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Orders Of The Day

Volume 650: debated on Thursday 30 November 1961

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Order for Committee read.

Motion made, and Question proposed, That Mr. Speaker do now leave the Chair.—[ Mr. Redmayne.]

Public Accounts Committee (Reports)

3.49 p.m.

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:

"this House takes note of the First, Second and Third Reports from the Committee of Public Accounts in the last Session of Parliament, and of the Special Report from the Committee of Public Accounts."
I should begin, perhaps, with the same explanation that I gave when I opened a similar debate a year ago by saying that though I am speaking from my accustomed place in the Chamber I am opening the debate as Chairman of the Select Committee of Public Accounts and not speaking for the official Opposition on the subject under review. The Reports which the House has no doubt studied cover a wide range of subjects, but perhaps the House will bear with me if the first point to which I draw attention is the one recorded in Question 2278, namely, the fact that last year was the centenary of the Select Committee of Public Accounts.

It was on the 9th April, 1861, that the then Chancellor of the Exchequer, William Ewart Gladstone, moving that a Committee of Public Accounts be established, said that
"the object of the Committee would be to revise the accounts of the public expenditure after they had gone through the regular process of examination in the hands of the executive Government. …"
This Motion went through without debate. However, on 19th April the then Chancellor of the Exchequer moved the nomination of Members to form the Committee and there was immediate opposition from an hon. Member, Mr. Hennessy, on the ground that the Committee did not contain a single Irishman. Mr. Seymour Fitzgerald then drew attention to the fact that the Committee did not contain a single Scotsman, and he pointed out that one hon. Member, Mr. Richard Cobden, was at that time in Algiers.

The adjournment of the debate having been moved to deal with these omissions, the Chancellor of the Exchequer deprecated the suggestion that
"these national distinctions should be imported into the appointment of a Committee of that House."
He went on to say that
"The Government had sought to ascertain what hon. Members were best qualified to undertake these duties, which were of a dry and repulsive kind, and he believed their choice was correct."
After a Division the Committee was appointed.

Whether it is still true that these activities are of a dry and repulsive kind, it is certainly true that the Committee is now responsible for handling appropriation accounts considerably larger than those which Mr. Gladstone contemplated at that time. In 1861, they added up to £69 million. The Appropriation Accounts covered in the Reports before the House this afternoon add up to £5,600 million, or rather more than an eighty-fold increase in the century during which the Public Accounts Committee has been in operation. It is still true, however, despite that change, that the main basis of the Committee's operations remains responsibility for satisfying the House that money voted by the House has been properly accounted for and has been devoted, as the Income Tax Act would put it, "wholly, necessarily and exclusively" for the purposes the House intended when it was voted.

I do not propose to spend a long time on the history of the Committee, but I think that one or two points from that history will have some bearing on the way that the Committee conducts its activities today. In the early days of its activities it spent its time in clearing up the jungle of pre-Gladstonian finance, getting the idea of strict appropriation established, dealing with the endearing habit of the Revenue Departments of retaining tax revenue for their own expenses, the misuse of the Treasury Chest and Civil Contingencies Fund, and the retention of balances by Departments from one year to another.

The first milestone in this history was the Exchequer and Audit Act, 1866, which gave the Committee a real opportunity, by providing not only an independent audit, but also providing that professional expertise which has been the mainspring of the Committee's work ever since. I am sure that all hon. Members who now serve on the Committee would join with me in a tribute to the work of the present Comptroller and Auditor General and his very dedicated staff at Audit House. The second milestone was the practice, which developed from 1870 onwards, that the Opposition should provide the chairman. The tradition also developed that the Committee should not merely report on cases of misappropriation in the widest sense of the term, or misapplication, but deal with the problem of ensuring that due economy had been observed. The appointment of accounting officers in 1872 was the third development, and for many years it has been the permanent practice that the chief official of each Department has been the accounting officer responsible not only as Permanent Secretary to his own Minister, but also as accounting officer to the Committee of Public Accounts. There was a long, weary battle with the War Office before it finally came into line, but that was long ago.

I should like to refer, in passing, to a famous test case in 1888 which established the powers of the Committee. There was a firm known as Thorp and Son—I do not know whether it had any relation of the hon. Member for Devon, North (Mr. Thorpe) in it—which had contracted to supply the War Office with ribbon at 14s. a time, though I do not know what was the unit of measure. The War Office cancelled the contract and placed a similar order for similar ribbon with Davis and Company for 20s. The War Office refused the application of the Comptroller and Auditor General for information on the ground that the Committee did not deal with matters of administration, but the Comptroller and Auditor General was backed by the Committee and won. It has been unquestioned ever since, and the Reports are more and more related to issues on which the Comptroller and Auditor General has reported to the House and the Committee has full access to all the information it requires in its discharge of its duties.

If there is any change today it would be true to say that the Committee now devotes less attention to the problem of due economy merely for the sake of past events and locking the stable door after the horse has gone and is now spending more of its time drawing attention to any failure of administration, of methods and system, which has a bearing on the future. To that extent it is less and less true to say, as some perhaps not well-informed observers say, that the Public Accounts Committee is concerned only with the past. This is now nothing like what perhaps it was many years ago.

Last year we had the first debate under the new arrangement proposed by the then Leader of the House on the question of Government expenditure. In that debate I tried to stress the value of, and, at the same time, to make clear, the limitations of the work of this Committee and, by and large, what I say here applies also, of course, to the Committee on Estimates. These Committees cannot do much, indeed the House cannot do much, to control the general volume of public expenditure. Last year I devoted a long time to referring to the great debate between the Gladstonian and Disraelian concepts of the control of expenditure, and I said that all history has accepted now what Disraeli then said—that "expenditure depends on policy".

It is useless and hypocritical for the House to vote one day for a particular increase in expenditure, for example, on National Assistance payments in the summer of 1959, or for a new development in defence expenditure and then, the following February, curse the Chancellor when he adds up the Estimates and asks for the money to pay for expenditure for which perhaps the House has voted unanimously.

All that we on the Committee of Public Accounts can do is, first, to deal with the problem of misappropriation in the parliamentary sense of the word and, secondly, as far as possible secure value for money. It is a limited objective, but, I believe, an important one. I believe that in doing this both the Public Accounts Committee and the Estimates Committee have important and complementary functions. Here, perhaps I might be permitted to refer to the election as Chairman of the Estimates Committee of the hon. Member for Farnham (Sir G. Nicholson), who is a member of the Public Accounts Committee, and to wish him well and all success in the very important task which he has taken on for the future.

I do not apologise for taking a little time for saying one or two general words about how the Public Accounts Committee works. There are, actually, only three essential factors in our work. The first is the direct contact between the Committee and the accounting officers of the Departments. Many observers and experts in political science might find something anomalous about the fact that a Committee drawn from the Legislature maintains direct contact with top level officers of the Executive. This is a typically British compromise. There is no nonsense on Montesquieu lines about separation of powers.

The Treasury has always insisted on full responsibility to the Committee of the accounting officers. The Treasury reaffirmed its attitude to the Committee as recently as 1953. Frankly, I think that we all know that accounting officers take this responsibility seriously. When I was a Minister, a distinguished civil servant who feared no man I knew, and who worked happily with Dalton, Cripps, myself and others and who never lost a moment's sleep over these duties—told me that he always lost a whole night's sleep before appearing before the Public Accounts Committee.

Perhaps it is not going too far to say that the Public Accounts Committee is the only blood sport which is sanctioned by Parliament and which is enjoined upon a select number of its hon. Members as a parliamentary duty. My colleagues, I understand, are normally kind-hearted men, kind to animals, and men, who in their private lives, would not hurt a fly. Some of them—not all—would be conscientiously opposed to field sports. When they enter Committee Room 16 upstairs they take on what Shakespeare's Henry V called
"a terrible aspect"
and enter on their duties in the Committee hunting season, which roughly covers the span from December to June, in a way which less understanding observers might regard as a sublimated blood lust.

In spite of all that, not much blood is spilled. The Civil Estimates are a great deal higher than some years ago.

I will deal with the question of blood, the noble Lord and Civil Estimates later. It is, perhaps, not incorrect to say that the noble Lord must vote for practically the whole of the increase in the Civil Estimates year by year which, when added up, he condemns as the sum total.

As I say, I will refer to those matters later but while I am still referring to the activities of the Public Accounts Committee in its examination of the witnesses before them, perhaps I might express a personal view about the quality of the great majority of the accounting officers who are now coming before us.

We are now seeing a new generation of accounting officers. They are younger men who give me the impression of being clear, straightforward and used, in many cases, to handling big business Departments. Yet, in the main they are as dedicated to the protection of the public purse as were their predecessors. It is only right that they should be so.

The second aspect of the Committee's work is the importance of the close links between the Committee and the Treasury. Although the Treasury is technically a witness before the Committee—and is often rather roughly treated in that capacity—it is also regarded as a partner, in a sense. We in the Committee are the Treasury's inquisition and it is our secular arm. Perhaps it is also that our function, our in terrorem function, of preventing waste is more significant than anything we achieve in our Reports on waste after it has occurred.

I would put it to the noble Lord that it is obviously difficult for me to produce evidence on this, or to produce identifiable blood which he could examine. But I think that the fact that the Committee is there, acting in this in terrorem capacity, prevents a possible development in one Department after another which might lead to adverse criticism. This is neither something which we nor the Treasury can ever know about, but I think that the Treasury feels that this is perhaps the most important function of the Committee and that, in this sense, my hon. Friends on the Committee constitute a standing deterrent which, in modern phraseology, remains both credible and real.

Thirdly, the essential fact is that this Committee is a Committee of the House, responsible to the House as a whole and is not a battleground for party factions. In the 100 years of its existence there are only 64 recorded Divisions. Perhaps it would be departing a little from the impartial manner in which I am debating this matter if I said how many of these have occurred between 1945 and 1961.

There have been times of great party passions, but I feel that if any one member of the Committee is more responsible for this calm atmosphere than anyone else it is my hon. Friend the Member for Chesterfield (Sir G. Benson). Since this is the Committee's centenary year it should be noted that of its hundred years of existence my hon. Friend the Member for Chesterfield has been a member—there was a gap from 1931 to 1935 for reasons we all understand—for so many years that the period from the time he first joined the Committee amounts to nearly one-third of the whole hundred years' history of the Committee. My hon. Friend explained to me—since he is not here at the moment—that he would not be able to be present during the early part of the afternoon as he was attending an important and State ceremonial occasion. I think that it is the funeral of someone who was in public life.

I believe it is true to say that the authority of the Committee is greatly enhanced by its unanimous character, and, I hope, the complete objectivity of its reports. It is fair to say that many hon. Members of both parties have made great endeavours and have sometimes sacrificed personal views to ensure that this should be so.

I do not apologise for having spent so much time explaining certain aspects of the Committee's workings. I think that there is probably a vagueness in the minds of the general public about what the Committee does. There may even be a little vagueness among the small minority of hon. Members who do not read every word of our Reports, about our exact functions and about the limitation which, by the nature of things, must be placed on that function.

Because I have spent a few minutes dealing with these general subjects, inevitably I cannot go into the detail of all the subjects covered in our Third Report, which are now commented on in the Treasury Minute. I hope that some of my hon. Friends on the Committee, if they catch your eye, Sir, and a number of other hon. Members will wish to take part in this debate, because I would deprecate it if the debate were thought to be just an opportunity for members of the Committee to speak. I hope that the debate will embrace the whole House.

No doubt many hon. Members will be dealing in detail with some of the subjects covered in the Report. I will confine my observations to a small number of them. The House will see that the Report this year—and this is true of every year—covers a wide range of subjects and I will briefly summarise them. It covers loans for the Malta Dockyard, delay in receipt of audited accounts for the Colonies, financial assistance to the British Guiana development programme, a full examination of the problems of financial control within the University Grants Committee, which has been a subject dealt with by the Committee many times, the National Health Service, the problem of pharmaceutical manufacturers' costs and also the margins and fees allowed to chemists, rents in Scotland and the Committee's examination of the control, or inability to control, research and development contracts in the field of guided missiles, this year with particular reference to Blue Streak, the examination of the operation of the activities of the ring which exists in the supply of equipment to the Post Office, naval education, the costs of refits in the Royal dockyards, materials purchased by Royal Ordnance factories, some skullduggery in connection with payments for certain Air Ministry maintenance work, financial problems connected with airports and the extraordinary financial obscurantism of the Atomic Energy Authority.

In addition, the Committee spent a considerable time on new Treasury proposals to change the form of Estimates presented to Parliament and its proposals to change the procedure for recording losses, write-offs, and so on, on Appropriation Accounts. I shall not go into all these objects. No doubt other hon. Members will between them cover practically every important question which the Committee has thrown up. For my part, I propose to draw attention to just four subjects, pharmaceutical services, research and development contracts, the bulk supply agreements for Post Office equipment, and certain problems arising from Ministry of Aviation control of airports.

I take, first, the National Health Service. The House had long debates, both by day and by night, last spring on certain proposals which came from the Minister of Health at that time. I shall not go over that ground. Several hon. Members, on both sides of the House, I think, drew attention at the time to the problem of the rising cost of pharmaceutical prescriptions, particularly propriettary drugs. I think that the Report and the evidence taken enables the House now to have a fuller picture of the problem, though not as full as the Committee would have liked.

The total cost of prescriptions has risen during the past two years from £68 milion to £81 million, an increase of £13 million in two years. The average cost per prescription has risen from 5s. 11½d. to 6s. 10¾d., an increase in two years of 16 per cent. in the cost per prescription. It is a fact, also, as the Committee has noted, that the cost of proprietary preparations is rising more than proportionately with the cost of drugs generally.

Last year, the Committee, after a very lengthy investigation which was largely frustrated by the virtually total ignorance of the Ministry at that time of the figures we required, simply expressed its concern and said, rather ominously, that the figures had better be made available this year, "or else …". Evidence produced to the Committee during the previous Session showed on the face of it that for eight British subsidiaries of American concerns profits on pharmaceutical business as indicated in the firm's published accounts averaged nearly 73 per cent. on capital employed, with individual figures of separate firms ranging from 37 per cent. to 98 per cent. The comparable figures for wholly owned British companies—I think that I should not use the word "comparable" here— showed 20 per cent, on capital, and for subsidiaries of Swiss companies operating in this country the level was 13 per cent.

Of course, the Committee recognised that qualifications have to be made. All of us are well aware of the problem of financing research. Moreover, in regard to the American-owned companies—though, presumably, this would apply to some extent, at any rate, to Swiss companies as well—there is the fact that some of the cost of research, perhaps a substantial proportion, is undertaken abroad and, therefore, does not enter into the figures here. That is why I qualified my use of the word "comparable" just now.

The Ministry this year, so that we should have a fuller statement, produced the report made by an eminent firm of accountants which had examined the figures. This firm of accountants accepted the companies' own statements of the amount attributable to research undertaken in the United States which it was not in a position to check or query, and reached the conclusion that, allowing for this, the range of profits was nothing like so spectacular as appeared the previous year, but the range was, nevertheless, from 18·4 per cent. to 44·8 per cent., with a weighted average of 33·67 per cent.—still very high in relation to the figures for British and Swiss companies.

The Ministry accepted that these figures were too high and entered into negotiations. I believe that there has been a big improvement in the past year in the way that the Ministry has approached the problem. Speaking for myself, however—it is a little difficult for an individual member of the Committee to say these things, and other hon. Members who catch your eye, Mr. Speaker, may express different views about it—I do not feel satisfied with what has so far been achieved. Incidentally, if the figures given by the companies to the firm of chartered accountants, Messrs. Cooper Bros., to cover the American element in the costs are true, then they hardly square with the impression one gains from a study of the evidence presented to the Kefauver Committee of the United States Senate which has been conducting a parallel inquiry. If all this American-spent capital is related to earnings here, then the percentage profits to which the Kefauver Committee has drawn attention in America would have to be very substantially increased and would give a very different picture.

The Committee has called for further figures to be made available, especially figures of advertising costs. We have been told that expenditure on advertising through the mail and through free samples amounted to 4·31 per cent. of the total net sales of about £50 million, but this figures does not include the cost of sales promotion activities by door-to-door representatives, which we all know to be quite considerable. I think that it will be generally agreed that these advertising costs are important and that the House ought to know about them. In the first place, they enter into costs and, to the extent that they enter into costs, they are an element in the fixation of the price.

Secondly, since the profit, whether reasonable or unreasonable, is calculated as a percentage of the cost, then, of course, the higher the advertising costs the higher are total costs and, accordingly, the higher is the profit, and therefore, the higher the price. Thirdly, quite apart from the cost element, I do not think that anyone will deny that the high-pressure salesmanship which goes on is bound to have some effect, however vigilant doctors may be, on doctors and general practitioners to prescribe more expensive drugs.

Every hon. Member who has talked to doctors will have seen the enormous parcels of literature which reach doctors, and not only literature but gifts, many of them rather irrelevant, I think, to the performance of their medical duties. If the House will allow me to refer to a personal experience, in the days before I became Chairman of the Public Accounts Committee, when I still had time for indulging in vices, I used occasionally to try a little golf. On one occasion, after I drove off from the first tee, I found that, with that well-known deviationism to the right which hon. Members on both sides of the House have always associated with me, the ball ended up under a bush. I went to the bush to look for it, not being able to afford new golf balls on quite that sort of scale and there I found three new golf balls all of them bearing the name of a well-known American pharmaceutical manufacturer. I knew that this company had diversified considerably, but I did not know that it had gone in for making golf balls.

On making inquiries from my partner, a surgeon, I learned that all the leading doctors and surgeons of the area, most of them constituents of the Chief Secretary to the Treasury, had, one day during the previous week, been invited there at the expense of this manufacturing firm. They had been given a lot to drink and a very good lunch, after which those of them who felt able to face the elements went out to play golf and were presented by the company with a box of golf balls all inscribed with the company's name.

I think that that is going a bit far. Hon. Members may not in principle object to golf balls being supplied on the Welfare State, but I think that we should like their distribution to be rather more equitably controlled so that we can all have some, not just the doctors.

This was a rather extreme example, and I understand that the Ministry of Health has, over the years, been trying to persuade the pharmaceutical manufacturers to be a little less extravagant in their methods of sales promotion. I think that the Ministry has had some success, but I do not think that it has gone all that far. Every hon. Member will have evidence about it. I heard of a case recently where a high and important official of a public health department in one of our big cities was lured away from the important work he was doing by a very tempting offer from a drug firm, which suggests that, so long as this sort of thing can happen, our priorities in the Health Service must surely be wrong.

As I have told the House, the Committee did not reach any final conclusions on the matter, because it did not have all the figures it needed. I, at any rate, am very disturbed to see in the Treasury Minute printed in the Special Report which is available to the House that, despite pressure by the Ministry, the information which has been asked for by the Ministry is still not forthcoming. I suggest to the House that from an industry which has grown fat at the expense of the public purse this is simply gross impertinence and the House ought not to tolerate it.

We were told last year that when the Ministry asked for particulars from individual firms, all it got was a letter from the trade association concerned—there were no replies from individual firms—saying that it refused to supply the information. Now we have a Report to the House, with the authority of the Treasury, saying that the Government, so far at any rate, have not obtained it.

I do not think that the Government are powerless to obtain the information if they want to ask for it. After all, Government expenditure depends, or should depend, on having all the information. Perhaps I may remind the House that in the days of price control during the war and after the war—for example, price control of textiles and clothing—though there was no public money involved after 1947 when the subsidies were ended, the Board of Trade in those days received the most detailed information about every element of costs and profits.

This is a situation in which public money is involved, where tens of millions of pounds are spent year by year, and the executive Government have not got the information they need. I do not wish to prejudge what this year's Committee may say or do. There can certainly be two views on this question in the House, and it would be perfectly fair for there to be two views on this in the Committee; but I feel that it is right to say, speaking as an individual, that if the Ministry loses its nerve about getting the information required it should be remembered that the Committee has full power to call for persons, papers and records.

