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Commons Chamber

Volume 645: debated on Tuesday 25 July 1961

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House Of Commons

Tuesday, 25th July, 1961

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Private Business

Glasgow Corporation Order Confirmation Bill

Read the Third time and passed.

Oral Answers To Questions

Ministry Of Works

Empress State Building, Earl's Court

1 and 5.

asked the Minister of Works (1) for what purpose his Department has leased the 28-storey Empress State Building from City Centre Properties; and what are the financial terms and duration of the lease; (2) what will be the annual cost to public funds arising out of the use of the Empress State Building by Government Departments; and what annual saving or increased cost will result from these departments moving from other accommodation.

My Department has taken a lease of the Empress State Building at Earl's Court in order to replace certain leased buildings where the leases cannot be renewed on expiry or could be renewed only on much less favourable terms. On the question of financial terms and costs, I would refer to the reply given to my hon. Friend the Member for Harrow, West (Mr. John Page) on 18th July. I can say, however, that the leasing of this large office building away from the expensive Central London area will lead to considerable savings to my Department.

May I ask my right hon. Friend if he is aware that the Answer which he gave to my hon. Friend for Harrow. West (Mr. John Page) does not cover my second Question, No. 5? I asked my right hon. Friend the cost to public funds, not the lease, and whether it would, in fact, be a saving or an increase in expenditure. Could he give me that information?

I am not prepared to give my hon. Friend the information, in so far as the amount charged for the rent would emerge, for the reasons which I gave last time, but, overall, the facts are as I stated. This will result in a saving.

John Lilburne


asked the Minister of Works whether, in view of recent historical evidence of the part played by the Levellers in the establishment of Parliamentary freedom and democracy in this country, he will make arrangements for the establishment of a suitable memorial to John Lilburne and his associates within the Palace of Westminster.

Does not the Minister appreciate that the minorities of today, even the very small minorities, very often become the majorities of tomorrow? Does not the right hon. Gentleman think that it would induce a healthy respect for this excellent truth if we paid proper tribute to the first Englishman who dared preach the doctrine of democratic Parliament?

As far as I am aware, the Levellers were primarily an extra-Parliamentary group, and I am not sure that it would be a good thing to go too wide.

The Minister is absolutely misinformed on the subject. There were quite a number of spokesmen for the view of the Levellers in Parliament at that time. When the right hon. Gentleman has examined his history and read, say, the recent book of Mr. H. N. Brailsford and got his history more accurate, would he reconsider the matter?

However accurate or inaccurate my history may be, the Answer which I have given to the House must be my answer.

The right hon. Gentleman says that he will be guided by the wishes of the House. Will he ask his right hon. Friend the Leader of the House to give us an opportunity to express our views, because I think that if he were so guided he would reach a conclusion such as is urged upon him by my hon. Friend the Member for Ebbw Vale (Mr. M. Foot)?

Cholwichtown Stone Row


asked the Minister of Works why he agreed to the proposal of English China Clays Limited that they might obliterate Cholwichtown Stone Row, an ancient bronze-age monument in the Dartmoor National Park.

This stone row, which is by no means one of the best on Dartmoor, is not to be destroyed: it will simply be buried. I was satisfied that there was no other site would could reasonably be used for dumping the spoil from the china clay workings.

May I ask the Minister to reconsider his decision, because burial is usually the end of things, and will he take into account that this is a scheduled monument of anything from 3,500 to 4,000 years' old and that there are alternative sites for the spoil?

It is quite literally true—it really is—that this monument will not be destroyed by burial, unlike some other things which were in the hon. Gentleman's mind. These stones really are not by any means the best examples of their kind.

Royal Palaces (Expenditure)


asked the Minister of Works whether, in the interests of the national economy and the new need to curtail public expenditure, he will now stop the £50,000 improvement work contemplated on IA, Kensington Palace; and if he will reappraise other expenditure on Royal Palaces with a view to effecting further economies.

The Answer to the first part of the Question is "No." With regard to the second part, the maximum economy is exercised over the Royal Palaces Vote, as with all the Votes for which I am responsible.

Does not the Minister recognise that very soon now the whole nation will be asked to make sacrifices in the national interest? Why, therefore, should a very tiny, highly privileged and, in the main, useless minority —

Order. The hon. Gentleman cannot ask that supplementary question. It is out of order. Mr. Fletcher.

On a point of order, Mr. Speaker. Are you referring to the original Question or to the supplementary question, because, if it is to the supplementary question you refer, I would gladly withdraw—

Further to that point of order, may I have an opportunity to rephrase the questions—[HON. MEMBERS: "No."]

I am sorry. The hon. Gentleman's question is out of order, so I have to go on to call the next Question. Mr. Fletcher.

Further to that point of order, Mr. Speaker. I think that it is within the recollection of almost every hon. Member that, when a supplementary question has been ruled out of order, the hon. Member asking the original Question has been given the opportunity to ask a supplementary question which is in order, and I am simply seeking—

Order. The hon. Gentleman has, I think, some illusion. In fact, I called the next Question.

Then, Mr. Speaker, on a point of order. In view of the grossly unsatisfactory nature of the original reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.



asked the Minister of Works what are his present proposals for improving the public facilities for visitors to Stonehenge.

Facilities are at present provided in three rather obtrusive structures. Because of the increased number of visitors these are no longer adequate. I therefore wish to tidy up the site and provide proper facilities in one building, which, unlike the present structures, would be invisible from the Stones. But the National Trust, which owns the land, feels unable to agree. I regret that I can make no further headway without the co-operation of the Trust.

I thank the Minister for that reply, but will he appreciate that there is increasing public interest in Stonehenge; that greater facilities are required, but that it is equally desirable that any new building should be so sited as not to destroy the natural detachment and isolation of the site? Will he do his best to continue his negotiations with the National Trust with a view to getting an agreed solution?

I will, indeed. I should tell the House that the Ancient Monuments Board for England supports my proposals as being a definite improvement of what is there now, just as I myself support the Board's long-term view that the perfect solution involves the closure of A.344 where it passes the monument. In the meantime, the Board agrees that what I propose to do is an improvement on what is there now, but I cannot go on with it until I have the agreement of the Trust.

Will my right hon. Friend set my mind at rest? I am rather afraid that the intention is to bury Stonehenge.

There is no more danger of my burying Stonehenge than that that same fate awaits my hon. Friend.

Since the closure of A.344 is the only satisfactory solution to a very intractable problem, will the Minister have urgent discussions with his right hon. Friend the Minister of Transport to see whether his right hon. Friend cannot press ahead with this rerouteing?

I think that the hon. Gentleman will realise that this must lie some way ahead, but I certainly do not mean to lose sight of it. It is the right answer. Meanwhile, I cannot see why we should not do as well as we can temporarily, and that is precisely what I have asked to be allowed to do.

Local Government

Greater London


asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he is yet in a position to announce his proposals for the reorganisation of local government in the Greater London area.


asked the Minister of Housing and Local Government and Minister far Welsh Affairs what consideration he has now given to the representations made to him by local authorities with regard to the Report of the Royal Commission on Local Government in Greater London.


asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will make a statement on the Government's policy on the Report of the Royal Commission on London Government.

The Minister of Housing and Local Government and Minister for Welsh Affairs
(Mr. Henry Brooke)

The Government have the Royal Commission's Report and the representations of local authorities on it under consideration, but I regret it will not be possible to make an announcement before the Recess.

Can my right hon. Friend give some indication of when he is likely to bring forward the Government's proposals; or, at least, to introduce a White Paper on the subject? Furthermore, will will my right hon. Friend bear in mind that many local authority employees are becoming increasingly apprehensive about how their future will be affected by these proposals, if they are accepted, and that local authorities are finding it extremely difficult to recruit new staff?

Whether or not the proposals are accepted, I think that it is desirable to keep the period of uncertainty to a minimum. Therefore, in response to my hon. Friend's main supplementary question, I certainly reply that the Government will announce their decision as soon as they properly can.

When the right hon. Gentleman says that the decision will be announced as soon as it properly can be and, at the same time, says that it will not be before the Summer Recess, is he anticipating that the statement will be made while the House is in Recess, or is it meant to await the return of the House before making the statement? In addition to the present effect on local authority staff recruitment, is the right hon. Gentleman aware that the London political parties will shortly be preparing for next year's elections? If there are to be major changes there will, presumably, be no elections, so the sooner we know the better.

