, but at least it ended the danger of fall-out over a very considerable area of the world and relieved nerves which were tense; and, more lately, a ceiling has been placed by the Soviet Union and the United States on strategic intercontinental missiles. The United States and the Soviet Union could still blow the world to bits several times over. But it could be a straw in the wind of détente; it could be the beginning of turning downwards the graph of rising armaments levels.
Year after year, we have pursued formulae for mutual and balanced disarmament and have worked through many sessions with our Allies and with our Community partners in the Conference on Security and Co-operation in Europe. In this case there has been practically no response. Eighteen months ago I myself put forward to the Soviet Government eight modest proposals for better contacts between East and West—the kind of thing which would be universally approved in this country—that people who marry in either country should be able to choose in which country they live; better facilities for tourism in both countries; proposals for the joint editorship of a magazine explaining Europe to Russia and vice versa, and so on. To every single proposal the answer was, No, or that it was not appropriate, and in exasperation I found myself saying to Mr. Gromyko, "The trouble with you Russians is that you are so dreadfully conservative"! And, my Lords, it is true. They will not consider any move towards liberalism, even with the smallest "1".
I am afraid it is a sad fact—which I hate to recall but it is better to face the facts—that after 30 years of effort to change co-existence into co-operation, the Berlin Wall is still there as a hideous blot on civilisation. But people have got used to it. The occupation of Czechoslovakia is still there, and the denial of self-determination, but people have got used to it. And, in spite of 1 million men and corresponding weapons on the Chinese frontier, there is a superiority of the Warsaw Pact over NATO in conventional forces and weapons of three to one, and the Soviet forces are always on full alert. Then, again, there is the progressive erosion of countries on the periphery of the Free World which goes on all the time.
Freedom may be assaulted in a number of ways—by systematic subversion of the will to defend it; by picking off, one by one, countries which have internal divisions and which are, in the Communist jargon, ripe for revolution; by wars at second hand and by direct attack. Under the umbrella of co-existence, subversion goes on all the time, as the noble Lord, Lord Chalfont, vividly illustrated to us only a short time ago.
Despite all the alternatives I have presented, I do not believe that there will be a direct attack by the Warsaw Pact upon the NATO Alliance. At the present time it suits the Russians to maintain the status quo in Europe, because there are other opportunities for them elsewhere. But they are tempted to foment strife. Where they find an opening of civil disorder in any country, they are tempted to dabble in wars at second-hand.
Every piece which is nibbled away from the Free World weakens the whole. There cannot be a Communist take-over on the scale which we have witnessed in recent days in South-East Asia without serious repercussions on the global balance of power. Thailand and Malaysia and Singapore—two Commonwealth countries—will not now be so confident of their future security as they were but a short time ago. Already there is penetration by the North Vietnamese into the North of Thailand. Indonesia, Australia and New Zealand will be compelled to begin to look anew at the safety of their communications, not only with the West but with Singapore and among themselves.
It so happens that I have had long and first-hand experience of the events which have led up to the conquest of Vietnam, in the context of the neutrality of Laos, Cambodia and Vietnam. In 1954, the first treaty was signed with the purpose of ending strife in the area. The aim was to create for those three countries a status of non-alignment and a right of self-determinaton, and to provide the machinery for that. Sir Anthony Eden, as he then was, the Russian Foreign Minister and the local parties negotiated and signed a treaty providing for the withdrawal of troops from each other's territories, the rationing of imported arms and the creation of machinery for free
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elections and self-determination through-out the area.
A Control Commission of impartial countries was set up to oversee and guide progress, and to bring it to fruition. The Soviet Foreign Minister and our Foreign Secretary were co-Chairmen of a continuing process of conciliation and peace building. From the date of signature, the Russians did all they could to stultify the work of the Commission and they succeeded in rendering it impotent. I succeeded to this situation in 1962. There was trouble in the area—trouble so serious that it seemed to be leading directly to war.
I tried to reconvene this continuing Conference, and so applied to Mr. Gromyko. He took no interest in the suggestion, but eventually the conference was reconvened. We spent months in negotiation—Russia, the United States of America, China, France, Britain and all the local countries and all the local parties within those countries; the Vietcong, the Vietnam, the Pathet Lao—the lot. We signed a solemn treaty, argued over word by word. Foreign troops were to be withdrawn, armies to be reduced to policing size, imports of arms to be limited from outside and restricted to policing needs. A Commission was set up again to ensure ordered progress towards that result.
My Lords, it is true to say that from the date of the signature the Russians—not the Chinese—and the North Vietnamese stymied all progress and rendered the Commission impotent. The Paris Conference of 1973 is within the recollection of your Lordships. The Secretary-General of the United Nations was brought there to give the occasion added solemnity and authority. The process was gone through all over again; a Commission was set up to supervise peaceful organisation of the area. It is fair to say that the ink was not dry on the paper before the North Vietnamese, aided and abetted by the Russians, brought the proceedings of the Commission to an end. I am not blaming the United States for the original intervention, or the Soviet Union for pumping arms into the area. What I am saying is that there were three opportunities to end strife. It could have been ended but the opportunity was deliberately thrown out of the window, in favour of fighting,

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by the North Vietnamese and by the Russians in league with them in 1954, 1962, 1973. I am going to borrow a phrase from Sir Winston Churchill, "Three times is a lot."
There has lately been almost a conspiracy of silence on the record of these events. I do not know whether to label the latest proceedings "Communist expansion" or "imperialist expansion"; I think it is a blend of both. But this story, which has culminated this morning in the surrender of South Vietnam, is as planned, as deliberate, as cold-blooded, as cynical and as cruel an exercise in power politics as anything even this hard-bitten world has ever seen. I see that in relation to Phnom Penh, and now Saigon, the use of the word "liberation" is in currency. When liberation and domination begin to mean the same thing, the process of sapping the will to preserve security of the free way of life has already begun.
This tale of the Vietnam treaties raises questions which are profound, and the most profound of them really is this: is a treaty with a Russian Communist merely a trap for the democracies? This is not an academic question or one that refers posthumously to Vietnam. We are told that a conference on the Middle East is shortly to be held in Geneva—something very much nearer home to us. The Soviet Foreign Minister will be co-chair-man yet again with the American Secretary of State. There is a passionate desire among the democracies that there should be reconciliation in this area, which is deadly dangerous to the peace of the whole world. There are people in that area with a grievance who are only too ready to be exploited if others are unscrupulous. There is a chance for a settlement, as there was in Vietnam, and if Mr. Eban's speech of two days ago is properly reported there is a much better chance now than there ever has been before.
There will be a need, whatever the terms, for a Commission to ensure progress. The co-chairmen, the desire for peace, the possibility of peace, the Commission to ensure progress—it is the horrible, demoralising effect of the damnable double-dealing of Communists that free men are bound to ask themselves the
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question, "Is this to be Vietnam all over again?". My Lords, I profoundly beg that it is not. The Russian self-interest may be different. The Arabs are people of very considerable experience of diplomacy and people of independent mind. Israel can look after herself and fights for her recognition and survival. One hopes, therefore, that this conference will be different. But I notice it is said —and this is not the end of the story— that the result of the Portuguese election is unsatisfactory to the Soviet Union. Are they the next on the list, and are we to have this doctrine extended to the internal affairs of country after country?
My Lords, would it be better in such circumstances if we, the democracies, were to say to the Soviet Union that we are not interested in detente as the Russians present the prospect to us? My answer to that is No. and emphatically No, because in doing so we should be untrue to the values in which we ourselves believe. We should therefore persevere; but we should persevere in prudence, and react to a situation like this not in panic but in prudence. I submit to you, my Lords, that that means imposing some discipline on ourselves in the context of the security of the free nations.
Subject to what the noble Lord, Lord Goronwy-Roberts, may say, we shall go to the Conference on European Security and Co-operation in Europe. I think the discipline of which I have spoken should take this form: we should not concede any point of substance unless it is matched by a concession of equal weight; we should not allow any treaty that we have signed or intend to sign to be broken with-out bringing the breach immediately to the public notice and releasing ourselves from the obligations assumed unless that breach is rectified at once. The price in terms of security of turning a blind eye to Communist deception is too high. Until the balance sheet is weighed (and that will be known before the Conference on European Co-operation and Security) I would not commit myself to attending that conference at heads of State level. If hard things are to be said it is much better for them to be said by Foreign Secretaries, and they do it much better.
We shall doubtless have a Defence debate, and therefore I will not anticipate it except in the context of which I am

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speaking, of concern for our security in this present-day world. Defence cannot be exempt from cuts when a country is in economic crisis, but I hope the Government can assure us that in this respect we have reached rock bottom in economies. We and our NATO allies are only just within the margin of safety. We should not, in relation to our NATO contribution, be using the excuse of our partners' lower contribution of percent-age of their GNP for defence. On the contrary, we should be urging them to bring their level up to ours. We should not forget, either, that every reduction of conventional manpower and conventional weapons brings us nearer to the policy of nuclear tripwire from which, in recent years, we have done so much to try to escape.
We should re-examine the deployment of allied forces on the periphery of the Free World. We cannot fight on the main-land of Asia and win. The French tried it, the Americans have tried it. No European could do it. But we can keep open the sea and air routes to Common-wealth countries, to and from the West and to and from each other. I am not one who subscribes automatically to the domino theory—history does not work like that—but I should be very unhappy if I were in Thailand today. Malaysia, Singapore, Australia, Indonesia and New Zealand—these seaways and air routes must be kept open unless there is to be a mortal wound to the Free World. Plans should now be laid. Our friends must not be allowed to be cut off and isolated from the free. We should not allow any ocean—and here I am thinking in particular of the Indian Ocean—to become the virtual monopoly of a single Power. It is in danger of becoming that today. If, for reasons which seem to the Government to be good but which seem to me to be bad, Gan and Simonstown must go, then we should equip Diego Garcia to supply our naval needs in that area. I am thankful that the last Conservative Government, as its last gift, gave that to Her Majesty's Government of today.
My Lords, I believe that there should be a NATO Summit. I see virtue in this. It would enable the President of the United States to attend and declare that the defence of Europe and the Atlantic Ocean is a self-interest of the United States. It differs from the situation of
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America and Vietnam. Foreign policy and defence is basically about self-interest, and as the Continent of Europe is to us, so the Atlantic Ocean is to the United States. It would enable other heads of Governments to explain the philosophy of democracy and freedom and to express an ideal which will attract allegiance far and wide; for that, at the end of the day, is the real way to stem the Communist tide.
Finally, my Lords, let me say that we should pursue détente. If the Soviet Union is ready to change over from icy co-existence to co-operation, we must not miss that day. That would be a day in which we could all rejoice. But it is right to say clearly that the Free World has reached a point of insecurity where the democracies must require proof of Communist Russia's intentions, and deeds which are compatible with co-operation and partnership. Nothing less than that will do, because on nothing less than that can we build confidence in the security of free nations. My Lords, I have trespassed on your Lordships' time, but I think this morning, when there has been a change in the balance of power—and do not let us delude ourselves on this day, of all days—it is perhaps right that the Free World should review the ways in which we may remain secure. I beg to move for Papers.
3.25 p.m.
The PARLIAMENTARY UNDER-SECRETARY of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the whole House will join me, I am sure, in expressing deep appreciation of the tone and content of the speech of the noble Lord, Lord Home of the Hirsel. I can only hope to respond with an equal blend of realism and aspiration. Clearly, as he said, there have in the last year been a number of developments through-out the world which greatly concern the Western Alliance. Fresh in all our minds is the war in Indo-China. If the news this morning is accurate, it means that that tragic struggle may at last be drawing to an end. The collapse of the Governments of Cambodia and South Vietnam has undoubtedly made a great impact, both on the peoples of the West and on those of South-East Asia. As the noble Lord rightly pointed out, the

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repercussions will spread very widely indeed.
My Lords, in this struggle we in Britain in recent years have been largely and inevitably onlookers. We have given humanitarian aid to the extent of our power, and shall continue so to do. We have consistently urged the observance of the Paris Agreements to which the noble Lord referred, and a political settlement; but unfortunately, like our Western partners and allies, we have not been able to change the course of events. We shall need to study carefully the implications of recent events for stability in the world, for Great Power relationships and for the future development of detente, above all, in the Atlantic area.
These events have been a particular shock to the Government and people of the United States. A major debate is developing there about America's future Tole in the world. Some people in America, indeed, are wondering whether their allies, as a result of the events in South-East Asia, will begin to question or lose confidence in the solidarity of the American commitment to the Western Alliance. To such people I would say, and Her Majesty's Government would say, that we believe the Americans are too great a people to allow the shock of this reverse to lead them into a crisis of self-confidence, or to blind them to the realities of their own security interests, in particular the need for continued support and commitment to the Western Alliance and all it stands for. There are signs that the superb resilience which characterises this great people is already making itself felt.
For example, Dr. Schlesinger recently said that with the slaking of passions over South-East Asia an improved perspective is emerging in America regarding the American role in the North Atlantic Community. Senator Hubert Humphrey has said something very similar. Above all, President Ford told a joint session of Congress on 10th April that events in South-East Asia must be kept in their proper perspective, that no potential adversary should believe in a slackening of the national will of America, and that America's destiny has never been more closely linked with that of the Western world. I believe we can look forward with some confidence to the NATO,
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summit meeting which will be held at the end of next month, and the fact that President Ford intends to attend personally speaks for itself.
During the past year Portugal, also, as we have heard, has been the scene of rapid change. The transition from dictatorship to democracy is not an easy one, and many of us may not have appreciated quite how difficult this is. Fundamental changes, economic, social and political, were and are clearly needed in that country. In this transitional period, it is not a simple matter to translate into practical effect the sincere and deep desire of all Portugal's friends and allies— and we, perhaps, are her oldest ally—to help that country and that people.
We all want the establishment and consolidation of a new democratic Portugal which can contribute to stability and security in Europe. I believe that the results of the elections on the 25th April, and, above all, the strikingly high turnout, have shown that the Portuguese people are eager to assume the role and the democratic responsibilities which the transition now taking place in their country offers them. It is our under-standing that it is the stated objectives of the Armed Forces Movement to work towards this during the current transitional period. We certainly wish the Portuguese Government and people all success in building democracy once more in their country.
In Cyprus, also, there has been justifiable anxiety about the cohesion of NATO's Southern flank. I am glad to say to the House that there seem now to be some signs of hope in regard to progress towards the solution of the Cyprus problem. If, as we hope, the talks which have recently been renewed in Vienna can succeed in making progress towards such a settlement in Cyprus, it may be possible to prevent any serious damage to the solidarity of the Western Alliance in South-Eastern Europe. Although both Greece and Turkey have shown some disillusionment with NATO because of the Cyprus dispute, both countries still remain members of the Alliance, and it is perhaps time to remind ourselves once more that the Alliance exists to safeguard the external security of its members and not, in fact, to resolve disputes among them.