Let me say once again, as I did a few moments ago, that although there is still a long way to go I believe that there has been a very great improvement at the Ministry of Health. From the evidence we have had, the Ministry seems much more aware of the considerations affecting the public purse. There has also been the decision about patents and about importation from abroad. I do not want to go into this question, because I know that it is a highly controversial one within the House, though perhaps I should say that in this matter I owe a great deal to Sir Stafford Cripps, who was one of the greatest patent lawyers this country has ever known. He always took the line that where the public interest was involved patents, being the gift of the Crown, should not be used against the Crown. Therefore, speaking purely for myself—here I cannot pretend to speak for the Committee, because this question has not been before us—I welcome the action taken by the Minister of Health.

On the question of chemists' prescriptions, on which negotiations are currently proceeding, all I can do is to draw the attention of the House to one or two facts in the Report. The 1956 costing and settlement, which was intended to provide an average net profit per prescription of 2¼d., turned out the following year to be yielding an average realised profit not of 2¼d. but of 3·865d. per prescription, getting on for double.

It should be remembered that the flat percentage to be added to raw material and other costs meant an automatic windfall gain to the pharmacists as a result of the higher prices charged by the manufacturers. It is probably true to say that manufacturing costs were rising more than the costs of running chemists' shops during that period and that this of itself involved an automatic increase more than the Ministry envisaged in 1956. However, the Minister has now acted. He has now shown himself to be a great deal more tough in these matters than his predecessors. Whether he has been tough enough or too tough, time and the future investigations of the Committee of Public Accounts will no doubt show.

I turn briefly to research and development contracts. I spent a great deal of time on this subject last year. So did the House. It appeared to us then that the problem was virtually insoluble. The arguments we put forward were that it was difficult to place an order for some new development—not an identifiable piece of hardware like a big battleship or a gun, or even an aircraft, but a new scientific development whose performance was unknown, and the cost of whose production was perhaps incalculable. All of us felt that doing it on a cost-plus system meant that we were entrusting the very important task of financial control to the manufacturers themselves who, as I said last year, in the matter of the interests of the public purse were sometimes rather less than enthusiastic.

We made some very detailed investigations of the record of certain weapons—Sea Slug, Red Shoes, Thunderbird, and also an examination of the Spadeadam Waste story. This year we had to add to those our examination of the Blue Streak development. Once again there is the record of cost-plus contracts without detailed specifications. As the Report points out:
"after six years, although a specification was available for many of the details, there was still not a complete specification"
covering the production of the missile in question.

In paragraph 53 we say this:
"Your Committee observe that in 1955 the Ministry were able to make only a conjectural estimate of £50 million for the cost of this project excluding expenditure in Ministry establishments and on firings, and that for October, 1957 to early in 1960 the total estimated cost of the project rose from between £160 million and £200 million to between £280 million and £310 million."
That shows a major example of miscalulations of the original cost.

I will not go into the wider question of defence policy, whether it is right or not to rely on the nuclear deterrent. Nor do I intend to go into the narrower question whether, having decided to rely on the nuclear deterrent, Blue Streak was the right instrument to choose at that time. Purely on the narrow question of finance, I think that the House must agree that the system of control and the estimating in this case have been utterly deplorable.

We have been given evidence of a number of reforms, particularly design studies, technical programmes, and other important and quite hopeful developments. I know that the hon. Member for Portsmouth, Langstone (Mr. Stevens), if he catches your eye, Mr. Speaker, will have a great deal to say on this subject as a result of the Committee's work. I believe that an honest attempt has been made to solve this problem, but the Committee obviously has many doubts and reservations and no doubt we shall be called on to report again in future.

I turn very briefly to the system of allocating Post Office contracts among the happy band of manufacturers which forms the ring of suppliers for important equipment. That such a ring exists is not denied. That it is a very closed shop and that even efficient and modern firms have been unable to obtain access to it, except by purchasing a ring firm, is public knowledge, I think. It is also beyond dispute that this ring covers thirteen manufacturers in four specific rings, getting orders altogether for £28½ million at the expense of the public purse in 1959–60, which is half the total contracts placed by the Post Office.

It is equally beyond dispute, on the other hand, that successive Postmasters-General have regarded the system as advantageous to the Post Office and even to the public purse. I know that this is the view which has been taken by the Post Office, though I should want a little more convincing on this.

What does take a lot of excusing and explaining is the fact, to which the Committee draws attention in paragraph 63, that three-year contracts which were in force from 1957, and under which work was being done and money paid out by the Post Office were not actually signed until 30th September, 1960. There was no competition. They were all negotiated contracts. Work was proceeding. It was nearly completed. Sizeable profits were made, yet the contracts under which these profits were made were not signed until the contracts had been almost completed. In the case of cables, for example, covering four years from September, 1957, the agreement was not signed until three of the four years had run.

The fourth of the subjects I want to comment on relates to airports. Here again, the Committee's work has covered a wide range of subjects connected with airport finance. There is an important concurrent Report on this subject from the Estimates Committee. I shall refer only to one of the subjects we have dealt with.

The House will remember that speaking not as Chairman of the Committee of Public Accounts, but when wearing my other hat I had occasion recently to refer to the Government's attitude to the sanctity of agreements in respect of wages for certain airport employees who were due to receive a small wage increase under the agreement covering "M" class employees. I will not pursue that subject this afternoon. It is quite clear from paragraph 96 of our Report that the Government do not regard so lightly the agreement which they made, without going to tender, with big oil companies—suppliers of fuel at London Airport—an agreement which is regarded as binding on the Government until 1991, about thirty-five years from the date of signature.

In some countries, for example, the United States of America, agreements giving a particular oil company the right to occupy premises on international airports and to supply fuel, usually provide for rents which vary with the volume of the sales or of the profits of the companies concerned. But the genius who concluded the particular agreement in respect of London Airport has ensured that the companies concerned hold their rights for thirty years ahead, and more, at a fixed rent. I hope that we shall get an explanation of this from a Treasury Minister today.

I will not further weary the House by going into the question of the new form of estimates and accounts. I know that hon. Members on both sides want to deal with this question. On the form of the estimates, I think that is probably more the concern of the Estimates Committee, which spent a long time studying it. On the question of the Appropriation Account, the Committee was concerned with proposals about the writing off of losses and questions of that kind. This problem of the way in which losses should be dealt with is one of the subjects thrown up by the Report of the Plowden Committee.

I am not going into the important issues raised by the Plowden Report, but I feel that the House should have a separate debate on that Report at the earliest possible opportunity. Some of the more important recommendations of the Report follow the pioneering work of the Estimates Committee, which the hon. Member for Farnham has been particularly active in pressing on the House in the past two or three years. Since the Government owe the House and the two Committees concerned a day which we lost last year in debating these subjects, there might be a useful compromise if we were to be offered a day on which the Estimates Committee, in particular, could debate its own Report and the question of the Plowden Report.

On the proposals for long-range expenditure forecasting, on which the Financial Secretary and I have exchanged courtesies in the past, and occasionally rather barbed courtesies, I welcome the proposal of the Plowden Committee, though for my part I would go further, and, on this issue, would say that the Report should be published. On the other criticism of the serious effect and the increased cost to the taxpayer of the "stop and go" policies in Government expenditure, I welcome the Plowden Committee's proposals with much more enthusiasm than the Financial Secretary to the Treasury.

About the general proposal of the Plowden Committee to diminish Treasury control and place the responsibility of control on the spending Departments themselves, I must say right away that I have many more reservations. I myself am not satisfied that the arrangements in the individual Departments are yet such as to provide adequate protection for the public purse. Indeed, when we look at some past Public Accounts Committee Reports on such subjects as the Independent Television Authority and missile contracts, I think that we can see some evidence—I do not like saying this—of a rather laissez faire attitude, almost a "couldn't care less" attitude, on the part of the Treasury.

It is difficult to escape the conclusion that we are at present getting the worst of both worlds; that we have a diminution in the effectiveness of Treasury control with no corresponding tightening of the machinery for Departmental control. Obviously, the Plowden proposals will need the most careful scrutiny by this House before further progress—or regress—is made in this connection.

Although I have spoken longer than I intended, I should like to say that I am conscious that I have not given to the House any real idea of all the work my colleagues put in on this Committee for the benefit, as I believe, of the House and the taxpayer. Still less, perhaps, have I given, as I ought to have given, any impression of what a privilege I feel it to be to work with a group of hon. Members of both parties and of political views which, outside Committee Room 16, can and do give rise to vehement and passionate argument, but who, in the service of this House on the Public Accounts Committee, can bring a spirit of dedication and comradeship of which I feel we, and I hope the House, have the right to be proud.

4.35 p.m.

I am grateful to you Sir, for calling me at this time, because I wish to make some comments on what the right hon. Member for Huyton (Mr. H. Wilson) has said, as Chairman of the Estimates Committee, which is the younger sister committee of the Public Accounts Committee.

First, I should like to thank the right hon. Gentleman for his very kind remarks about myself, and also for his complimentary remarks about the Estimates Committee. In my turn, I should like to congratulate the Public Accounts Committee on having as Chairman the right hon. Gentleman, who has held very high posts in the Socialist Administration. It augurs well for the next century of the Public Accounts Committee that it should have acquired such a distinguished recruit for the Chair. I agree with him about the charm and interest of the work of these two Committees, and I also agree that it is work done on an entirely nonparty basis, done by companions from both sides of the House. I should also like to say that it adds very considerably to the pleasure by the fact that there is very little publicity attached to it.

The right hon. Gentleman made a very interesting speech, in which, by implication, he touched to some extent upon the desirability of treating the findings of the Public Accounts Committee from a party political angle. I see no objection at all to the findings of the Public Accounts Committee or the Estimates Committee being used as weapons in party warfare across the Floor of the House. Where I feel that party political argument is completely inapposite is in the actual work of the Committee, and I hope that no hon. Members will be deflected from using the weapons provided by these two Committees across the Floor of the House.

I believe that this is valuable and useful work. It is certainly interesting, but there is a surprising amount of ignorance about it in all quarters of the House. Since I have become Chairman of the Estimates Committee, quite a number of senior Members have said to me "Now that you are in charge of the Estimates Committee, for heaven's sake see that Government expenditure is cut down," as if they were under the impression that the Committee vets every item of £5,500 million worth of public expenditure in a few short hours of work and then passes it, so that I am in a way being made responsible for the whole volume of Government expenditure.

The right hon. Gentleman explained very clearly the work of the Public Accounts Committee. I will not attempt to explain the work of the Estimates Committee, because there will be further opportunities for so doing. The Estimates Committee concentrates its work upon a few selected subjects, and, although, in the course of the years, almost every aspect of the nation's expenditure is dealt with, in any one year only between six and ten subjects, and no more, are dealt with.

Where I agree most deeply with the right hon. Gentleman is in his clear statement of the truth, which is so often ignored by hon. Members and by the public outside, that the great volume of Government expenditure is the responsibility of every Member of the House when he votes originally for the proposals entailing it. It is no good right hon. or hon. Gentlemen, like my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), cavilling at the vast volume of expenditure when he himself had voted for it.

I will give my hon. Friend plenty of opportunity later. My noble Friend does cavil a good deal.

The noble Lord is well-known for his very praiseworthy economy campaign, and I should like to say something with which he may not agree. It is no good him going for the two Select Committees—I do not know whether he has done this—it is no good either he or anybody else doing this because they do not snip, as with a pair of scissors, various items of expenditure.

Perhaps my hon. Friend will allow me to interrupt him, because he has made a slight charge against me that I would like to clear up. He seems to think that I am in favour of economy in general and expenditure in particular. Will he give me examples of items of expenditure for which I have voted and afterwards criticised?

—but it is well known that he is a very praiseworthy supporter of all campaigns of economy, and takes to himself a very virtuous position—

My hon. Friend might try to restrain his irritation. I think that he is well known as a protagonist of economy—

Order. It would be better if we got on with the Amendment now before the House.

I apologise for that interruption, Mr. Deputy-Speaker. The true way in which this House can fulfil its function of bringing about economy is by encouraging efficiency, and not by Gladstonian candle-ends methods.

This is an important occasion, because it is the first of the days allotted by the House to the two Select Committees, and we are very grateful. Three days were allotted last year to debate the Reports of the two Committees together. One day was left over, and I take it that today we have the repayment of that instalment. I hope that all hon. Members will interest themselves in these days, because if we do not take the best advantage of them they will be taken from us. They constitute a golden opportunity for anybody interested in a particular aspect of public expenditure. The widest possible range of subjects can be covered, as was shown by the very few specific examples quoted by the right hon. Gentleman. I hope that hon. Members will take full advantage of these opportunities.

The work of the two Committees does occasionally overlap. This year the work overlapped in relation to the Ministry of Aviation, airports, the accounting of the Atomic Energy Authority and, to a less extent, the refitting of ships in the Royal Naval Dockyards. I will deal only with the overlapping over the fuel leases at the airports. Particular attention should be paid to this; indeed, the Estimates Committee came down very heavily on the Ministries of Transport and Aviation and the Air Ministry. I think that the moral is that the civil servants in the Ministries should not be too proud to take advice when dealing with purely business matters.

The Estimates Committee, after inquiry into the subject, estimated that
"A fuel levy of a halfpenny a gallon would have provided an income at Heathrow alone of over a quarter of a million pounds last year which would be at least doubled by 1970 …"
It is a serious matter when one of the Select Committees discovers holes of this nature in the Administration, and if nothing else comes out of these two Reports with regard to the airports, it should be seen to that the Ministry of Aviation and the Air Ministry Lands Branch are not too proud to take expert outside advice.

I shall not further detain the House, because I think that it is wrong for members of the two Committees to take too large a part in these debates, but I again congratulate the Public Accounts Committee on getting this day's debate, and the right hon. Gentleman the Member for Huyton on the able way in which he has introduced it.

4.45 p.m.

I am very grateful to my right hon. Friend the Member for Huyton (Mr. H. Wilson) and to the hon. Member for Farnham (Sir G. Nicholson) for having opened the debate on what I feel to be the right tone. In these affairs, most of us naturally regard the Treasury as the root of all evil, and it is equally natural that one of its Minister—I understand that today it will be the Financial Secretary—should reply. The scope of this Public Accounts Committee Report affects many other Departments, but as the Ministry of Aviation is one of the Departments principally dealt with I am surprised that it does not have a representative on the Front Bench now. As I intend to address many of my remarks to that Department, I wonder whether something could be done about that.

I speak as a former member of the Public Accounts Committee, and I also have some small measure of responsibility on behalf of the Opposition for dealing with aviation affairs. It is not always possible to resolve this dual personality. Sometimes, in fact, my aviation duties conflict very much with those, as I conceive it, owed to the Public Accounts Committee, but I shall try to deal with those later.

Last year, in opening his annual report, as it were, my right hon. Friend spoke of feeling our way into these debates. I hope that this year we shall not be so gingerly in our approach, but will be much more forthright, and even critical of the work that has been done and which obviously remains to be done. As the hon. Member for Farnham rightly said, we should not in this House be inhibited from speaking on party lines where there are major differences of approach.

It is difficult for the members of the Committee itself to take a purely party attitude, because many of our criticisms might cross normal party divisions. As far as I can remember, we have generally managed to reach unanimity on all points by tempering our own position to meet that of the other side. On the other hand, we should be failing in our duty if we blunted our criticism. The Public Accounts Committee would then become merely a body of technical experts with some expertise in that work, and would lose its cutting edge as an important body in the Constitution.

It is agreed by all that the main function of that Committee is not to control expenditure. That, as my right hon. Friend said, would imply a control over policy which is not part of its work. That control rests with the House as a whole. Nor do I conceive it to be the Committee's function to curb Government expenditure as a matter of principle. That, again, is something that the Government must decide. The Government's duty is to decide the total amount of Government expenditure and its allocation between different Departments, and we have many other occasions on which we can argue merits, priorities, and so on. It is not the job of the Public Accounts Committee. Its job is to ensure that the money voted has been used properly and that, in the main, the public have not been robbed; in other words, to ensure that we get value for money.

That implies a very thorough scrutiny, and how thorough that scrutiny is, anyone who has sat in the Public Accounts Committee knows. It really is an exhausting business to sit two or three times a week, often for many hours at a time, going into minute details of administration, and the like. In this respect, as well as congratulating the Comptroller and Auditor General on searching these things out for us, we owe a great deal to the Committee Clerk, who is always exceedingly helpful—and, indeed, to the man without whose work none of us could get on, the shorthand writer. It has been the same one for as long as I can remember, and he never seems to make a mistake, though hon. Members mumble, and permanent secretaries mumble even more. We owe him a gratitude which, I hope, can be conveyed to the right quarter—

I hope that the hon. Gentleman might also consider including the Stationery Office in that message. It has tried very hard this year to get out the Report in good time.

That is one of the amazing things—that we always seem to get our Reports very quickly and very accurately done indeed. However, the printing is pretty poor—the style of it. The print is rather small, and it is sometimes difficult to read; but that is the fault of the setting, not the setters.

Coming to normal Government activities, we find that in the normal day-to-day administration there is very little of any major nature that we have to criticise, but there are two important spheres where I think there is room for vast improvement. I feel that the whole merit of our work is that we can learn for the future from examination of the mistakes of the past.

First of all, the main problem arises in respect of large Government spending departments, mentioned by my right hon. Friend, where we have the difficulty of controlling the expenditure on research and development contracts. This is mainly in respect of the Ministry of Aviation, which is one of the largest Government spenders. There are more begging bowls hanging outside the doors of the Ministry of Aviation than of any other Government Department.

The spending programme of the Minister of Aviation is not on a year-to-year basis—which makes it more difficult, perhaps, to get control—but is spread over a considerable period—ten, twelve and more years in many cases. Therefore, the comments that we have had to make in the past can have some effect upon the future policy of the Department in these matters. The fact that we refer in the Report to the two previous Reports of the Committee in respect of development contracts is important. When we go into this matter, we must make sure that attention is paid to the efforts that we have made to cut out waste and promote further economy in respect of such new developments as ballistic missiles, for instance. What we have to say this year is very appropriate to the new marks of weapons that may be coming along, just as the remarks of previous Committee Reports have been.

The basis of this work, unfortunately—though it is difficult to see how it could be otherwise—is still cost-plus. This has proved to be most difficult to check. In spite of all the safeguards that we have tried to impose, I cannot see that we have found the answer to the cost-plus problem. We certainly cannot be satisfied that in this huge field of expenditure we have yet found any foolproof method of supervision and control. We are not here dealing with the spending of Government Departments only. We are also dealing with spending by private industry, and its methods are very different in many respects from the controls exercised by Government Departments. At times it is almost impossible to achieve an accommodation between the two without the aid of an enormouse staff. We must find an efficient method of co-ordination if the Government's policy to cut out waste and get value for money is to succeed.

We have now the advantage of last year's Report and last year's debate, when this problem was highlighted. Hundreds of millions of pounds were then spent, and were criticised. I hope that the Financial Secretary will be able to tell us about the tightening up of controls, and say whether there has been more responsible estimation and progressing of work in this regard, bearing in mind that all the time this has to be related to costs and the permitted ceilings. I hope we may be told by the Financial Secretary that it has been possible, in conjunction with the Ministry of Aviation, more or less to keep estimated expenditure in line with actual developments and the time schedules.

Last year it was Seaslug, Thunderbird, and Firestreak. This year it is Blue Streak which has come under the scrutiny of the Committee. We were faced all the time with continually rising estimated costs. The information that we got always came to hand too late to check and to have anything done about it. The argument always advanced was, "We have spent so much money. If we spend only a few more millions, we shall get what we want." At no time did a Minister or responsible official come along and say "This must be stopped here and now, and money saved."