I think that the political parties can take it for granted that there will be elections next year, but I really cannot say when I shall be able to make a statement.

Does not the right hon. Gentleman think it would be better to have a debate in this House before the Government make their decision, so that they can make it in the light of the opinions then expressed?

There has been nearly a year during which it has been possible for the Oppposition to seek a debate on the question. It seems better now that the Government should reach their decision and make their announcement, and for that to be debated.

Local Government Act, 1933 (Section 76)


asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will now make a statement on the operation of Section 76 of the Local Government Act, 1933, in view of the continued uncertainty of those engaged in local government.

I intend to make a statement in due course, but I regret I cannot do so yet.

Is my right hon. Friend aware that on 4th July, 1961, 3rd May, 1961, 28th June, 1960, 29th March, 1960, and 17th November, 1959, we had Answers almost precisely similar to the Answer just given, and can he not give us a definite date when he will make a statement on this matter, which looks like dragging on like the trial of Warren Hastings?

I regret that I cannot give a definite date. In any case, I have no power whatsoever to interpret the law, and any change in the law would naturally require a Bill.

Green Belts


asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he will categorise the exceptions permitted by the Government to its policy of maintaining the green belt.

This information is set out in Circular 42/55, a copy of which I sent to my hon. Friend, following his Question on 3rd May.

Is my right hon. Friend aware of the deep concern felt among my constituents in the Chigwell urban district and the Epping and Ongar rural district lest there be further encroachments on the Metropolitan green belt, which they value very much? Will he remove any misapprehensions that Government Departments and public institutions are in a privileged position in this matter?

Nobody is in a privileged position, though my hon. Friend will recollect from that Circular that the purposes for which buildings might be erected in the green belt include

"… agriculture, sport, cemeteries, institutions standing in extensive grounds or other uses appropriate to a rural area."


asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether it is now his policy that new schools should be built in a green belt whenever possible, instead of in areas designated for building development; and what consideration he has given to the effect on the green belts of the present financial incentives to local education authorities to acquire land for schools in the green belt because of the much lower compensation payable.

Schools ought not to be built in a green belt simply because the land there is cheaper. Most schools need to be near to the homes of the boys and girls, and this factor alone will normally rule out a site in a green belt. But there are cases where the most suitable site in all the circumstances may be in a green belt, and I would not think that green belt zoning should be held to preclude absolutely such a use as a school.

May I take it from my hon. Friend's reply that he does not regard it as generally consistent with his green belt policy that two or three schools should grow up side by side in what is said to be a green belt?

It is not my policy to encourage schools in a green belt, but there may be cases where the green belt is really the most desirable place for a school, and if it is surrounded by extensive playing fields it might not be an offensive intrusion there.

Dorell Glass Company Limited (Planning Decision)


asked the Minister of Housing and Local Government and Minister for Welsh Affairs what inquiries he has made of the Shoreditch Borough Council concerning ex gratia compensation for financial loss by the Dorell Glass Company Limited, arising out of planning decisions, in view of his circular to local authorities on the considerations governing such matters.

The Parliamentary Secretary to the Ministry of Housing and Local Government
(Sir Keith Joseph)

I wrote to the hon. Member on 7th June fully explaining the position. The only change since then is that the borough council has decided to pay an additional £39 18s. 0d. in respect of surveyors' fees.

While thanking my hon. Friend for that reply, and for the trouble that he has taken in the matter, may I ask him whether he is aware that my constituents have been brought very nearly to the verge of bankruptcy by the interpretation of policy by this council, and could he see his way to making further representations to that authority?

My right hon. Friend has no power to intervene here, since the compensation payable is only discretionary. Of course, my hon. Friend's constituents did not object to the compulsory purchase order.

Cholwichtown Stone Row


asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he will hold a public inquiry into the application of English Clays Ltd for permission to obliterate the ancient Stone Row at Cholwichtown, in the Dartmoor National Park.

No, Sir. The hon. Member for Tavistock (Sir H. Studholme) has already been in touch with me on the same subject. My right hon. Friend gave his decision on this matter on 9th May.

Can the Minister say whether he will reconsider his decision because, after all, Dartmoor is a National Park and is something of a right to the nation? This is a wealthy company which could very well site the spoil heap elsewhere. Surely an ancient monument of this kind should be respected.

My right hon. Friend cannot reconsider his decision now it is taken. The National Parks Commission was consulted before the decision was taken.

Drainage And Sewerage, Onneley


asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he is aware of the insanitary smell at Onneley, near Crewe, due to the lack of proper drainage and sewerage; and if he will consult with the local authority about ways and means of removing this nuisance and introducing a reasonable standard of sanitation.

My right hon. Friend is making inquiries of the local authority, and will write to the hon. Member.

While bearing that in mind, would the hon. Gentleman take note that several years have been spent trying to bring about a limited land drainage scheme to which the Ministry of Agriculture would contribute? This has failed owing to the difficulty of getting local agreement among the farmers. Could the hon. Gentleman's Department take the initiative and propose a proper sewerage scheme for this rural area?

Aluminium Scrap Plants (Fumes)


asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he will issue a Command Paper giving a report on the work carried out by the Alkali inspectorate in conjunction with the aluminium scrap plants industry; and what results have been obtained in diminishing the fumes emitted by such plants.

I would invite the right hon. Gentleman's attention to my Chief Alkali Inspector's Annual Report for 1960, presented to Parliament last month, which records the position reached in England and Wales by the end of 1960. His next Annual Report will record progress during 1961.

Is the Minister aware that, in spite of what he has told me in previous Answers, the results of the Inspectorate's efforts in Derby are nil? Is that due to the fact that there are net enough inspectors, that their powers are inadequate or that new legislation is required to deal with this evil of air pollution?

Their powers are adequate and the number of inspectors has been increased, but if the right hon. Gentleman will look alt the inspector's report he will see that more experience of some other tentative methods of remedying the troubles is needed before we can he quite sure what is the best course to follow.

I have looked at the report. Will the Minister come to look at the fumes emitted by Denby Metals Ltd.?

Property (Compulsory Purchase)


asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he is satisfied with the way in which local authorities are acquiring property under the threat of compulsory purchase orders, or by means of compulsory purchase orders; and if he will make a statement.

I have not received many complaints on this matter; and no compulsory purchase order has effect unless the appropriate Minister decides to confirm it. The basis of compensation is no different whether a property is bought by compulsory purchase order or not.

Is the Minister aware that certain practices take place where there is a threat of compulsory purchase? Is he aware, for instance, that the City of Birmingham, when acquiring property and having to evict an owner, frequently charges £500 if alternative accommodation is found? Would he not agree that this is most unfortunate?

I think I know what is in my hon. Friend's mind, but the position is that I have no jurisdiction over the compensation which owners receive under a compulsory purchase order. That is settled, or can on appeal be settled, by the Land Tribunal and I must not trespass on the Tribunal's ground.

Would not my right hon. Friend agree that the whole question should be looked into.

I will certainly examine further any information which my hon. Friend sends to me, but I have not anything before me at the moment and, as I say—and it should be widely known—if there is a dispute about compensation, then an appeal lies to the Land Tribunal and the aggrieved person can take advantage of that.

Is it not true that, while the Minister has no control over the amount of compensation to be paid, neither has Birmingham Corporation? As the Minister has said, the appeal lies to someone outside both the Ministry and local Government.

Yes, but I would add that advice has been given to local authorities that if they are unable to reach agreement on the price to be paid for a property which they wish to acquire and they are not actually exercising compulsory powers, they should refer the matter to the Land Tribunal so that a proper decision can be arrived at.

Public Lavatories (Turnstiles)


asked the Minister of Housing and Local Government and Minister for Welsh Affairs why he has refused to accept a deputation from the National Council of Women on the prohibition of the use of turnstiles in public lavatories.

The hon. Member is misinformed. I did not refuse to see a deputation, but suggested that the Council should in the first place approach the local authority associations. It has done so, and has now asked to see me; I am arranging to meet it.

While welcoming the Minister's belated agreement to meet this deputation from the National Council of Women, may I ask him whether he will now accede to the desperate plea of a large number of women's organisations that he should take action in this matter? Will he either support my Private Member's Bill abolishing turnstiles or introduce similar legislation himself to the same effect?

I understand that a new Clause on this subject has been tabled to the Public Health Bill, so there seems to be plenty of potential legislation about. The National Council of Women is coming to see me this week and, with respect to the hon. Lady the Member for Blackburn (Mrs. Castle), I should prefer to say nothing more at this stage until I have seen that deputation, which I am looking forward to meeting.


asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will now state the composition of the delegation which he has agreed to meet regarding turnstile entrances to ladies' public lavatories.