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It is equally true that throughout this period of doubt and uncertainty in certain areas of NATO there has been, as the noble Lord quite rightly pointed out, no slackening of the Soviet military build-up in Europe and elsewhere. The Soviet Union has achieved rough strategic nuclear parity with the United States. At a conventional level, the Warsaw Pact faces NATO in Central Europe with a marked superiority, which is further increased if one takes account also of forces stationed in the Soviet Union itself. Moreover, the Soviet Union has emerged in the last five years or so as a maritime super-Power, and the increasing presence of the Soviet navy in the Atlantic, Indian and Pacific Oceans is well known to the House.
The military facts are there, and until we in the West can be convinced that neither force nor the threat of force, actual or implied, will be used against any member of the Alliance we must proceed with the utmost caution. So long as the Soviet Union continues to deploy forces on the scale to which I have referred, a scale far greater than purely defensive purposes would seem to necessitate, there is bound to be an insistence in the West that the military strength of NATO shall be adequate to form a credible deterrent against aggression, whether at the conventional or at the nuclear level.
The noble Lord raised the question of Her Majesty's Government's Defence Review and the policy flowing from that Review. We are asked, in fact, why, in the light of all this, the Government has decreased our defence expenditure under the Defence Review. It is, my Lords, precisely the recognition that Britain's security is best guarded by our commitment to NATO that underlies the whole philosophy of the Defence Review. The decisions taken under the Review will enable Britain to concentrate her contribution where it can most effectively be used.
The noble Lord, quite rightly, referred to the inefficiency of military action in outlying continents. This is not a point for partisan argument at all. We believe it is a fact that Britain's capability can primarily be best mobilised and exercised in the service of NATO in Europe. It certainly cannot be in the interests of
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NATO for us to continue to spend more than we can manage on defence, taking into account the fact that economic power must be the basis of any credible defence effort. The House will be aware that our defence expenditure in proportion to our GNP— and this still remains a respectable criterion of capacity— has been well above that of our major European allies. Britain may no longer be a world Power, at least in the old sense, but if we use our resources in the best way possible, always keeping in mind the interdependence of economic and military capacity, then our influence in the world may yet grow, together with that of our friends and allies, in the future.
NATO, as the noble Lord has often reminded us, is not only an instrument of defence. It has been the policy of successive Governments to emphasise, as we heard this afternoon, that the Alliance is also an instrument of detente. One recognises the real anxieties of many people that in seeking detente in Europe we might compromise security. Personally, I do not believe detente is possible without security. It cannot be attained without assuring confidence. I do not think that the interests of our security are best served, in any circumstances, by a continuation of the confrontation which we have had in Europe since the War. What is vital—and Her Majesty's Government fully recognise this—is that in seeking detente we should at no stage go further than the legitimate requirements of our security allow. That is why we have always insisted that detente must be real, not just theoretical. In this area our bilateral relations with the Soviet Union and Eastern Europe have an important part to play—even if only in clarification of some of the terms of art which the noble Lord mentioned this afternoon; the precise meaning in practice of "co-existence" for example. The very successful visit made by my right honourable friends the Prime Minister and the Foreign Secretary to Moscow has played a valuable role in this direction. We hope that it may be at least one step on the road to a better understanding with the East.
We shall therefore continue, with the other Governments of the Western Alliance, to play our full part in the

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important conferences which are taking place in Geneva and Vienna, to which the noble Lord, Lord Home, referred. I would not conceal for a moment from the House that there are real difficulties in both negotiations, but a great deal of useful progress has been made. The Government believe that if real efforts are made on all sides—and I mean on all sides—it should be possible to obtain a result which would justify the holding of the final stage of the Conference on Security and Co-operation at the level of Heads of Government this summer. I repeat this: if real efforts are made on all sides, it should be possible to obtain a result which would justify the holding of such a summit meeting this summer. But my right honourable friends have repeatedly emphasised during their visits to Eastern Europe— and I had the opportunity of doing something of the same during my recent visit to Prague— that if the Conference is to mean anything to the peoples of Western Europe, it must be possible to show them substantial results. Detente is a continuous process, drawing its impetus from mutual confidence and assured security. I repeat, there is no detente without an assurance of security.
Political détente in fact is not enough on its own; it has to be backed up by comparable measures in the field of military security. I cannot say that we have yet achieved substantial results in the talks now going on in Vienna on force reductions: there are important differences of approach, as the noble Lord and the House will know, between the two sides. I think that there is distinct hope for the future: the position of the NATO countries in these negotiations has been firm and closely co-ordinated at all stages, and continues to be so. For our part, we shall not reduce our forces in the Federal Republic of Germany below the levels laid down in the 1954 Protocol to the Brussels Treaty in advance of an agreement being reached in the talks in Vienna which would involve a reduction of the British Forces. Meanwhile, the United States and the Soviet Union are continuing their talks on strategic arms limitation. The United States has kept her NATO allies, including ourselves, closely informed of progress in these talks. I need hardly say that
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their success has extremely important implications for our security, and for that of NATO as a whole.
Thus the process of détente in Europe is continuing. It has not yet become irreversible. We have not yet attained the necessary degree of mutual confidence for that. But I do not think that recent international developments have changed the basic need to continue to strive for progress towards detente, or indeed that the leaders of the Soviet Union have reversed their commitment to detente. I am confident that the relaxation of tension will go on, and Britain will certainly play her full part in ensuring that it does.
The search for detente, for world stability and security, has been given almost a new dimension by the emergence over the last two years, of the producer/ consumer question: what has come to be known indeed as the "North/South confrontation". It is very important that in pursuing military detente in an East/West connection, we should equally pursue an economic detente in a North/South connection. It has become as much a pre-occupation to us to avoid a confrontation with the producers as it is to avoid a confrontation with the East. This is why we have seen in recent months an increase in activity on the part of the Western States, led in many respects by the United Kingdom, in the attempt to seek understanding with the Third World on the supply of commodities. In this connection my right honourable friends are taking initiatives now, today, at the Commonwealth Conference in Jamaica.
This does not for a moment mean that the importance of East/West relations should be minimised, but it does mean that we must see them as part of a wider context. While the Soviet leadership remains committed to detente, as we are confident it does, we must surely work to achieve the greatest possible lessening of tension. Her Majesty's Government will continue to work for this bilaterally, regionally, and through the United Nations and its agencies. But I give this assurance to the House, that however assiduous our search for detente may be — and it will continue to be assiduous— we shall not for a moment forget the absolute requirements of the security of this country and of the West. With a lack

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of proper caution on the part of the West and, in a different sense perhaps on the part of the East, a situation might develop which would not help détente: on the contrary, it might ultimately destroy it. I think that there is a general consensus in the House and in the country that we should continue to work for détente, with the cautionary qualifications which the noble Lord has set forth so precisely and eloquently and which I, at least, find no difficulty in supporting.
3.49 p.m.
Lord GLADWYN: My Lords, no wonder the noble Lord, Lord Home of the Hirsel, is worried about possible Soviet intentions, and so we should all be if we did not prefer to bury our heads in the sand. The truth is that Western democratic leaders cannot disregard public opinion, which is quite unduly confident of the possibility of achieving detente in East/West relations. It is perhaps rather odd that this tendency should be even more marked in this country than in any other, seeing that the word "détente" does not even figure in the English language! Of course, it all depends on what you mean.
The Western conception of detente, as we all know is that there should be a progressive series of agreements whereby, in the first place, trade between the Soviet Union and the Free World—or, if you like to put it that way, the non-Communist world—should be gradually stepped up, the Soviet Union consequently taking more and more Western consumer goods, and not merely capital goods, and thus, it is to be hoped, slowly becoming more democratic, or, as the French say " embourgeoisé"; that the great, and quite unbalanced, conventional forces now confronting each other, chiefly in Europe but also elsewhere and, above all, perhaps, on the seas, should be gradually reduced to a point where they are not only smaller but actually balanced; that there should at least be a beginning of the process of nuclear and, indeed, general disarmament; that so-called "cultural exchanges" should be much increased; and that there should finally be a freer flow of persons and ideas between the eventually two great opposing social systems, this resulting in what is always referred to as
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"liberalisation" of the entire Soviet governmental machine. I see that the noble Lord, Lord Goronwy-Roberts is nodding his head.
It is as certain as most things that, short of some Soviet internal collapse, these objectives, however laudable, will, except to a minor degree, never be achieved though that, as the noble Lord, Lord Home of the Hirsel, and the noble Lord, Lord Goronwy-Roberts, have said, is no reason for our not trying to achieve them. For the Soviet idea of detente is quite different. It is fundamentally inspired by the notion that the free, or capitalist, system is rotten; that it will soon, therefore, break up; that the Soviet Union must be ready for such a development; and that, in the meantime, the great thing is to convince the capitalist States of the profoundly pacific intentions of the Soviet Government so as to prevent them, in accordance with the prophecies of the classical Communist writers in what might be described as the holy books, from being tempted, once again, to overrun the workers' paradise.
Since the cause—this is still the thesis —of the workers is exhypothesi reasonable and, above all, just, and the cause of the capitalist States unreasonable and unjust, it follows that the Soviet Union can legitimately do everything in its power, if it can do so without damage to its interests, to promote the downfall of the capitalist regimes, including subversion, propaganda and support of Western Communist Parties; whereas it is intolerable that the capitalist Powers should have the opportunity of, for example, bringing the advantages of their system to the notice of the Soviet people and still less of encouraging any nationalist movements in the whole Soviet Empire.
Détente à la russe must therefore, in the first place, include recognition by the capitalist Powers of the existing, and it is to be hoped, unalterable, frontiers of all the so-called People's Republics; opportunities for the Soviet Government to extol the virtues of Communism in the West, without any real corresponding opportunity for the West to proclaim the advantages of a free system in countries under the control of the Soviet Government; and the establishment, if possible, of a security system in which, by one

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means or another, the Soviet Union will eventually possesss a preponderance of power—which incidentally it very nearly possesses at the moment.
More especially, it is hoped to achieve this last aim by pressing for the abolition of what is always called the " two blocs " —namely, NATO and the Warsaw Pact Organisation—which would, in effect, mean that the Americans would go back to distant America and the Russians to nearby Russia, but that a closely co-ordinated military system would continue to exist in the East of Europe, though no longer, presumably, in the West; the Russians also retaining the right, in accordance with the Brezhnev doctrine, to reoccupy any of the East European People's Republics in the unfortunate event of any attempt to overthrow a Communist régime.
It is true that the Soviet Government would welcome an increase in East/West trade in the sense of Western help in improving the deplorable Soviet system for the distribution of consumer goods, more especially if this should result in the continued ability of the Government to appropriate gigantic sums for the development of its armaments effort which, in itself, of course, largely depresses the standard of living of the Soviet and Soviet-controlled peoples. And this gives the Western Powers some slight lever for the negotiation of agreements which, on the face of it, might represent some progress, or, at any rate, some appearance of progress, towards the broad Western détente objectives to which I referred at the outset of my remarks.
For instance, it might be possible, in the context of what is called "Basket I" of the European Security Conference, to trade commercial concessions against, shall I say, the prior announcement of manoeuvres on each side of the Iron Curtain, or something like that. Nor is it by any means out of the question that some useful results may, as the result of hard bargaining, come out of the Mutual and Balanced Force Reductions negotiations now under way in Vienna. But only for so long as it is clearly understood that all these results must represent measures which are clearly in the interests of both sides. The same principle could apply to the renewal of any SALT nego-
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tiations, because there it may well be that the Soviet Government, without abandoning any of its objections, may decide that it is useless to go on spending any more money on more silos, missiles and so on. Therefore, in the coming SALT negotiations it will not only agree to call it a day, but perhaps also agree to certain measures for diminishing the total number of missiles on either side. It is not out of the question.
The noble Lord, Lord Home of the Hirsel, indicated, however, that since the Soviet Union had repudiated over the years no less than three solemn treaty obligations in respect of proceedings in South-East Asia generally, which of course is undeniable, it was questionable whether it was worth while signing any treaties of a political nature with the Soviet Union at all. I am not so sure about that. The thing to remember here is that if the Soviet Union thinks that it can get away with breaking a political treaty without any adverse consequences, indeed with great benefits to itself, then it will do so. It has been able to do this in South-East Asia, with no bad results. Indeed, it has resulted in great advantages; namely, the expulsion of American influence in that part of the world and a dreadful humiliation for the United States. This great victory for the Soviet Union therefore no doubt justifies its repudiation of its solemn treaty obligations from its point of view. In the Middle East this is not necessarily so.
The Soviet Union obviously does not want war as such—certainly not nuclear war—and it was certain that a repudiation of its treaty obligations in South-East Asia would have no such result. A repudiation of any treaty signed in respect of Israel might well, however, cause an immense upheaval in the Middle East, resulting almost inevitably in war. Therefore, I think that if Mr. Gromyko at Geneva does sign something reasonable about Israel the presumption must be that Russia will abide by it. That may be optimistic, but it is on the face of it an argument in favour of trying to get Soviet agreement to some Middle East settlement.
Nevertheless, the sad truth is that a genuine detente does not depend on what is said or done in Helsinki, Geneva or

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Vienna; it depends on a real change of attitude on the part of the Soviet Government of which there is absolutely no sign at the present time, or indeed any sign of its happening in the future. After all, the Soviet regime rests, and must rest, on a totally illiberal foundation. If the Soviet Government admitted the right of an individual to express his views freely, or the right to strike, or the right to organise national movements in the Baltic States, the Caucasus, the Ukraine and so on, it would inevitably fall. It is obvious, in other words, that the Soviet Union in its present form can be held together only on the basis of Great Russian domination and a total suppression of individual liberties. It is even arguable that the Great Russian people— though clearly, not the peoples under Russian domination— actually prefer it that way. What is not permissible is to suppose that the Soviet leopard can ever change its spots, and yet this is apparently the assumption made by our patient negotiators in "Basket III ".
Does this mean, therefore, that the West must do nothing but prepare for an inevitable war? Of course not. The Soviet Union does not want war; it wants only, as I think Churchill said, the fruits of war. Nor will there be a war if the West possesses a minimum of unity and, above all, makes its social system work. The real way to achieve a genuine detente —that is to say, a situation in which the Soviet Union will give up being a revolutionary and become just an ordinary totalitarian empire—is to form in Western Europe a unity capable, within the frame-work of the North Atlantic Alliance and over the years, of defending itself; that is to say, in possession of conventional defensive armaments sufficient to make any Soviet pressure an unprofitable undertaking. If such a new form of community emerges, and manages also to achieve a measure of prosperity on genuinely democratic lines—which I certainly believe it will—then the larger hope must be, as I say, that the Soviet leopard, even if it does not change its spots, will make them less visible and perhaps more acceptable.
Until then we must not be misled into thinking that even if there is agreement on some rather meaningless formulae at the end of the European Security Confer-
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ence, perhaps as the noble Lord, Lord Goronwy-Roberts, hinted even this summer at some "Summit" conference, and photographs of all the leaders concerned embracing each other under the benevolent eye of Mr. Brezhnev, peace has broken out and detente has been finally achieved. For if in such an event the defence of the West should be still further reduced, or even perhaps, which God forbid!, that the Americans should show signs of reducing some of their forces, or if the effort to advance towards a European political community were seriously arrested, there would then be grave danger of an exploitation of Western disunity by the Soviet Union. "When the fruit is ripe "— which is a Red Army saying which I think I have quoted in this House before—" it is only necessary for us to shake the tree ".
It is for these reasons that I would support in a general way the attitude rightly recommended by the noble Lord, Lord Home, and I think we should all be very grateful to him for raising this important issue this afternoon. Perhaps it will help to bring public opinion back to a greater appreciation of hard realities.
4.5 p.m.
Lord CARRINGTON: My Lords, I very much hope that the speech of my noble friend Lord Home of the Hirsel in this debate will get more publicity than the debates in your Lordships' House seem currently to get. It certainly deserves to and I would think that that goes also for the speeches of the noble Lords, Lord Goronwy-Roberts and Lord Gladwyn. If he will allow me to say so, the noble Lord, Lord Goronwy-Roberts, made a very sensible Foreign Office speech — and I do not say that disparagingly because I pay him the compliment of saying that he is as sensible as the Foreign Office. It was a speech that very much needed to be made. We are naturally preoccupied with our own problems and difficulties, more particularly with the referendum, the Common Market and the economic situation, but it remains true that, however important those two subjects, the security of this country should and must remain an overriding priority.
While I was contemplating my noble friend's Motion it occurred to me to wonder how we should view the defence and