It is as though someone said to the Minister, "if you let us go on for a few months more and spend a few more million pounds, we shall then have what we want" But, the answer to that is that we never get what we want at the time when we want it. We get something quite different, and usually too late. This is another instance where the perfect is always the enemy of the good. I hope that some instructions will be issued that, rather than going on spending money and throwing good money after bad, we should accept something which is a little less than perfect.

I now turn to Blue Streak. It is clear that the decision to abandon it as a military weapon should have been taken much earlier than it was. When we had decided to abandon it as a military weapon, it seems that we could then have made a much earlier decision than we did to go ahead more rapidly with it as a launching weapon for future satellites.

My right hon. Friend has given some of the details about this. The first study in 1955 threw no light at all on the estimated costs and the time-scale development. The Ministry was committed to a cost-plus contract without detailed specification, and even now, after six years of this, there is still no final detailed specification.

In 1955 the estimated cost was £50 million. Between October, 1957, and 1960 the figure rose from between £160 million and £200 million to between £280 million and £310 million. What it would have reached if the development had gone on to finality is anybody's guess. Perhaps it would be almost impossible to guess it.

The original estimate, we are told, was purely conjecture. It is a refreshing admission that it was a guess. But I wish that, after all this experience, people in the Ministry could guess a little more accurately. There is nothing wrong with making a guess, but when one makes such a wild and hopelessly inadequate guess, it leads to all kinds of difficulties.

Finally, on this project, when it was abandoned we had a cost to the public of £100 million, involved in the original development, going down the drain. We still do not know what the cost of the new development as a civil launcher will be. There has been an estimate of £70 million. What guarantee have we that it will not be £500 million? What guarantee have we that, as we are to share in the development with other countries, we shall be able to retain any degree of control over the expenditure? Has the Treasury thought out with the Ministry in respect of this new field of weapon development—we seem to be going into consortia all over Europe—how we shall devise the control of the expenditure between the Treasury here and corresponding departments overseas? That is something which should be looked at now and not in the years ahead when these things come to pass; otherwise, we shall find ourselves in just the same mess in the future.

I admit that in these matters the Minister and, more so, Members of Parliament are in the hands of the technical advisers, and the technical advisers seem to be totally at the mercy of the contractors. I may be doing them an injustice, but from an examination of these accounts it seems to me that all along the line the Ministry is completely baffled and defeated by people in outside industry. There are dangers inherent in this system. I hope that some attention will be given to the Committee's recommendation that more and more of this work should be put out through Government departments to our own research establishments and so on. I am not satisfied that the R.A.E. could not be given a much larger part to play in some of the design contracts.

That brings me to the subject of the design study. I wonder whether we can be told at this stage how many feasibility and design studies are now in progress, how much money has been spent on them, and how much money it is estimated will be spent on them. I wish that we could be told how many development contracts have been let from these design studies and what the estimated cost will be.

In our dealings in this matter, which I admit is a difficult one, we must have four guiding principles. The first is that rising costs outside and above the estimates must be notified immediately. It is no good coming a year later, when the money has been spent and when one is committed to millions more, saying, "I am sorry, Minister. We spent too much." The notification must be immediate.

Secondly, there must always be a constant check on the requirement itself. It may be that over the period the need for the thing has gone. I do not know whether Seaslug is still required. It came five years too late. Had it come when we really wanted it, it would have been all right, but now no one really knows.

Thirdly, wherever possible competitive tenders must be used. Many of these great projects have been put out without tender and the implication is that the firm doing the design study will automatically get the contract. That situation may not be in the best interests of efficiency and economy.

Fourthly—and this is something which we lack—the Ministry must possess effective sanctions to protect itself against delays and rising costs, and be much more prepared to deal with them rather than let private manufacturers get away with it. I hope, therefore, that we shall be able to report progress in ballistic missiles in particular and find some answer to the open-end contract which will help us pursue economy and efficiency much better in the future.

The second major field in which mistakes occur—and I think that this is due to lack of commercial experience—is in negotiation by Departments of long-term commercial contracts. Ministry officials are babes in arms in this when compared with the tough people in the advertising world and in business. It is unfair to put them all in the same room, because the officials do not stand a chance.

Take the I.T.A. contract as one case in point. That cannot be touched now until 1964, and the television companies are getting away with vast sums of money which we cannot recoup by one single penny. If we go into the position of the petrol companies—Shell-Mex and B.P. and Esso at London Airport—we see the absolute futility of putting Government officials up to negotiate contracts with people like that.

What have they done? They have given these two concerns a 35-year lease expiring in 1991, and after the first ten years we cannot get an additional penny out of them. Yet everyone knows that more and more fuel will be sold at London Airport to the ever-increasing number of aircraft using it. That situation is indefensible. Perhaps we should ask these concerns for ex gratia payments. They should be so pleased with what they have gained that they should willingly make a voluntary contribution, for it is clear that we shall get nothing from them by contract. I think that if we only had a halfpenny a gallon extra—that was the figure used by the Estimates Committee, I believe—on the petrol to be sold, we could do away with the deficit on London Airport. There is a golden Esso opportunity gone by.

We are in a hopeless position in this matter, and I believe that the Estimates Committee recorded this incident as being deplorable. No consideration has been given by the Ministry, in negotiating these leases, to the basis that they should be sources of revenue and income for the Government. We should tie contracts to the growth of business. We have, however, virtually left the petrol companies in a position of monopoly, and we cannot touch them. Are these existing leases completely irrevocable? Could we not see if there is a loophole which would enable us to tap this source of income?

What is being done to bring about a more businesslike sense in the Ministry in dealing with these matters? Perhaps when London Airport is handed over to an independent authority we shall get more commercial judgment. But that is like shutting the stable door after the horse has gone. These are errors of judgment. They are nothing to do with the system, but arise because they are in a field outside the usual run of a Government Department.

I hope that the recommendations on the airports will be followed up. The Public Accounts Committee and the Estimates Committee are wasting their time, if, when they come to the same conclusion that an independent authority should be set up, the Government say that they cannot find time this year to do it. If the Government tackled this problem seriously and the Treasury threw its full weight behind it, sufficient time could be found this year to set up the authority.

I have gone on for too long, but I just want to say that there is still plenty of room for the Departments to make better use of staff and methods of working. This applies very much to the Ministry of Aviation. I am sorry to have to refer to that Ministry so much but it is the nigger in the woodpile. The Ministry could get more income from ancillaries and from apron services under this new agreement. It could get more economic rents from concessions given at London Airport. I hope that it will got full value for the concessions it will let in the long-haul building.

I am in total disagreement with my right hon. Friend the Member for Huyton and the Public Accounts Committee, which I have now left so that I can say this more freely—not that I would have been deterred anyway. My right hon. Friend suggests that there should be a service charge on domestic passenger services. I believe that would be disastrous. I believe that the airlines would regard it simply as a means of passing on to the customers an increase in fares, whereas our policy should be devoted to reducing air fares and encouraging more people to travel by air. I hope that the Committee will let that one go.

Surely the hon. Gentleman would not suggest that air services should be subsidised as well as railway services? That would be too much.

If the hon. Gentleman reads the Report about the effect of raising landing charges at London Airport, he will find that the policy is to move away from subsidising airports as fast as possible. In considering the matter of increased landing charge at the airport, we are in the same position as with the drug companies in facing a lack of real information about what charges are levied at overseas airports.

It should not be too difficult to find that out. There are different bases for calculations, but when all the airlines say that London Airport is the most expensive in the world, and that this might lead to diversion of traffic, while the accounting officer tells us that it is not so bad, we cannot find the facts and figures to justify these claims. Something more should be done.

The effect of the recommendations by both Committees is that Government policies should be altered. The Minister should take that into account, act with speed and get on with the job this Session.

One of the most distinguished of the permanent secretaries appearing before the Public Accounts Committee spoke about being a "toad under the harrow". A good simile. For, as he rightly said, a toad knows exactly where each tooth point goes.

My right hon. Friend the Member for Huyton is a very nice person who has, inside a velvet glove, the toughest and hardest of fists. He does not spare anyone appearing before the Committee. Neither does the hon. Member for Dover (Mr. Arbuthnot) nor the hon. Member for Portsmouth, Langstone (Mr. Stevens), I should hate to be cross-examined by them. They spare no one. It must be a tremendous discipline for permanent secretaries and accounting officers to have to appear before these Committees.

These permanent secretaries are surrounded by bevies of assistants who are never asked questions but who grin at the discomfiture of their chiefs—which is probably the only time they can do it. They all come with masses of notes, only one-seventh of which they ever use. They suspend the operations of the Department for a fortnight in order to get that information. But this is important, because it means that the permanent official knows everything going on in his Department. Even if he gets through with his answers, he still has had this tremendous discipline, which is good for him.

It has been my experience that there are two kinds of accounting officers. There is the accounting officer who has many years' experience and who gets away with everything by the simple dodge of making his answers to simple questions so long that, by the time he reaches the end, one has forgotten the point of the question. When the time begins to get near 6 o'clock, it becomes very difficult to keep a quorum and such an accounting officer can therefore get through difficult questions very easily. The other kind is the officer who has newly come into his Department and who gets away with it by saying that all the decisions were taken before he arrived. He pleads not ignorance but innocence. It is not ignorance, because he has made himself aware of things, but he pleads innocence of decisions saying that they were taken before his time.

I think that more hon. Members should have experience of the Public Accounts Committee. While it is necessary to have a small nucleus of more or less semi-permanent members with experience of this job, membership should go round so that members are changed every two or three years. We are ordinary Members of Parliament and not a cabal of experts whose only function is the work of the Public Accounts Committee. I do not know whether it is practicable, but I suggest that hon. Members who do not belong to the Committee should be allowed to attend as observers, perhaps with the Chairman's permission, undertaking not to reveal anything which went on until the Committee had reported.

Will my hon. Friend forgive me? I call him my hon. Friend because we have served on this Committee together. Is it not a fact that hon. Members can attend the Committees already?

Perhaps, but I have not seen any of them there. After my speech, they may feel that it is more entertaining than they had believed and they will go along.

I wish that something could be done about the arrangement which separates the poor permanent secretary by at least twenty feet from his experts from the Department. It is very difficult for him to get the least information, for he does not have the ready access to them which a Minister has to his Parliamentary Private Secretary in the Chamber. I suggest that more use should be made by permanent secretaries of the members of their Departments who have the expert knowledge of the subject under discussion. That would help considerably and would obviate the need for notes to be put in later.

My final suggestion is that the Committee should meet in the mornings. We begin our sittings at 4 o'clock on Tuesdays and Thursdays when many hon. Members want to be in the House to hear or take part in important debates, and it is sometimes exceedingly difficult to keep a quorum at 6 o'clock or half-past six. Unless there are insuperable administrative difficulties for the Departments, it would be preferable for meetings to be held in the mornings.

I enjoyed myself very much on this Committee and in some ways I am sorry that I have not been able to continue on it. If the information on the tape is correct, I wonder whether my right hon. Friend the Member for Huyton will be able to continue.

I know nothing of what is on the tape, but I have been elected Chairman of the Public Accounts Committee for this year.

5.14 p.m.

We have all listened with pleasure to the speech of the hon. Member for Stockton-on-Tees (Mr. Chetwynd), who has just left the Public Accounts Committee. We shall greatly miss him. However, when we debate future reports of the Committee, we shall have his sympathetic interest and participation and perhaps keen criticism of any recommendations which we may make.

I was glad to hear the right hon. Member for Huyton (Mr. H. Wilson) refer to the bipartisan nature of the Public Accounts Committee. He might have quoted the words of my right hon. Friend the Member for Woodford (Sir W. Churchill) in another context when he remarked:
"We hunt as a pack of hounds rather than as a flock of sheep."
We are pleased to learn that his position as Chairman of the Public Accounts Committee will not be affected by the announcement on the tape since we have taken pleasure in his leadership.

His tribute was indeed fitting to has predecessor, the hon. Member for Chesterfield (Sir G. Benson), who did so much to unite the Committee into a single team. Those of us who have been on the Committee for some time know the great debt of gratitude which not only the Committee but the House owes to the hon. Member for Chesterfield for that spirit of unanimity of purpose and friendship which he instilled in its members. That does not mean that we are all of one mind on everything. It would indeed be dull if we were.

The right hon. Member for Huyton touched on one of those subjects on which there is possibly a divergence of view in the Committee when he spoke of the report on the pharmaceutical industry. That Report, in these paragraphs, reflected the lowest common denominator among the members of the Committee. He referred to our difficulties in extracting information from the Ministry about the industry. Before I speak about it, perhaps I should remind the House that I have a constituency interest in that there is a major pharmaceutical firm in my constituency. That may possibly colour my views; I hope that it does not: but at least it means that I know a little about the views of the industry and its difficulties.

The real problem is that we have here in combination both the operation of patents and the fact that the Government are the largest buyer of the pharmaceutical industry's products. Those two factors operating together place particular responsibility on the industry to be completely frank, on the Ministry to be fully informed, and on the Public Accounts Committee to ensure that prices charged are no more than fair and reasonable.

With other members of the Committee, I am in some doubt as to whether the industry is being completely frank. The industry's problem is that it finds it difficult to say what the actual costs are. For example, in America—and at times we are in grave danger of conducting an anti-American witch hunt—the industry selects the "eyes," so to speak, of the products developed in the United States for manufacture here. Because of that, one is bound to expect them to earn a larger proportion of profit in Britain than they would expect to earn over the totality of their business.

Another question is this. What proportion of the charges should be made against the pharmaceutical side of the business, since they manufacture many other products as well? They would not be successful pharmaceutical manufacturers if they did not. Antibiotic manufacturers, for example, have one side of their business which is pharmaceutical, and another substantial side which manufactures animal feedingstuffs. It is very difficult to allocate the proportion of the costs as between the two.

Another factor that we should bear in mind is that at the moment the National Health Service is spending on pharmaceuticals, with the pharmaceutical industry, about £56 million—that is excluding chemists' remuneration and costs of distribution. In contrast, we are exporting £44 million worth of pharmaceutical goods. If we chase the pharmaceutical industry too hard, if we go into the Common Market we will find ourselves with American firms putting down their factories anywhere other than in Britain, and for the sake of what might be a comparatively small saving to the Ministry we may well lose a considerable export trade; in addition, we may find ourselves having to pay royalties for research that has taken place in America and not here. In short, we may find ourselves in a very much worse position in the end for a negligible saving now.

Therefore, while I am fully seized of the importance of making sure that the charges are no more than fair and reasonable, I think that we should also beware of conducting a witch hunt which will do considerable damage to us nationally.

What my hon. Friend is saying is very interesting, and everybody wants to get to the bottom of this problem. When the Public Accounts Committee was investigating this problem, did any research take place into the following question: if company A in this country was making X profit, what profit was company A's main parent company in the United States making in the United States? In other words, was a picture built up of how the main company and the subsidiary tied up on this basis?

Yes, I think my hon. Friend will find the answer to his question in the Minutes of Evidence by the Ministry of Health, and in particular the Report on the eight companies to which the right hon. Member for Huyton referred.

Will the hon. Gentleman comment on Appendix 1 at page 347, where it compares the price of continental drugs with the price in this country, bearing in mind the entry of Britain into the Common Market?

It is fair that the hon. Member should ask me to comment on that. It is a fact that these drugs can be bought more cheaply from continental manufacturers. That is understandable, since the continental manufacturers concerned do not do any of the research which provides the "know-how" which enables the drug to be built up. Once somebody has done all the research and perfected the drug, it is relatively easy for somebody else to copy it. It is, therefore, not surprising that continental firms can come in, and if they ignore patents—and as the hon. Gentleman knows there are no patents in Italy, for example—crib somebody else's patent. This boils down to pretty straight thieving.

But I am not entirely defending the industry. For example, one of the arguments put forward by the industry is that the cost of pharmaceuticals in France, or America, is higher than it is here, and that this is evidence that we are not paying unduly high prices. I do not think it necessarily follows, and I have often told the industry this, that because other people are having to pay more than we are, our price is necessarily fair and reasonable, but I repeat that we must not overdo the witch hunt because it may do us more damage in the end.

I ask the Miinstry not to get itself into the position of being at loggerheads with the industry so that manufacturers have no confidence that we will treat them reasonably if they are frank. I believe that if the industry is frank, if the Ministry creates confidence, then the Public Accounts Committee will be able to obtain the information that it needs to assure Parliament that prices charged are no more than fair and reasonable.

I turn now to the form of the Accounts. The Treasury suggested to the Public Accounts Committee that there was too much detail in the form which the Accounts took, and that they were so complicated and formed such a massive tome that it was not possible for most people to find their way round them. I think that is correct, and that the Treasury is right in wishing to simplify the form of the Accounts, but one of the Treasury's proposals in the process of simplifying the form of the Accounts was to modify them so that they would never again show any individual items of loss.

That, in my view, would have been a great mistake, and the Committee was right when it refused to accept the Treasury suggestion and insisted that the items of loss should continue to be reported. We said in paragraph 116 of our Report:
"Your Committee do not, however, feel able to accept a change which has the effect of removing particulars of individual losses, etc., from the Account."
I feel sure that we were right to say that, since although the Committee relies in the main on the work of the Comptroller General and his staff, they are not the only ones who initiate searches into particular items of expenditure. This year, for example, we had an item about Army shirts—it is to be found at Question 2721—where, through private enterprise, it was disclosed that although contracts had been placed for Army shirts to the wrong specification in 1951, the discovery was not made by the Ministry of Supply until 1958. If individual items of loss were eliminated from the Accounts, it would be impossible for individual members to be able to chase items of wasteful expenditure such as that.

I am not entirely satisfied with the Treasury Minute on the Committee's proposals. It says that while they are disappointed and regret that the Committee has felt unable to accept their proposals to eliminate details of losses from the notes
"they propose to meet it by arranging for details of the main individual losses—that is, of cash and stores losses, nugatory and fruitless payments and abandoned claims—to continue to be noted"—
But—and here is where the sinister sentence comes, to my mind—
"The Treasury also propose to continue to review from time to time the exemption limits for individual noting of the various categories of losses, so as to keep the detailed notes within reasonable compass."
I hope that my hon. Friend the Financial Secretary will be able to assure us that this does not mean that the Treasury will try to whittle away by the back door what the Committee refused to allow the Treasury when it tried to do it openly.

I now come to the last item that I should mention. This is a distasteful item. It is the first item in the Third Report of the Committee and is concerned with Malta and the firm which is redeveloping the Malta docks. I do not think that anybody comes out of this with very much credit. One million two hundred thousand pounds have been loaned by the Government to the firm of Bailey (Malta) Ltd. which is a subsidiary set up by the parent firm of Bailey Ltd., registered in the United Kingdom. The subsidiary will re-develop the Malta docks. This £1,200,000 was loaned for working capital, but the first thing that the firm did was to remove £650,000 of it and salt it away in Bermuda.

Is this related to the firm that sends a very expensive circular around every week, fortnight or month?

It is, indeed, related. I was about to finish my comments on this sorry account by saying that I feel that this document, which we receive from time to time, is rather nauseating in view of the facts adduced before the Public Accounts Committee. I should have though that it would have been better for that document not to be circulated, and if that could be counterbalanced by not having the sort of Report that we have to consider today, I should be very much happier.

I think that, in view of what my hon. Friend has said, he might also agree that the advertisement in the Financial Times is a little bit unfortunate.

I absolutely agree with my hon. Friend and am glad that he has drawn the attention of the House to it.

The second item was the payment of £200,000 by the Malta firm to its parent company in the United Kingdom for "promotion and formation expenses". Anyone who knows what the formation of a company costs would question the propriety of such a charge. The third item which came in question was another £200,000 which was made as a loan, free of interest, to the parent company to help with some tugs to be operated in Malta. All these matters did not come to light until the firm, having done all these things—that is to say, having used all except £150,000 of the £1,200,000 which was loaned to it—applied for a further loan.