I understand from the National Council of Women that the deputation will include representatives of that Council and of the British Federation of University Women, the British Rheumatism and Arthritis Association, the National Federation of Women's Institutes, the National Union of Townswomen's Guilds, the Royal College of Midwives, and the Women's Co-operative Guild.

Would my right hon. Friend agree that, in view of the large number of women's organisations represented on this delegation, this is obviously a matter of great importance to all women in this country? In view of his answer to an earlier supplementary question to the effect that he preferred to say and do nothing until after he has met this delegation, and since two new Clauses on this point have been tabled for consideration during the Report stage of the Public Health Bill on Friday morning, which will naturally come before Parliament before he meets the deputation, will he reconsider this matter?

I am extremely anxious to find a solution of this genuine problem which will be satisfactory to everybody, but I also want to meet all these important bodies when they come to see me.

Planning Appeal, Saffron Walden


asked the Minister of Housing and Local Government and Minister for Welsh Affairs on what grounds he concluded, when deciding the planning appeal of Messrs. D. Heath & Son against the Saffron Walden Rural District Council, that there was need for the production of chalk in the area.

What I actually said was that chalk from the appeal site would make a useful contribution to an area which is partly dependent on pits lying at a distance. But, as I made clear in the House when the case was debated in May, my decision on the appeal did not turn on this. It turned on whether there would be serious nuisance from chalk dust blowing on to neighbouring land. Once I was satisfied that there would not, there was no reason for withholding planning permission.

Clean Air Act, 1956


asked the Minister of Housing and Local Government and Minister for Welsh Affairs what progress has been made in the five years to 30th June, 1961, in securing implementation of the provisions of the Clean Air Act, 1956, notably in the establishment of Smoke Control Areas in black areas denoted in the Beaver Report.

In the black areas of England and Wales, over 623,000 premises and over 102,000 acres are now covered by confirmed smoke control orders. Over 128,000 more premises and over 29.000 more acres in these areas are covered by orders submitted for confirmation. These figures, which are correct to 30th June, indicate a substantial start, but continued vigorous use of all the Act's provisions is needed.

While this is impressive progress in the first five years, will my hon. Friend recognise that the whole of the policy for clean air is being vitiated by the fact that no progress is being made in the abatement of diesel oil exhaust fumes? As there is divided executive responsibility between the Ministers of Transport and Housing and Local Government, cannot we have a combined policy to rid us of this public menace?

I cannot accept that the clean air policy is being vitiated for this reason, but consultations are taking place on the subject.

Alkali Inspectorate


asked the Minister of Housing and Local Government and Minister for Welsh Affairs what improvement has occurred in the effectiveness of the Alkali Inspectorate and associated facilities in his Department during the five years to 30th June, 1961, since the Clean Air Act reached the Statute Book; and whether he will make a statement upon the adequacy or otherwise of current alkali arrangements.

The annual report shows how many distinct problems there are in this field. While in most cases the necessary techniques are known and are being applied, there are some processes which cannot in the present state of knowledge be entirely without undesirable emissions. Research continues and the co-operation of all concerned is unstinted. To deal with its increased responsibilities, the staff of the Inspectorate in England and Wales has been increased from 10 in 1956 to 25 now. My right hon. Friend has in mind extending the Alkali Acts by order to cover certain additional processes, where control is now on an informal, though satisfactory basis.

Having regard to the very great increase in chemical production and associated processes in this country, is my hon. Friend satisfied that, notwithstanding the increase in staff among the Alkali Inspectorate, it is likely to be sufficient to enable the members of the staff to tackle their formidable duties in all parts of the country?

My hon. Friend must bear in mind that a number of manufacturing processes are converting to smokeless techniques and a number of other undertakings, particularly gas and coke works, are concentrating in fewer hands.

Roads, Oxford (Inquiry)


asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will announce his decision on the Oxford roads inquiry when the House reassembles after the Recess.

I cannot yet say when I shall be able to announce my decision, but I will do so as soon as I can.

Can the Minister give an assurance that he will neither come to a decision nor announce his decision while the House is in recess, because of the very important issues involved, especially if he finally decides to sanction the pernicious proposal to drive a road through the Meadows? Before coming to a decision, will he also have a word with the Chancellor of the University of Oxford about it?

Having a word with people after public inquiries is just what I am not allowed to do and do not want to do. I should not like to give an undertaking that in no circumstances will I announce my decision on this matter before the House reassembles, because there are many people who are extremely anxious for a decision one way or the other to be reached. What I will say to the hon. Member is that, after a decision is announced, a very long procedure has still to be followed and it will probably be several years before a single sod is dug.

Is my right hon. Friend aware that everybody will breathe a sigh of relief if he can bring to an end this inter-collegiate road warfare at Oxford in good time and once and for all?

Does not my right hon. Friend recall having a word with the Minister of Agriculture after the public inquiry on the chalk case?

My hon. Friend cannot have been present when I said in the House, in the early morning of 17th May, that I reached my decision that that appeal should be allowed because there appeared to be no substantial agricultural or amenity objection to it. I let the Ministry of Agriculture know that that was my view. I am quite sure that it was proper for me to do that, and the Ministry of Agriculture had no comment or objection to raise.


Housing Loans (Interest Rates)


asked the Minister of Housing and Local Government and Minister for Welsh Affairs what additional help he will give local authorities to offset the latest increase in interest rates on public works loans for housing purposes and on loans to house buyers affected by the rise in interest rates.

It is not Government policy to insulate housing from the market cost of borrowing.

That is no help at all. Is not this the fourth increase in a series? Is the Minister aware that, because of the resultant high rents, many people living in tragic housing conditions are having to refuse council houses and, indeed, in certain cities even with Tent rebate schemes the top fifteen or twenty with priority on the list are having to forgo their chances of a house.

Certainly no one in the borough which I represent, where there is an effective differential rent scheme, ever has to refuse accommodation offered because the rent is too high.



asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will list the fifty local authorities with the largest populations which, under the Housing Bill, are likely to receive an annual subsidy of £8 instead of the present £22 per house, and the fifty largest to receive £24 instead of £22.

As the rate of subsidy payable will depend in the first instance upon the state of a local authority's housing revenue account at the end of March, 1962, I have not at present sufficient information to make reliable forecasts about individual local authorities; their own treasurers are best qualified to advise them what rate they are likely to receive initially.

Yes, but the Minister surely must have prepared such figures when telling us in Committee that the increases would balance the cuts. Is the Minister aware that this list would show that Manchester, Liverpool and Newcastle, with terrible housing situations, are to have their subsidies slashed, while Bournemouth will benefit? How can the right hon. Gentleman defend such a gross injustice?

This has been fully debated. If Manchester, Liverpool and Newcastle do not qualify in the first instance for more than £8 subsidy, that is because the test shows that they have considerable potential financial resources which they could mobilise by charging more realistic rents.

The matter has been debated a good deal, but the Minister has never answered this point. When preparing the Bill, he must have had some idea about the answer to my hon. Friend's Question. Why cannot we have the information as to which authorities he thinks will gain and which will lose so that we may judge the matter in the light of the facts?

During debates on the Bill I gave a broad indication—and I stick to it—that half the local authorities will qualify initially for the £24 and half for the £8. But that is a very different matter from that raised by this Question, which asks me to specify one hundred particular authorities. That I could not do.

Slum Clearance, Birmingham


asked the Minister of Housing and Local Government and Minister for Welsh Affairs what progress has been made with slum clearance in Birmingham since his visit to the city in mid-March.

Since my visit, I have confirmed thirty-one Birmingham slum clearance orders, comprising more than 1,000 houses. I understand that in the same period the corporation has demolished some 700 unfit houses and reconditioned a further 650.

What have you done about it since on 21st March—[Horn. MEMBERS: "Order."]

I am sorry, Mr. Speaker. I will put myself in order. What has the Minister done since he visited Small Heath in the middle of a by-election—for the purpose of ensuring that I did not come here—when he said that he had seen property in Birmingham such as he did not know existed, and that he thought that that sort of thing

"had come down years ago. It appals one that children should be playing around them. They have got to come down."
Since the sight which he saw at Small Heath appalled him—and I agree with that feeling—may I ask the right hon. Gentleman what emergency action he has taken since he returned to Westminster the next day to help Birmingham to get rid of its slums? Can he give us a guarantee that no reduction in slum clearance will be proposed later this afternoon?