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political posture of this country and the West if we had gone to sleep in 1945 and woken up in 1975. Some people would say that that is precisely what we have done in this country, and have not yet woken up. But 30 years is a comparatively long time in someone's life, although a comparatively short time in terms of political change. I suspect that on awakening we should be surprised at some things, reassured by others and alarmed by quite a few more. We should be surprised, I think, at the rapidity with which the progress of decolonisation has taken place since 1945.
I doubt whether anybody in 1945 seriously considered a timescale in which all the French and British Colonies in Africa, with one exception, would be independent States in well under 30 years, or that that process would be completed with comparatively little trouble. If we had contemplated such a thing, it might well be that we should have thought it inevitable that some of them would have come under the domination of one or other foreign Power, more likely the Soviet Union. There have been alarms and excursions, and there is undoubtedly some foreign influence in some African States, but they have remained non-aligned, and in no way a danger to the security of the world or aggressive in intent, though the South African problem remains unsolved and potentially dangerous.
In India, in Malaysia and Pakistan the same applies. Not so, however, as all three speakers have said, in Indo-China, where after many years of fighting, first by the French and then by the Americans, both Cambodia and South Vietnam are now Communist controlled, though I think it is too early to say exactly how the new régimes will turn out. There can be nobody, though, who cannot and does not feel that the events of the last few weeks have altered the balance of power in South-East Asia to the detriment of the West, a situation which brings with it to the Americans—and through the Americans to ourselves—consequences which will affect our security in the future.
My Lords, I think, too, that we would not be all that surprised at the turbulence which exists in the Middle East.
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Certainly we should be astonished at the development of the Arab countries and their new-found unity, the power that they possess by reason of their vast oil reserves and the dependence of the industrialised countries upon them. We should at once, I think, recognise the seeds of potential world conflict, the consequences of an oil embargo which would be inevitable in a further outbreak of hostilities, the danger of polarisation between East and West, Arab and Jew— and we would, I hope, acknowledge the work that Dr. Kissinger has sought to do, realising, as he does, the appalling dilemma with which the United States would be faced in a future conflict. It is fashionable now to criticise Dr. Kissinger, but I believe that the trust which has developed between him and the Egyptians and the Saudi-Arabians can still be used by him on behalf of all of us. I hope that he will continue to seek a fair settlement in the Middle East, for I do not believe that there is anybody other than him at the moment who has a better chance of success.
All this would surprise us, but what would reassure us? I suppose the most obvious reassurance would be that there has not been a Third World War, and I wonder how many of us would have been prepared to say that in 1945? We would be reassured, too— at any rate partially reassured— by what has happened in these past 30 years to Western Europe. In 1945 he would have been a bold man and an optimist who would have supposed that there was not a very grave danger, within a fairly short timescale, of Italy, France and Western Germany falling under the Communist bloc. It has not happened, partly because of the foresight of the Americans and the Marshall Plan; partly because of Europe's own efforts in restoring its economy and bringing unprecedented prosperity to those countries; partly because of the foundation of NATO, in which Mr. Ernest Bevin played no small part—an organisation which by the very fact of its existence and the terms of its membership, has prevented until now a military attack on the countries which are its members— partly, too, because of the increasing economic and political co-operation in Europe since the War, culminating first

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in the EEC of Six and now in the EEC of Nine countries of which we are, and pray God will remain, a member.
We would be reassured, too, by the steadfastness of the United States as an ally, not something that in 1945, with the pre-War isolationist tendencies, we would necessarily have taken for granted; but, in view of recent events, I shall say a little more about that later. We would be reassured, too, by the post-War history of Japan and its emergence, not as a military Power but as an important economic factor in the Far East and far beyond. Lastly, we would be fascinated by the emergence of China— Communist but certainly Communist in a quite different way from the Russians—whose growing capacity, industrial and military, so far from making the situation of the West more difficult, has been a factor in the changing balance of power which, on the whole, has been of advantage to us. Who could deny that but for the ideological differences between the Soviet Union and China, the attitude of the Russians towards the West might at this time be very different.
So much for surprise. So much for reassurance. What about the factors which would give us little cause for comfort? In 1945 the Soviet Union was a Continental Power, primarily military, in Europe with no navy and though with enormous population and raw material resources, quite unequal in technological skills to the United States. They had no nuclear weapons and certainly at that time no capacity to compete on the frontiers of technology with the Americans or, at that time, with ourselves. Today the situation has radically changed. Not only have they the nuclear weapons but, more important, the means of delivering them, as sophisticated as that of the Americans and more so than ourselves. Though there may be arguments about the relative capacities of each country, no knowledgeable American will tell one that the Americans have an edge, or too much of an edge, in technology and certainly not in numbers of warheads as compared with the Soviet Union. From a small coastal navy the Soviet Union has built a worldwide ocean-going navy which in the number and quality of its ships is second to none in the world. The naval exercise which finished last week would have been unthinkable even
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a short while ago. Russia's financial and scientific effort, so far from decreasing, is increasing and their military capacity grows year by year. Your Lordships do not need to be reminded of the imbalance in conventional weapons between the NATO countries and the Warsaw Pact countries.
As for NATO, we are passing through a period of crisis. Some countries of the Alliance have their own problems, either with themselves or with each other; there are disagreements between Greece and Turkey, the possibility that there may be oil off the Western coast of Turkey, a coast interlarded with islands belonging to Greece, is a cause of tension. The coup in Cyprus, engineered by the Greek colonels, and the subsequent Turkish invasion of the island adds to that problem. Yet one has only to look at a map to realise the importance of those two countries to the NATO Alliance and the consequence to it of a weakening of the Eastern flank. Portugal, though many of us must have been relieved at the result of the Election last week, is still an unknown quantity; the Armed Forces Movement is further to the Left than the democratically-elected assembly, and the Armed Forces Movement is in control. In Denmark and in Holland there have been decisions to cut defence expenditure, and in Holland to dissociate itself from the military side of NATO, as the French have done over the years. In all Western countries whose leaders rely for re-election on the benefits which they bring to those who vote for them there is increasing difficulty in making understood the truth: namely, that because a defence policy is successful, it is not very sensible immediately to change it. Butter not guns, even mountains of butter, is a much more popular cry than the reverse, and noble Lords on these Benches will not find the present Government guiltless in this respect; but that is an indictment which, so far as I am concerned, will wait until the defence debate.
Nor is this attitude confined to Western Europe. It is common knowledge that it has been the power, and particularly the nuclear power, of the United States which has been more instrumental than anything else in preserving our freedoms. I do not doubt for one moment that President Ford, Dr. Kissenger and the

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Administration have exactly the same determination to honour the United States treaty obligations as have had their predecessors over the last 25 years, but it would be foolish of us not to recognise that recent events have, to an uncertain extent, undermined the confidence of America's allies and the attitudes of the Americans themselves. To the Americans, Vietnam, the dollar crisis and a general feeling that they, the Americans, have made a relatively bigger contribution to defence than other countries were prepared to make, have put in doubt the hitherto generally accepted idea of American policemen around the world. There is a tendency in the United States to query the world role, and that cannot go and does not go unobserved among America's allies; nor does, as they see it, the failure of the United States policy in South-East Asia, or the increasing demands from many influential members of Congress to reduce America's contribution to NATO.
My Lords, I agree with the noble Lord opposite, in that I do not think that we want to view this with too much alarm. The Americans are a resilient, a tough and a right-minded people. Moreover, the realisation that their own safety and security is involved in the continued independence of Western Europe, and elsewhere, is certainly very clearly understood in Washington, and more widely. But a bridge building operation is badly needed, and I very much hope that the opportunity to do that will be taken by President Ford and the other heads of the European States at the NATO Summit at the end of May. The peace of the world depends not just on American military power; it depends even more on the potential aggressor's conviction that America would use it in defence of its allies and itself.
On awakening from my 30 years' sleep I should be more than a little disquieted at the increase in subversion in non-Communist countries. I know of no State which has of its own free will elected a Communist Government, yet the number seems continually to be growing. I know of no one who has studied Communism and the Russian approach to it, who believes for one single moment that the long-term aim of the Russians has changed in any degree. The conver-
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sion of the world to Russian Communism, however you interpret that phrase, by one means or another remains the ultimate objective. It may sometimes be necessary to change tactics. It may be sensible to accept co-existence, but the ultimate objective does not change, and I have no doubt that in each country Communists are deciding which is the most fruitful way in which a country can be subverted.
For example, it must have been some considerable time ago that a decision was taken that the right way to subvert Portugal was to infiltrate the armed forces. The noble Lord, Lord Chalfont, in a debate the other day, gave your Lordships some idea about how it has been done in this country. If what he said was unpalatable to some, that does not make it any the less true. No doubt the pattern is different in other countries, but the tactic is the same, and it cannot be denied that in too many cases it has been successful. The easiest way to defeat the Western world is by destroying their belief in their own society, and by constantly querying and deriding the values in which most of us were brought up to believe. Therefore, on awakening from my 30 years' sleep I do not think I should be too despondent, but I would certainly begin to realise that in the past few years there had been— and there has been—an increasing reason for disquiet and concern: the problems of prosperity; the preoccupation of the West with material things; the increase of subversion; the ever increasing money spent by the Soviet Union on defence.
My Lords, what then are the lessons? What do we do? I think that we do three things, and I spell them out with some diffidence since I think that they are pretty obvious. First, however difficult it is and whatever may be the sacrifices, we must continue to retain defence forces which can make a proper contribution to the NATO Alliance; and also retain a small nuclear force which, in the last resort, is known by any potential enemy to be capable of inflicting unacceptable damage. I do not think that at this particular moment a military adventure in Europe is very likely. But I think that a thoroughly bad reason for reducing our insurance premium; first, because of the long time lag necessary

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in these very complicated days to re-build adequate defence forces which have drastically been cut; but, even more importantly, because an adequate defence force is an indication that a country or an alliance is prepared to defend itself; that it has the will to remain independent; that it prizes its independence above all else; and that it is not going to risk being blackmailed by anybody with superior forces to whom, without adequate defences of its own, it must inevitably yield. The success of a defence policy is not in winning a war; it is in preventing it. Money is not wasted, nor are soldiers, sailors or airmen, if soldiers, sailors or airmen are not used to fight. Peace is the evidence of their success.
Secondly, we have to learn the lesson of co-operation with our friends and allies. We must learn to take a more active part in settling the disputes which are potentially dangerous; and I believe that Europe must begin to take a part consistent with its economic importance and the sum of its influence. A number of leaders of Arab States told me, during a visit to the Middle East a few weeks ago, how much they regretted the lack of involvement by Europe in trying to settle, and helping to settle, the Middle East problems. We must learn to act together in seeking détente—and every-body in your Lordships' House wishes for détente. But it is only too easy for one country or another to vie each with the other in seeking to be the most forward-looking in reaching a peaceful settlement, in pretending that because of this or that they have a special relationship with the Russians, or whoever it might be.
But we must have unity, we must behave sensibly, we must seek détente— and of course we want it. But at the same time we must not disarm without some evidence of deeds as well as words, and we must make sure that in the meantime we maintain our security. Above all, my Lords, let us acknowledge that ultimately it is still upon the United States that we depend for our safety. There is nothing more repulsive than the relish with which some people in this country, who write in the Press or speak on the radio, have watched the discomfiture, and now the defeat, of the Americans in Vietnam in the past few weeks.
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There are difficult times ahead. Let all of us show a little understanding.
Lastly, my Lords, I turn to the problems of subversion. Do not let us pretend that it is not happening, and happening in this country. Do not let us shut our eyes to the fact that there are a number of people—some in important places— who are determined to alter in order to destroy, the system of society which we have built up over so many years. I do not think from what I know of him that the noble Lord, whom I hope is to make another speech, would disagree with much of what I have said. If those of us, regardless of our Party, who are aware of the dangers which face this country are now prepared to speak up for security and for defence, then at least the people of this country cannot say that they have not been warned by their leaders.
4.28 p.m.
Lord TREVELYAN: My Lords, I must first apologise for the fact that I shall be unable to be present for the end of the debate, owing to the Royal Academy dinner this evening. I follow four very remarkable speeches with some diffidence. I cannot hope to compete with them, particularly with my old boss the noble Lord, Lord Home of the Hirsel, who sent me to Moscow. He gave us a brilliant survey over a wide canvas of the many events in which he himself played a leading part, and of the conclusions which we should reach upon them. My purpose is to deal with only one aspect of the subject of defence. In determining our security policy we must examine what we mean by détente and what the Soviet Government mean by it, for each party interprets it in the light of its own interests.
What should be our attitude to the Soviet conception of détente? First, we should have some understanding of the Soviet interests in its promotion. Like the noble Lord, Lord Carrington, I do not believe that there has been any change in basic Soviet aims, though their tactics change in the light of changing world conditions and of successes or failures. In Khruschev's time, their tactics were risky and had a certain gambling element. Khruschev pushed hard in trying to get the Allies out of Berlin, but he gave that up when it became clear that the Americans would defend the