The firm went to the Colonial Office and asked for a further loan of £550,000. Then, the Colonial Office—and only then—said, "What have you done with the money that you have already had?" and put in an independent commercial accountant, Sir Richard Yeabsley, who is the Board of Trade accountant adviser, to investigate on these matters. Sir Richard dealt with these matters very succinctly. Hon. Members will find the details of his findings in pages 62 and 63 of the Minutes of Evidence before the Committee. Sir Richard recommended, for example, that the £200,000 for promotion and formation expenses should be refunded in cash forthwith or, alternatively, the parent company should take up at par, payable forthwith in cash, 200,000 shares at £1 each in the Malta company.

Can my hon. Friend tell the House whether in fact this money has been transferred back to Malta? It is not very clear from the first part of the Report whether this money has now been repaid to the company in Malta.

I think that my hon. Friend will find the details of that if he looks at the answer to Question 587. Apparently the company has accepted the idea of buying the shares, so that has in effect been returned, but this should never have taken place.

This misuse of public funds should have been found out, in my view, earlier, because the Colonial Office ought to have kept track of the £1,200,000 which it had provided for this firm. The only thing that is satisfactory about this story is that, having found this out, the Colonial Office have put in three additional directors one of whom is Sir Richard Yeabsley himself and the other two of whom are also of the highest standing, so that we can now be assured, because of the reputation of these gentlemen, that this sort of thing will not take place again. This is an example of how the Public Accounts Committee works and, I trust, works efficiently.

5.37 p.m.

I should, first, like to thank the hon. Member for Dover (Mr. Arbuthnot) for his very kind reference to myself and also my right hon. Friend the Member for Huyton (Mr. H. Wilson) whose remarks, I regret very much, I was unable to hear.

I am afraid that despite the unanimity of the Public Accounts Committee—and it is a united body—it has another side; it is an extremely querulous body. I doubt whether during the whole century that is has existed it has ever said a kind word about anyone. Its purpose is to criticise, and if it cannot criticise it says nothing. The very most that a Government Department can hope from it is that it is not mentioned. It is ninety-five years since the Public Accounts Committee failed to find somebody to criticise. That happened in 1866.

The Committee met, it considered the Appropriation Accounts, and in its Report to Parliament it said that it had
"no particular remarks to address to the House".
The Departments got a clean sheet. But in those days the expenditure of Departments amounted to only £60 million a year. The Public Accounts Committee cannot give our present Departments a clean sheet, but we must remember that they are spending not £60 million a year but the colossal sum of nearly £6,000 million a year. Taking that into consideration and then looking at the criticisms which the Committee, with the help of the Comptroller and Auditor General, is able to direct to the Departments, I think that we are entitled to be proud of our Civil Service.

The audit is a fairly severe matter. The Comptroller and Auditor General has a staff of about 550 highly-competent officers, and they carry out an audit of a special type. When one thinks of an audit one usually thinks merely of accountants balancing the books. The audit of the Comptroller and Auditor General is vastly different. His staff of between 500 and 600 men live and work in the Departments. Their activities are as intrusive as they can make them. They read the correspondence of the Departments, and they poke their noses into practically every activity, the whole of their purpose being to discover errors, inefficiencies and shortcomings.

But there is also a parallel financial control. Each Department has its own financial machinery, and there is an internal audit, departmentally, by the financial officer with his own staff. This dual control by the Exchequer and Audit Department and by the internal audit has for a century been steadily developed as a very efficient machine of control.

I joined the Public Accounts Committee thirty years ago. In those days, as I have said, expenditure was small compared with what it is today. What is more, it tended to be repetitive. There were not the vast swings of expenditure that we now have. Repetitive expenditure, from the point of view of the Treasury, the Exchequer and Audit Department, and the Department itself, is very much more easy to control than when we have these vast variations of large sums.

When the Public Accounts Committee first started, a century ago, it was primarily concerned with building up a type of financial procedure and with niggling points of financial etiquette. Now it is primarily concerned with the efficiency of a Department and the control it has over its own expenditure. We can put matters into perspective if we realise that our annual expenditure amounts to nearly £6,000 million, which is a colossal sum. Comparing that £6,000 million a year with the comparatively small amounts to which the Comptroller and Auditor General draws the attention of the Committee and the House, we are entitled to be proud of the efficiency of our Civil Service.

For that efficiency the Exchequer and Audit Department, the Departments themselves and the Public Accounts Committee, for its century's work, are each entitled to credit. It is true that if we look at the Reports of the Public Accounts Committee we find that they are long and invariably critical, but the Committee's job is to find fault. If one read its Reports without putting them against their background one might get a very wrong impression of the efficiency of the Civil Service. We must remember that it is criticising a very tiny fraction of an expenditure of £6,000 million a year. I have been a member of the Committee for thirty years, but my admiration for our Civil Service steadily grows.

5.46 p.m.

There are only a few points upon which I want to comment. The first arises from the remarks of the Public Accounts Committee with particular reference to variable cost contracts, and especially Blue Streak. There are many forms of aeronautical research in which it is extremely difficult to predict costings in man-hours, with a particular method of design, development and testing, and also the amount of fuel which will be consumed, and so on. But one of the variables which are generally written into a variable-cost contract is the wage-escalation clause, and that, in the light of the Government's current economic policy, is certainly an element that we should seriously reconsider.

We can say that the wage-escalation clause, in effect, is a directly inflationary inducement, in that it guarantees a more or less unimpaired profit margin to the contractor, whatever may happen to his wage costs during the period of the contract. So it seems to me that it would be complementary to the Government's current economic policy if an absolute embargo were placed on wage escalation clauses in new design development and production contracts. That is a way in which the Government's economic policy could directly impinge upon the management decisions taken by individual privately-owned contractors to the various defence Ministries.

The Committee commented upon the question of imposing a gallonage charge on the fuel suppliers at the various publicly-owned airports. Even if it is too late to make a gallonage charge, because we have now agreed to lease for a fixed charge for a very protracted period, the House may yet have an opportunity of remedying the situation when it considers the provision of a statutory authority for pipelines. The pipelines will have to go through the airports concerned, and can see no reason why, if the House decided to do so, there should not be written into such contracts a gallonage rent for the wayleave through which the pipeline will go. In that way the defect revealed by the Committee of Public Accounts might be put right.

One of the major problems facing a purchasing Ministry when it is purchasing equipment where only the function is specified, and the manner in which it will be achieved is not specified, is the very difficult question of what is and what is not an economy. For instance, if the timing of the project is critical it will be necessary to have a number of alternative design schemes so that if any one of the major systems of the project, such as the fuel system or the guidance system, does not come up to expectation, the whole project does not came to a halt until that one system can be developed in a reliable and satisfactory manner.

If all the major systems come up to the expectations of the designer, one could say that the alternative design systems represent a wastage of public expenditure. In other words, they are like an insurance premium, and the question whether money spent on an insurance premium has been wasted if one does not, for instance, have a fire, is a highly contentious one. If one takes the time element as being of primary importance, as it must be in any weapon system which only remains competitive over a limited period, I think that we could argue than money spent in the form of alternative design schemes has not by any means been money wasted.

What the Committee has done very usefully is to point out the necessity—this is also recognised in the British aircraft industry—for doing a proper job in the first place, when there is an investigation, first, into the feasibility of the project, and, secondly, the cost estimate of the design before we put the thing into the development and then the production stages. It may well be, indeed I think that it has been demonstrated to be, a very false economy to foreshorten the original design study and feasibility study, with the result that the Government are apt to commit themselves to an almost indefinite expenditure without knowing what the upper limit of that expenditure may be.

Certainly, last year's Report of the Committee of Public Accounts, if I recollect correctly, did recommend a practice whereby there should be a number of steps for each year, with a maximum limit to the expenditure in each step. If the expenditure exceeded the maximum by more than a certain percentage, an immediate investigation was put in hand.

This certainly is very necessary on any contract, even if it has already a maximum expenditure limit to it; because if that maximum limit is reached when the contract is only one-third of the way through the development phase it is then too late to decide that the money would have been better saved and the whole project scrapped at an earlier stage. So there are surely two lessons which we have learned. The first is the difficulty of estimating cost in advance without sufficient study at the feasibility and design stages; secondly, the importance of relating our financial control procedure to the passage of time as well as to the amount of work which is actually performed on it.

I am quite sure that there must be a number of other hon. Members who have observations which they wish to make on this Report. I have looked only at a certain section of it and it strikes me, not having been very long a Member of this House, as a most fascinating document to study; and also a most necessary one to be written. When we bear in mind, as was pointed out by the hon. Member for Chesterfield (Sir G. Benson), the enormous annual Government expenditure and the very small proportion of it which comes within the facilities of the Committee to be subjected to its perspicacious microscope, one wonders very much what sort of document would have resulted if the same concentration of attention could have been applied to every Ministry.

It has been suggested that this document is not representative of the criticisms which might have been aimed at other Ministries.

May I interrupt the hon. Member to say that this is a document which picks out the Ministries that require criticism? That is done by the Public Accounts Committee with the advice of the Comptroller and Auditor General. Any body which is not mentioned is more or less guiltless.

I am grateful to the hon. Gentleman for elucidating that point for me.

I certainly found it an extremely interesting document to read through, and I believe that it is probably the major way in which this House can control public expenditure effectively. So little time is devoted to many of the financial implications of Money Resolutions, I think it of monumental importance that as many hon. Members as possible should take the trouble to read through the Report and note the manner in which the sums of money we vote are spent.

5.56 p.m.

I have this Session returned to the Public Acounts Committee after having been away from it for two years, and I returned with very great pleasure because I feel that to work on the Committee is one of the most satisfying and rewarding experiences for any hon. Member of this House.

As was pointed out by my hon. Friend the Member for Chesterfield (Sir G. Benson) the Committee keeps a watch on whether Departments are spending these sums of money efficiently and economically. From my experience on the Committee, and from reading this Report, for which I have no responsibility whatever, I find that it clearly emerges that in this country we have a capable and dedicated Civil Service.

In the changing conditions of the twentieth century, when, perhaps, it is inevitable that in this changing world our country is slipping from its position of power and leadership, it is good when we can say with truth that we have the best Civil Service in the world. It may not be that we have the best Government, but we have the best Civil Service. In my service on the Committee I have always been impressed by the knowledge and competence of the accounting officers and other officials who appear before the Committee for examination. In this Report I was particularly impressed by the Minutes of Evidence on pages 145–150, to which most of my remarks will be directed. This deals with the problems of one of our problem industries, the cotton textile industry.

The examination of the witnesses on the work of the complex Orders under the Cotton Industry Act, 1959, was a very complicated matter. I know a little about these schemes, perhaps just enough to appreciate the excellence and the accuracy of the replies given to the questions posed by members of the Committee. Here, we are concerned with the spending of an estimated £30 million of public funds. To date, there has been spent, I think, only about £20 million. The burden of what I have to say on this point is that unless the remaining £10 million is spent wisely, much of the £20 million already spent, or to most of which we have been committed, will have been wasted. In effect, it will have "gone down the drain".

To elucidate that statement, I must point out what the Cotton Industry Act, 1959, aimed to do. It aimed to make a smaller, more compact and more efficient industry. To do that there has to be two phases: first, the scrapping of surplus and redundant machinery; and, secondly, creating confidence in the firms remaining in the industry to re-equip and make themselves really efficient. The first phase, the reorganisation or scrapping of redundant plant and machinery, has been more successful than was expected. In fact, it has succeeded in making a smaller industry, but let us remember that "small" is a relative term. Since 1958 imports of cotton yarn have trebled and imports of cloth to this country have doubled. So the probable position in 1961 is that the productive capacity in relation to effective demand bears much the same relationship as it bore in 1958.

The real success by which these schemes must be measured is whether the re-equipment takes place and the industry is made more efficient. If we look at Questions 1587 and 1588 it becomes apparent that the re-equipment phase is falling woefully short. Since the witnesses were examined in March this year, I believe that the trend in the making of application for re-equipment grants has tended to slow down or fall. The Act provided that Treasury payments would be made to the extent of two-thirds of the cost of scrapping the machinery in compensation to the owners of scrapped machinery. The other third of the cost would be met by a statutory levy on the firms remaining in the industry.

The Act also provided that Treasury funds would be available to meet one quarter of the cost of re-equipment; and that 100 per cent. of the cost of compensating displaced operatives would be met by statutory levy on the firms remaining in the industry. As will be seen from the Minutes of Evidence, it was estimated that £10 million of the £30 million total estimate of Treasury funds would go to the scrapping of redundant and surplus machinery and £20 million of Treasury funds would be available for re-equipment. As that represents only a quarter, it provided for an expenditure in the industry of £80 million on re-equipment.

In fact, the actual result is likely to be as follows: £13½ million of Treasury funds will be spent on the scrapping of machinery and it is doubtful whether more than £10½ million of Treasury funds will go to re-equipment. There are only seven months remaining before the closing date laid down in the Act for the receipt of applications for re-equipment grants. The morale of the industry is very low. This is due mainly to the Government's refusal to control the growing flood of imports which, as I indicated earlier, comprises double the importation of cloth and treble that of cotton yarn in about three years. No other industrial country in the world permits the free importation of cotton yarn and cloth on the scale that this country does.

We are now in the position that the United Kingdom has become the world's largest importer of cotton textile goods whereas as recently as thirty-five years ago we were the world's largest exporter. I have never taken a narrow or protectionist view of this issue. I recognise the need for advanced countries to buy the manufactured goods of developing countries, but we have to face the fact that unless some control is exercised, unless this growing importation to meet the growing export possibilities of the developing countries is controlled and phased, we shall be faced with the disruption and destruction of some of our traditional industries.

President Kennedy has recognised this. He has taken the initiative which I am sorry Her Majesty's Government had not taken earlier. As a result, we have had at Geneva earlier this year a short-term agreement reached between the principal exporting and importing cotton textile countries. The net effect of this has been to put a temporary ceiling on imports of cotton textiles into the United States of America at a level of about 5 per cent. of her domestic production. In the United Kingdom the temporary ceiling put on imports under this international agreement is in the region of 50 per cent., one half of the level of domestic production. France has imports of around 1 per cent. of the level of her domestic production. She very generously agreed to double the intake, which would make it only 2 per cent., but I understand that on second thoughts France has reduced the percentage to 1½ per cent.

In Geneva long-term proposals are now being negotiated. I hope that the United Kingdom will come out of those negotiations better than we came out of the short-term negotiations. My criticism is not against the emergent countries exporting. This is an international problem and a problem which the United Kingdom cannot resolve on its own. What has happened is that the United Kingdom share of this growing volume of exports, which has a disruptive effect upon our traditional industries, has been too large. If we are to help forward the development of these emerging countries the United Kingdom has surely a responsibility which is not a responsibility to be carried only by one or two industries of this country.

It may be that Her Majesty's Government partially recognised this problem and this responsibility. It may well be that that was the reason why we had the Cotton Industry Act, 1959, making available £30 million to help the industry through its reorganisation and re-equipment phases. If I were in a more controversial mood I would convey what Mr. W. T. Winterbottom, chairman of the Fine Cotton Spinners and Doublers Association, indicated recently, which was that the Government offered the industry the £30 million in the spring of 1959 because a General Election was coming in the autumn of 1959.

The point which I wish to make is that it is futile for the Government to spend £13½ million on scrapping surplus and redundant machinery with a view to subsidising re-equipment unless conditions of confidence in the future are created, and this is where the Government have failed badly. I pointed this out when the Cotton Industry Act and subsequent Orders were passing through the House. I pointed out that the disincentive to re-equipment caused by the growing flood of uncontrolled imports would be greater than the incentive to re-equip provided by the 25 per cent, subsidy, and that has proved to be correct. In case I give the impression that I appear before the House as an infallible prophet, I should point out that other of my prognostications were not quite as accurate.

It may be too late to restore confidence to ensure the success of the re-equipment phase of the reorganisation scheme, because the closing date for applications for re-equipment grants is 7th July, 1962, so that only seven months remain. The success of the scheme will be measured by the amount of re-equipment undertaken, and it depends upon the industry's confidence in the future whether it is prepared to take steps to re-equip.

I have listened with great interest to my hon. Friend and to his complaint about imported textiles. Why cannot the industry do something for itself? As far as I know, no kind of case has been put from the Cotton Board or anybody connected with the cotton industry to the Board of Trade under the existing anti-dumping legislation. I think that if they had a good case on, say, Spanish dumping, it would be heard.

My information is that the Cotton Board and the Cotton Employers' Trade Association have chased the Board of Trade relentlessly.

On a point of order. Are we not straying far from the Report of the Public Accounts Committee?

I have been rather concerned for some time that we are getting far away from the Report of the Committee.

I took the trouble to read the Report of the debate on the Report of the Public Accounts Committee about the guided missile programme last year. That debate ranged over the whole field of Government policy on that issue. Last year's debate was the first debate on the Report of the Public Accounts Committee, and I take it that it established a precedent that these debates can go rather wide on the subject investigated.

It does not create any precedent for discussing the whole trade situation of an industry.

With great respect, I was attempting to establish that the Public Accounts Committee is not concerned merely with examining the question of money which has been spent. If there is to be efficient expenditure of the money, then it is necessary that the two phases of the scheme should be considered—the destructive phase followed by a creative phase. Unless the second stage is effective the whole scheme will be a failure and there will have been a tremendous waste of public money. It appears to me, with very great respect, that this line of argument is quite consistent with the purpose of the debate.

The hon. Member has gone much further than the Report of the Public Accounts Committee. On this Amendment we cannot discuss the whole question of the cotton industry.

With great respect. I am discussing the examination of witnesses who are responsible for the spending of £30 million of public money under the Cotton Industry Act, 1959. The evidence is on pages 140 to 150.

I think that the hon. Member went further than that. As long as he is on that point he is in order.

If this scheme is to succeed and there is to be justification for the £20 million already committed, then there must be the advanced stage of re-equipment to make the industry efficient. That entails establishing confidence that there will be markets for the products produced by the reorganised industry. If this is to be done, then the minimum requirements to make the scheme a success and the expenditure of this large sum of money justifiable are that there must be a temporary ban on imports to clear the huge stocks of imported yarn and cloth; and secondly, the present level of annual imports should be cut by about 20 to 25 per cent., after which the ceiling on imports should be raised at a rate of about 3 per cent. per year. This is by no means an unrealistic suggestion if the long-term proposals now being discussed at Geneva, to which I referred earlier, mean anything. Thirdly, the industry should be assured of a substantial share of the United Kingdom home market, at least until 1965, when the re-equipment should have been completed.

May I turn to one or two other issues raised by the Report? Questions Nos. 1488 to 1495 deal with the issue of operatives' compensation, which the Order and the Act covered. As I pointed out earlier, the money for operatives' compensation is raised by statutory levy, authorised by the House, on the firms remaining in the industry. One of the very few doubtful answers given is in relation to the question of operatives' compensation. The accounting officer said during those Questions that £5 million had already been paid out to the operatives in March of this year. I think that this is some mistake or misunderstanding. I understand that only £3⅓million has been paid out to date.

The reason I draw attention to this is that the accounting officer is not respon- sible for this aspect of the levy and for the operatives' compensation. There is no responsibility on the Department. The question which arises is that where a statutory levy is permitted to an industry, that is, in effect, authority to levy taxation, and it seems to me wrong that, having done this, Parliament should relinquish all its control over it. There is something to be said for the view that the amount raised by statutory levy for a purpose prescribed by Parliament should in all cases be subject to scrutiny by the Department of the Comptroller and Auditor General.