I saw the property to which I was referring, not on that occasion, but on an earlier visit to Birmingham, in company with the Birmingham Corporation. Since then I have been giving the Birmingham Corporation all the help that I can, some of which is set out in the Answer to the hon. Gentleman's Question. I hope that Birmingham will press on with slum clearance.

Leasehold System, Wales

30 and 31.

asked the Minister of Housing and Local Government and Minister for Welsh Affairs (1) what reply he has sent to the protests concerning hardship caused by the operation of the leasehold system in South Wales; and whether he will make a statement;

(2) what steps he has taken to collect evidence regarding hardship caused by the operation of the present leasehold laws in Wales; and whether he will make a statement.

All protests or evidence sent in have been acknowledged, and my right hon. and learned friend the Lord Chancellor and I are having them examined to see whether they do demonstrate hardship. He has been making inquiries through the solicitors' profession also. As I said in the House on 12th July, if hon. Members have any evidence of a specific character which seems to them to prove hardship, I am very ready to consider it.

is the Minister aware that there has been a storm of indignation following his statement that there was no evidence of hardship caused by the leasehold system in Wales? Can he indicate how long it will be before he and the Attorney-General are able to reach a conclusion on the evidence, which I know that they have received, of grievous hardship being caused in Wales by the operation of the leasehold system?

Since the debate, I have received only twenty-one communications. What I am trying to discover is cases of actual hardship. In the debate, the hon. Member quoted the case of a man who, he alleged, was suffering hardship because his rent had been increased from 1s. to 11 s. 7d. a week, which did not seem to me to be evidence of hardship.

I can provide the right hon. Gentleman with many more than twenty-one cases of extreme hardship, and I will gladly do so today if he is willing to see me. Is he aware that all his hon. Friends who represent constituencies in South Wales say in public that they also support leasehold enfranchisement and that he stands alone, disowned by the Welsh Conservative Party, on this matter?

I have stood alone before. My concern here is to get at facts. To use phrases like "a storm of indignation" does not help unless people produce actual cases of hardship following from the action of ground landlords.

Is the Minister saying that, even though there is no hardship —of course, it can be demonstrated that there is—the system is fair as between landlord and tenant? If so, he will be disowned by everyone in Wales.

I am saying that up to the present the Government see no cause for amending the Landlord and Tenant Act, 1954, which considerably improved the position of the occupying lessee. However, if hon. Members have further evidence to submit to me, I, together with my right hon. and learned Friend, will be glad to examine it.

On a point of order. In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible moment.

British Guiana

Colonial Development Corporation (Consolidated Goldfields Ltd)


asked the Secretary of State for the Colonies whether, in view of the financial reorganisation, and in view of the importance of maintaining local good will for the operations of the Colonial Development Corporation, he will reconsider the decision of the Corporation to insist on its rights as secured creditors of British Guiana Consolidated Goldfields Limited being given priority over other small creditors in the area.

I understand that the Corporation has authorised the Receiver to make a number of ex gratia payments to creditors of the company. It is expected that the Corporation will shortly dispose of its residual assets and that the company will remain in operation.

While thanking the Minister for that Answer, which, I think, will be very welcome in the West Indies, may I ask whether he is aware that it would be much easier for the Colonial Development Corporation to build up the kind of local good will that is essential if the Government would relax some of the financial restrictions which they impose upon the Corporation?

The West Indies

Citrus Industry


asked the Secretary of State for the Colonies whether he will make a statement on the official citrus negotiations now taking place with a West Indian delegation.

I have nothing to add to the reply given on 20th July to a Question from my hon. Friend the Member for Surbiton (Mr. Fisher).

Is not it a fact that these negotiations have been concluded? In view of the fact that British orders for concentrated orange juice from the West Indies are to be cut by nearly 50 per cent., will the Minister consider ways and means of averting what may be a disastrous effect upon the West Indies citrus industry?

I understand that the negotiations have not been completely concluded and that there is to be a further stage of negotiation, at which the Colonial Office will doubtless be brought in.


Financial Assistance


asked the Secretary of State for the Colonies whether he will now make a statement about economic aid to be provided to Tanganyika after independence; and how far this will help the government of that territory to fulfil its development plans for the period 1961 to 1964.


asked the Secretary of State for the Colonies what grants or loans are being made to Tanganyika to assist with her three-year development plan.

I have been able to put improved proposals by Her Majesty's Government for continuing financial assistance after independence to the Prime Minister of Tanganyika. But as these are being considered by the Tanganyika Government I am not yet in a position to give details.

When does the Secretary of State expect to inform the House about this? Are we not being kept waiting a very long time? Has the right hon. Gentleman seen the Press statement made by Mr. Julius Nyerere, one of the ablest and most friendly Prime Ministers towards this country in Africa? Has he not seen the expression of regret and despair made, too, by Mr. Julius Nyerere? Can the Secretary of State offer any hope that the proposals of which Mr. Nyerere was then speaking will be modified before he makes his next statement?

I have made it clear that I have put forward improved proposals. For myself, I would be quite ready to give details of them, but the Prime Minister of Tanganyika prefers not to do so at this stage and, of course, I agree with him. I will, however, make as full a statement on this matter as I can in the debate which we are to have later today.

Is it not a fact that Tanganyika was promised generous aid for its £24 million development plan? Will my right hon. Friend look again at the possibility of concentrating British aid in the earlier years of the plan and forming a consortium with the United States and West Germany to finance the later stages of the plan?

Yes, Sir, those two latter points are very much in my mind. Indeed, it is, perhaps, rather the phasing than the amount of the assistance we give that creates the more difficulty.

Does the Secretary of State mean that his proposals which he has been putting to the Prime Minister of Tanganyika are the Government's final word, or does he mean that after the Tanganyika Government have considered them, he will be prepared to continue negotiations with them?

Of course, we should be very glad to look again if Mr. Nyerere came back to us with new suggestions. In any event, we have said that we would study the development and the phasing of these loans and grants after a reasonable interval.

It could do. The matter that affects Tanganyika most, however, is how she will be able to go ahead with her three-year development plan. Therefore, as the right hon. Gentleman will appreciate, it is not only the amount of the loans and so on that one gives, but the phasing of them in the early years, that is important.



asked the Prime Minister if he will invite the Ruler of Kuwait to London to discuss with him plans for the withdrawal of British forces from Kuwait.

No, Sir. Any discussions with the Ruler can take place through Her Majesty's representative in Kuwait.

Is there not an urgent need to reduce military expenditure overseas? Could not something be done to speed up the withdrawal from Kuwait? Is the Prime Minister aware that the Ruler of Kuwait would be very welcome in the City of London, because he has £300 million invested there and he would be the right man in the right place at the right time?

In regard to the removal of our troops, as the hon. Member knows the forces there have been considerably reduced and, of course, we are urgently seeking ways by which we will be able to make a withdrawal without the threat to Kuwait being increased.

Can the Prime Minister state by how much our forces have been reduced and how many troops remain, in order to clear up the confusion which appears to exist in this matter? Can he also say whether any approach has been received from the Ruler of Kuwait since Kuwait joined the Arab League?

With regard to the first part of that supplementary question, I would rather not state the number of troops which remain. An announcement has, however, been made about some which have been withdrawn. With regard to the second part of the question, we are, of course, in the closest touch with events. For instance, we welcome very much the admission of Kuwait to the Arab League. That may enable us to find a way out.

Is the right hon. Gentleman learning the lesson, which might be of value to some of his supporters, that it is a great deal easier to put troops in than to take them out?

Yes, Sir. We had that experience in Jordan, but we were able to accomplish our task and successfully to make a withdrawal. I hope that it will be the same thing again.

As it is now clear from the statements made by the Minister of Defence and by the Secretary of State for War and the Secretary of State for Air that the number of our forces is very limited indeed, what is the purpose of retaining them in that area when it is quite impossible for them to deal with any act of aggression?

The right hon. Gentleman rather over-simplifies that question. I would rather leave it where it is.

Ministerial Statements


asked the Prime Minister whether he will arrange for all members of the Government making public statements when Parliament is not sitting to submit them first to him for approval.

European Economic Community


asked the Prime Minister whether it is proposed to discuss economic conditions for the association of the United Kingdom with the European Common Market at the Commonwealth Finance Ministers' Conference in September: and whether decisions will be taken on these conditions by Her Majesty's Government before that conference.