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Western position there at all costs. They took great risks in Cuba, perhaps on the incorrect assessment that if they put missiles inside the American guard, the Americans would give way to them in Europe. Here, again, they had to give way owing to American firmness and the danger of nuclear war.
Under the next régime, they became much more cautious, a cardinal point in their policy being the avoidance of a dangerous confrontation with the United States in Europe and elsewhere. Faced with restiveness in Eastern Europe, they were able to prevent a dangerous deterioration in their East European system by intervention in Czechoslovakia, since they knew that there was no serious risk of Western counter-intervention against them. Faced with an increasingly intransigent China, it was clearly in their interests to avoid simultaneous tension on their Eastern and Western frontiers. Most importantly, they were approaching a rough nuclear balance with the United States, and it then became in their interests to achieve a modus vivendi with the United States in the nuclear field.
One of the most important objectives of the Soviet Union, and one for which a diminution of tension in Europe was necessary, was the securing of the recognition of East Germany as a separate State, in order to complete the East European system. This objective they achieved when the Western alliance decided that it was also in their interests. They might also hope that, if tension diminished, Western defences might be weakened and the Americans might be encouraged to withdraw wholly or partially from Europe, in the feeling that the Russians would regard military intervention in Western Europe as too risky —which indeed it was—and that everyone could relax. Moreover, an easier atmosphere was needed to assist them in reaching an agreement with the Americans for the limitation of strategic arms, which had become one of their most important aims. If they could get on easier terms with the Americans, it would also be easier for them to avoid the danger of confrontation with the Americans in the Middle East. For all these reasons, a diminution of tension—détente, if one likes to call it that—was clearly in Soviet interests.
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The one indication contrary to this policy was the buildup of Soviet conventional forces, particularly the land forces on their Western frontier. Perhaps it resulted in part from military pressure after the failure in Cuba. Perhaps it was intended to discourage the West Germans from new attempts to subvert the East German State. Perhaps it was intended as an encouragement to the Europeans to regard a move towards neutrality as the safest policy. In any case, the policy of the Soviet Union with her great armies and her great fleets is one of détente from strength, not détente from weakness.
For these or similar reasons, the Soviet leaders have considered their ideas of détente to be in Soviet interests. That should not, however, lead us into a Pavlovian response of opposition to a relaxation of tension in Europe, as the noble Lord, Lord Home said, provided that we on our side ensure that it does not weaken our position. We want easier relations with the Soviet Union, provided that this is not used by the Soviet Union to pursue an active policy of political disintegration in the non-Communist world, in Europe or elsewhere. If they do pursue such a policy, tension will rise again and detente will quickly disappear.
The Soviet Union is, as I think the noble Lord, Lord Home indicated, to some extent a satisfied Power in Europe, provided no one interferes with its Eastern European system. The political disintegration of Western Europe would by no means certainly be wholly advantageous to the Russians and they, like everyone else, have learned disagreeable lessons in their attempt to extend their influence in the Middle East. However, the compulsions of the Communist ideology are strong and as the noble Lord, Lord Goronwy-Roberts, said, we must exercise continuous caution and vigilance.
If, then, we agree that we should not reject the idea of détente, how should we consolidate it in our dealings with the Soviet Union in such a way as to consolidate it in a manner which suits our interests and which will not expose us to new dangers? It used to be said that the Foreign Office preferred negotiation to settlement. True or not, there is sense in the saying. Negotiation is a permanent process. There are many disadvantages in ad hoc conferences like the current

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Security Conference. They are apt to become vehicles for propaganda; they encourage expectations which cannot be fulfilled and general propositions which have little substance in fact. But I believe that we are entering on a period of permanent negotiations with the Soviet Union probably on three levels.
There are the SALT talks between the two super-Powers, which are the basis of world security and, in the fluid situation of the nuclear balance, must be a continuous operation. There are the negotiations for the mutual and balanced reduction of forces in Europe, which are likely to continue on and off for many years. There may be more or less continuous negotiations in a permanent European security organisation with American participation, which would discuss such matters as measures to prevent the possibility of surprise attack and progressive liberalisation in human contacts between the Communist and non-Communist countries and which would deal with any situation threatening the peace. This suggestion for a permanent European security organisation has always had the support of the Warsaw Pact, but has aroused some doubts in the West, though it was at one time supported by NATO. I am inclined to think that, on balance, it would be a useful reinforcement of European security and not to our disadvantage. This is a particular hobby-horse of mine but I have never induced it to run very far since Mr. Michael Stewart was Foreign Secretary.
Of course, it goes without saying that we must keep up NATO's defences and maintain the belief of the people of the United States, on whom we finally depend, that we are worth the risks which they take and the resources which they deploy to ensure the continued independence of Western Europe in the interests of their own security. They will be much less likely to believe this if Britain throws away its membership of the European Community. I cannot emphasise too strongly the importance in our defence interests of our building up the European Community with our continued membership of it. Apart from the question of standardisation of defence procurement, which will be much easier if we are in the Community, NATO will be largely dependent on the political strength and unity of Europe. For us, too, it must be
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détente based on strength. The more we can channel our negotiations with Eastern Europe through the Community, beginning with the negotiations which have now been initiated between the Community and Comecon, the more likely are we to see the tender plant of détente grow without distortion.
My Lords, we must not expect Soviet policy to change substantially, if at all. We may well see the Soviet Government acting in a manner which we regard as inconsistent with a serious wish to improve relations with the Western alliance. Detente requires moderation by both sides and we must make it clear that Russia cannot hope for easy pickings from Europe. But while we exercise continual caution, and while we work for Western consolidation, we must at the same time make clear our genuine hope that if both sides show commonsense and prudence, we shall at least be able to get on together rather better than in the recent past and avoid disaster.
4.39 p.m.
Lord GORDON-WALKER: My Lords, I know that all noble Lords will agree with me when I thank the noble Lord, Lord Home of the Hirsel, for introducing this very important subject and for the most impressive analysis of Western security which he made arising out of his rich experience—an experience which no one can now rival in this field. We listened, too, with great interest to the speech of the noble Lord, Lord Trevelyan, and particularly to his description of the reasons behind Soviet moves and policies, of which few people know as much as he does. I hope that he will allow me to say how much I admired his work as our Ambassador in Moscow.
The security of Britain has been for many centuries, and is still today, inseparable from Europe. That was true, even in the heyday of the British Empire. The prime object has always been to prevent any one Power from dominating the European Continent, and we have always needed an alliance to achieve that end. As Continental Powers waxed and waned in strength, as new dangers arose, we always made, sometimes very quickly, corresponding changes in our alliances. The latest example of that is the alliance with Germany after two very bitter wars that were fought against her, an alliance

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which we made to seek to balance to some degree Russian power in Europe and the danger of Russian domination of the Continent. But so overwhelming is Soviet power that no combination of European Powers alone can hold head against it. That was why the United States, in its own interests, had to enter the scales to maintain and preserve the balance. That is why NATO and the American alliance is a continuation of our traditional policy of forming the necessary alliances to prevent one Power from dominating Europe. That is also why NATO and the American alliance are the linchpin of military security for this country.
I was glad to hear the noble Lord, Lord Home of the Hirsel, say that despite Russian perfidy—which is established beyond doubt—he feels it right, as I do, to pursue, with proper precautions, the policy of detente with the Soviet Union. If it should be successful, it would be the greatest contribution that could be made to our security; it would remove the great menace to our security. There could be a real possibility of a major détente, leading to what the noble Lord described as a partnership with Russia, if the Soviet Union had to adjust its policies to face the problem of two fronts because of a serious threat to it from China. This would have a great effect upon the genuineness of Russia's desire for a relaxation of tension in the West.
In the meanwhile, before any such great thing happens, we must achieve what measure of détente we can. I agree with my noble friend and others who said that we must not let down our guard. I was glad to hear my noble friend's firm commitment not to reduce the number of our forces in Germany until we have achieved a proper détente. To let down our guard would not only endanger security but would leave us with nothing with which to bargain, and this matter must depend upon a bargain. Vital as NATO and the American alliance are to our security and that of Europe and the West, we cannot any longer take them for granted. They have been threatened by possible political changes in Portugal, Greece and Turkey. The most serious threat—and here I agree with what the noble Lord, Lord
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Trevelyan, said—would be if the United Kingdom came out of the Community. The United States has made it clear that it wants an alliance with a single Europe, not a series of separate second-rank European Powers. If the United Kingdom remains in the Community we shall have a more stable and effective Western alliance, an alliance with America. If we were outside, not only would this weaken the alliance—it might even strengthen the isolationist forces in the United States—but the United Kingdom, outside the Community, would become increasingly irrelevant to the United States, and the value and importance of our own American alliance would diminish. That would involve a great threat to our security.
As one or two noble Lords have suggested, the security of the United Kingdom and other Western countries cannot be divorced from the danger of subversion at home and abroad, or of terrorism, something which has not yet been mentioned by noble Lords. I agreed with the noble Lord, Lord Carrington, and I liked his speech very much. I thought it was an original approach to the problem. He said, quite rightly, that there is a danger of subversion in a number of countries in the West. He agreed with the noble Lord, Lord Chalfont, that there was a danger here—I think I noted his words correctly. I personally am not greatly impressed by the charges and alarums made by the noble Lord, Lord Chalfont. Of course there are attempts at subversion in this country. There have been attempts at subversion all through my political life in this country. If they were to succeed they would be a danger to democracy; but in the first line they are a challenge to the Labour movement by penetration and by the seeking of influence and power. The hope of all these various bodies, the Communists and so on, is first of all to penetrate the Labour movement. This is, and I think it will always be, a situation where only the Labour movement can effectively hold the danger in check. It has done so all my life, and with very real success.
The reason is that the great mass of members of trade unions and of the Labour Party are anti-Communist, and when infiltration from these various subversive bodies gets too obvious and

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direct it has been possible to rally the membership of these movements to resist the danger. There are some signs today of this happening again. But this battle is never won outright. As in many things in democracy, the battle has to be fought again and again. It has been fought again and again, and is now being fought. We will fight also against future dangers. I ask noble Lords, such as the Lords Carrington and Chalfont, to have a little more confidence in the experience, the vigour and the self-interest of the Labour movement in fighting subversion in this country.
As to terrorism, this has become dangerous and sinister. It is not a new problem. We have had anarchists and Bakuninites in the past, but the problem is more sinister today. Terrorists now use new weapons, maybe terrible ones; they exhibit a new desperation and possess a new international dimension which is shown by, among other things, attacks not only on a Government at home but on it abroad, through attacks upon its embassies, consulates and so forth. More than ever now, we need international co-operation between the intelligence services of the Western world in order, so far as possible, to penetrate terrorist organisations and to anticipate and frustrate their planned coups. We have already had considerable successes here. The hijacking of aircraft has been greatly reduced. Only a few years ago it seemed to be something we should be helpless against. I am glad to say that considerable progress has been made against IRA terrorism which is aided by its foreign friends. This progress is the result of the work of our own intelligence services, which we must never starve of resources, and their co-operation with intelligence services abroad. In dealing with terrorism, the one important aspect is never to give way to terrorist demands, however heartbreaking the immediate consequences may be; otherwise it is a kind of danegeld which will stimulate and increase outrages. The Government of Bonn are to be praised for reversing their previous policy, which was a weak one, and standing firm when their embassy in Stockholm was attacked.
Of course, as all noble Lords have said, we must be realistic and face things as they are: we must not hide our heads in the sand. Equally, we must guard
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against exaggerating the strength, cunning and skill of the Soviet Union. They have made a number of mistakes; they have not always had great successes. It was not we but the Soviet Union which created NATO by its great forward advance, and particularly its invasion of Czechoslovakia. In the dangers that face us we must not fall prey to perplexity, doubt and pessimism, because that would undermine the very things—determination and confidence—that we need to solve the problems with which we are confronted.
4.50 p.m.
The Earl of ONSLOW: My Lords, first I must apologise to your Lordships because I may not be able to stay until the end of the debate. I have to make a speech on Europe in Woking, and if the debate is not over by seven o'clock I am afraid I shall have to leave. I have already explained this in private to the noble Lord, Lord Home of the Hirsel.
It is presumptuous of me to speak in a foreign affairs debate initiated by the noble Lord, Lord Home. When I saw the list of those who were to speak before me, the sense of presumption was increased. The noble Lord, Lord Home, was intimately involved in foreign affairs when I was lying prone in my cradle, not yet able to speak. But I decided to speak in your Lordships' House this afternoon because three weeks ago I saw, for the first time, the Berlin Wall. It made an absolutely horrible impression on me—miles of wire and breeze-block, with sparse North German sand raked over to see whether anybody had walked over it during the night; the underfed guard dogs on wires, with uncomfortable kennels so that they have to stay outside; the sentry boxes with two sentries in each, one of whom is always married so that the regime have his wife and children as hostages. Behind that wall is the tyranny of Imperial Russia so horrifyingly depicted by Solzhenitsyn. Russia has always been a tyranny. Talleyrand said to Czar Alexander at Erfurt that the ruler of Russia was civilised, but his people were not. The present rulers of Russia are not civilised, and their peoples are only slightly more so than in 1808.
My Lords, let us remember that Russia has always been an expansionist Power. In the days of the great Elizabeth, she was just the Grand Duchy of Moscow,

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still owing nominal allegiance to the Great Khan. Ivan the Terrible and Peter the Great expanded Westwards and Southwards. In the 18th century Poland was partitioned. The Russian conquests of Central Asia and the Caucasus in the 19th century were bloody and barbaric. China is still reacting to the unequal Treaties of that period. The Communists, after the temporary setback of Brest Litovsk, and after the War, advanced their empire beyond the dreams of the most imperialist of all the Czars, and they intend to keep their empire by any means they can: Czechoslovakia showed that. We cannot drop our guard for one fraction of a minute. The freedoms our society gives us to disagree fundamentally with others are too precious. I fundamentally disagree with the erstwhile second Viscount Stansgate, with Mr. Enoch Powell and with Dr. Ian Paisley; but Voltaire summed it up by saying:
"I disagree with your views but I would die for your right to hold them."
Whether the old cynic actually would have done so is a matter for interesting historical conjecture.
Our main, and indeed only, potential enemy is Russia. China, contrary to what many people believe, has never fought an aggressive war. Tibet was recognized as being under Chinese suzerainty in 1904. When the Indians—who seem, incidentally, to have inherited some of the imperial habits of the Raj, judging by their performance in Sikkim—tried to push their North-Eastern boundary into China, the Chinese attacked and, after their victory, withdrew from the MacMahon line. They reacted in Korea in the way that I think most of us would have reacted if large numbers of troops came charging up Northwards to our boundary, commanded by a General who was clamouring for the use of nuclear weapons.
This must bring me to Vietnam. It is fruitless to go over the ground of where the West went wrong, but it is very fruitful to bend our minds to the effect it will have on the United States. Will the effect be like that which the first Afghan war on Majuba Hill had on us, and not deflect the United States from her responsibilities and interests in Europe? Or will it have the effect that Verdun
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had on France, which was to sap all energy and will to defend herself and us in the event of tension in Europe? The noble Lord, Lord Goronwy-Roberts, recognised this problem, as did the noble Lord, Lord Carrington. Above all, will the Russians think that it has deflected the Americans' will?—because if so, that could easily tempt them into adventurism. That temptation, historically, has never been far below the surface.
What can we do to help the United States? In my view, there are two positive things we can do. I should also like to give one example not to be followed, and one situation requiring extremely delicate handling. First, to take the example not to be followed, in 1965, and again last year, Mr. Wilson—for very honourable motives of humanity, decency and kindness—said at the beginning of two crises that he would not use troops, first over UDI and then over Cyprus. In both cases we had treaty obligations. I am not saying we should have used troops. All I am saying is that in no circumstances should we have said, "We shall never use troops". It is possible that UDI might have been postponed or stopped. It is more than probable that, had we reinforced Sovereign-base areas in Cyprus and sabrerattled just a little, that nasty character, Nicos Sampson, could have been booted out of power in Cyprus without a Turkish invasion of the Island, and thus the Eastern and Southern flanks of NATO would not have been in the chaos they are in at the moment.
The most delicate of all the situations at present is that of Portugal. We have to encourage without pressure the Armed Forces' movement towards democracy. If we use pressure they could turn towards Russia. The Colonels there are different from those late and very unlamented Colonels in Greece. Those could not become Russian satellites, because they had too-sharp memories of the Communist civil wars. The Portuguese, on the other hand, have no direct memory of Russia since the Russian Fleet briefly anchored in the Tagus in 1807. Therefore, if we appear to interfere too much they will turn to Russia for help. The noble Lord, Lord Goronwy-Roberts, said in his speech that he was fully aware of this problem, as did the noble Lord, Lord Carrington.