Another point to which I should like to draw attention, and which seems to me to be a point of principle, relates to the money for the scrapping of machinery—that is, the reorganisation phase. Two-thirds of the money is found by the Treasury and only one-third by the industry by statutory levy. Parliament, however, handed over full responsibility for the operation of this phase to the Cotton Board, an organisation outside the Civil Service. I make it clear that I am not casting any reflection on the Board's special committee, which has done a magnificent job under extraordinary difficulties and in a great hurry. It appears to me, however, to be a rather dangerous principle when Government money, which represents the majority of the money being expended, is handed over to a body outside the Civil Service with no responsibility by that body to a Department of State.

On the other hand, in the re-equipment phase, when 25 per cent. of the funds are found by the Treasury, the Board of Trade retains responsibility and the Cotton Board acts only as an agent for the Board of Trade. These are points of principle that are worthy of consideration. It seems to me to be wrong that when the majority of the money which is disbursed is found by the Treasury, responsibility is handed to a body outside the Civil Service, whereas when a minority of the money is found by the Treasury, responsibility remains within a Department of Government. This sounds wrong and is wrong in principle.

I emphasise that, in saying that, I cast no reflection upon the Cotton Board, which has done a magnificent job. As my hon. Friend the Member for Chesterfield was at pains to make clear, the fact that there is no adverse comment in the Report against the Cotton Board means that it has a completely clean sheet.

My hon. Friend now qualifies it. I had intended to say something concerning premium payments and one or two other items that emerge—

On a point of order. I am loth to interrupt a fellow member of the Public Accounts Committee, and I do so in no churlish spirit, but I seek your guidance, Mr. Speaker. We are discussing the Report of the Public Accounts Committee. The subject which the hon. Member has been mentioning, as he himself has said, does not find a place in the Report. It is true that it features in evidence. It is important to have it made clear, not so much for today's debate, but for future debates, whether the debate should be limited to what is in the Report or to evidence which the Committee has taken but has not found necessary to deal with in the Report.

Further to that point of order. The view had, I thought, been taken that evidence was part of the Report. Otherwise, there is no means by which the evidence could come before the House and be printed by the House. The Amendment which we are debating was drafted with that point in view so that the evidence would be covered. While, naturally, I accept your Ruling, Mr. Speaker, the advice which I was given was that the Amendment certainly would cover the evidence.

Had the right hon. Gentleman not risen to assist me, for which I am grateful, I should have expressed that view. The House must be able to discuss the evidence if it is taking note of the Report.

As I was at pains to point out earlier, I was not a member of the Public Accounts Committee when these witnesses were examined. It may well have been that on my examination of the Minutes of Evidence, as a Member of the House and not as a member of the Public Accounts Committee, I may have come to the conclusion that there should have been an adverse Report. I do not come to that conclusion on reading the evidence, which I read with great care, and I knew a little about the subject. I feel reasonably satisfied that there have been no major abuses. I was worried about this aspect earlier in the operation of the scheme and I put a number of Questions to the President of the Board of Trade on its operation. Having read the Report carefully, however, I feel assured that there have been no major abuses and I consider that the Public Accounts Committee, of which I was not a member, has done an excellent job in the examination of witnesses on an extremely complicated and complex issue.

6.25 p.m.

On reading the 30 pages of the Third Report of the Public Accounts Committee, I was struck by the rather sorry record of human error, failure and mismanagement over a large field. I will not comment on Malta, but running through the Revenue Department's Appropriation Accounts, I saw how, as the right hon. Member for Huyton (Mr. H. Wilson) has mentioned, three out of the four years of the life of the cable agreement had been taken up by negotiation before it was signed. While that sort of thing happens in war time, it should not happen in peace time.

I saw the story of H.M.S. "Belfast", for which the estimates were exceeded by £1½ million, the stories of H.M.S. "St. James" and "Gravelines", which had to be scrapped after about £½ million was spent on them, and of H.M.S. "Swift-sure", when £1,200,000 was spent on the ship before it was scrapped. In the case of the Royal Ordnance factory, over-provision was made for 800 tons, or £20,000 worth, of copper and Air Ministry officials were found guilty of corruption in another case. I should like my hon. Friend the Financial Secretary, in replying to the debate, to say whether, in serious cases, the officials are dismissed the service. In the case of the Admiralty, perhaps the Board of Admiralty itself should be dismissed. Are any officials dismissed or are they merely put over to jobs of equal remuneration?

I have lately come across two quite high-ranking executives in industry who have come to me and who have been dismissed by their firm, not for any bad misconduct, but merely because they were not sufficiently efficient to hold down their jobs. In cases such as those to which I have referred, in which large sums are involved, I wish that my hon. Friend the Financial Secretary would tell us what is the position in the Civil Service. We should face the fact that in some of these serious cases, officials should be dismissed and not merely slightly demoted or put to other jobs.

Looking over the field as a whole, I ask myself, as the hon. Member for Chesterfield (Sir G. Benson) brought out, whether more mistakes have been made than should have been made in the Civil Service. Having regard to the fact that there are nearly 600,000 civil servants, I ask myself whether there have been more mistakes than would have occurred in 600 firms employing 1,000 men each. That is a fair way of putting it. By and large, I think that there have not been proportionately more mistakes than in private industry and, in fact, probably a good deal less.

When a mistake is made, however, very large sums of money are involved. As the Budget as a whole is nearly £6,000 million and there are 600,000 civil servants, each civil servant is responsible per annum for an expenditure of £10,000. A single mistake by a quite humble civil servant might, therefore, account for a very large sum of money.

My next constructive suggestion is that the big spending Departments such as the Ministry of Health—and I am sorry that the Minister is not now in the Chamber—should have a third Minister, as we now have in the Treasury, whose sole duty would be to watch over the finance and administration of the Department. Obviously, the Permanent Secretary of the Department has a tremendous burden thrown on him of watching over the problems going through the minds of 2,000 or 3,000 civil servants. We are involved nowadays in such large sums of money that I wonder whether the time has not come when the appointment of a Minister whose sole work would be to oversee the administration and finance of the Department ought not to be considered.

My hon. Friend seems to imply that the new Chief Secretary to the Treasury is concerned with precisely that in the Treasury, but that is not quite true. He is mainly concerned to take over part of the Chancellor's traditional functions with regard to the financial implications of Government policy. That is slightly a different point.

I am much obliged to my hon. Friend. It is a rather different point. The Chief Secretary to the Treasury will oversee Government finance as a whole vis-à-vis the various Departments and Government policy. I am addressing myself to the rather smaller point that in the big spending Departments we should have a Minister whose sole job would be to look at the finance and administration.

A very interesting part of the Reports of both the Public Accounts Committee and the Estimates Committee covers aviation and deals particularly with the London airports. The Public Accounts Committee has come to the same conclusion as the Estimates Committee. The London airports were losing £2¾ million to £24 million a year. We hope that as a result of the adoption of certain recommendations the losses will amount to only £1 million in the current year.

It was agreed by both Committees that the technical services provided by the London airports and, indeed, other airports, cannot be free services to the air passenger. Many people have argued that they ought to be. They have said that the radar, the air traffic control, the runways, the bringing in of aircraft in safety, should all be subsidised if not be free. I do not take that view. Obviously, the heavier and faster the aircraft are, the heavier the charges are. At London Airport there must be a three-shift system of radar operators working round the clock to bring in the enormous Boeings, making contact with them at Fishguard and bringing them over Watford and from Watford to London. This is a very expensive arrangement.

When comparisons are made between the landing fee which must be charged at London Airport to cover costs with the landing fee in New York, it is often said that the charge at New York is much cheaper than it is at Heathrow. Less well-informed people than the Estimates Committee have pointed out that the landing fee at Idlewild is £39 compared with £243 at Heathrow. The Estimates Committee brings out in its Report that at Idlewild the following charges are made: porter service £21, inspection space charge £48, general terminal charge £3, air navigation facilities £2, terminal facilities £62, apron services £76, incinerator service charge £0·12, and passenger ramp charge £4. The Idlewild charge therefore comes to £269, plus some further extras making in all over £300, compared with £343 at Heathrow. The average cost of landing and take-off at Heathrow and Idlewild are, therefore, not so far apart.

Is it not a fact also that because of the different way in which the oil companies charge rents at the two airports the oil charges are heavier at Idlewild than they are in London, for reasons which appear in both Reports?

I think that they are slightly heavier, but, anyhow, we have recommended that these landing charges should be charged and we hope that the airport will make a profit in perhaps ten years' time.

The next point dealt with was the passenger service charge of 7s. 6d. There has been a good deal of complaint about that by members of the public, but that, again, goes to help meet the deficit on the airport and to meet these very expensive charges. The only criticism we had at the Estimates Committee was that B.E.A. has managed to secure a discount or a collection charge of 7½ per cent., or 6¾d. for every passenger, for collecting the 7s. 6d. This certainly seems rather unnecessary, because in Paris the passenger service charge is collected free.

Both Committees have recommended that the passenger service charge should be levied on domestic flights as well as overseas flights. I cannot see the logic of omitting the charge on the domestic flyer. Why should the domestic flyer be subsidised to that extent? He has the use of the extensive central area and the radar and the navigation facilities all over the country. To ask that he should be freed of this charge is like asking the State to take over the signal- box at King's Cross and free the passenger of the cost of running it. [An HON. MEMBER: "It does."] Of course, that is partly so, but it is hoped not for ever.

The air passenger is highly favoured. At a time when air traffic is competing with the railways we should not favour him any more, because he is flying in a machine the basic design and manufacture of which were probably developed for war purposes by the Air Ministry. A sum of £10 million is put into Rolls-Royce for the development of engines for military purposes the benefit of which is taken up in civil aviation. Therefore, the air passenger is flying in a somewhat subsidised machine.

My hon. Friend the Member for Farnham (Sir G. Nicholson) referred to the fuel leases, which, at thirty-six years, are too long both at Heathrow and at Gatwick. The point that we should criticise is that while a mistake was made at Heathrow in 1955 in granting these long leases the same mistake was made at Gatwick in 1957. We hope that it will not be made again. If there is any renegotiation of fuel leases it might be pointed out that in Copenhagen the fuel companies pay 1d. a gallon to the operators of these airports, which brings in about £500,000.

Another point to which reference has been made is the payment for the apron services at London Airports, or rather their administration, which will now be taken over by the airlines and particularly by B.E.A. I refer to luggage handling, the provision of steps and ladders, the handling of mail and freight and the loading of food on the machines, and so on.

I think that the Committee is pleased that the airlines are to take this over, and also those unprofitable buses which many of us think are rather an extravagance when we have to walk only 100 yards from the terminal to the plane. The weakness of the old system was that the Ministry of Aviation ran the porters for the loading of baggage under a B.E.A. baggage master, who had no discipline or control over the men. It was a headless squad. This position has now been put right, as the Committee recommended, and the porters are now under the airline.

I put this point particularly to my hon. Friend the Financial Secretary, because I now that he is interested in customs. The rents for office space at London Airport are very high. They are just about as high as rents in the centre of London, if not a little higher. We in the Estimates Committee were amazed to find that the Customs and Excise, one of the most profitable Government Departments, does not pay any rent to the operators of London Airport, namely, the Ministry of Aviation, for the 34,500 sq. ft. it occupies. In view of all the bottles of whisky, etc., the Customs and Excise confiscates and sells, it must be very profitable to the Government. It should surely pay rent for the very large office and other space it occupies at the airport. The airport is doing increased business every year.

If such a transfer payment were operated, there would be additional cost to the Government from effecting the transfer. Surely it would be undesirable for the Inland Revenue to pay rent.

It would be a very small additional cost. The Ministry of Aviation in running London Airport is under rather a disability from having a vast space in the middle which it could let if it was not used by the Customs and Excise. It would be both logical and fair that the Customs and Excise should pay rent for the space it occupies.

Finally, I ask the Minister of Aviation, who, unfortunately, is not here at the moment, to take into consideration the recommendation made by the Committee on the future of a third airport for London. Should there be a third airport for London? Is it necessary to have one besides Heathrow and Gatwick? If it is necessary to have one in five or ten years' time, should it be Stanstead, which is at present designated as the third London airport? Stanstead is on the borders of Hertfordshire and Essex and is a rather long way from London, in a remote area, but to that extent it would be favourably placed because it is not surrounded by great housing estates as Heathrow and, to some extent, Gatwick are.

If Stanstead is to be the third airport, vital decisions have to be taken in the next year or two. The Ministry must not dilly-dally over the decisions. It must not take time to test public opinion. Decisions must be taken quickly. For instance, is another runway necessary at Stanstead? If it is to be an airport, what about the road and rail links? The road link to Bishops Stortford on the A.11 is highly unsatisfactory at the moment. All these things would take about five years to develop if the airport were to be used as a third airport. It is not a minute too early to take these decisions. If the Ministry of Aviation is to learn any lessons for the future from the expensive running of London Airport, it must make these decisions now if Stanstead is to be the third airport, because we all know that it will take about five years to develop and we shall lose a lot of money if these things are not done.

6.43 p.m.

May I begin, as one who is not a member of the Committee of Public Accounts, by saying how very much this Report is appreciated by hon. Members. Not many hon. Members are able to read it through in its entirety, but we are certainly able to turn to any subjects which particularly interest us and find that lucid cross-examination has produced an equally lucid Report.

I also congratulate the Committee on its centenary. The right hon. Member for Huyton (Mr. H. Wilson) gave us a dissertation on Disraelian and Gladstonian economics. There is a very fashionable trait in politics today, in which the right hon. Gentleman does not indulge, of claiming other people's ancestors. I intend to invoke one of my own party political ancestors and say that I think that the Committee of Public Accounts can claim in its corporate capacity to have inherited the mantle of Gladstone as regards retrenchment and reform, but not perhaps peace as far as its witnesses are concerned.

I turn to the section of the Report dealing with the pharmaceutical industry. I hope that it will not be thought irrelevant if I refer, first, to last year's Report on this subject, which I shall touch on very briefly, because there for the first time the facts were substantially made public. The Committee of Public Accounts found the disturbing information that the cost of individual prescriptions had risen by about 10 per cent. and that, whilst the number of prescriptions between 1957 and 1958 had decreased, the total cost of the Bill had risen from £68 million to £73 million.

The Committee recognised in its Report last year and, indeed, in its Report this year that a firm from which the Government purchases drugs is entitled to get a fair return, not merely for the cost of production, but for the research which has gone into the production of the drug and, indeed, to cover part of the cost of research on other drugs which may not have successfully produced a product, because much research is abortive.

The Committee also took the view that, if under the protection of a patent, a pharmaceutical firm has a monopoly position, the monopoly position should not be abused. In paragraph 18 of last year's Report, the Committee said:
"The evidence adduced before Your Committee was insufficient to enable them to give an assurance to Parliament that prices charged to the Health Service were no more than fair and reasonable."
The Committee went on to say that it needed very much more information.

It was, however, in that year that the right hon. Member for Huyton, in Question No. 2162, elicited the information about the profit percentages. They were, as he said today, 13 per cent. profit on capital invested for Swiss-owned firms, 20 per cent. for British-owned firms, and the very high figure of 70 per cent. for American-owned firms. The hon. and gallant Member far Croydon, North-East (Vice Admiral Hughes-Hallett), who was then a member of the Committee, also discovered that one firm which produced drugs which were purchased for about £½ million was making a return on its capital of about 100 per cent. It was with that picture in mind that the Committee decided this year to delve more deeply into the problem.

One point which the right hon. Member for Huyton mentioned in the 1959–60 Report, which I want to touch on shortly in relation to this year's report, is the patent position of the Crown. He suggested, in Question 2399 that, as patents were granted by the Crown, the Crown should have the right to invoke the benefit of the patents to the ultimate benefit of the taxpayer. I agree with that.

The hon. Gentleman seems to have come on now to this year's Report after referring to last year's Report. He has dealt with the difficulty we had last year in coming to a conclusion about profits on capital employed. Unless he completes the picture, a misleading impression may be given. He has clearly studied not only this year's Report, but last year's Report, also. He may recall that the main reason why we decided not to take any further action at the time was that neither the accounting officer who was giving evidence before us nor the Comptroller and Auditor General could tell the Committee what they meant by capital employed, which meant that percentages of 100 per cent. and other percentages were completely meaningless.

I accept that entirely. I intended to make the point later that the 70 per cent. weighted average was reduced to 35 per cent. when the research costs in America were taken into account. I will certainly bear that point in mind.

On the patent position, in the 1959–60 Report the right hon. Member for Huyton asked a witness this question:
"Do you really feel that patents which are granted by the Crown should not be capable of being invoked by the Crown to save the Crown money?"
This year we hear from the Committee that the Government have entered into certain discussions with the industry with a view to reducing what certainly at first sight were extremely large profit margins, that were being paid for by the British taxpayers to these largely American-owned subsidiaries and thereby inflating annually the cost of the Health Service. We learn that there are various alterations. The export criterion is to be raised from 20 per cent. to 25 per cent. There is to be direct negotiation for other categories of drugs, and so on, and that is certainly a move in the right direction.

Then, as a result of the accountant's report, to which the right hon. Gentleman referred, we find out that the costs of American research had not hitherto been written into the costing of British products, but that when that was done, the profit returned was 30 to 35 per cent. The hon. Member for Anglesey (Mr. C. Hughes) put a very pertinent Question, No. 1172, when he suggested that this was still far too high a return on the invested capital, and in that he got the agreement of the Ministry official who was then being cross-examined. It is clear that when we consider the profit margin of 35 per cent. compared with 13 per cent. of the Swiss firm that is still far too high a profit.

There was also the question in which the right hon. Gentleman referred to the Press statement that it was possible for hospitals in this country, by purchasing abroad, to purchase drugs at two-thirds the price, and in some cases at one-third the price, charged by the American-owned subsidiaries in this country. One only has to look at Appendix 1 to the Report of the Public Accounts Committee to see the fantastic difference in price between drugs which can be purchased for the Health Service in Europe and drugs the prices of which are being charged by American-owned subsidiaries in this country. I say again that the Public Accounts Committee has done a tremendously valuable service—

I am grateful to the hon. Gentleman. I shall give details relating to one or two antibiotics, and I hope to satisfy his appetite.

It was against that picture, and, I would hope, largely as a result of the pressure exercised by this Committee, that the Minister made the statement on 2nd October that he would allow hospitals to purchase from drug suppliers on the Continent, which, needless to say, met with a howl of horror and fury from the British-based American subsidiaries in this country. We now have the position, that, if we take the case of chlortetracycline, the hospital formerly had to pay £56 for every 1,000 pills and now gets them for £24. If one takes tetracycline, and 1oks at Appendix 1, one finds the price from continental sources is £37 5s. per 1,000 tablets, and whereas, formerly, the same number was being sold for £71 the present price is now £62 18s. 6.

Quite clearly, drugs can be purchased for the hospital service at very much lower prices than are being charged by the companies in this country. Though their are one or two honourable exceptions, the price is largely the result of a monopoly position.

Can the hon. Gentleman say whether the companies which charge a fair price in this country are wholly-owned British companies and those which charge the higher prices are wholly-owned American companies?

The main American firms who will be chiefly affected by imported drugs are Pfizers, Lederle, Parke Davies and Squibb. They are 100 per cent. United States owned subsidiaries, and, substantially, these are the firms which have been charging prices much greater than those obtainable on the continental market. The three firms to whom the Minister has awarded contracts in this country are Bio Rex, the Fraser Chemical Company and Strang Chemicals. The first one is an extremely well-established United Kingdom firm, of which one of the directors is a Member of this House, with excellent laboratories, and it is a firm whose prices are very much lower than those of the three American subsidiaries I have mentioned.

The Fraser Company is, again, a British-based firm, but for its laboratory and scientific knowledge it relies on Carlo Erba, of Milan, who are also their suppliers. There is the third firm, Strang Chemicals, which is Danish owned, and whose imports are backed by the Steiner Laboratories, in Copenhagen. I understand that some part of the antibiotics which are being imported originate from Roumania.