Relations with the European Economic Community will no doubt be one of the subjects for discussion at this meeting. As regards the second part of the Question, I would ask the right hon. Gentleman to await the statement that I intend to make on Monday.

But as this conference is to be held in September, anyway, and it is now the end of July, might it not be wiser for the Government to await the conference before making further decisions on these issues?

I told the House that I intended to make a statement and I propose to do so.

Has the attention of my right hon. Friend been drawn to a report in The Times today of the warning from the Governor of the Reserve Bank of India that India's export programme will be affected and her loan repayment plans upset if Britain joins the European Economic Community? Would not this have extremely serious consequences for our invisible exports?

I should prefer not to discuss this question. We shall have a statement on Monday and a two-day debate, and it will be better to discuss it then.


asked the Prime Minister whether he will now seek an early personal meeting with President de Gaulle to discuss Great Britain's relations with the Common Market.

I have had several useful meetings in the past with President de Gaulle. I am always glad of an opportunity to meet him.

While accepting that the Prime Minister's remarks are unexceptionable in that respect, may I ask whether he is aware that about three weeks ago, in a speech in Metz, President de Gaulle said that Britain's entry into the Common Market would be welcomed only if it was unconditional? Would the Prime Minister therefore not agree that it would be unforgivable if we were to enter into negotiations with the Common Market, which are bound to impose a dangerous strain on our existing links with the Commonwealth, unless there are real prospects of agreement in the end? In view of that, does not the right hon. Gentleman think that he should try to see President de Gaulle as soon as possible to find out whether his speech at Metz represents his final position?

All these matters will be discussed, but I really would prefer not to pursue the point at the moment. I do not think that it would be very wise to do so.

Would the Prime Minister make clear to the House that the Government do not intend to involve themselves in any real commitment, even as to negotiations, until they have consulted the House of Commons and ascertained the views of the House?

I think that all these matters will arise in the course of our discussions next week.


asked the Prime Minister whether he will undertake that, in issuing a White Paper on the measures taken by the parties to the Treaty of Rome in implementation of its articles on common organisation and institution, he will include the declaration on steps towards political unity issued by the Heads of State of the Common Market countries on 18th July.

In reply to Questions on 11 th July, I said, not that I would issue a White Paper, but that I would make available in the Vote Office copies of the Progress Reports issued by the European Commission. This has been done, except for the latest report which is now printing. I am arranging for copies of the Declaration to which the Question refers to be placed in the Library of the House.

While thanking the Prime Minister for that reply, may I ask whether he is aware that heads of the Common Market countries have now explicitly stated that they are seeking political unity in order to strengthen the North Atlantic Alliance? Will the right hon. Gentleman consider again whether it would be wise for this country to enter into an organisation whose avowed aim is to perpetuate the division of Europe and to intensify the cold war?

Those are points which no doubt the hon. Member will make in debate. I do not think that they arise out of this Question.

Public Expenditure (Control)


asked the Prime Minister what steps he proposes to take, in the light of the recommendations of the Plowden Committee, to secure effective Government machinery for taking collective decisions with regard to the control of public expenditure.

My right hon. and learned Friend the Chancellor of the Exchequer will be making a statement at the end of Questions which will be relevant to this matter.

Does not the Prime Minister realise that the Plowden Report amounts to a condemnation of the Government's failure in ten years of Tory rule to plan the economy effectively, and that this failure has produced the present crisis?

Those are matters which no doubt the hon. Member and others will deal with in the two-day debate which we are to have tomorrow and the next day.

But does the right hon. Gentleman remember that when he was Chancellor of the Exchequer he pledged himself to cut Government expenditure by £100 million, since when it has gone up by £1,200 million?

I think that I succeeded in my efforts during that period. Of course, Government expenditure is rising. The Plowden Report does not say that it should not rise. It says that it should be related to gross national product.

Hong Kong

Food Parcels


asked the Secretary of State for the Colonies what are the figures for food parcels sent from Hong Kong to the Chinese mainland during May and June.

The figures for postal packets are 1,389,300 and 1,114,140 respectively.

Can my hon. Friend enlarge at all on those figures and say whether they are more or less than for the previous month? Can he also say Whether the actual parcels are in any way similar to the food parcels which we used to send abroad or used to receive from America?


Sea Fisheries Compensation (Scotland) Act, 1959


asked the Secretary of State for Scotland if he will name the oases, and give the circumstances of each case, where seizure of fishing gear by Her Majesty's fisheries cruisers was not followed by conviction or by prosecution; and if he will state in each case the amount of compensation for loss and damage which was paid under the Sea Fisheries Compensation (Scotland) Act, 1959, or otherwise.

There has been only one case since the Sea Fisheries Cornpensation (Scotland) Act, 1959, became law where seizure of fishing gear by one of my Department's vessels has not been followed by prosecution and conviction. This was the case about which the hon. and learned Member asked me a Question on 18th July when I informed him that I had been advised that there was no liability against the Department and that the claim for compensation had therefore been refused.

Does the right hon. Gentleman realise that this amounts to Star Chamber conduct and is repugnant not only to English law but to Scottish law? Will he see that it does not occur again?

The hon. and learned Member knows very well that the procedures followed have been strictly legal and proper.

Hydro-Electric Schemes


asked the Secretary of State for Scotland when he expects to receive a report from the Committee on the future of hydro-electric schemes in Scotland; and whether all further developments are to be held up until its conclusions are reached or whether there will be an interim report where schemes are now held up.

I regret that it is not possible at present to say when the Committee's report is likely to be available. I am, however, considering with the North of Scotland Hydro-Electric Board how its generation requirements over the next few years can best be met.

May we at least have a guarantee that this further development will not be held up until the Committee reports, which I understand is not likely to be this year?

The Committee, for very good reasons, is taking longer to report than I had hoped, but I am considering very carefully with the Hydro-Electric Board its programme for electricity generation.

Private Property (Collection Of Rates)


asked the Secretary of State for Scotland when he received a letter from the Society of Procurators of the Central District of Fifeshire regarding the collection of rates by landlords of private property on behalf of local authorities under the Rating of Small Dwellings House Letting and Rating (Scotland) Act, 1911; what was the nature of his reply; and what action he will take in the matter.

The letter was received on 13th July. It represented that the valuation limits under the Act of 1911, below which house occupiers pay rent and rates together, should not be raised; and further, that amending legislation should be introduced to terminate the collection of rates by owners of small dwelling-houses. The reply, dated 20th July, stated that I do not propose at present to introduce legislation on this subject.

National Finance

Federation Of Rhodesia And Nyasaland (Financial Aid)


asked the Chancellor of the Exchequer if he will make a statement on his official discussions with Sir Donald Macintyre, Minister of Finance of the Federation of Rhodesia and Nyasaland, regarding financial aid by Her Majesty's Government to the Federation.

As announced in the official statement on 13th July, the United Kingdom Government have offered a loan of £5 million to the Federal Government for the purchase of United Kingdom goods and services. The loan is to provide funds towards the development programmes of the Federal and South Rhodesian Governments over the next two years.

May I ask the hon. Gentleman whether, even at this late hour, he will whisper into the Chancellor's ear that we hope that his statement this afternoon will not mean any restriction on aid to under-developed countries?

Does the hon. Gentleman think it fair shares to give a loan of £5 million to the Federation for two years and to restrict Tanganyika, with its much greater poverty, to £3½ million for five years?

Protective Tariffs


asked the Chancellor of the Exchequer his estimate of the loss to the Revenue in this financial year of a 50 per cent. reduction, from 1st August, of all United Kingdom protective tariffs.

The estimated yield from the duties charged under the Import Duties Act, 1958, for the current financial year is £155 million of which £103 million is estimated to relate to the period from 1st August to the end of the financial year. The cost of halving all protective tariffs would depend on the extent to which imports increased as a result of such reductions.

Is the hon. Gentleman aware that if the Chancellor of the Exchequer announced such a cut this afternoon it might actually be worth the cheer which the right hon. and learned Gentleman was given earlier when he entered the Chamber?

Any questions on trade policy are, of course, for my right hon. Friend the President of the Board of Trade.

Trade And Commerce

Japanese Trade Fair


asked the President of the Board of Trade, how much money he will be making available for the pro- motion of the official British stand at the forthcoming Japanese Trade Fair in 1962; and when it is proposed that preparations should begin.