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What, then, are the two positive things we can do? We must, after this putrid referendum is over and assuming and hoping the answer is "Yes", go all out for a united EEC foreign policy, closely linked with the other Atlantic pillar, the United States. The second one seems to me vitally important, and that is the standardisation of our defence equipment. We must also allot to various NATO nations in Europe the task of producing armaments so that we can buy one piece of equipment, say from Germany, which all the European NATO Powers will buy, and they will buy one piece of equipment from us, together with all the other European NATO Powers. This must make the various defence budgets of Europe go further and must increase our defence capability.
The last and possibly the most difficult point is that Europe must have a united policy on the Middle East, which will do what it can to produce agreement and disarmament in that part of the world. The noble Lord, Lord Carrington, said— and obviously one must agree with him —that this must be done in close support of Dr. Kissinger, because if we do not do this there is a powder keg in the Middle East in which, it seems to me, a lot of irresponsible people are running about blindfold, shouting and throwing matches about all over the place. It out-flanks NATO and gives the Russians another chance to meddle.
My Lords, this speech, as I said at the beginning, is solely due to the profound horror I felt when visiting the Berlin Wall, further tempered by a feeling of disgust at the thought of the vast quantities of money that the present Russian Czars are spending on arms instead of their people, and the equally vast sums of money we must spend to defend the right of Mr. Mick McGahey to talk the drivel that he does.
5.1 p.m.
Lord BOURNE: My Lords, I should first like to thank the noble Lord, Lord Home of the Hirsel, for introducing this Motion, and to say that we are very lucky he is in his rightful place now. He has a wealth of experience of which we can make full use. I should like to categorise the security problems which the noble Lord has raised into external and internal. To show that I agree entirely
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about this matter I asked a question about the Special Constabulary in regard to the internal threat. My object was to calm down any crisis that might come. I was told by the Government that the police must not be used in this way; they must not take part in industrial strife and must be completely impartial; furthermore, they had plenty of powers in an emergency. So I should like to deal with the external threat now.
Most speakers have agreed that the threat is from Soviet Russia and China; that is to say, it is a Communist threat. We are entitled to look over the last 30 years and I cannot help feeling that two matters stand out. First of all, there has not been a nuclear war. In fact, there is a nuclear stalemate. But there have been many limited wars. I believe that somebody added them up yesterday and they number over 50. Secondly, what has been proved is the superiority of the latest weapons. The nuclear submarines have a colossal roundworld endurance. Still the tanks with the best guns and the best armour win the battles. And aircraft which are only recently out of date are shot out of the sky by the more modern versions. What is not shown in the Defence White Paper is the quality—it cannot be, I imagine. But we make a great mistake if we do not think that Soviet quality is very good.
I should like now to touch upon Asia. Apart from the internal Civil War inside China which resulted in that country's becoming Communist in 1949, there have been four big, limited wars: Korea, Indo-China, the Malayan emergency, and the confrontation with Indonesia. The lesson of all these has been that if the allies make promises they must stay long enough to keep them. One must not break faith with allies in Asia any more than with allies in other parts of the world. In thinking of Indo-China, as we all do, I would add that the sentiments of the Americans were very good when they went in. A Communist Government would have been established in Saigon within a matter of weeks if they had not gone in. But they did not stick it out. The tactical lessons are, incidentally, that the North Viet-namese advanced through the country without any air support, and that the best way of dominating the jungle is by soldiers and not by air bombing.

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Although air bombing produces a very terrible, but momentary, effort, it does not dominate the jungle.
I would refer now to the Middle East. In 30 years the Israelis and the Arabs have been at war, I believe, four times. So far the Israelis have won, largely because they are prepared to die for their country. The Arabs ought now to give up their plan to drive the Israelis into the sea and to make use of the Jews in the area. They are experts in trade and in universities and such spheres, and the Arabs should make use of them—their local, home-grown reinforcements. An additional safeguard would be if the present United Nations 10-mile gap between the Armed Forces were widened. It should be widened if possible—and there is plenty of room in the Sinai Desert —to fifty miles. I think the SAM's range is about forty. Then the armies would not be able to get at each other. It is the ground Forces which cause us the trouble. This ought to be done before any Geneva Conference is held. The Arabs have been more difficult than expected. The fear was that Russia would penetrate into Africa, but there has been a delay. The Arabs are being very difficult; we have plenty of experience of that.
As to NATO, in the Alliance there has been no war in Europe for the last 30 years. The reasons for this have been stated by the noble Lord, Lord Carrington, but I should like to repeat them in my own way. The first is the United States' nuclear power and the second is the 300,000 United States soldiers in Southern Germany. Despite their numerical superiority, the Russians have always estimated that the risks have been too great. I should like to ask the Government a question. The 1966 Statement on Defence stated:
"In recent years the threat to peace has been far greater outside Europe than within it. When such instability leads to open war it may imperil not only economic interest in the area but even world peace."
Nine years is a short time in defence matters. I should like to ask the Government whether they have completely ignored recent events in Asia and the Middle East, and why they have changed their mind, because they have certainly done so.
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I come next to the disarmament conferences which to my certain knowledge have taken place for well over twenty years. The result has been absolutely zero. What hope is there now for the present three conferences which are on the list: the SALT talks; the MBFA Conference, which we have just heard from a noble Lord is likely to last for many years; and the Conference on European Security and Co-operation? Are we being made to look fools? At any rate, there is very little hope of good results. The Russians must be having a jolly good laugh when they read our British Defence Statements.
The noble Lord, Lord Home of the Hirsel, was careful in his Motion to refer to the "free and independent countries". Therefore, I feel that we ought to add up the score. We must assume that the Soviet is working towards world Communism and therefore that a State which is run by a favourable or Communist Government is a step towards that aim. Although they may call it co-existence, we heard the explanation, and that is a convenient label. How are they doing? Not at all badly. How many States have the Communists taken over in 30 years? I have jotted the number down, but I will not bore your Lordships with the list. By force, by external means, they have taken over nine countries. By internal means they have taken over six countries. Having conducted only limited wars, that is not at all a bad record over a period of 30 years. This list does not include States where they have tried and failed, but the Communists are not in a hurry. Malaysia is one example; Thailand is another; and Burma is yet another. Oman is another continuing war. In most of these countries, the West has had the possibility of losing, but the Soviets and China do not mind at all. They measure time in quarter centuries, but we are always in a hurry to obtain quick results. I shall remember with exceptional pleasure that in the Malaysian emergency we gave independence to the country when they were in the middle of their war, but it was very pleasant when I went back to Malaysia a couple of years ago to be thanked officially for the good framework, good relations and friendship that we handed over to that country. It was very nice and rather unusual to be thanked.

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If I may summarise, the West have lost about 15 countries and, if they go on like this, they may well lose more. There has been no nuclear war, but there have been very profitable, limited wars to the Communists. It is very good for the Communists to support wars with other people's casualties. Although the United States of America is still the unquestioned leader of the West, there is no question but that they have burned their fingers and taken part in a tragedy.
I agree with the noble Lord, Lord Home of the Hirsel, that the balance of world power has been very much affected. In Asia, the Soviets have waited for 10 years to instal a favourable Government in Saigon, Cambodia and Laos. The easy targets are now in their view. In the Middle East, they have succeeded so far in making Communists of only Iraq and Syria. The Arabs have been unexpectedly difficult. They are accustomed to being dominated on the spot. There was always peace when they were dominated by Britain having a force on the Suez Canal and in Aqaba. It is taking much longer in the Middle East. The internal success in Cuba has not given the Soviets direct entry into South America which has been proving more difficult. However, they are not in a hurry. In Africa, the Chinese are well ahead of the Russians.
Turning to the attitude of the West, first of all I think that, unless we are content to continue our retreat, now is the time not to weaken alliances but to strengthen them. At the present moment, Britain is a very bad ally in NATO. We ought to be alert, also, to the possibility of internal takeovers which will be described in more detail by the noble Lord, Lord Chalfont. We ought to assign Forces, which at present we do not do, to CENTO and SEATO. A presence is far better than a promise to consult, because on the day you may say you cannot go there. We ought to pay special attention to the sea routes. It is not enough to protect the shores of the United Kingdom and Northern Europe. We ought to keep places like Simonstown and Freetown on our list.
Finally, we all hope for détente which has been discussed in considerable detail by the noble Lord, Lord Trevelyan, but it has not yet shown results. The Soviets
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must be pleased that NATO is weakening itself and hoping that inflation will cause a weakening disease to spread to other allies. Already it has got hold of three of them. In other words, détente so far has been equivalent to deception. All that the Russians have to do is to keep talking at three Conferences and await events. I entirely agree with the noble Lord, Lord Trevelyan, that when it eventally comes, détente must be from strength on both sides. It is still some way off.
5.17 p.m.
Lord DAVIES of LEEK: My Lords, I am very grateful that, through the noble Lord, Lord Home of the Hirsel, we have been given this opportunity to call attention to the problems of security which face Britain and the other free—I emphasise "free"—and independent countries of the world and to move for Papers.
Before I begin, despite the fact that I am diametrically opposed to a great deal of what has been said by the noble Lord, Lord Home of the Hirsel, I wish to pay a tribute to the noble Lord. I want publicly to declare that, having listened to him over the years, whether or not I have agreed with him, I consider the noble Lord to be one of Britain's noble gentlemen and, more important, a real gentleman. Consequently, I hope that my Celtic nature will control any acerbity that I may show in the emotion of composing this speech and that the noble Lord will not think I condone the cartoon pictures of him which have been made over the years when, according to his own ideas, he was trying to arrive at the truth.
I regret that I shall have to leave the Chamber, but I am going to take part in a very important part of defence. I am going to a farmers' dinner at seven o'clock. I assure this House that, in defence, steel and food are the first line of any sense of security. Therefore, I shall go without trepidation or fear to my farmers' dinner—and I hope it is a good one!
How am I to begin? I wrote a book on SEATO. I was one of the people who said that he considered that the Pact was neither a pact nor anything else. Therefore, I had better quote from what I said. I was at the Geneva Conference in 1954 and, in my book, I quoted the noble Earl, Lord Avon—then

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Sir Anthony Eden—who said at page 113 of his fine book called Full Circle:
"Meanwhile Mr. Robertson (U.S. Assistant Secretary of State) whose approach to these questions is so emotional as to be impervious to arguments or indeed facts was keeping up a sort of 'theme song' to the effect that there were in Indo-China some 300,000 men who were anxious to fight against Vietminh and were looking to us for support and encouragement. I said that if they were so anxious to fight I could not understand why they did not do so. The Americans had put in nine times more supplies of material than the Chinese and plenty must be available for their use. I had no faith in the eagerness of the Vietnamese to fight for Bao Dai."
They dragged him out of the nightclubs of Hong Kong to be emperor in Vietnam, and, as a result, 55,000 Americans lie in graves in Vietnam because of the wrong path which was taken at that time.
Only a few weeks ago I stood bare-headed in Korea paying tribute to the Gloucesters and to the Americans who had lost their lives in two of the most useless wars in world history. And when the Americans accuse the Vietnamese of fighting as Communists, let us live in a world not where words are using men but where men are using words. In 1776 when the Americans had the audacity to tell King George III and Lord North what they could do with Britain, and fought a civil war and fought against us for their independence, were they Communists? If the word "Communism" had been a universal word at that time the War of Independence in America for freedom from the domination of Britain was no more evil than the war of the Vietnamese against the Americans and the people who invaded Vietnam. Correct? Of course it is correct. So let us adjust our thinking to the world in which we are now living.
Let me quote a little further. The noble Lord knew—and so did I—the puppet Emperor of Laos. Laos is a lovely little kingdom. I have tramped around its roads—it has got only one ashphalt road, from Vientiane to Luang Prabang. The mountain people were given guns, and the Americans said: "We have given them the guns; all we want now is to get them to fight". Two and a quarter million people, and all they wanted to do was to fish in the river Mekong and be left to make love and live happily. Well, the emperor had about 30 wives, so that the whole of
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the Western world was mixed up with the sons and daughters—Souvanna Phouma, Souphanouvong, Boun Oum, were all related and the Pathet Lao was no more a dogmatic Communist Party than the Left Wing of some of the local parties of the Labour Party.
Boun Oum nearly got the whole world at war. What did he say? The premier, Boun Oum, who was supported by America, sent out a communiqué. Oh, the British! On the Floor of the House in another place I was shot down in flames by my own Party for daring to question this. Boun Oum stated that seven well armed battalions of North Vietnam soldiers from the North had invaded Laos; and then he put a little bit of garnish on it because they were fighting on the Plain of Jars at that time, which some of your Lordships may know, and he claimed that not only were these troops in but that the Chinese sent in troops as well. So President Eisenhower issued a statement, to the effect that the United States would take a serious view of any intervention by the Chinese Communists, so they looked into it.
The evil thing about this false report was that it could very well have involved the world in a war, and it was not until 26th January 1961, at a Press Conference, that Boun Oum admitted that the announcement was untrue and made in order to speed up the support from this Government's friends abroad to show the Laotian people that this Government had plenty of friends—and about 50,000 people died for that in Vietnam. The House of Commons and the Labour Party were dormant about it, and unfortunately 99 per cent. of the Press were dormant about the truth.
I remember after the battle of Dien Bien Phu in 1954 meeting a Vietnamese doctor, educated at Hanoi and Paris, She was 47 years of age; she had fought in the trenches at Dien Bien Phu, and when the second effort was made after Foster Dulles had built up SEATO, she said, "I will fight as I did in the trenches at Dien Bien Phu and where I patched up the wounded. I have six children, five of them sons. They will fight and, if the war goes on for 30 or 40 years, we will fight for the independence of our people". Why cannot the Western world realise this fact? The outbreak

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in Vietnam in the beginning had nothing to do with Russia or China.
I do not doubt the marvellous service to his country of the noble and gallant Lord, Lord Bourne. He knew General Gracey well; he knew that Gracey was down in Saigon in 1945–46, and it was well known that we used Japanese troops to suppress the Vietnamese. It was well known that if the Geneva Conference decisions had been carried out after 1954, and had there been a General Election, Ho Chi Minh would have won it. But it did not suit Foster Dulles. Thank goodness! Churchill—and bless him for this! —had enough sense to say to Dulles, and to others, that he was not going to be drawn into a war in Indo-China, and as much as anything we owe him a tribute for the fact that British soldiers were not forced into that war. We should have taken a greater lead, but this is where—
Lord BOOTHBY: My Lords, may I interrupt the noble Lord?
Lord DAVIES of LEEK: Well, nobody has interrupted anybody else. Certainly I will allow the noble Lord to interrupt me, with pleasure.
Lord BOOTHBY: My Lords, I only thought the noble Lord might be interested in the fact that de Gaulle gave President Kennedy one piece of advice when he first became President, and he told me this himself. President Kennedy asked: "Have you any advice to give me?" President de Gaulle said: "Yes, one piece of advice: keep out of IndoChina".
Lord DAVIES of LEEK: Yes, my Lords, this was where the Western world made its mistake. I can build this up because I have written about it, and so have other people. What I have said is the truth, whether noble Lords on both sides of the House agree or not. That was one of the great mistakes of the Western World, because Britain should have been more courageous in her replies to the United States of America. There is all this rubbish about it just being created by the Chinese. Noble Lords must make up their minds which Communists they are now accusing of having started this—the Russian Communists or the Chinese Communists. Communism is no longer a monolithic thing; Communism has as many facets as capitalism, and if you say that Communism is spread-
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ing itself through the world, what is capitalism doing, via the multinational firms? I suppose it is all right for the multinational firms to be more powerful than governments, but let us have a realistic approach to the problems facing us.
Aldabra is an island in the Indian Ocean, and in 1969 Mr. Geoffrey Rippon, the Tory shadow Minister of Defence as he was at that time, speaking at Hoddesdon in Hertfordshire, spoke at length about Aldabra. He said that the British had finally found a staging post in the Indian Ocean, when, presto!— now listen, my Lords, to this insidious bit, and they all do it—with the aid of Soviet finance all the wild life conservationists came and said that the British would kill all the turtles, so Soviet money had subsidised the British people who wanted to conserve the turtles. That was the accusation. The result was a subversive movement by Russia again.
It so happened that Miscellany of the Guardian was at the meeting and he asked about it. He bearded Rippon and he said, "What is your evidence?" What was Rippon's reply? His reply was, "I have no evidence. I cannot substantiate the charge. I withdraw it. I did not know there were any members of the Press present." Tell me the difference, my Lords, between that and Boun Oum. If we want a clean world, let us get rid of this hypocrisy. Both sides play games like this. If mankind is to save itself, we must abandon this type of game. This is where I come to Dr. Kissinger. I agree with the noble Lord, Lord Carrington, who paid a tribute to Dr. Kissinger. I will not quote, because this is a well-informed House.
In January 1974, there was an article by Michael Brennan on Nuclear Strategy and European Defence. That was followed by an article on Dr. Kissinger in July 1974—many of your Lordships are members of Chatham House like myself—called The Irony of Henry Kissinger, who made his great faux pas when he wrote a book almost suggesting that nuclear weapons should be a part of foreign policy. After that, he wrote his famous book called A World Restored, which analysed the policies of Metternich and Castlereagh. Out of that he drew two doctrines. He wrote:
" Legitimacy should not be confused with justice."