A point which I should like to make, which, I think, arises directly out of this Report and one which I hope the Public Accounts Committee will be able to consider when it carries on with this question—I hope that it is in order to put suggestions to the Committee, because this is the only opportunity we have of making representations—is that the Minister, by his action of 2nd October, has enabled the hospital service to buy drugs very much more cheaply. Since the hospitals are on tight budgets, this is of vital importance, but hospitals account for only 15 per cent. share of the total drug users. This still leaves the major users, who, of course, are the chemists, and they are having to pay very inflated prices.

I have mentioned the charge of £56 against £24 for chlortetracycline per 1,000 tablets which the hospitals buy from the three firms I have mentioned, but the chemists, by reason of the patent position, which protects those who have a monopoly of the market in this country, are still having to pay £56. believe that the Minister must extend this important concession, this same right to buy in the cheapest market, to the chemists as well as the hospital service.

This brings me to the second point about what is so unhealthy in the present positon—the patent situation. It is the patents that protect these firms manufacturing under licences and preclude competition. I believe that there is an obvious and classic case for saying that firms which spend money on research and are able to develop drugs are entitled to a fair return on their products, and that may well mean that they must have a protected market for a period of years. I do not, however, believe that the present period of sixteen years is fair or reasonable. The hon. Member for Dover (Mr. Arbuthnot) suggested that, possibly, the prices on the Continent are cheaper because those firms do not do the research or have the staff to do it.

But if one takes one particular drug, chloramphenicol, this has been on the market for sixteen years, yet it is still a patented product which has a monopoly position in this country. I understand that the patent is shortly to expire and that the licensee will ask for a renewal. If we take tetracycline, this has been on the market for ten years, and I cannot believe that a period of more than three, four or possibly five years is necessary (in the shape of a patent protected monopoly position) to ensure that a firm shall get a fair return for its research. Therefore, I believe that, although this is something of a legal question, it has economic significance, and it is the second thing which must be considered when taking account of drugs, namely, the reduction of the patent period.

I hope the attention of the Minister will be brought by the Public Accounts Committee to the fact that powers exist under Section 41 of the Patents Act to give compulsory licences for manufacturing in competition. Some of the firms in this country could very well do with a little bit of rugged competition. I hope, also, that the Committee will remember the powers which the Crown already possesses under Section 47 of the Patents Act under which a licence may be waived, and the Crown may so to speak, disbar the user from the benefit of the licence if production for the Crown is for the benefit of the taxpayer.

I believe that there is this need to extend more freedom to the chemists. I believe that we have to look into the patent position. I believe that the Government must be much more flexible in allowing firms to be given compulsory licences to compete. I also believe that the Public Accounts Committee and, indeed, this House will have to fight very strong vested interests. The first thing the drug firms affected by the Minister's action are trying to do is to carry out a campaign to discredit those firms from which the Minister is at this moment purchasing drugs for the Health Service.

It is an iniquitous campaign. The firms from which the Minister is now purchasing are reputable firms, backed by properly qualified technicians and laboratory staff, and I do not believe—nor do I think any hon. Member believes—that the Minister of Health would purchase drugs for the Health Service unless he and the officials advising him were quite certain of the absolute efficacy of the drugs supplied. That campaign is one we must fight.

I also believe—although this is now going into the melting pot of the Common Market—that it is quite wrong that we should not only give these monopoly powers to the firms through these patent rights, but that we should also impose a 33⅓ per cent. duty on the imported drugs. We should be able to buy in the cheapest markets, provided there are the necessary technical skills behind the product being sold.

I have no doubt—one has only to look at Appendix I of the Report for 1960–61—that the firms that have for so long enjoyed a monopoly position in this country are making excessive profits. I believe that the Public Accounts Committee has done a tremendous public service in throwing a sharp light on this matter, and I hope that when it resumes, it will go into the subject thoroughly. If the Committee can help to reduce the cost of drugs, it will earn the gratitude of every man and woman in the United Kingdom.

7.2 p.m.

I had not intended to devote any time at all to the pharmaceutical service, but since several hon. Members have made certain criticisms—not altogether unjustified, I think—of this service, I should like briefly, and without retracting in any way from what we on the Public Accounts Committee said in paragraphs 24–31, to say one or two things that ought to be said in such a debate as this, both in fairness to the industry and, perhaps, to put the whole matter in a better perspective.

First, as has been said by my hon. Friend the Member for Dover (Mr. Arbuthnot), the pharmaceutical industry spends a great deal of money on research. I believe that it has a higher percentage of its employees engaged on research work than has any other branch of British industry.

Secondly, I want to refer to the entry of American subsidiaries into the British market, with all the disadvantages that it may bring—and I recognise that we have some criticisms to make of certain aspects of that. The fact is that this entry gives to the British industry benefits from world pharmaceutical research to the extent of about £100 million per annum. It is interesting to contrast that figure with the industry's sales to the National Health Service of about £56 million.

Thirdly, the Board of Trade Index of Wholesale Prices reveals that in the years 1954–60 the prices of pharmaceuticals increased by less than 1 per cent., as compared with an increase of, I think, about 13 per cent. in the price of other manufactured products. Better drugs have shortened the duration of hospital in-patient treatment, and since the cost of a day's stay in a general hospital is £3 3s. 7d., of which only 2s. 1¾d. is attributable to drugs and dressings, an extra day saved in hospital costs represents more than the equivalent of a four-week supply of drugs and dressings. I say that without retracting in any way from a Report for which I am in part responsible.

I make no apologies for now turning to a matter with which I dealt last week in a debate on Scottish housing. I want to refer to paragraphs 40–45 of the Report, and to deal with the effects of unduly low rents of local authority houses in Scotland upon the contribution from the Exchequer equalisation grant. Very many local authorities in Scotland are charging, and long have been charging, very low rents to their council house tenants.

In England and Wales, outside London, average weekly rents increased, as the Public Accounts Committee was informed, from 7s. 6d. a week in 1938 to 19s. 6d. in 1959–60—a 160 per cent. increase over the period. In the same period, the average net weekly rent in Scotland increased only from 5s. to 8s. 8d. per week, an increase of 73 per cent.

Expressed as a proportion of total local authority housing costs, rental income in Scotland in 1959 was less than half that in England and Wales whereas, as the Committee was informed, the average earnings in Scotland at that time were only 5 per cent. or 6 per cent. less than they were in England and Wales.

That would not really concern the House were it not that deficits on housing revenue are taken into account when assessing the amount of Exchequer equalisation grant payable to individual local authorities. The aggregate amount of grant payable is determined by reference to a local authority's expenditure, and that includes expenditure out of the general rate fund to meet deficits on the housing revenue account after receipt of housing subsidies. As I pointed out last week, we found that where house rents are unduly low, housing deficits are correspondingly greater and larger Exchequer contributions fall to be made.

During the examination of witnesses, at Question 498, in reply to my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens), the Treasury witness said:
"There is no doubt at all, Sir, that the fact that many Scottish local authorities charge what would appear to be unreasonably low rents does, under the formula which works at the moment, increase the amount of the Exchequer Equalisation Grant which is paid."
He went on to explain that it was not a direct 100 per cent. relationship, and that the formula worked out at an increase of something under 20 per cent. Nevertheless, that is a fairly considerable amount, and something with which the House ought to concern itself.

The law in Scotland provides that a local authority must from time to time review its rents and make such changes in rents and rebates as it thinks may be required. Not all local authorities by any means have been doing this. The Comptroller and Auditor General told the Public Accounts Committee that twenty-two local authorities in Scotland have not reviewed their rents in the last five years, and that one of them—by questioning the representative of the Department of Health, I elicited the fact that it was the Burgh of Saltcoats—had not reviewed its rents since 1937.

Incidentally, the Committee was informed that in the year 1959–60 the Burgh of Saltcoats had to put in from the rates £55,600 in order to balance its housing account over a total of 2,100 houses. In other words, it put in £26 or £27 per house in rate contribution. The Committee was also told that during the same period the Burgh had received in respect of that deficit, in round figures, about £18,000 in Exchequer equalisation grant.

The average rents of the local authorities which have not reviewed their housing rents in the last five years or so range from as little as 2s. 10d. a week to 10s. 8d. The Committee was informed by the Department of Health that it went upon certain principles, and those principles will be found in the Report in the reply to Question 491. I think the principles are quite unexceptionable, and I do not suppose that any hon. Member would disagree with them.

The first principle was:
"That subsidies ought not to be given to those that do not need them".
The second was:
"… that no one in genuine need of a house should be asked to pay more rent than he can reasonably afford."
My right hon. Friend the Secretary of State drew the attention of local authorities to those principles in a circular which he sent out in 1956.

My right hon. Friend has no power to fix rents. I think that it would be agreed that rents ought to be fixed by the local authority. However, where my right hon. Friend thinks that rents are unduly low, he can institute an inquiry. He has done so on two occasions. He did so first of all in the case of the Glasgow Corporation rents in July, 1958, following which the Corporation raised its rents from an average of 5s. 2d. a week to 8s. 5d. per week, which represents about £22 per year.

In respect of the year 1958–59 the Department of Health for Scotland made some calculations which showed that the sum needed to balance housing accounts throughout Scotland, given a rate contribution of one-third of the Exchequer subsidy, was £39 a year. My right hon. Friend the Secretary of State is on record as having said that at that time, 1958–59, £39 a year would not be an unreasonable rent. That is, of course, very considerably above the average rents at which the Glasgow Corporation houses are now let.

The second inquiry was the one into the. Dumbarton rents, over which Mr. G. C. Emslie, Q.C., presided. As I told the House last week, and as the Public Accounts Committee was subsequently informed, the report of the inquiry had not been made by the time the Committee was examining its witnesses. The report was subsequently made, and we were favoured with a summary of it and .subsequently with Mr. Emslie's full report.

That report shows that the Dumbarton Council's average rents were 2s. 10d. a week. That figure is less than a third of the weekly cost of hiring a television set, less than a quarter of the cost of a garage and less than half the cost of the necessary repairs to a house.

As a result of that, its housing deficit for 1959–60 amounted to £286,000, in respect of which an Exchequer equalisation grant of £50,000 became payable. This was a flagrant example of a majority on the council, in spite of repeated guidance by its officials, deliberately and as a matter of policy allowing its tenants to occupy council houses at a rent of 2s. 10d. per week and requiring other ratepayers to shoulder a net housing burden of 7s. 9d. in the pound.

It is very small wonder that Mr. Emslie said, on page 19 of his report, that they did this with
"A cynical and deliberate disregard of the duty of trust which was and is theirs towards the general body of the ratepayers."
One of the troubles in the past has been that the Secretary of State has not taken the initiative in ordering an inquiry. I am not at all sure whether he has the power to do so. I rather think he has in terms of Part II of the Local Government Act, 1948. I should like to know whether that is the case. I hope that the Under-Secretary may be able to give me the answer privately later. If my right hon. Friend has not the power I think he ought to take it now, which he can do by means of an Amendment to the Housing (Scotland) Bill now before the House.

What I said was that I am not at all sure whether the Secretary of State has the power himself to take the initiative in ordering an inquiry. In the past he has done it only when local representations have been made. In the Glasgow and Dumbarton cases it was done after local representation had been made. At Question 494 in the Report of the Committee of Public Accounts a Department of Health witness was asked:

"Have you considered initiating public inquiries without waiting for representations from the locality?"
The answer was:
"That has been considered. So far the Secretary of State has not felt justified in moving on that basis."
First, I urge that, when the Secretary of State has reason to believe that a local authority is failing in its duty to fix reasonable rents for its houses, he himself should call for its housing accounts and, if he is then still dissatisfied, should initiate an inquiry.

The Secretary of State has already announced that he is taking account of the recommendation of the Public Accounts Committee and that he intends to introduce—presumably in the form of legislation—provisions which will make it possible to ignore the deficit in the housing revenue account for the purpose of calculating the Exchequer equalisation grant. If the right hon. Gentleman is to do that, what is the particular point of giving him fresh powers of inquiry?

The question of the method of calculating the Exchequer equalisation grant is a separate point, but I think that the reason is that the review of the equalisation grant has not to be made until spring of 1963. I want action much more urgently than that.

Clause 29 of the Housing (Scotland) Bill provides that, when an inquiry has been held, whoever may have instigated it, and when the local authority concerned has been found to be in default of its duties under the Housing (Scotland) Act, 1950, the Secretary of State may make a rent scheme and direct the local authority to comply with it. That is a permissive power, however. I want to see that, once a legal inquiry has proved that a local authority is in default, it is mandatory upon the Secretary of State to fix the rents, whether he wants to or not, and make the local authority comply with them.

There are about 230 local housing authorities in Scotland. The rents of the houses under their control are published each year, usually in March, in "Rents of Houses Owned by Local Authorities in Scotland." In the Report for 1960 there are certain facts, but before giving them I remind the House that the Secretary of State, when speaking of rents in 1958 and 1959, said that £39 a year would not be unreasonable. This White Paper on rents shows that only in seven out of about 230 authorities did the average standard rent exceed that figure of £39 a year. In less than fifty cases—including those seven—the average standard rent of all houses was just over £30. In as many as thirty-four cases the average rent was under £20 a year and in four cases it was actually as low as 5s. a week or less.

The hon. Member can get more information from that Report. In referring to the rent which is less than 5s., could he also say what it was before the 1956 Act came into operation, because that is relevant?

The hon. Gentleman will appreciate that he supported the Government in passing certain legislation in 1956, the effect of which was greatly to reduce the amount of rent to be shown in the rent returns he is referring to. If he has before him the page which gives the rent charge for 1960, he will also find, in another column, the rent charge in 1956.

The four authorities concerned are listed, but I do not think that those figures are on the same page. Perhaps the hon. Gentleman and I can talk about it afterwards. It is quite true that we passed legislation to abolish what were known as owner's rates, and naturally the effect of that brought a reduction in the gross rent figure, because owner's rates had formerly to be paid but now have not to be paid.

It was not the abolition of owner's rates that did this but Section 16 of the 1956 Act, which said that rents had to be reduced by the amount of owner's rates.

That is what I intended to convey. It is perfectly true.

Finally, I want to deal with the point about the present system of calculating the Exchequer equalisation grant referred to by the hon. Member for Edinburgh, East (Mr. Willis). I believe that this is due to be revised before May, 1963, when the present statutory formula ends. The Committee recommends that this point should be looked at very carefully and that
"… early consideration should be given to the exclusion from the calculation of Exchequer equalisation grant of housing deficits which are due to the charge of unreasonably low rents."
I am sure that the House will be glad to learn from the Treasury Minute on that Report that the Treasury has agreed that this should be done, and that the Secretary of State is to examine the best means of doing so as part of the review of grant arrangements to be made in consultation with the local authority associations, with a view to the introduction of fresh legislation to take effect in May, 1963, when the existing arrangement finally ends. But the question still remains: when is a local authority rent unreasonably low? My third and final recommendation is that the Secretary of State should give serious attention to the possibility of tightening up the procedure.

7.28 p.m.

I join with hon. Members who have paid tribute to my right hon. Friend the Member for Huyton (Mr. H. Wilson). Chairman of the Public Accounts Committee and to the former Chairman, my hon. Friend the Member for Chesterfield (Sir G. Benson). I would also pay tribute to the officials of the Committee, the permanent officials who see to it that the machine goes smoothly.

Is that not rather euphemistic? "Smoothly" is the right word sometimes.

If my hon. Friend the Member for Leek (Mr. Harold Davies) reads the Report of the Committee, I think he will agree that not only does the machine move smoothly but also efficiently, and to the benefit of the House and of the country as a whole.

The hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley) referred to the part of the Report dealing with pharmaceutical services. I wish to refer to that section briefly also, because the pharmaceutical services and the cost of proprietary preparations caused members of the Committee considerable uneasiness over a long period.

Hon. Members have already referred to last year's Report when we probed as deeply as we could into this matter, but in 1959–60 we were not able to elicit all the information we would have wished. What we did in our recommendation last year was to return an "open verdict" on the question of the costs of proprietary preparations. To get the matter into the right perspective, it is worth recalling precisely what was said at that time:
"The evidence adduced before Your Committee was insufficient to enable them to give an assurance to Parliament that prices charged to the Health Service were no more than fair and reasonable, particularly so far as the three year 'free period' is concerned."
The Committee went on to say:
"The Ministry have little or no information about costs or profits relating to proprietaries supplied to the Health Service, and the only information available about trading results is such as is afforded by the published accounts of firms engaged in pharmaceutical manufacturing. …"
The Committee then recommended that as a matter of urgency the Ministry should obtain fuller and more reliable information.

By the time we met in February of this year, more information had been obtained. It was not as much as I would have wished, but it fully confirmed our fears that the profit margin on these drugs was excessive. Details are given in paragraph 28 of the Report and I will not go into them now. The Ministry of Health concluded that the adjusted profit levels of American subsidiaries were about 30 to 35 per cent. and, to answer the point made by the hon. Member for North Angus and Mearns, that included the costs of research.

One of the Committee's difficulties was that at no time did we have an accurate criterion by which we could judge what was "a fair and reasonable price." Hon. Members reading the Report will see that we had no precise evidence of an independent nature before us, although we knew that the profits of the British and Swiss-owned firms were considerably lower. It should be made clear to the House that the inquiry into the accounts of the American subsidiaries during last year was not accompanied by a similar inquiry into the accounts of British and continental firms. That would have been of great assistance to the Committee and, to the House.

I congratulate the Minister of Health, who, I am glad to see, is present, on accepting the Committee's advice and buying in bulk from the Continent for the hospitals. In this way we are getting drugs at a much lower cost, but we must remember, as the hon. Member for Devon, North (Mr. Thorpe) said, that these drugs are only for the hospitals and that we are still paying the top price for 85 per cent. of the proprietary drugs.

It is difficult to get to the core of this problem, and yet that is what the House wishes to do. One can say at once that we are paying an excessive price for proprietary drugs. There is general agreement about that. The result is that the overall cost of the National Health Service is increased, with consequences of which we are all aware—the 2s. charge for prescriptions, which has caused great hardship among certain sections of the community.

The Government have sought to control prices in two ways: first, by the Voluntary Price Regulations Scheme, which has now been amended; and, secondly, following the Minister's statement on 2nd October, by bulk purchase from the Continent. Both will obviously help in a limited way, but we have to ask ourselves whether those two expedients will bring the cost of proprietary drugs down to a reasonable level. Notwithstanding those two steps, I fear that we shall continue to pay an excessive price and that profits will remain at about the 30 per cent. level.

The second deduction which we must make from the evidence is that we are extremely dependent upon purchases either from American subsidiaries or from the Continent of Europe. That is a sad commentary on the present state of the country. We may not be able to afford to make rockets, but we ought to be able to produce the drugs we need by our native enterprise and genius. I do not think that there is an hon. Member who will disagree about that. It is a major tragedy that the country which produced Jenner, Simpson, Lister and Fleming should be dependent on external sources for the production of drugs essential to the Health Service.

What is the solution, for we ought to be thinking in terms of solving the problem? Why should we have to look forward to years of paying high costs for our drugs? I know that the Minister of Health is deeply concerned about this matter. I do not wish to be doctrinaire, but I suggest that the only solution is that the Government should go into business on their own account. This is the view of the Labour Party.

This is something which we should have done years ago. The Medical Research Council does an extremely good job, but it cannot manufacture drugs for the Health Service. I am not advocating now that the Government should nationalise the drug companies. I suggest that the Government should go into competition with the drug companies and I hope that that is the sort of "rugged competition" which the hon. Member for Devon, North wants. If we did that efficiently—and there are plently of young men in his country with the ability and drive who would gladly enter such a State industry—we would bring prices down, thus serving the country and saving vast sums of money.