It was originally intended that there should be a display of British machine tools at this Fair, mounted by the Board of Trade in collaboration with the Machine Tool Trades Association. On the advice of the Embassy and with the support of the industry, this display will now be staged at a specialised fair at Osaka in the autumn of next year.

My right hon. Friend does not tell us how much money will be spent on this. Is he aware that the British community in Japan is feeling very unhappy about the way the British Government are trying to prepare for this Fair?

The cost to the Government of the machine-tool display will be about £11,000. If any other industries in addition to the machine-tool industry wish to participate in this Fair we shall be very glad to discuss matters with them.

Economic Situation

Mr Selwyn Lloyd's Statement

With permission, Mr. Speaker, I wish to make a statement on the economic situation.

I think that it will be for the convenience of the House if I make a fairly detailed statement today. I am arranging for copies of it to be put in the Vote Office later this afternoon, at about half-past four, I hope. I think that this procedure will have the advantage that the House and those hon. Members wishing to take part in the debate on Wednesday and Thursday will have made available to them the text of my statement, and, incidentally, it will curtail my speech tomorrow.


In my Budget speech on 17th April I referred to the unsatisfactory balance of payments and the probable expansion of home demand with its effect upon costs, and upon our competitiveness. I provided for a very large surplus of over £500 million above the line, but I clearly indicated that I thought the situation might require further measures. I asked for two new powers—the regulators.

In the three months since the Budget, home demand has continued to increase and is likely to increase even more than was then foreseen. There are labour shortages in most areas. Investment is rising strongly. The building industry already has more demand upon it than it can satisfy, and parts of the engineering industry are coming under increasing pressure.

Simultaneously with the increase of pressure on our domestic resources, we are faced with a critical external situation. This is the third successive year in which our overall balance of payments has been in deficit, and this is, clearly, not a situation which can be allowed to continue.

In 1960, the deficit on current account was about £350 million and there was also a net movement overseas of capital funds, by way of Government loan and private investment, of about £200 million. This was not reflected in the reserve figures because of a large flow of funds to London. Indeed, during 1960 the reserves rose by £177 million and, in addition, we strengthened our position with the International Monetary Fund to the tune of about £130 million.

During the first half of 1961 our current account was still in deficit though at a substantially lower rate than last year's rate. There have, however, been heavy withdrawals of short-term balances and, in spite of the Ford transaction and the prepayment of German debt, our reserves of gold and dollars have fallen by about £164 million over the past six months. This fall would have been much greater but for the special arrangements made with the central banks.

If rising personal demand and rising investment demand are not matched by increased production, the burden falls on the balance of payments. We have less for exports and we import more. In addition, prices go up, our competitiveness suffers, and it becomes more difficult to sell our goods abroad.

In my view, therefore, our aims at the present time should be as follows: First, we should maintain investment in productive industry with a view to the long-term growth of the economy. At the same time, we must make ourselves more competitive. Both are vital for a long-term improvement in the balance of payments.

Secondly, we must see that public expenditure is brought under better control.

Thirdly, we must take action designed to protect our position in the immediate future.

The proposals which I shall now outline are, in part, long-term and matters to which I have been giving consideration for some time; in part, they are required by the exigencies of the present situation.

Growth, Profits, Wages And Salaries

I shall deal, first, with growth in the economy. The controversial matter of planning at once arises. I am not frightened of the word. One of the first things I did when appointed Chancellor was to ask for a plan of the programme for development and expenditure in the public sector for five years ahead. I referred to the problem as affecting the economy as a whole in my speech in the economic debate last February. I have thought about it a great deal since and discussed it with representatives of both sides of industry. In addition to plans in the public sector, including those of the various nationalised industries and plans for certain industries in the private sector, developments in the economy as a whole are studied by a number of bodies.

These include the Economic Planning Board, presided over by the Permanent Secretary to the Treasury, the National Production Advisory Council on Industry, over which I preside, and various other advisory councils. I think that the time has come for a better coordination of these various activities. I intend to discuss urgently with both sides of industry procedures for pulling together these various processes of consultation and forecasting with a view to better co-ordination of ideas and plans.

I stated some time ago, in February, that I thought that an annual increase of 3 per cent. in the gross national product was feasible, but only if we have a 6 per cent. annual expansion of exports. I want to discuss with both sides of industry the implications of this kind of target for the various sectors of the economy.

To suggest that British industry is generally inefficient gives a totally false picture. We have many go-ahead and progressive concerns whose performance matches that of similar ones anywhere else in the world. In addition, in the field of exports, bodies like the Western Hemisphere Export Council and the Export Council for Europe are doing excellent work. But in substantial areas of industry there is room for a greater readiness on the part of both sides for radical changes in outlook and methods. This will be assisted, in my view, by the reductions in tariffs which should come from current negotiations. Much more effort is still needed in the training of skilled labour. A determined attempt is needed to deal with restrictive practices which are out of date. A start was made with the Restrictive Trade Practices Act, dealing with one aspect, but there is much more to be done by both sides of industry.

Today, I want to deal in particular with one aspect of the drive towards lower costs. The wages and salaries bill for 1960–61 was about £1.000 million, or 8 per cent. higher than in 1959–60. Over the same period, incidentally, company profits fell by about £13 million. Personal incomes other than wages and salaries—rents, dividends, interest and income from self-employment—rose by about £450 million, or 6½ per cent. Gross dividends formed £161 million of this second figure—a 20 per cent. increase. Over the same period, national production in real terms rose by £650 million, or by about 3 per cent.

These are the figures: £1,450 million increase in personal income against £650 million increase in production. They do not make sense. Of course, one has to deduct tax and savings from the first figure to get the amount actually spent, but the second figure has to provide not only for increased personal consumption but also for increased public expenditure, increased private investment and exports. These figures reveal in the simplest form what is our present difficulty, and what it is all about. We are cashing in ahead of production, and, in the process, making ourselves uncompetitive.

Profit margins are now being squeezed to some extent, but in some cases they are still too high.

With regard to dividends, although it is true that gross they represent only 7 per cent, of the figure for wages and salaries, and net of tax even less, they have increased substantially. In present circumstances, I do not consider that a further general increase in them in the coming year is justified.

Tax-Free Profits

Before I deal with wages and salaries, I want to say something about those profits which escape taxation. I have already explained my practical objections to a conventional capital gains tax. However, that does not affect my view that certain profits at present tax free should be brought within the existing system of taxation. I said so in my Budget speech and again the other day. I have made sufficient progress in this matter to be able to say definitely that in next year's Budget I shall be bringing forward measures designed to impose a clear liability to tax over a wider field than at present.

The activities I want to see taxed are of two main kinds. The first kind are those seeking short-term profits, which are more in the nature of speculation than investment, for example, short term transactions in shares and securities. The second kind are, in effect, trading activities—often in real estate—hut cloaked in such form as to escape liability under the present law.

Wages And Salaries

Turning to wages and salaries, of course, increases in real wages and salaries are desirable, but only provided that national productivity increases sufficiently, always remembering that increases for those who work in fields such as the social services have to be found out of increases of productivity in industry. As the figures which I gave a little time ago show, at present we are heavily over-drawing on our productivity account. In my view, there must be a pause until productivity has caught up and there is room for further advances. It is not possible in any general statement to cover every particular case. Where commitments have already been entered into, they should be met.

Subject to this, however, a pause is essential as a basis for continued prosperity and growth. In those areas for which the Government have direct responsibility we shall act in accordance with this policy. The Government ask that the same lines should be followed elsewhere both in the private sector and in those parts of the public sector outside the immediate control of the Government.

In itself, however, such a pause is certainly not a lasting solution to the problem of rising costs and prices. A pause must mark the beginning of a new long-term policy. That policy is that increases in incomes must follow and not precede or outstrip increases in national productivity. During the pause we must work out methods of securing a sensible long-term relationship between increases in incomes of all sorts and increases in productivity.

Public Expenditure

I now come to public expenditure. It is now so great that unless it is brought into a proper relationship with the resources likely to be available in the long term, our chances of sound growth will be gravely prejudiced. I also want some immediate contribution from the public sector towards lightening the present overload on the economy. In making these adjustments, we must see that priority is given to whatever directly affects national efficiency, and that we do not wastefully disrupt programmes under way. We shall, therefore, not interfere with the investment that the nationalised industries require for attaining their financial targets and providing essential supplies and services.