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This is a rough and realistic world with which he deals.
"It means no more than an international agreement about the nature of workable arrangements and about the permissible aims and methods of foreign policy. An order whose structure is accepted by all major Powers is 'legitimate'. An order containing a power which consider its structure of power oppressive is 'revolutionary'. A 'legitimate' order limits the possible by the just."
He was not making a case that every conclusion he came to was just, but it fitted the balance of power at the moment.
He was a speechwriter for Rockefeller. Rockefeller was campaigning in 1968 and, in a speech he said:
"I would begin a dialogue with Communist China. In a subtle triangle of relations between Washington, Peking and Moscow, we improve the possibilities of accommodation with each as we increase our options towards both."
I have been speaking for 16 minutes and have reached an appropriate place to sum up. But Kissinger wrote for Rockefeller the words I have just quoted, and that is what we owe to Kissinger. I am grateful to the noble Lord for raising this subject, because Dr. Kissinger broke through what appeared to be an impossible position. Some of your Lordships, like myself, were in America when McCarthy was in power—that evil man; it was good to see George Morrow the other day on the television hacking to bits this vile creature who ruined the lives of innocent people. If we are not careful, it will be done here. Somehow or other, I believe those of your Lordships who want to get into the Common Market, if we get in—
Several Noble Lords: We are already in.
Lord DAVIES of LEEK: All right, I am not denigrating, but whatever regional bloc it is, it will somehow or other try to find a formula, not of just standing like cockerels crowing on their own dung heap, but trying to get a rapprochement. This debate has been like a man driving down the road and looking in his driving mirror. He is looking backwards and then he wonders why he crashes. This is what is wrong with our policy. This debate has been worth while. Whether or not your Lordships will consider my contribution has been worth while does not matter to me but at least I have, I hope, put a facet of the truth.
5.35 p.m.
Viscount MASSEREENE and FERRARD: My Lords, the noble Lord, Lord Davies of Leek, is not the easiest man in the world to follow, so perhaps he will excuse me if I do not do that. But I should like to make the point that I have heard some very odd statements in this House; however, with all due respect to the noble Lord, to compare the wars in the American Colonies with the American intervention in Vietnam is very farfetched. The Americans went into Vietnam for no other purpose than to protect the rights of man. The noble Lord apparently thinks that the South Vietnamese would be happy under the Government of North Vietnam, but a Government like that, who can send a boy to prison for 14 years for playing a Western gramophone record, and who can arbitrarily arrest anyone without a trial, is one of the most totalitarian régimes in the world. One cannot really blame the Americans for going into South Vietnam to protect the South Vietnamese from falling under such a Government, and I really think that, on this matter, the noble Lord has rather gone astray.
My Lords, I am glad that this debate has been raised by the noble Lord, Lord Home of the Hirsel, because the subject could not come up at a better time. Obviously, we are at one of the most dangerous and hazardous periods in our history with regard to the security of this country. We are at a great disadvantage. I can compare our present situation only with that of a man fighting for his life, but with one arm tied behind his back. The enemy who would destroy the West —and I am not speaking specifically of ourselves alone, but also of the Western Alliance—has already infiltrated us for several years through many Trojan horses.
A short time ago we had a debate which was initiated by the noble Lord, Lord Chalfont. During the course of this debate we heard of the very great influence and the many dangers of subversion in the countries of the West, but particularly in our country. We now have signs that our public figures are waking up. I am glad to see that my noble friend below me has come out of his long sleep of 30 years, as he called it, although I am sure he was really alive to

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the dangers. It is very agreeable that our public figures are at last waking up to the danger in which this country and the West are in through the desire of world Communism to control eventually the whole globe.
It must be 15 years ago when I moved debates in this House on the subject of the Overseas Information Services of the B.B.C. in order to try to get more money for these services. When I started doing this, only about £12 million to £13 million was spent on our Overseas Information Services or on, if you like to call it that, propaganda. So far as I could gather, because it was not easy to get any kind of accurate figures, during the same period the Soviet Union was spending hundreds and hundreds of millions on foreign propaganda. The figure was definitely over 1,000.000,000 roubles. Noble Lords can see what difficulties the West has been up against. When Krushchev shouted, "History is on our side, we will bury you", it was not an idle boast. I am not sure now where or when he shouted it—I think in the General Assembly of the U.N.—but I know that he did. He had a certain amount of logic on his side, because when one has the vast military power of the Soviet Union allied to an equally vast propaganda machine spewing out material which is very attractive to millions of unreasoning minds, one is up against a very formidable adversary. It has always surprised me that so many public figures in this country have not realised this sooner. I am glad to say that they are now realising it.
We are not having a defence debate, and one does not want to go into the military problems of security, but it is very unsettling to hear, as we have heard today, of the disarray that NATO is in, especially on the South-Eastern flanks. I understand that our early warning systems are dependent especially upon Turkey for that area. Of course, Greece is out of NATO now, and it looks very much as if even Portugal will be out of NATO. We have hope, of course. The elections there have been a disappointment, I suppose, to the Communists, but after all, as I think the noble Lord, Lord Carrington, pointed out, the Armed Forces Movement really have control in that country. It is obvious that, if we had not had the
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nuclear umbrella of America, we would have had the hammer and sickle flying over London now. I do not think there is any doubt of that. It would have happened, I imagine, at the time of the Berlin airlift. I think the Soviet Forces would have swept across Europe, and I do not know where we would all be now.
What really worries me is the question of North Sea oil. I think one noble Lord said that the Russian naval Forces have grown to a great extent, and that is quite true. The Russian North and Baltic Fleets now go far out into the Atlantic, and the axis of their defence line—as one could call it, their perimeter—embraces the Faroes, Iceland, Greenland. I am told that 60 per cent. of their submarines are in those fleets, and 45 per cent. of their surface warships. I presume that we are taking adequate precautions to defend our North Sea oil. They will have to be very adequate indeed to meet the great strength of the Soviet Fleet in that area. We cannot expect America to police all the oceans of the world, and it is the oceans of the world that arc of potential importance, especially when we think of Australia and New Zealand. I was very glad to hear what the noble Lord, Lord Goronwy-Roberts, said about détente. I am all for having détente, but it must be, as he said, détente with security.
The only thing I am frightened of is that the noble Lord does not realise quite how much security we will need. To have detente with Russia, the West needs a great deal of security, and we do not have that security at the moment. I sincerely hope that we will build up our security so that we shall have that. We have heard that, in conventional Forces, the Warsaw Pact has three to one against us in men. I do not know the exact figures for tanks and aircraft, but I assume it is not far off that. My noble friend tells me that it is two and a half times. People are right to put their trust in détente, if it is backed up with great security. The other thing that they put their trust in—and I do not quite agree with them here—is the fact that Moscow and Peking will always fall out and be at loggerheads. I do not think that is quite right. They may be at loggerheads over geographical boundaries, but their ultimate aim is the same; world revolution. Therefore, we should

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not count too much on Peking-Moscow antagonism.
My Lords, I think I have spoken for long enough, but I should like to say this about Ho Chi Minh; he did prophesy that the people of the United States would not have the determination to persevere in the struggle in South-East Asia. He prophesied that some time ago. I do not say that to cast any aspersion on the United States. I have the highest regard for America. When I think how they have defended the Free World, their generosity has been magnificent. But the trouble is that the West must have the will to survive. We appear to have rather lost this will. I do not know whether it is because we have too many consumer goods, too many cars, too many refrigerators, too many TVs, whether life is too easy. I do not know what the cause is. But it is the duty of our leaders to try to instill into the West the will to survive, because if you do not have that will your Armed Forces will not be morally backed up by the home front. It is very necessary for us to have that will.
I shall end by reminding your Lordships what Karl Marx wrote in his 1848 Communist Manifesto. He said:
"Communism abolishes eternal truths. It abolishes all religion and all morality".
My Lords, that has come true. The noble Lord, Lord Home, said that three times is a lot. Of course it is. We saw how the Paris Agreement and other agreements have all been broken by the Russians. If they adhere to the words of Karl Marx, as they do, there you are! Put in plain English, what is expedient to the Communist Party at any moment is moral. Unless we understand that we shall go on being made fools of.
I presume the Foreign and Commonwealth Office make a study of international Communist Party meetings. I sincerely hope they do. For instance, a meeting was held in Budapest last December. One of the up-and-coming Russian politicians—I cannot pronounce his name, but it is Pomarev—was representing the Central Committee. This meeting was held for the Communist workers Parties of Europe, and it was a preparatory meeting for the Communist summit meeting later this year of all the Communist Parties of Europe. He was
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speaking on behalf of the Central Committee of the Communist Party, in other words, on behalf of Brezhnev, and he took a very hard line against the West. Therefore, I can only say, by all means have detente, but beware, because the West cannot continue being made fools of.
5.50 p.m.
Lord HARDING of PETHERTON: My Lords, I should like to join other noble Lords who have expressed their thanks and appreciation to the noble Lord, Lord Home of the Hirsel, for initiating a debate this afternoon on what I believe to be a most timely subject in present world circumstances. I propose to address myself primarily to the problems of our own national security, but what I have to say will be of general application to other free and independent countries in the world.
My own experience of responsibility for security in military operations, in civil administration, and in industry has led me to the belief that there are three essential processes, three requirements, to be met in considering this problem. The first is to assess on the best available information the nature, extent and timing of the threat, or threats, and to keep that assessment up to date. The second requirement is to get general acceptance of the existence of the threats and their nature and extent, and to get understood generally throughout the country as a whole what the threat is, and what its timing and extent is likely to be. Thirdly, I believe that it is essential to maintain, or to set up, an organisation capable of dealing with whatever threats there are, and to keep that organisation or organisations, efficient and up to date.
In war the security of his troops is the first responsibility of any commander. It is his duty to make certain that they cannot be caught by surprise, or put into a position which they cannot deal with. They must never be unready for any eventuality. I maintain that the same applies to any Government of any country. It is the first responsibility of the Government to make proper and full provision for the security of the nation, and for the protection of its freedoms and its independence. I suggest that the first questions on this subject that Her Majesty's Government require to ask themselves are: are we exposed to armed

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aggression in this country or in areas that are vital to our interests, and are we likely to be faced with demands by foreign Powers backed by force, or by the threat of force, to which we cannot accede without damage to our freedoms and our institutions? I agree with the noble Lord, Lord Home of the Hirsel, that there is no immediate, or even early, danger of a military assault on NATO by the War-saw Pact Powers, but I remember so well that twice in my own lifetime we have been faced with a dictation which we have either had to accept or fight at a disadvantage. Who can say that that will not happen again?
I suggest that Her Majesty's Government must ask themselves the question: are we vulnerable to subversion backed by violence—attempts to undermine by force our political institutions, our freedom of thought, of speech and of choice within the law? I no longer have access to any secret information, but from what I see happening around me, and from what I hear being said and discussed, I believe that some of our countrymen—few they may be in number—are intent on imposing on this country a totalitarian system of government, or on denying to individuals the freedoms that we have enjoyed over the centuries, and which I am most anxious that my grandchildren, and their children's children, should also enjoy. These men may be few in number, but they already wield significant power.
I have had some personal experience of dealing with people of this kind—Communists, Marxists, revolutionaries, call them what you will. I have had dealings with them in Europe, in the Mediterranean and in the Far East. I know something of their methods and dedication to the cause which they have taken up, their patience and timelessness in getting fulfilment of their plans, and the ruthless discipline which they impose on all who come within their power.
There are some people in this country, and in other parts of the Free World, who fondly believe that they can ride this tiger. I suggest to them that they had better get out their history books and study what happened to people of the same ilk—moderates, as they might be called—first in the French Revolution and then in the Russian Revolution. They should also ponder over recent casualties among moderates in the persons of Mr.
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Dubeek and General Spinola. I believe that we are faced with such a threat. It may still be some way off, but it will inevitably materialise unless we take active steps to forestall it.
So much for the nature, extent and timing of the threat. The second question that I would pose is: are the facts known, understood and accepted by the general public in this country? I have grave doubts about this. I find that most people do not want to know. They are happy to live now and pay later, as the common expression is; to leave it to future generations to pay. How many people up and down the country will even hear, much less take heed, of the grave warnings uttered by the noble Lord, Lord Home of the Hirsel, here this afternoon? Another noble Lord who spoke before me mentioned the need for wider publicity for what is said in your Lordships' House, and I heartily endorse that, particularly when someone with the experience, knowledge and wisdom of the noble Lord, Lord Home of the Hirsel, is speaking. I maintain that successive Governments of this country have failed in their responsibility to keep the public informed on this critical matter of national security.
So I move on to the third responsibility that I have mentioned: to maintain, where it exists, and to set up where it docs not, an organisation, or organisations, to meet the threats. So far as external aggression is concerned, we rely on the forces of NATO, to which we contribute, backed by American nuclear power. Whatever way you look at it, the recent events in Vietnam must put some question mark against the future credibility of that continuing American interest and all-out support for our security on this side of the Atlantic Ocean. I have great confidence in the Americans. I fought with them throughout the Second World War, but there are other considerations and factors which may come into play, which were mentioned by other noble Lords this afternoon, which put a smaller question mark against the credibility of that future support. Our own Forces have been considerably weakened over recent years and recent measures that are now in hand will weaken them still further. But this is not the appropriate time to go into details about that aspect. I hope on a