This is an interesting suggestion, but can the hon. Member give a little more detail? Does he have in mind the idea that the Government should produce their own drugs and not buy them from any other source, even though there may be drugs produced by pharmaceutical companies which are their own particular preparations, which are life-saving drugs and which may be essential to the Health Service?

What I am suggesting is that the Government should set up an industry to enter into competition with the American subsidiaries and other firms. Something might happen which would appeal to the hon. Member—prices would find their proper level.

I do not think that I made the point quite clear. There are certain pharmaceutical preparations discovered by research chemists working for certain pharmaceutical companies. So far as I understand the present law, they cannot become the property of any company which may be set up by the Government to produce drugs for the Health Service. Does not that mean that certain essential and valuable drugs would be denied to the Health Service?

That is not the whole picture. The hon. Gentleman should remember the powers which exist under Section 41 of the Patents Act. If the hon. Gentleman goes into that carefully, he will realise that the Government have power in certain circumstances to manufacture these drugs he has in mind.

Is the hon. Gentleman suggesting that the Government firm he is proposing to set up should steal the patents of the existing pharmaceutical manufacturers?

I made no such suggestion, and I will not insult the House by seeking to answer the hon. Gentleman. He knows that that is not what I suggested. If he studies the legal position, he will realise what I have in mind.

I hope that during the current Session the Public Accounts Committee will continue to study this matter and will continue to examine it. By so doing it will serve not only the House, but the country as a whole.

7.31 p.m.

I regret that the right hon. Member for Huyton (Mr. H. Wilson) is not here, although I understand the inner urges which have taken him elsewhere at the moment. I wanted to add my tribute to those which have been paid to him for his excellent speech in introducing the Reports of the Committee. His speech was extremely impartial and fair, and, as one has come to expect from him, very witty, which shows that he can be amusing when dealing with facts as well as on other occasions when perhaps he draws more on his imagination. I am delighted that the right hon. Gentleman has now returned to the Chamber.

I am sorry that the Chairman under whom I originally served, the hon. Member for Chesterfield (Sir G. Benson) is not here. I learnt a great deal while serving as a Member of the Committee under his Chairmanship, as I am sure did all the members of the Committee. I add my tribute to his great work for this Committee over many years.

I confess that when I first became a member of this Committee I was a little doubtful about its real value. It seemed that it was the kind of Committee which, as other hon. Members have said, shut the stable door after the horse had bolted. It took me a little time to appreciate its real value and its long-term effect on the spending departments of our great Ministerial organisation. I have come to appreciate the Committee, and I hope that the House and the public will also come to appreciate the valuable work done by it.

It was probably as a result of the work done by the Committee and its Report on the pharmaceutical industry which persuaded my right hon. Friend the Minister of Health, if indeed he required persuading, to be much tougher with that industry than his predecessors had been. I think, however, that in fairness it should be pointed out that when the figures were carefully examined by an impartial accountant the profits being made were nothing like as large as were first imagined.

This is borne out by the evidence in Question 1090, when the witness said:
"The weighted average comes down to 33·6 per cent. I should add that the figure would, of course, be somewhat lower—the firms have asked that this point be made—had price reductions which were introduced during the course of the year of account been operative throughout the year. … Secondly, they have done this"—
that is the calculation—
"on the basis of the United Kingdom share of the total world sales of the product. Since United Kingdom prices are, on the whole, lower, particularly than the home sales of the United States company, it is suggested that another adjustment can fairly be made which would have the effect of reducing this again slightly."
I think that we ought to get this into its proper perspective. Profits are not as high as they are sometimes made out to be, although one would agree that they are higher than they should be.

While I recognise that the gross profit may seem to be reasonable, may I ask whether the hon. Gentleman is satisfied that in many cases the costs incurred in the production process are essential to that production?

I could not be sure of anything of the kind. I have not seen the figures. I merely heard the evidence before the Committee. In bringing a searching examination to bear on this item the Committee has done a service of which the Minister has been able to take advantage.

The Committee has done a good deal to bring to light some of the problems of airport charges. For some time, by means of Questions in the House, I tried to discover from the Minister of Aviation how the landing fees at London Airport compared with those charged by other major airports in the world, because it was my information that London Airport was amongst the most expensive—if not the most expensive—major airports in the world.

I was never able to get that information. I was always told that it was not possible to compare the figures accurately because all sorts of adjustments had to be made in the charges calculated between one airport and another. Nevertheless, by hammering at this problem the Committee was able to get some figures and arrive at some basis on which it could calculate whether the London charges were properly calculated, what they were, and so on. From this point of view the Committee was able to do something which it apparently was not possible to do on the Floor of the House.

The hon. Member for Stockton-on-Tees (Mr. Chetwynd), when dealing with the problem of research and development in the aviation industry, and referring to the cost of developing Blue Streak and guided missiles generally, suggested that to avoid the tremendous costs involved in future developments of this kind design teams which might be called on to produce designs for missiles, or indeed any form of aviation development, should not necessarily come from the same firm which in the end was given the contract for production.

That is what I understood the hon. Gentleman to say. Does he realise that if that were done it would be a great discouragement to the major engineers, designers and contractors of this country to tender for any kind of development of this nature in future if they thought that they would not get the contract that followed from it? I hope that I misunderstood the hon. Gentleman.

I hope that the Report of the Committee will have the same sort of effect on one or two points I propose to mention as it has had on the items to which I have referred, and which have been discussed today. For example, the Report refers to some of the problems confronting Admiralty dockyards. I find this of the greatest interest. I find, for example, that the refitting of ships in the Royal Dockyards involved this country in a total loss of £3,156,000 in the form of wasted expenditure.

This resulted from the arrangements for the refitting of certain of Her Majesty's warships—"Belfast", "St. James", "Gravelines", and "Swift-shore". Apparently the dockyards were not able to properly plan the load of work at any one time, and from time to time had to suspend refitting operations on these vessels in favour of more urgent work. In consequence they were left for some time. They deteriorated still further, and eventually, for one reason or another, the Admiralty decided, in most cases, to scrap or dispose of the vessels. In consequence there was a loss of the order to which I have referred. What was extraordinary, to my mind, in the evidence which came before the Committee was to learn to quote page xlvi, paragraph 77:
"Your Committee were concerned to learn that, partly as a result of under-estimating the work involved in refitting a number of ships and over-estimating the labour force available in the dockyards, the Admiralty had found it necessary to suspend work on a number of ships and later to abandon work on some of them"—
"this had led to wasteful expenditure of money and workmen's time …".
That expressed it very modestly. The next paragraph states:
"Accordingly Your Committee inquired as to the measures taken by the Admiralty to avoid a recurrence of these happenings. The Admiralty stated that as a result of their experience the dockyards were getting a better and more realistic appreciation of the amount of work involved in these large jobs."
I was under the impression that the Admiralty dockyards had been in operation for a long time, and I should have thought that by now there would have been a great deal of accumulated experience, especially experience of being able to plan the work load adequately. I was staggered to hear that it was only now that we had decided to reorganise the docks and to take into account some modern methods of work control and management, which I should have thought would have been known to the Admiralty for many years. I hope that as a result of the Public Accounts Committee's Report and the fact that the Committee drew attention, fairly strongly, to the deficiencies of control in the dockyards we should not get a repetition of this kind again from the Admiralty.

It seemed to me from my hon. Friend's remarks that he was criticising the efficiency with which the dockyards are run. Would he agree that the Report of the Committee deals not so much with the inability of the dockyards to plan as with the wavering in the Admiralty?

I think that it was both, and if we refer to the Report of the Committee, although I do not need to refer my hon. Friend to it, because he was partly responsible for its preparation, we find that paragraph 78 definitely refers to the

"… great development in the past few years in the technique of dockyard planning and Admiralty control."
It points out that the Admiralty had now improved its methods of dockyard control and, indeed, was making sure that cases do not occur in the future of the overloading of the dockyard facilities through improper use of labour or other facilities.

I agree that it is the Admiralty that decides what load is to be put on the dockyards; but, until the dockyards have instructions, information or plans from the Admiralty they cannot work out their plans accordingly.

I fully understand that. I am not blaming the people at the dockyards. I was arguing that the dockyards are one of the Admiralty's installations and I was careful to refer to the Admiralty when I began my criticisms.

So that there shall not be any Service feeling about this, I should like to refer to the Army which is dealt with in following paragraphs. There we had a rather interesting case concerning the authority for the purchase of copper and zinc for use in the Royal Ordnance factories. It is not true to say that this is an Army responsibility; it is rather the former Ministry of Supply's responsibility. There we had Ordnance factories where one particular individual had responsibility for making purchases of copper up to a certain amount, and we found on examination that orders amounting to £440,000 for the purchase of copper had been placed without the authority of the War Office and in excess of the authority in the hands of the superintendent responsible.

After a good deal of evidence had been heard it was agreed by the War Office that some of this excess ordering might have been justified by the conditions of the market, by the need to have stocks of copper for work in hared and so on. But it came down to the fact that, because one person had exceeded his authority and the organisation of the War Office was such that it did not pick this point up until it was too late, a sum variously estimated at between £20,000 and £30,000, was in fact wasted. If anything were required to justify the work of the Public Accounts Committee, even though it is conducting postmortems, that kind of thing is, I think, a justification.

The Committee brings these matters to light, examines them thoroughly and can indirectly, through the action taken by the principal secretaries concerned, impose some disciplinary measures upon those responsible. We hope that these disciplinary measures will act as a discouragement to others who might be inclined to do the same thing. In general, I think that the Committee acts very well as a watchdog, and a fairly efficient watchdog, of the public purse.

The only thing that I regret is the way that we debate these matters. I say that for this reason. I think that the majority of hon. Members who have taken part in the debate today, certainly more than 50 per cent of them, have been members of the Committee themselves. The people who really ought to be taking part in this debate are other hon. Members. I shall sit down shortly so as to give them a greater opportunity.

I should like to see the Reports of the Public Accounts Committee perused very thoroughly by hon. Members on both sides of the House, and the matters disclosed in them ventilated in Questions and debates on the floor of the House. We should pursue energetically, and in every way possible, examples of public waste or misuse of public money. Although many of us pay lip-service to the need to economise and to cut down public expenditure, there is an incredible lack of real interest shown in the matter when an opportunity occurs. I have sat in the House listening to hon. Members on both sides fulminating against Government extravagance, yet when an opportunity like this occurs to pinpoint definitely the Chamber is practically empty. I hope that in future we shall not wait for a debate on the Report of the Public Accounts Committee but that hon. Members will take every opportunity to take up points and ventilate them on every occasion to the best of their ability.

7.58 p.m.

I do not intend to be very long, but I wish to say something about the Admiralty and the muddle, lack of decisions and lack of control revealed in this Report, in so far as the Admiralty control expenditure, in respect of ships being refitted and modernised.

The first thing that I noted in reading the evidence concerns the first ship mentioned in the Report, H.M.S. "Belfast". Question 3075 asks:
"So, would the work have been approved in any case regardless of the estimated cost?"
This was the very interesting answer that we got from the Admiralty.

"Yes, because the ship was felt to be needed to keep up the cruiser strength of the Fleet."
In other words, the Admiralty is in the unique position of being able to approve work at an unknown cost without really receiving any approval for it. I have raised this question in previous debates on the Navy Estimates. I think that I am correct in saying that the Public Accounts Committee and, also, the Estimates Committee have drawn attention to this power of the Admiralty, which exists, of course, by virtue of the Letters Patent. I think that perhaps the Financial Secretary might say something about this later. Both these Committees have drawn attention to these powers. I think that the Select Committee on Estimates did so, and it certainly does reveal what is to my mind a very big hole in the public control of expenditure.

Apparently the expenditure of £4 million on H.M.S. "Belfast" would have been undertaken by the Admiralty whether or not approval had been received. I hope that the Minister will say something about that when he winds up the debate. I hope that this is one matter to which the Committee at present considering Treasury control of expenditure will also give some attention.

Looking through the evidence and tracing the history of this ship, we find some rather strange proceedings. We find enormous delays. We find a certain lack of decision and we find that on one occasion almost a year elapses before the Admiralty finally takes a decision.

In Question No. 3111 one hon. Member asked:
"Surely, we have here fifteen months in which, if I am correct, a cruiser is taken out of the Fleet, is laid up, and for one reason or another nothing happens except a growing appreciation of the work to be done. Is that a fair statement?"
The answer was.

"Well, it would be going on."
This seems to be a most casual attitude for a big Government Department to adopt in respect of very large expenditure.

Later, in Question No. 3119, we find the Committee questioning the fact that an additional £837,000 was to be approved. The Question was asked:
"Nevertheless, £837,000 worth of extra approval was obtained presumably during these years?"—
that is, the years during which the work was going on. The answer was:
"That is true, and it would be equally true to say that at this time the drill was by no means under such good control."
This is a most casual way in which to treat these large sums of money. The witness went on to say:
"Things got through more easily inside the Admiralty."
I hope that as a result of this Report and of the deliberations of the Committee dealing with Government control of expenditure something will be done to put the Admiralty more on its toes. In these matters, the Admiralty tends to treat the House in a most cavalier fashion. We get much the same story in regard to the destroyers and the cruiser. There is delay, lack of decision—on one occasion amounting to almost a year. It is difficult to find any justification for delays of this character.

If we turn to the replies made by the Admiralty to the criticisms expressed by the Public Accounts Committee we are made to understand even more clearly how casually it seems to treat these matters, On the question of the ability of the dockyards to undertake the work, and the fact that the load on the dockyards was not taken into account properly and was not understood, the Admiralty simply said:
"My Lords are assured that the dockyard reorganisation scheme is being pressed forward;"—
it was approved four years ago—
"but since it involves a complete change in the structure of managerial control and a strengthening of the professional staff it will take some years to complete throughout the dockyards."
I wonder what hon. Members on both sides of the House would say if a private shipbuilding firm conducted its business in this fashion—if it decided to reorganise its dockyard and shipbuilding capacities over a period of about ten years or more. I can imagine hon. Members on both sides of the House referring to it as an inefficient industry, and so on. But that does not apply in the case of the Admiralty. It can take as long as it likes about these matters.

Then it comes along with its old familiar excuse concerning the priority of competing demands in the dockyards, and tells us that a committee is considering the matter at the present time. I have never yet heard a suggestion put to the Admiralty when it did not reply, "We have a committee considering it." This is a stock reply. By the time the Committee has finished considering it we have forgotten all about it, and we are dealing with something else. In that way the Admiralty "gets away with murder," and very few people say anything about it.

However, that is not the prize answer of the Admiralty. After receiving the criticisms in respect of its lack of decision and the enormous delays which took place, leading to the deterioration of the ships being refitted and modernised—they were going rusty in the dockyards—the Admiralty representative made this reply—and I think that it is rich:
"Arrangements have, however, been made by the Admiralty for the Board's attention to be drawn specifically at six-monthly intervals to any ships whose refit, modernisation or conversion is in suspense."
Who authorises the work to be suspended? It is the Admiralty itself. Apparently it will now appoint somebody to remind it that it did this six months ago and that it is about time it had another look at it. What type of organisation is this?

It makes a decision to suspend work on a ship—because it must be the Board of Admiralty that makes the decision, since it decides whether other ships are to be given priority and it is the priorities given to other ships in the dockyard that create the overcrowding that makes it necessary to suspend work on the original ships. But when once the Board has made a decision to suspend work it apparently then forgets all about it. Then it says that it is making arrangements to be reminded about it by somebody—I do not know who.

I said that I did not want to speak for very long, but I wanted to raise the question of the cavalier manner in which the Admiralty treats the House of Commons. It may be a very old and historical Department. It may be a Department that is held in great affection by the people of Britain. Most people like the Navy and the Admiralty, and the tradition of the Navy being the shield of Britain, and things of that sort. But we are living in the 1960s now, at a time when this nonsense should go by the board and this manner of treating the House should cease.

We should not tolerate answers which simply say, "We have made arrangements to get a prod in the back occasionally." That is not good enough. I hope that the Committee which is now engaged in examining the question of Government control of expenditure will look into this matter seriously. The amount mentioned here, namely, £3 million, is not the sum total of the amount wasted by the Admiralty. Admiralty Votes have a habit of accumulating and snowballing. I believe that H.M.S. "Victorious" started with an approved expenditure of £4 million and ended up with an expenditure of almost £20 million.

I served on the Select Committee on Estimates when we took evidence on the question of expenditure of this type, regarding the necessity for keeping it under constant review and for making decisions. The work of that Committee resulted in the appointment of a committee of inquiry into Exchequer expenditure. It was clear from the proceedings on that Committee that these matters ought to be tightened up in the Treasury. I hope that during the next year or so this will be done.

8.10 p.m.

I am sure that the hon. Member for Edinburgh, East (Mr. Willis) will forgive me if I do not comment on his vigorous remarks about the Admiralty, but turn to the portion of former Admiralty pro- perty which has been handed over to a commercial concern.

I read with deep resentment the remarks made during the inquiry into the working of the firm of Bailey (Malta) Ltd. in trying to produce a dockyard in Malta to serve a good commercial purpose. I wish to comment on this, because I am sure that all hon. Members are concerned that we should see that the limited amount of aid which we provide for the Colonial and Commonwealth Territories is well spent. I am also sure that we must endeavour to encourage the development of industry throughout the Commonwealth and that we must be disturbed when we see an experiment has been made to assist a commercial firm to operate in Malta for the good of the people there, and then read of the unfortunate happenings in this instance.

Here was a firm which, we were told, could obtain loans from the Government for the purpose of working capital to improve the plant and machinery of the dockyard. The Government immediately agreed to a loan of about £1,200,000. This loan was made in October, 1959. By January, 1960, it was discovered that a substantial part of this money had disappeared to the most extraordinary places.

A sum of £650,000 had gone to Bermuda where it was supposedly being used for the purposes of a pension fund for the employees within the dockyard concerned. Upon further inquiries it appeared that the pension scheme was somewhat unsound and that the company had the right to discharge people from the scheme and could at any time terminate it.

A further £200,000 disappeared to the parent company in England for what was described as formation expenses. This was an incredibly large figure to be put under such a heading and, quite rightly, we find that when the company came for further loans from the Government these matters were looked into.

What I find disturbing is the fact that during the examination on this subject we see that the Permanent Under-Secretary of State said:
"I will be perfectly frank about it. It is very difficult for a civil servant dealing with a commercial firm when they try and play commercial practices against you. My suspicions were at once aroused. I said to myself; 'I am going to get some professional advice on that'".
The point that I find astonishing is that when sums of money of this size are concerned, professional advice is not readily at hand all the time.

It having been decided to obtain some commercial advice on the problem, we then find that the Permanent Under-Secretary went, first, to the Treasury, who put him on to the Commercial Adviser at the Board of Trade. I should have thought that when such very large sums were involved, and there was a Department such as the Colonial Office, and in view of the constant transactions which that Department must have with commercial firms, there would be people who could provide the Colonial Office with commercial advice on these matters.

Having obtained the commercial advice we find that many of the ways in which the loan money had been spent were strongly criticised by the independent accountant who was brought into this case. As a result, certain actions have been taken whereby these matters have been put right. One of the most important of these actions was the strengthening of the board of the company, by the inclusion of the independent accountant who looked into the affairs of the company, and two other distinguished people.

Surely, in such a matter, one of the things which the Colonial Office could do would be to see that from the beginning of the transactions there were on the board of the company concerned representatives of the Colonial Office who could see that these large loans were spent in a reasonable way. I suggest that if, in future, Government Departments enter into agreements with commercial companies to assist in the economic development of Colonial or Commonwealth Territories they satisfy three points.