The sums required for assistance to industry will fall away next year, and we shall apply very strict criteria to any new proposals. We shall have to look critically at the level of agricultural support during the 1962 Review. In the services provided by central and local Government, we shall have to ask for desirable proposals to be postponed or abandoned. Authorisations and loan sanctions to local authorities will have to be considerably reduced.

The house purchase scheme under the 1959 Act, which is now costing about £40 million, will, in consultation with the Building Societies Association, be suspended.

Next year, unless checked, Government supply expenditure will rise substantially. I intend to do my utmost to keep this increase at a level not more than 2½ per cent. in real terms, which should be within our expanding capacity to carry; that is to say, about £125 million above the estimates for 1961–62.

This increase in Supply expenditure over 1961–62 Estimates will be broadly offset by the savings below-the-line following the completion of the steel loans and the suspension of the house purchase scheme. Taking it all together, I would put the effect of the decisions which we have taken as being to reduce the load in 1962–63 by some £175 million compared with what it would have been otherwise, to which can be added £125 million on account of the savings below the line or about £300 million in total.

I do not wish to create any false impression about this; except for the below-the-line items these are not cuts on this year's figures; they are part of the process of containing future expenditure for which I ask the House's wholehearted support.

With regard to this year's expenditure, it would be a waste of resources to delay work in progress or to postpone necessary maintenance. Nevertheless, there will be a stringent re-examination to see what savings can be made in administration and in other respects.

On one particular matter affecting public expenditure my right hon. Friend the Minister of Education will tomorrow inform both sides of the Burnham Committee that, while recognising that teachers have a good case for some increase in pay, the Government cannot agree to the size of the increase in salaries for teachers in primary and secondary schools as proposed in the Burnham Committee's provisional agreement. The Minister is also concerned about the distribution of the proposed increases. He will, therefore, ask the Committee to make some reduction in the increase and will give them his views on how the revised sum might best be distributed to meet the needs of the education service.

My right hon. Friend will also discuss with the constituent associations how in future the Government's views can best be made known to the Committee at an earlier stage. The present procedure is not satisfactory.

Other Measures To Relieve Strain On Balance Of Payments

Before I deal with the private sector at home, I wish to say something about overseas expenditures.

Government expenditures overseas—defence, aid and administrative—are running at present at a rate which will certainly rise to some E480 million next year and quite possibly, on present trends, to £500 million. I do not believe that we can sustain such a level. My aim is to hold that figure down to £400 million in the year 1962–63. This compares with £330 million in 1958–59.


It is right that we should carry heavy burdens for the sake of maintaining our commitments to our friends and allies around the world. But the defence programme must be carefully examined, particularly in relation to the overseas payments which it involves. The Minister of Defence has put in hand another review of the whole of this programme to see what can be done to lighten the burden.

In fulfilment of commitments to N.A.T.O., we are spending some £80 million a year across the exchanges in Western Europe. Of this sum, over £65 million goes on the maintenance of our forces in Germany, in accordance with our obligations under the revised Brussels Treaty. I have come to the conclusion that the strain upon the balance of payments caused by this expenditure cannot be allowed to continue next financial year. We have, therefore, invited the North Atlantic Council to review the financial conditions under which our forces are maintained. Such a request is provided for under the terms of the Treaty. It does not affect our determination to stand by our N.A.T.O. obligation in the defence of West Berlin and the review will relate to the next financial year.

Overseas Aid To Underdeveloped Countries

Assistance to underdeveloped countries from United Kingdom Government funds has risen steadily from some £80 million in 1957–58 to £150 million in 1960, and disbursements are expected to increase still further this year to about £180 million. Most of these disbursements are being made under commitments to other Governments and to international organisations, and these commitments will be honoured. I am bound, however, to take steps to contain the increase and to see it does not rise much above the present level. There is no question of cutting back, but even to sustain this level is a considerable challenge. It will not be easy. The figure of £180 million compares, I say again, with a figure of £80 million in 1957–58 when our balance of payments was better.

Overseas Administrative Expenditure

Finally, there is the cost of our diplomatic and various administrative services overseas. The total expenditure on these is not large in comparison with that of the commitments which I have been discussing. But, even so, these services must make their contribution towards the reduction in total expenditure overseas which our present situation demands. I look for a saving here of 10 per cent. in the financial year 1962–63.

Private Investment Overseas

I now come to private investment overseas. The volume of investment in the non-sterling area, which is subject to control, has been rising steadily. It is true that it produces earnings in the long run. But these earnings do not always benefit the balance of payments in the short term—partly because of the tendency to invest further in the overseas enterprise concerned and partly because of local restrictions on remittances. I therefore propose a more severe test than at present. The test for new investment in the non-sterling area will be that it will produce clear and commensurate benefits to United Kingdom export earnings and to the balance of payments.

Remittance Of Overseas Profits Profits

The powers to control investment in the non-sterling area apply equally to investment made out of profits earned over- seas by British companies and their subsidiaries. I am not satisfied that in all cases an adequate proportion of profits earned overseas is being repatriated to this country. I propose to request United Kingdom firms operating overseas to look at their policies in order to ensure that a higher proportion of earnings is remitted home. So far as non-sterling investment is concerned, I propose to reinstitute on a selective basis the examination of company accounts by the exchange control authorities to ensure that this policy is followed.

Monetary And Credit Policy

I now come to measures designed to affect the private sector here at home. The Bank of England have called upon the clearing banks for further special deposits. In the case of the London clearing banks the call is for 1 per cent., of which half is to be deposited by 16th August and the balance by 20th September, 1961. In the case of the Scottish banks the call is for a percentage equal to one-half of that called for from the London clearing banks. In making this call the Governor of the Bank of England has made it clear that it is the intention that the impact should fall on advances.

The banks have been asked that, when reviewing existing commitments or considering new lending, they should be particularly severe on proposals related to personal consumption, including finance for hire purchase, as well as finance for speculative building, property development, or for other speculative purposes, so that all possible room should be left for the finance vitally needed for exports and productive industry. I am sure that, despite the difficulties, the clearing and Scottish banks will as usual give their full co-operation.

The Governor is also drawing the attention of the other United Kingdom banks, including the foreign and overseas banks and the accepting houses, to the action taken with the clearing and Scottish banks. He will see the British Insurance Association and ask that the insurance companies should observe a similar policy in their lending. I look to these institutions, also, to give me their support. It is not my intention to force a down-turn of private investment in productive industry. I am not pro- posing any change in the initial or investment allowances. At the same time, the demands made by private investment, particularly on the building industry, are growing rapidly and it is right that some less essential forms of development should be postponed. I do not rule out further measures if they appear necessary.

The Government do not intend to alter the present hire-purchase restrictions.

Bank Rate

With my approval, the Bank of England is announcing a rise in the Bank Rate from 5 per cent. to 7 per cent. I have agreed to this partly because of the need to restrain credit internally, and partly because of the unsettled international situation.

The effect of all this will be to make credit more expensive and more difficult to get. The impact will be felt particularly on credit for personal consumption and property development.

Customs And Excise Surcharge

I have also decided that I must take action under Section 9 of this year's Finance Act. The Treasury has, therefore, made an Order, the Surcharge on Revenue Duties Order, the effect of which is to put a surcharge of the full permitted amount of 10 per cent. on the range of Customs and Excise duties referred to in the Finance Act, and an Purchase Tax. The surcharge will take effect from midnight tonight.

I wish to make it clear that, taking Purchase Tax, for example, the increase is the equivalent of 10 per cent. of the existing rates, not an addition of a further 10 per cent. to the existing rates. There is some misunderstanding about this. Thus, for goods now chargeable at 5 per cent. the increase would, in effect, raise the rate to 5½ per cent., not to 15 per cent.

The Order will be laid forthwith, and hon. Members will see in the explanatory note the full list of duties to which it relates. I must stress that the effect on prices of individual articles will be a matter for the traders concerned to determine.

The effect of the surcharge will be to withdraw purchasing power from the economy at the rate of £210 million per year. It can, of course, be reduced or removed at any time, but if it were maintained till the end of the current financial year, it would fortify the surplus above the line to the extent of £130 million.

Imf Drawing

Finally, I have decided to take action to fortify our reserves by a substantial drawing from the International Monetary Fund. This is being put in hand. The actual amount will be announced shortly when the discussions with the Fund are concluded. I would remind the House that such drawings have to be repaid within a period of three to five years, and this means that it is all the more necessary for the policies and measures I have outlined to be pursued with resolution.