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future occasion to have the opportunity of expressing in your Lordships' House my views on the defence cuts. However, it is a matter of great concern to me.
On the issue of international subversion, I suggest that except for the police force, which is undermanned, our defences are virtually non-existent. We have no organisation that could ensure the maintenance of the essential services in this country in the event of widespread politically-motivated disorders. I am not a supporter of what have been called "private armies". When I am asked, as I frequently am by friends and acquaintances, whether they should join one of these organisations, I reply, "No. If you are of the right age you should join the Territorial Army. If you are older than that you should join the Special Constabulary in your district, the Red Cross or some other organisation which can and will play a useful part in any widespread national emergency". I am frequently asked, too, whether or not the Armed Forces can, as they have in the past, maintain the essential services in the event of such a disastrous, catastrophic situation. On my limited knowledge of their capabilities, I would say that they no longer have the manpower or the skills to maintain the essential services on which all of us in this country depend for our daily life.
Finally, I firmly believe that the security of any nation rests on its strength, not solely or even mainly on its military strength, but on the strength that stems from a sense of common interest, common purpose and the acceptance of individual responsibility for the defence of our national institutions and freedoms. I sincerely believe that in the longterm, and in the absence of effective counter-measures, there is a threat of internal subversion, backed by force, to overthrow our free society. I submit that it is the responsibility of any Government to put themselves in a position to counter that threat, whatever form it may take. Above all, I maintain that our future security depends more than anything else on the creation of a sense of common purpose and responsibility in defence of our liberties, and on the leadership that is needed to bring that situation about.
6.5 p.m.
Lord ST. JUST: My Lords, I, too, should like to congratulate the noble Lord, Lord Home of the Hirsel, for introducing this important subject. On a personal note, may I say how good it is to see the noble Lord back with us once more. Having served under him when he was the Leader of this House, it gives me, and I am certain your Lordships as a whole, a feeling of great security to have an elder statesman of his calibre with us again.
Having looked at the list of speakers in the Whips' Office this morning, I feel rather like a horse and jockey who have entered the Liverpool Foxhunter's Cup but find themselves entered for the Grand National the following day. Basically, I wish to speak broadly on the political front and try to cover the various points made by noble Lords who spoke previously. First, I have a word for the Minister, the noble Lord, Lord Goronwy-Roberts, concerning Cyprus. We recently had a good Statement about the current position there. I know Cyprus fairly well and, of course, the situation at the moment is serious and delicate. Therefore, I shall be exceedingly careful in what I say. But I think that in the negotiations going on it is essential that not only the points of view of the Turks and the Greeks should be taken into account, but also those of a great many people of Cyprus who come from both those communities and who now call themselves Cypriots. This is a theme which has developed very much over the last few years. They take the line, "We are basically not really Turkish, not particularly Greek. We have had our difficulties and problems, but we are now Cypriots". In principle, I know that the Minister will probably agree.
The second country which I should like to deal with, and which I think historically gives a good example of the issue we have been debating this afternoon, is Portugal. It is interesting to analyse the Portuguese situation over a period of time. It started off with a monarchy that was very weak and which collapsed. Then we had an endless period of military juntas trying to form a government. Finally these military juntas, who could never hold the power of the country for any length of time and were always argu-

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ing among themselves, had to send for Professor Salazar from Queenborough University to get his opinion on the economic state of the country, and then they realised that here was a man who could positively run the country. As we know, Salazar finally took total control of Portugal for many years.
It reminds me of a short story which I know is true, because it was told me by our Ambassador some years ago when I was in Portugal. When Salazar was having to take total control, the military junta were still arguing whether or not he should be allowed to have it. Finally, in desperation he turned and said, "There are always very fast trains back to Queenborough." At that moment he took over. Look, my Lords, at what has developed since. I know a great deal of history will be debated concerning the dictatorship of Salazar. But he had many good intentions. Salazar held the Portuguese and the Portuguese Empire together. Being an economist, he produced a steady economy for a number of years. Probably one of the most important factors that he tried to accomplish, but which did not happen in his lifetime, was to produce a middle-class in Portugal to balance the great riches of the few with the great poverty of an enormous number of the Portuguese people. We all know of the unpleasant sides of his dictatorship —the secret police, the way political agitators were put under house arrest or taken off to prison to be "cooled off", not in the sense of torture but just put away in order to, as one might say, gain their equanimity.
There is no doubt that since his death we have seen the pattern being repeated. There have been political Parties that have basically eaten their way, under Communist guise, into the structure of Portuguese society, and then there has been a military group holding the country. Where has this taken the situation? It has produced the total collapse of what was the Portuguese Empire. I am not going to discuss whether or not an empire is a good thing. The fact is that Angola and Mozambique were extremely rich areas of Africa and, after all, my Lords, the Portuguese, being a great maritime nation, were the first people to discover South Africa. They came before both the Dutch and ourselves. I was
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recently in South Africa, at a time when the position in Angola and Mozambique was developing more rapidly as the position in Portugal developed. One saw the chain of events and the reaction of the South African Government. The Prime Minister of South Africa quickly started to pull out of Rhodesia. He realised that Mr. Smith was much too entrenched to be able to get any satisfaction, and he had to contain a situation so that he himself could produce a position of détente.
There is no doubt about the dangers of Communist infiltration in a country that is not in a very stable state. This afternoon we have discussed in detail the elections which have taken place in Portugal in the last few days and which have shown that the Portuguese have a stability about them that is very good. But they have yet to form a constitution, and, as has been said already, there will be a long battle ahead before the Portuguese achieve any form of stability.
My Lords, I should like to turn for a moment to our own Island. We know the danger of Communist infiltration into any country, and at the moment there is no doubt that we are going through difficult times. This is the type of situation on which the Russians feed. I do not want to sound scaremongering, and I do not intend to be so, but the situation has been discussed this afternoon and we all understand what it is. It is one in which our people in this country are bewildered and uncertain, and that is just the sort of breeding ground on which Communism can take a hold. Let us be honest as to what has been happening. I know that the Government have been in grave difficulties over the last few months. Business people and English people living in South Africa have asked what is going on here. We may approve or disapprove of apartheid and the way South Africa is going, but there is no doubt that at the moment that country is surging ahead economically. It is depressing to have to be on the defensive and to try to explain the problems we have to deal with on the lines we have discussed this afternoon. People appear to feel that we are not pulling together as a nation and getting out of our difficulties.
The noble and gallant Lord who spoke before me mentioned one point about the police, and on this I am going to end. I

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apologise to the noble Lord who is winding up for the Government because I know that this is not his Department, but I feel that this is rather an important factor and I hope that he will pass it on to the appropriate quarter. We have heard how the police throughout the country are undermanned. This is a fact which we have to accept. I am sure we all have the greatest respect for the police, whether they work in the cities or in the counties. We know that wastage is occurring, and somehow it has to be stopped. The police are undermanned not only in the counties but also in the Greater London Area.
The other day in this Chamber we discussed a point connected with Colonel Stirling and his group of gallant gentlemen who have announced to the world that they are prepared to take over and ran the power stations and everything else for this country if there arises a case of dire necessity. I think everybody agrees that the conception was good, but that Colonel Stirling went about it in the wrong way. As I happen to live in London, close to a police station, I called in the other day and asked the police about the position of the Special Constabulary. Most of us hear little about special constables. They do a magnificent job, a great deal of it in their spare time. They get themselves properly trained over a short period and can be of great use to the police in a crisis. This morning I received a message from the Police Federation to say that the top age for joining the Special Constabulary is 60. That is a reasonably high age, and quite a number of the gentlemen who have joined Colonel Stirling's group could well join the Special Constabulary, and I am told that the Special Constabulary would be delighted to have them. There they would be able to carry on any work needed if an emergency should arise.
6.19 p.m.
Lord CHALFONT: My Lords, may I join with other noble Lords who have expressed their gratitude to the noble Lord, Lord Home of Hirsel, for introducing this debate in your Lordships' House today. May I say also what a great pleasure it is to hear once again in your Lordships' House the voice of a man who is not only a politician of distinction and experience but a statesman of world stature as well.
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The subject which he has brought to the attention of your Lordships' House today is one of the most important we could possibly debate. There can be no doubt in the mind of any intelligent observer of the scene that there is a constant and increasing threat to the political institutions of the Free World. It takes its form in four different elements. There is the external military threat, to which reference has already been made; and I was especially interested and gratified to hear the noble Lord, Lord Home of the Hirsel, draw attention to the fact that the growing preponderance of Soviet military strength in Europe is gradually leading us towards the position at which the nuclear threshold, the point at which we might have to use nuclear weapons in any war in Europe, is becoming progressively lower. This is a vitally important factor which we should never allow to leave our minds. The next element is the general expansion of Communism, to which the noble Lord also referred, which is taking place throughout the world and of which today we have had the final tragic act with the unfolding of events in South-East Asia. International terrorism is the next, and we have debated that subject in your Lordships' House before. It would be unwise not to regard that, too, in the long run as a very real threat to the political institutions of the Free World. Then there is the internal threat from subversion, and several noble Lords have kindly referred to the debate which I initiated in this House recently on this topic.
It is interesting to note that although this debate, in common with many debates in your Lordships' House, has not received very spectacular notices in the Press—and, indeed, there was a certain amount of scepticism about the facts which I put forward in your Lordships' House—there was one response which I found enormously interesting and moving. I received a massive personal mail from people throughout this country saying that they, too, had fears about the threats to which our politicial system was being subjected from within, and I believe that this threat is now being more and more recognised in this country. I wish this afternoon to look briefly at the ways in which the internal threat, the subversion threat from inside, is often linked with the external threat, and I begin by saying

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that there is some evidence, I believe, of a change in the emphasis of the way in which the Soviet Union is conducting its foreign policy towards the West. In the past it has been customary to regard its efforts as being mainly in the political and military sphere; its gathering of intelligence and espionage activities has been largely a matter of political and military intelligence. Now I believe there is growing evidence that the Soviet Union's present tactic, for the moment at any rate—as the noble Lord, Lord Carrington, said, there is a Russian strategy which is immutable and inexorable and there are Russian tactics which change—is one which tends to concentrate far more on the industrial field than on the political and military fields, and this is a change of emphasis of which we in the West should be aware. There is also evidence that there is now a co-ordinated effort to disrupt the major industries of the West, to undermine our economies and, of course, in that way to achieve exactly the same end as could be achieved by military conquest, but at a much lower cost.
In this connection, I will concentrate on one case history and deploy a few facts about that case history to demonstrate what I mean. The motor car industry is, by common consent, the keystone of the national economy in most developed industrial countries. It is therefore, not surprisingly, a prime target for the Communist Parties of Western Europe, and for the people who co-ordinate these affairs in the Kremlin and in the other Eastern European countries. The World Federation of Trade Unions, which is well known as a Communist front organisation, for some considerable time has been paying special attention to the automobile industries of the West. Shop stewards from the car factories of West Germany, France, Italy and this country —Communist shop stewards—have been attending congresses of the World Federation of Trade Unions, this Communist front organisation, since as far back as 1952; and in May, 1957—I am sorry to burden your Lordships with historical facts, but in the end they build into a picture—an international liaison committee for car workers was formed at a meeting held under the auspices of the World Federation of Trade Unions. That meeting was attended by 20 shop stewards
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from the British automobile industry and every one of them was a member of the Communist Party of Great Britain. That Committee has since met at intervals. It met in Paris in 1958 and in Milan in 1960.
In 1971 a conference was held in London by the Communist Party of Great Britain to discuss what is euphemistically known as the future of the car industry. Last year there was an international conference of automobile workers held, again to discuss the future of the car industry. One may say that this is all very interesting as an historical review of a moderately interesting kind and perhaps the noble Lord, Lord Davies of Leek, will say that it is rather like driving along looking in the driving mirror; so let us take a look at the present and the future. On 3rd March of this year there was held in Dusseldorf a meeting of the Communist Parties of Austria, Belgium, Britain, Denmark, France, Italy, Spain, Sweden, Turkey and West Germany. The Communist Parties at this conference decided on a plan of action for the automobile industries of Western Europe. The British delegate at that meeting was Mr. Tom Mitchell who is the South-East Midlands secretary of the British Communist Party and a shop steward in a leading car factory in the Midlands. At that meeting, which was intended to be secret, co-ordinated plans were drawn up for the disruption of the car industries of Western Europe. It was as simple as that.
That was on 3rd March last, and in case anyone should think that it was an isolated and soontaneous event, on the following day, 4th March, Moscow radio broadcast an attack on the car industries of Western Europe. It was a long, ideological attack, calling for action against what they described as the capitalist countries and their car industries. High prices, the broadcast said, and inflation had been unprecedented in Western Europe and were the result of premeditated action on the part of the monopoly of the car industries. That was the day after the meeting of those Communist Parties in Dusseldorf. On the following day, 5th March, the Morning Star, the organ of our own dear Communist party, published an article in which it said that the first steps in this campaign were to

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be a week of activity in the car industries of Western Europe—that is, from 13th to 19th April, this month.
In that week practically all the major car industries in Western Europe—certainly in Italy, Germany, France and in this country—felt the repercussions of that meeting and the decisions taken at it. This was clearly a centrally controlled, carefully co-ordinated plan to disrupt the car industries of the West, upon which a great number of the economies of the West depend. It is continuing and I hope that those people who have expressed scepticism about the degree of Communist infiltration and subversion that goes on in this country will, when next we have strikes at the Renault factory, the Fiat factory, the Ford factory or British Leyland, remember the conference in Dusseldorf on 3rd March and the plans drawn up there. I wonder whether, after pondering on that conference and its results, anyone will be able to claim that our industry and, through our industry, our economy and our political system are not under direct threat from sub-version, and subversion which is not only helped, but in many cases co-ordinated from outside the country.
We are, I believe, beginning to wake up to that threat. The noble Lord, Lord Home of the Hirsel, has contributed most valuably to that process today. He has warned us, as have other noble Lords, of the constant threat to our liberty and our political freedom. I believe that that threat is how as great— or perhaps even greater than—it has been since 1939. I believe that, if we look at the combined threat of the external military forces of the potential Communist enemy, the co-ordinated action of international terrorists, at the general expansion of Communism throughout the world and at the way in which all these actions are being reflected in this country by those who seek nothing less than the destruction of our political system, this adds up to a very sombre picture.
As the noble Lord opposite has said, I do not wish to be a scaremonger. Yet I believe it important constantly to be bringing this fact to the notice of the people of the country. I ask the noble Lord, Lord Goronwy-Roberts, as the noble Lord, Lord Carrington, asked him,
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whether he will—not perhaps today but some time—tell us quite clearly on behalf of the Government and the country that it is not only Back-Bench and Cross-Bench Peers and Members opposite who see this threat. I hope that he will tell us that Her Majesty's Government see it too and that they are determined to meet it, because I believe that it is vitally important that the people of this country should be made aware of the dangers, in the way in which the noble Lord, Lord Home, has made us aware of them today. Nothing would be more valuable, I believe, than a clear statement by Her Majesty's Government that they too recognise the existence of this threat— external and internal—are determined to meet it when the occasion demands, and are preparing now to meet it.
The comments of Communist and other Left-Wing media on the recent events in North Vietnam have, as the noble Lord, Lord Home, has said, in some ways been deeply depressing. When the word "liberation" is used for what has gone on for the past few months, or indeed years, it seems to me that we should pay a little attention to our use of language. What has happened is not liberation but, whatever it is, it has been the result of the operations of people who are dedicated, patient, austere and resolute in the pursuit of their political aims. In South-East Asia, they have for the moment achieved those aims. I believe that that should be a lesson for us all in Western Europe and in this country. I believe, as I feel does every other noble Lord in this House, that our most precious possession is political freedom. But, unless we are prepared to be as dedicated, patient, austere and resolute in defending it as they are in attacking it, it may not survive.
6.37 p.m.
The Earl of LYTTON: My Lords, I was quite spellbound by the speech of the noble Lord, Lord Home of the Hirsel. I think that it lasted for 36 minutes and it is the only speech of that length which I have ever felt to be in-complete. I wished that the noble Lord would go on for another 10 minutes. He hardly mentioned China and he mentioned Japan not at all; indeed, nobody has mentioned Japan today. I look forward to a second speech from the noble Lord, perhaps when we come to the

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defence debate, and I shall listen with the same enjoyment. May I also say how young the noble Lord looks compared to his appearance on television, which I think has been a great handicap to him. I am also always enthralled by the noble Lord, Lord Chalfont, to whose views I listened with rapt attenton.
With regard to defence, I shall add nothing to what has been said on the absence of the prospect that NATO will be attacked by the Soviet Union or by the Warsaw Pact countries. What I myself apprehend is that the target will not be NATO but Tito, or rather his bier. I am not sure that the Russians will not arrive for the funeral and remain to pray for rather a long time after it is over. That is my immediate apprehension about the next physical movement of the Red Army in Europe adjacent to the part which we regard as free.
My Lords, there is an aspect of this question upon which I should like to dwell. First of all, I agree with those who say that the numerical strength of Communists in most countries is relatively small. However, I am absolutely astonished that it is as small in this country as the noble Lord, Lord Chalfont, told us in his wholly splendid speech on the subject the other day. I think that it was put at something like 004 of 1 per cent. The only place where I have seen the results of an election in which Communists took part was Austria in 1945. Then the Russians permitted the only instance of free elections they have ever allowed, believing that the presence of the Red Army was such that they would receive overwhelming support. There, the percentage of votes cast for the Communist Party was 14 per cent. in the British sector and 10 per cent. in the Soviet sector. The nearer one is to the Russians, the fewer votes the Communists receive.
I was interested to notice that in Portugal—if the information we have received is correct—the Communists have registered less than 14 per cent. in what I believe to be a free election. If that is really so, that is an example of a country which has been run by a wholly unpopular dictatorship for a very long time, with every sort of opportunity for underground subversion. When they come to the surface and are free, still they register
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less than 14 per cent. of the votes for the Communist Party. In the case of Vienna in 1945, the winners were almost equally the Christian Democrats and the Social Democrats.
I think we have to concede that in Portugal today it is the Socialists who have ousted the Communist Party, and who have done the most to reduce it to relative impotence. I am not in a position to say whether the Army is so permeated with Communists that it is going to overrule this democratic result. My suspicion is that Communists never exceed 14 or 15 per cent., but frequently rise to that figure, and being dedicated people who very often serve the interests of the people they represent, they get into the position which has been explained chapter and verse by the noble Lord, Lord Chalfont, and which I do not challenge.
I have studied the works of Marx—the Communist Manifesto rather than Das Kapital and the Little Red Book. I cannot get beyond that to the works of Mao; they are unreadable. But I see that in those cases they try to convince us that there is a momentum of events which is leading inevitably to the result they seek. I find that there is a certain truth in that. For instance, there is the momentum of size and monotony of work in industry, which makes me enormously depressed when I visit certain parts of industry, particularly the motor car industry.
If anyone were to choose a spot to try subversion, I should say that the motor car industry is the spot to try it. It is boring; it is monotonous; it has a vicious smell and an appalling din in various parts of it. That would be the place to go to try subversion. Think of its size, my Lords. It is impersonal. One wants leadership. When the size is so great and is not broken up by subdivision into units where intelligent and sensible people could practise leadership, naturally selfappointed leaders come along. If the boss is never seen at all and is invisible, then naturally this is what happens. We must try to correct the momentum of size. We have not taken a grip of the momentum of boredom and the dullness of people's work—regardless of what they are paid. On top of this is the philosophy—I call

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it the "apostolate of discontent"—that is the essence of Communism.
I was walking behind two men in Athens with a Greek beside me. He said: "Those two men in front are Communists. "I said: "How do you know? Do you know them?" He said: "No". I said: "Have you ever met them?" He replied: "No". I asked: "Have you ever seen them before?", and he answered: "No". I then asked: "How therefore can you tell that they are Communists?" The man with me replied: "I can tell for certain. They never stop talking. They are always discontented about something. And you can see it by their backs. You don't need to hear what they say." That is the doctrine we import. We do not export a fanatical doctrine of happiness to the Soviet Union. Why not? It should be our function to create a happy society to combat this "apostolate of discontent". I think I have said enough on that point.
My Lords, I have time to mention just one more matter. We fail to grasp nettles which I believe should be grasped. I refer, for example, to the problem of the Middle East. Why can we not solve it? We have had Resolution 242 of the Security Council (1967), proposed by the United Kingdom and carried unanimously. We have also had Resolution 338 (1973) sponsored by the Soviet Union and the United States, and carried nem. con.— with only one abstainer, China. We have the Arabs—if the leadership of Egypt counts—saying on the 13th of this month, through President Sadat:
"We shall always be ready to fulfil our commitments in accordance with the United Nations Security Council Resolution 242."
He then went on to state what the Resolution contains. He dotted the "i's" and crossed the "t's", not only about the withdrawal of Israel to the 1967 boundaries, but about the rights of all States in the region to live behind secure and recognised boundaries.
What is stopping this happening? The argument is utterly ridiculous; it is a kind of Alice in Wonderland argument. First, the Israelis say that they will not budge until the paraphernalia of war has been dismantled. Then the Egyptians
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say: "We cannot dismantle the paraphernalia of war so long as Arab territory is continuously occupied." Is there no way to get rid of this problem about which everyone of importance—the Soviet Union and the United States—agree? Have we not come to the point where we should say, at any rate to the United States which exercises a dominating influence in this matter: "Look, if you run into a situation where there is another oil embargo, and in order to combat that you send Marines to take over the Saudi oil wells in the Gulf, that is a recipe for Armageddon and we are mightily against it." Let us settle the difficult Israeli problem before it is too late.
Here we have a huge territory occupied by 20 different Arab States—138 million people. Ten of these States are dripping with oil and all of them are naturally rather well disposed towards us. Surely the time has come when we can put into practise and enforce an item of diplomacy on which everybody, so far as I can see, is agreed. That is an illustration of the nettle which people do not grasp—
Lord GEORGE-BROWN: My Lords, as one of the army of the great divine discontent, I want to ask the noble Earl something else. If "we"—whoever "we" are—wish to influence events in the Middle East, from which I have just returned, had we better not make a Europe with a common foreign policy before we talk about influencing anything there at all? We as Europe might do it—we as Britain cannot.
The Earl of LYTTON: My Lords, am I honoured by the question which the noble Lord, Lord George-Brown, has just asked? I am honoured that he should interrupt and ask a question. I am, as he knows, a supporter of European union and of remaining in the EEC. I hope I shall be among the voters for staying in. I hope that it will not produce any feud with the noble Lord, Lord Davies of Leek, who, the other day, just after I had made a speech exactly contrary to his own, arrived in the Guests' Room with a drink, such as I like—I do not know how he knew—but twice the normal size, which I thought was a gesture of comradeship and which I welcomed. But to answer the noble Lord, I am thinking at this moment that we still

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have a special relationship with the United States in all matters, particularly with regard to the founding of Israel. Have we not? It seems that the noble Lord does not agree—
Lord GEORGE-BROWN: My Lords, let me make the position quite clear. We did not support the United States in the founding of Israel. The first State to recognise Israel was Russia—the Soviet Union. The Americans supported the Soviets. We ourselves—I was then the lowest form of animal life, a PPS, in the then Government, and I know it only too well—did not think that it was the right thing to do. Neither do I now, looking back on the history, think that I was wrong.
6.50 p.m.
Lord GORONWY-ROBERTS: My Lords, the noble Lord, Lord Carrington, in a disarmining moment, said that he expected me to make a second speech. This somewhat flattered me but rather alarmed the House, and I therefore promise to be as brief as possible. This has been a useful and stimulating debate, concentrating our minds, in the way this House does, in a deliberative, restrained and factual manner on a question of the utmost importance, not only to this country but to the future of the Western world and the things for which it stands. A number of points have emerged from this debate as points of broad consensus. Almost every noble Lord indicated that he or she supported the pursuit of detente. Equally, there was a point of consensus that the achievement of detente depended upon the assurance of confidence and security; in other words, we needed to pursue this very desirable situation with caution, and constructively.
If I may repeat myself, I put it in this way: I do not believe that there is such a thing as detente without an assurance of security. If, therefore, as we believe, the Soviet Union and its friends and allies are genuinely seeking detente, they must equally seek to promote genuine security in Europe as a precondition of a lasting détente. Indeed, Her Majesty's present Government—as indeed did the previous Administration—base themselves on these twin propositions. In answer to Lord Carrington's request that I should state Her Majesty's Government's attitude to challenges to freedom in the world, I
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would say that I hardly think it needs to be restated. We are opposed to any form of totalitarianism, whatever its origin or form. We would seek to resist it effectively, not only militarily but, to pick up a phrase which the noble Lord, Lord Gladwyn, used, by endeavouring to create in this country a social system that worked on a basis of democracy and equity. The true answer to the excesses of Communism, which is, after all, an economic and social technique, is an effective social system which not only accepts the basic principle of freedom but also the equally basic freedom of economic security for the people of a county.
The third point which I thought elicited general support was a deserved tribute to the United States of America for its extraordinary contribution to peace and stability in the world, certainly during the past twenty-five years, a contribution which is continuing. I am confident that that will persist in the future. I very much appreciate the remark which I think the noble Lord, Lord Carrington, made in denunciation of those people who take a peculiar delight in the temporary discomfiture of our American friends at the present moment. They are exactly the same people who rejoice in the difficulties of our own country. Also, a number of noble Lords joined in tribute to our great friend and ally in the United States, Dr. Henry Kissinger. When I reflect upon the tremendous exertions, extraordinary ingenuity and education which Dr. Kissinger has devoted to the pursuit of peace in the Middle East and elsewhere, and his continued determination to fight for it, I think it is time that a House which commands attention not only in this country but abroad should unitedly indicate its admiration and support for his efforts.
The noble Lord, Lord St. Just, raised a question about Cyprus which I should like to answer. I can assure him that we regard Cyprus not just as a Greek and Turkish question—it is that, of course— but as a Cypriot question. That is why we have emphasised all along that the solution must be based upon the agreement of the people of Cyprus, whatever their racial origin or religious creed, and that it should result in an assertion of independence, the integrity of the island as an independent State.

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I come now to the point of substance which was made by the noble Lord, Lord Home of the Hirsel, about the Middle East. I was most interested to hear what he said about the Geneva Conference on the Middle East and the comparisons which he drew with the Conference on Vietnam. Here, I agree in general with what the noble Lord, Lord Gladwyn, had to say on the subject. There are, I believe, great differences between the two situations: The Russian interest in the Middle East is likely to be very different from the Russian interest in South-East Asia. Provided an eventual agreement reflects the essential interests of both the Arabs and Israelis, I believe the Russians will have strong reasons for ensuring its full and continued observance, and that the Russians, as well as the rest of us, will have a strong interest in avoiding a renewed conflict.
Here may I say how much I welcomed the brief but trenchant intervention of my noble friend Lord George-Brown, and congratulate the noble Earl, Lord Lytton, on eliciting that contribution—at least, the first part of it—in which he emphasised that we should not expect that one country, that even Britain, should on its own be able to solve these tremendous problems. This is partly a hangover from the period of the Imperium when it seemed to be doing precisely that everywhere. I think it is time, as my noble friend reminded us, that we realised that we are in a partnership with a great many other powerful and capable countries.
I was glad to hear more than one noble Lord refer to the possibility of increasing political co-operation within the Community, leading to agreement and common action among the Nine in international affairs. It is fair to say that the process of political co-operation within the Community has developed rapidly over the past year or so. Whatever the differences may have been about the minutiæ—the important minutiæ—of economic and social policy, there has grown in the past year or so a realisation that the Community can become a united political force for peace in the world. The degree of co-ordination achieved among the Nine at the Conference for Security and Co-operation in Geneva has been a striking example of this. While
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on this subject, may I pay tribute to the effective political consultation which also takes place in NATO, a somewhat larger organisation which subsumes the Nine. There is no harm in regarding NATO as being the essential organisation of protection for stability and peace in the West, with an injection of special dedication, perhaps, as represented by the Nine.
The final point I want to make is a very brief one; namely, that the noble Lord, Lord Chalfont, as well as the noble Lord, Lord Carrington, pointed out the importance of being aware of the constant threat to liberty, internally and externally. Of course, Her Majesty's Government are aware of this end. Of course, as I said previously, not only must we arm ourselves materially to resist such a threat, but we must think hard and work hard to create, in parallel with material defence, economic strength and a social system which will give that material defence added strength.
7.1 p.m.
Lord HOME of the HIRSEL: My Lords, it would be base ingratitude on my part to your Lordships if I were to make a second speech, after the response which has been made to the Motion I moved earlier today. I should like particularly to thank the noble Lord, Lord Goronwy-Roberts, for his very careful replies. I should also like to associate myself with what both he and my noble friend Lord Carrington said about the contribution to peace made by the United States, and Dr. Kissinger in particular. I would not dissent from his evaluation of the situation in the Middle East—there we shall have to see what happens at the Conference—but I would agree with him entirely that the real answer to Communism is the quality of our own way of life.
All the speeches, if I may say so, have been most thoughtful, constructive and forthright. I believe I have been justified in my feeling that this debate ought to be held as a complement to that which was initiated by the noble Lord, Lord Chalfont, a short time ago on the subject of internal security. I thought it was proper that we should also have one on the external threat, so that the people of this country may see the

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world not as we in the democracies want it to be but as it actually is. Therefore, if I may say so, I think this has been an excellent and useful debate, and perhaps I might finally thank the noble Earl, Lord Lytton, for the delicacy of his references to my performances on television. I ask your Lordships' leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

LOCAL GOVERNMENT (SCOTLAND) BILL
Returned from the Commons with certain of the Lords Amendments agreed to, and with one of the Lords Amendments disagreed to with a Reason for such disagreement; the said Reason to be printed.
EXPORT GUARANTEES BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills without amendment and recommitted to a Committee of the Whole House.
  OVERSEAS BORROWING STATISTICS
  OVERSEAS BORROWING STATISTICS
  SOUTH-WEST ROAD IMPROVEMENTS
  SOUTH-WEST ROAD IMPROVEMENTS
  OLD AGE PENSIONERS AND INFLATION
  OLD AGE PENSIONERS AND INFLATION