I believe that these measures will protect our position in the immediate future and will form the basis for a long-term improvement in the balance of payments. They mark the first steps, following upon the five-year review, to establish a better relationship between public expenditure and the national resources. They will enable essential investments in productive industry to continue. At the same time, they will assist to restore our competitive power, to expand our exports, and to promote soundly based growth in the economy.

It is, of course, a truism to say that the whole tone of the statement of the Chancellor of the Exchequer was utterly inconsistent with the prospectus on which the Government got back to office. Perhaps it will take the smirk off the Prime Minister's face if he is reminded that the boasts of prosperity on which he won the last General Election are now being sustained by borrowing sixteen years after the war.

The Chancellor's statement lasted for half an hour, and I want to put these questions to him. First, is he aware that his whole statement has shown the classical bias of the Government against public services and public expenditure, while, despite his warning, their tenderness to the private sector? The Chancellor referred to labour shortages. Will he tell us why, despite labour shortages and a record investment programme over the last year, there has still been no increase in productivity? How does he explain that?

The right hon. and learned Gentleman said that rewards should not go ahead of the increase in productivity necessary to earn those rewards. Wild he tell us, then, why we had nothing from him in his proposal about scrapping the Surtax concession in the last Budget?

Turning to the specific proposals, is he aware that the most clear and specific ones are the restrictions in housing, in house purchase, which are to be administered by Government fiat, and, at the same time, the increase on the interest rates which, of course, will bear far more harshly on local authorities than on the private sector? Will the right hon. and learned Gentleman also try to justify his attack on wages in the public sector, including the salaries of teachers?

Does not this once again show the Government's bias against people who, in the main, are underpaid and are essential to the community against other people, whose spending power is increasing all the time with Government help?

With regard to the private sector, while we welcome the Chancellor's halting progress towards a capital gains tax on the lines that we have suggested many times, will he tell us why he is doing nothing to repeal relevant provisions of the 1957 Finance Act, which enable private companies to keep their profits overseas as a means of avoiding taxation? Warnings here are not good enough.

There are a great many other points which we shall want to debate tomorrow and on the succeeding day, but in relation to this regulator, this 10 per cent. increase in indirect taxation, has not the Chancellor yet understood, as we told him repeatedly during the discussions on the Finance Bill, that this is a measure which will press most heavily on ordinary families? An increase of 5d. on an old-age pensioner's tobacco is a very serious thing, of which the Government really ought to be ashamed. This will press on ordinary families, but he is doing nothing to increase, by a similar surcharge, the level of direct taxation on the wealthier taxpayer, in that he is still maintaining his Surtax concession.

Will the right hon. and learned Gentleman say how he can justify this discrimination between the essential, on the one hand, and the inessential, on the other; between the public sector and the private sector; and, finally, between ordinary families and the richer taxpayers who are getting away with it?

The right hon. Gentleman began his questions by referring to prospectuses. That is a matter which we are very ready to debate with him and his right hon. Friends. He also referred to borrowing. The right hon. Gentleman and his hon. Friends have some experience of that, too.

The right hon. Gentleman went on to say that my statement showed a classical bias against public expenditure. It did nothing of the sort. It showed my belief that we have to bring public expenditure under proper control in relation to national resources.

The Surtax proposals do not come into effect until 1963, but I maintain that the proposal I have made for restricting credit in these present circumstances is fair between the public and the private sector.

The Opposition did not vote against regulator No. 1 when it went through in the Finance Bill, and I would have thought that it was clear from the facts I have outlined that these are precisely the circumstances in which that sort of regulator ought to operate.

Before my right hon. and learned Friend concluded that he should in any way reduce any overseas spending, what consideration did he give to the question of the financing of the social services generally? For example, is it still justifiable that the State should bear about £68 million a year on school meals and milk? [HON. MEMBERS: "Oh."] Is he aware that he will have the fullest possible support for any measures he takes to strengthen the value of the £, such as he announced this afternoon?

I note what my hon. Friend said. I will bear it in mind, but I have tried to keep a proper balance in these proposals.

Is not the upshot of what the Chancellor of the Exchequer said that nothing new or unexpected has developed in the world economic scene? What we have been told is that Tory economic policy has been totally mis- calculated and totally inadequate. Is it not only three months since we had a Budget in the House, which is now shown to have been quite irrelevant to the economy of the country? Have not we been told today that the only thing the Government can think of in the current year is again to put up the Bank Rate and increase Purchase Tax? Is it not time that a Government who have come to the end of their road should resign?

I do not think that the hon. Gentleman can have listened very carefully to my statement. As regards the suggestion of miscalculation, I indicated very clearly in my Budget speech what the trends were, and the hon. Gentleman knows quite well that the international situation has certainly not improved since then. The figures which I have given show that internal demand has continued beyond what was to be expected. I do not remember at any time during my Budget speech any hon. Member of the Labour Opposition, or even of the Liberal Party, suggesting that the Budget ought to be harsher. Therefore, I think that there is a considerable element of humbug in this sort of criticism.

While congratulating my right hon. and learned Friend on his tough, resilient, and realistic statement this afternoon, may I ask him to answer two short questions? First, what does he intend to do with the extra £140 million in taxes that he is raising under Section 9 of the Finance Act in the current year, and £210 million in a full year? Is it intended to put it back into a fund for perhaps post-crisis tax credit to those who paid it, or what does he intend to do with it?

Secondly, in view of the dangerous inflationary pressures which he has explained this afternoon, would not it have been advisable to increase the incentives to personal savings, and to study the drop in the results of the National Savings movement in the last few months and perhaps have a new issue of National Savings Certificates, the 11th issue, or increase the limit on the present issue—but at least do something as a further hedge against inflation by giving people incentives to save instead of to spend. Would not that have been advisable?

The yield of the extra tax will be used to fortify the surplus and diminish the inflationary pressure. I think that my hon. Friend's second point is a matter for debate. I am not at all out of sympathy with the suggestion that he put forward, but I think that it is a matter for debate.

Will the Chancellor of the Exchequer agree that during the past year there has been virtually no change in British industrial production? Can he say whether the measures that he has announced this afternoon are intended, as far as he is concerned, to increase production, to reduce production, or to leave it unchanged? Can he also say by what means the Government propose to increase the long-term efficiency and competitive power of British industry?

The answer to the right hon. Gentleman's second point is, "By reducing costs". As for the first point, I believe that the best way upon which to build an increase in British production is to have the economy soundly based, to have public expenditure in proper relation to resources, and also for the steps to be taken in industry which I intimated in my statement.

My right hon. and learned Friend spoke of drawings from the International Monetary Fund. Is he aware of disturbing reports that I.M.F. assistance to sterling may be made conditional on our merging with the Common Market? If such pressure is applied, do the Government realise that if they tell the people and trust the people they will have the unswerving support of the nation for any measures necessary to resist such interference in British affairs?

There is no question or possibility of any such condition being imposed. As for drawing upon the International Monetary Fund, I would remind the House that during last year we strengthened our drawing powers by about £130 million. Our view of this Fund has always been that it should be used for immediate recourse in time of temporary difficulty.

In his survey of the economic position of the country has not the Chancellor overlooked one very important item, namely, the fact that we are now spending £1,600 million a year on military organisations? When he referred to the need for maintaining our obligations to N.A.T.O. and, at the same time, called upon the Minister of Defence to review our overseas military expenditure, what did he mean? Did he mean that we intend to withdraw some of our forces from the West, or are we to reduce our military commitments in some other theatre? Can we have some clarity in these matters?

As for military expenditure overseas generally, what I said stands. The Minister of Defence will have a review to see whether the burden upon our foreign currencies can be reduced. As for Western Europe, we are acting in accordance with the terms of the W.E.U. Treaty and in accordance with the procedures established by N.A.T.O.

Is my right hon. and learned Friend aware that the farming community will expect to make some contribution towards the national effort to overcome our difficulties? Nevertheless, has he taken full account of the fact that what has led to the subsidisation bill increasing at the ratepayers' expense year by year has been the uncontrolled nature of imports of products similar to those the stimulation of production of which is being encouraged by the Government? Can he therefore give an assurance that the whole question of import policy with regard to those commodities which are subject to the encouragement of Price Reviews will be fully examined?

The answer to the first part of that supplementary question is "Yes, Sir". The second part opens up wider issues.

Does the Chancellor think that the trade union movement will accept the philosophy of wage restraint in the light of the decisions that he has announced today?