First, that they have permanent representation on the board of the company so that the representatives can report back to the Government Department concerned exactly what happens to the loan moneys. Secondly, that they should see that all major items of expenditure taken in the form of loans or grants are looked at by the Goverment. It is outrageous to talk in terms of giving a loan of £1,200,000 under the bracket of working capital. One should be far more specific.

We see that this company decided that at least half of that working capital should go to Bermuda to finance and subsidise a pension fund. I suggest that in such a loan provision should be made in the original financial agreements that if any sum over a certain proportion of The total loan is used on a specific matter, it is first referred in detail to the Colonial Office.

The third factor which I found disturbing about the basis of the agreement with Bailey (Malta) Ltd. is that from the very beginning of its operations it was agreed that the company should be tied to certain courses of action which would in any case make the firm uneconomic. For example, it was decided that the labour force in the dockyard was greater than was required, but that this force should be retained for social reasons. I do not object to that, but if that is done I think that the right course to take would be to see that a grant is made to the company for social reasons. Then it could be shown clearly what proportion is the economic working of the firm so that it is possible to see how successful is the firm in that respect.

I wish to comment on a general point involved in this situation of providing money for the Colonial Territories and the under-developed territories. Hon. Members on both sides of the House are concerned that the total amount of money given to the under-developed territories is far too small. One of the questions raised in the cross-examination which took place in the Committee of Public Accounts was that loans have been given in ways which were perhaps not the best ways, because of the factor of political instability in the country concerned. To some extent, I think that the Government could take action to see that measures are operated to overcome this.

The basic cause of such political instability is these countries may at some time, in a feeling of nationalism, decide that they want to own the industries, and do not want them owned in the United Kingdom. That is a perfectly understandable view and one which we should recognise from the beginning by making arrangements to satisfy the national aspirations of the countries concerned.

Much more could be done by the Colonial Office and the Commonwealth Department to look into the possibility of encouraging schemes whereby, over a period of years, the controlling shares in companies such as the company mentioned here could be handed over on the basis of the purchase of a proportion of the profits by the national interests of the country concerned.

I think that we could also look into the question of creating some form of Commonwealth credit guarantee department which would give some kind of insurance cover similar to that of E.C.G.D., and in which the rate of premium would vary according to the political stability of the country concerned in exactly the same way. If we did this we would immediately make apparent to the countries concerned the cause and price of political actions on their part which discouraged investment from abroad, because it would show an immediate increase in the rating concerned. This would enable opponents of those creating political instability to point out the damage which was being done to the economy of those countries.

Finally, I put a point which was not put by the cross-examination which took place on this question as to the general attitude of this country in providing aid to underdeveloped territories. I was very interested to read a report by Mr. Paul Hoffman about aid to under-developed territories. Basically, the thesis of his argument was that for every £1 million which we invested each year in these countries over twenty years there would result an increase in exports to them of about £2 million a year. If the argument is correct, and if the figures he produced are anywhere near correct, this means that there are certain ways of investing in those countries whereby we can bring about a speedy increase in their prosperity.

Looking at some of the comments made on expenditure under the Colonial Development and Welfare Acts I am wondering whether we are studying in sufficient detail what types of aid will increase the prosperity of those nations.

8.22 p.m.

I think that I have heard every word uttered in this debate, and not the least interesting or forceful have been the words of the hon. Member for Worcester (Mr. Walker). I do not agree with precisely everything he said—I do not think he would expect me to—but when he dealt with the problem of Messrs. Bailey (Malta) Limited and went on to deal with something which obviously is very dear to his heart, the whole question of the assistance which could be given to under-developed countries, he carried me very closely with him in his argument.

I had the privilege of working for three years in Asia for the United Nations on technical assistance programmes. The hon. Member is quite right in saying that there should be an examination of all the productive efforts one can make not only to create assistance for a short time, but to produce more permanent results. The three points he raised in connection with the guidance he would give when Government money and Colonial development funds are used were also quite apt. The Public Accounts Committee has underlined that in the Report which it has given us.

I wish to join with my colleagues who have paid their tribute to this Committee. This has been a long debate, but, when we look at the Report, we find that a monumental amount of work has been done by my right hon. Friend the Member for Huyton (Mr. H. Wilson) and his colleagues. A considerable service has been rendered to the House by the way in which they have gone into the details of things which hon. Members do not get an opportunity of tackling very thoroughly. There is a vicarious pleasure here for us, because we are very inefficient in checking our own expenditure and it is pleasant to know that there are clever hon. Members on both sides of the House serving on this Committee able to perform that function on the national funds very efficiently and well.

I hope that the House will forgive me for going back to one of the preoccupations which have dominated this debate, the section of the Report which deals with the price of drugs and the pharmaceutical industry. I join with the hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley) in saying that we should not look only at the price index in an examination of the cost of drugs and medicine in the National Health Service. We have at the same time to consider the saving that the efficient and proper use of drugs can make for the nation. One has only to mention the group of streptomycins in the treatment of tuberculosis and the point made by the hon. Member about the saving of hospitalisation and medical care to see how all these things become very relevant. With the correct use of drugs and medicines we can save hospitalisation and get people back to work more quickly, especially if we are using the wide scale of antibiotics and other new drugs like cortisones which we now have in our armoury to defeat sickness.

At the same time, the Public Accounts Committee was quite right to draw our attention to seeing whether or not we are getting value for money. It has been significant that the stress placed by this Committee in its Report last year on this question has yielded results. I am glad to see the Parliamentary Secretary of the Ministry of Health present. I congratulate her Minister for taking some of the advice of the Committee about the central purchase of drugs. I think that can be expanded. I go further and estimate that about 80 per cent. of the drugs and medicines at present used in the National Health Service could be purchased centrally and only about 20 per cent. need to be purchased otherwise.

The vigilance of the Public Accounts Committee has led to changes. In particular, there is the revised voluntary price regulation scheme, which I think is an improvement although I think there is still a great deal which the public purse can be saved. I am not at all happy about the export price criterion. The amount of drugs affected has risen from 20 per cent. to 25 per cent. under the new dispensation. I am not happy about that particular criterion for the price of drugs in the three-year period.

I remember my experience in Pakistan on this matter. If one of my children fell sick, it meant that I not only had to pay a doctor's bill because there is no National Health Service there, but there would be two or three items on a prescription which would cost anything from 30s. to £3 10s. for any slight attack of dysentery the child had. I compare this with the prices here. Many ordinary things on the National Formula would not be dispensed on a G.P.'s prescription, because they would be under the 2s. charge, but in Lahore one paid not twice, but ten or fifteen times, the value in this country. Where there is the difficulty of export and import, licensing quotas, etc., unnatural selling prices arise. I am still not certain that we are getting a bargain when the export price is taken into consideration as a factor.

I think that the Committee is quite right and the statement of the Special Report should be adhered to that the Ministry has repeated its request to the industry to provide information about the cost of representation and representatives calling on G.P.'s and hospitals and other means of promoting their products. The industry, according to this Report, has not replied. I hope that the Public Accounts Committee will press that. My right hon. Friend the Member for Huyton gave the example of the general practitioners' golfing week-ends. We must realise that this is a glorious situation for anybody who is trying to promote sales. If he can influence general practitioners and hospital administrators who are ordering drugs, we know that these people do not have to meet the bill; the taxpayer and the Government meet the bill. But these people can be instrumental in increasing the sales of certain lines which the drug houses may be offering.

I admit that the represenatives can give some service, but I was interested to see in the bulletin of the Association of British Pharmaceutical Industries recently an estimate that there are 2,600 representatives calling on doctors. If that is so, it means that for every ten G.P.s there is one representative. The Public Accounts Committee is right; if promotion is taking place on that scale, the cost must be charged finally to the consumer and the Government must pay. Although it is possible that the representatives can give some advice to G.P.s, particularly when there are rapid changes in the drugs coming on to the market, I do not see why the Ministry needs to rely on representatives when it could do the job even better and certainly far cheaper. According to the Report the advertising quantities are £4·31 million out of a total of £50 million net sales, but we are still not getting the figure for promotion by sales representatives.

Obviously it is in the industry's interests to promote its sales in order to increase its profits, but, equally, it is the interest of the Ministry to seek to promote economies. Yet we have mentioned in the House time and time again the enormous flow of glossy, four-coloured pamphlets, brochures and other literature going into every G.P.'s wastepaper basket. In order to combat this the Ministry produces the Prescribers' Journal. Since March we have had four copies. It is a drab, uninteresting and uninspiring journal which has to combat a constant flow from the drug houses, and it seeks to persuade G.P.s to use the National Formulary and to use remedies which will cost the taxpayers less.

On page 44 of the last copy of this journal there is some interesting information about what it will cost to give certain courses of treatment for bronchitis. Unless one has a magnifying glass the print is so small that one cannot read it. It is a photostat copy which has been reduced to half the size of the copy of the journal which I have in my hand. If the Ministry is serious about trying to advise doctors on how they can reduce their prescribing costs, it should produce something more than this mediocre little journal in an effort to do so.

The drug houses are intent upon forming doctors' prescribing habits quite early. I read recently of a summer school at which young doctors, recently qualified, are entertained, dined and wined for a week. They receive £8 pocket money in order that they shall enjoy themselves during that time. If they are successful in persuading these youngsters, the drug houses feel that their prescribing habits may be influenced for the rest of their lives. It is, therefore, important that the Ministry and, in particular, the Public Accounts Committee should investigate promotion sales to see how much is spent in that direction.

I should like to mention the problem, which is brought out in evidence, which arises when two tablets are combined to make a third. If tablet A costs 1s. and table B costs 1s., and the same ingredients are put into one single tablet, the cost of that tablet invariably increases to 3s. instead of being the price of the ingredients of the two other tablets. If the Public Accounts Committee persists in this matter in its next term, this is one of the questions which it might well consider.

The Ministry has very complicated means of checking the cost of drugs to the National Health Service. Each E.C.10 prescribing form is priced and prices are averaged for the locality. A number of administrators and medical officers are paid to go round to see that doctors who are prescribing on too great a scale bring their prescription charges down. I wonder whether the Public Accounts Committee has investigated how much saving this makes on the drug bill. I notice from Question No. 1239 that, as a result of this, last year between ten and twelve doctors were reported to local medical committees. If that is the total extent of doctors' over-prescribing—although I know that there are many cases of doctors who do not need to be reported, because they have taken the advice of the medical officers—and this huge elaborate machinery yields only ten or twelve doctors a year, it might be questionable whether it is right to spend more in trying to check the abuse than in trusting to educational methods for prescribers in the hospital service and among the general practitioners.

I should like to deal also with the question of differing costs for the same commodity. I have details of five proprietary brands of Paracetamol tablets, one costing 9s. per 100, another 7s. 10d., the third 6s. 9d., the next 6s. 3d. and the last 6s. According to a recent article in the British Medical Journal, however, it is possible to have these tablets made up under the National Formulary at a cost of 3s. 10d. per 100.

That means that on prescriptions, the National Health Service pays five different charges. It should be possible for the Public Accounts Committee, in the case of medicines or drugs which have the same therapeutic qualities, to do something about standardising the cost when they can be made up under the National Formulary.

An increase in drug costs has arisen probably as a result of the prescription charges. All previous evidence concerning prescription charges showed that, because of them, the cost and quantities of each prescription had risen. The figures given in the present Report show, once again, an increase in the figures for each item of prescription that is charged. The report on the last increase in charges, prepared by Martin and Williams and published in the Lancet, showed that instead of the extra £4½ million from the last prescription charge being saved, £1,374,000 was spent. Commenting on this, the Lancet said that once there is intervention between the doctor and the patient by endeavouring to establish a price mechanism, the whole question of the cost of drugs and the cost to the National Health Service is thrown out of gear.

In speeches by hon. Members opposite, the point has, naturally, been made that the high cost of drugs includes the cost of research. I wonder whether it would he possible to have a further examination by the Public Accounts Committee to see whether research could more effectively be borne by the Medical Research Council. The hon. Member for Torrington (Mr. P. Browne), in a speech in the country, suggested that one of the answers might be the nationalisation of the drug industry. Some of my hon. Friends on this side of the House have suggested that one of the answers would be to have competitive State manufacturing processes, which would lead to effective competition and would bring down prices.

If the Public Accounts Committee can persuade the Ministry to be more active in the advice, education and kind of approach which it gives, both to general practitioners and to the hospital services, about the way in which drugs are prescribed and the way in which the National Formulary should be used, this could be far more effective and might be one of the most effective ways of bringing down the cost of drugs in the nation's health bill.

8.39 p.m.

I was rather surprised when I heard the opening remark of the right hon. Member for Huyton (Mr. H. Wilson) that only a minority of the House had read the Report of the Committee of Public Accounts. Speaking as one Member of the House who has read the Report, I consider that to be a rather optimistic statement. My belief is that extremely few people in the House read the Reports of the Public Accounts Committee, and, indeed, the Reports of some of the other more serious Committees which are sometimes put before us in order to debate public expenditure.

I was interested when the lion. Member for Devon, North (Mr. Thorpe), who, I am sorry, is not now in his place, referred to the fact that the Public Accounts Committee originated with Gladstone. All I can say is that some of these Reports have a very Gladstonian flavour about them and that I prefer the Disraeli touch. The hon. Member for Devon, North referred, as did the hon. Member for Willesden, West (Mr. Pavitt), to the cost of drugs. I thought that he was very fair when he pointed out that those companies making the greatest profit from the supply of drugs in this country were subsidiaries of United States companies. I thought that he gave a very clean bill of health to companies of United Kingdom origin founded here with British capital, possibly in association with a company from Denmark or Switzerland, and producing a far more competitively-priced article.

I thought that there was a case for the Public Accounts Committee, in subsequent inquiries on the subject, to recommend the extension of United Kingdom companies supplying drugs in this country in order to discourage the large profits made by American subsidiary companies. I do not want to say too much about the profit factors of American companies. Somebody once made awfully rude remarks about statistics. I gather that the figure of 70 per cent., which they make on capital employed in the business, can be reduced to 35 per cent. if a reasonable amount is allocated to the parent company in the United States for the cost of research. I treat that figure of 35 per cent, for the cost of research with a certain amount of reserve. I believe that it is an over-statement of the right proportion that should be allocated to the American company. I still think that these subsidiaries in the United Kingdom are making far too much profit, and that it is the general practice where companies originate in the United States.

As to the Report itself, the first matter to which I should like to refer is the position of Bailey (Malta) Ltd. The Committee did a very good job when it brought this subject out into the open. It is quite disgraceful the way this company was allowed to transfer £1,800,000 to the trust which it set up in Bermuda for pensions for its employees. The figure of £200,000 transferred from Malta to the United Kingdom company for promotion expenses was, as the Committee rightly says, greatly in excess of any reasonable amount that should have been allocated to such a purpose.

I am a little uncertain whether all this money has been actually paid to the company in Malta. Reference was made in the Committee to the fact that a guarantee was given by the United Kingdom company of the major part of the amount transferred to Bermuda, so that the money could be withdrawn from the bank. I think that there was a case for seeing that the actual money was paid out to the company in Malta. We do not know whether the company in the United Kingdom will be good for the guarantee to the Maltese company and I should have thought that it would have been very much better and to the public advantage to have had this money paid over in cash.

The next item in the Committee's Report in which I am interested is under the heading "Navy Appropriation Account" and refers to the costs of training students at the Royal Naval College, Dartmouth, and the Royal Naval Engineering College, Manadon. I have always been a little doubtful whether, having regard to the size of the Royal Navy today, we can justify a large establishment like the Royal Naval College at Dartmouth for the training of certain officers in the Royal Navy. I have made inquiries today and found that the Royal Naval College is practically up to strength. It may be 500, though I believe that when I was young it could take 600. There is not much in it. It is just about up to full strength.

I regret that it was found desirable that the Royal Naval Engineering College should be developed near Plymouth. I dislike this splitting of the training facilities for officers in the Navy. There is a great disadvantage to the Service from having officers trained in two different establishments. They become two separate bodies and are rather inclined to look upon themselves as quite different from the other people who have to serve in the Navy.

I believe that the administrative costs are considerably increased by this policy. I hope that in due course the Royal Naval Engineering College will be transferred back to Dartmouth, with possibly some extensions to the College at Dartmouth. I know the criticisms which can be made. There has been a considerable amount of public expenditure at the Royal Naval Engineering College and it could be argued that this will be wasted. There is a case for bearing this in mind in the future, because there have been many representations from the West Country that we should have another university, to be situated in Plymouth. If this proposal was proceeded with, there would be a case for allowing the new university to take over Manadon whilst we develop the engineering department at the Royal Naval College, Dartmouth.

The Report contains reference to the sum which is charged to overseas governments for overseas students being trained at Dartmouth. I hope that we shall not follow any policy of substantially increasing this figure. There is great public advantage in encouraging people to come here to do their training in the Royal Naval College. They get used to various devices which we have developed. It helps in many cases to get a more cohesive pattern of naval development throughout the Commonwealth. I am averse to there being any increase in the figure charged for overseas students. I hope that the remarks very properly made by the Committee will not lead to any increase.

I had intended to speak at some length on the civil aviation part of the Report, but owing to the lateness of the hour and the fact that I have undertaken to my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) that I will allow him to start his speech at ten minutes to nine, I shall refer only to one item in paragraph 93. It is the reference to the International Air Transport Association and the technical services provided at the London airports. There is a great case for real pressure being brought to bear on the Association, whose headquarters are in Montreal, to see that the figures charged at the various airports throughout the world are to a great extent standardised. I am not satisfied that their is fair treatment all over the world as regards costs. My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) endeavoured to prove that the charges at London Airport were about comparable with those in the United States, but there is a very good case for trying to persuade the Association to procure the standardisation of these charges throughout the world.

I am not satisfied that we are making adequate use of Gatwick. We are far too inclined to allow Heathrow to build up until it is overcrowded. We do not encourage or press enough airlines to make use of Gatwick. I should have thought that there was a considerable case for pressing Air France to go to Gatwick. Those of us who do a certain amount of travel overseas know that British European Airways are restricted from using Orly Airport. I am not saying that there is anything unfair on the part of the French Government in restricting B.E.A. to Le Bourget.

I can see that there may be good reasons why the French Government wish us to make use of Le Bourget, while they use Orly, with its international connections. I should have thought that there was a very good case for saying that Air France should be barred from London Airport and should use Gatwick, although nobody wants to insist on Gatwick if, at a later date, the French Government decide that it is more convenient for B.E.A. to make use of Orly. We might then change our minds and allow Air France to use Heathrow, but at this juncture I think there is a very good case on the grounds of equity for restricting Air France to Gatwick. I hope that the Minister of Aviation will press this point in due course.

Finally, I compliment the Committee on the very great work which it has done in drawing up its Report, which entailed an enormous amount of work by the members of the Committee. It is an essential function of our democratic Parliament that these Reports should be examined and discussed by the House, and I hope that the members of the Committee will accept the commendations which other hon. Members have given them tonight.

8.51 p.m.

At the beginning of his speech, my hon. Friend the Member for Exeter (Mr. Dudley Williams) said he was surprised at the view of the right hon. Member for Huyton (Mr. H. Wilson) that only a minority of hon. Members had read the Report of the Public Accounts Committee. I am not at all sure, from my recollection of the right hon. Gentleman's speech, that that is, in fact, what he said.

I remind the House that I also have been surprised to hear the hon. Member for Devon, North (Mr. Thorpe), at the beginning of his speech, saying that he had not only read the Report, but that he had very much appreciated it. I came to the conclusion that he was the hon. Member to whom the right hon. Member for Huyton referred in his opening remarks, when he felt sure that all hon. Members, not members of the Public Accounts Committee, had read the Report.

I would not like to make an unfair remark. What I said was that I thought the right hon. Gentleman stated that only a minority of Members had not read the Report. In my view, the difficulty is that only a minority read these Reports.

I think that it is being too generous to hon. Members to suggest that only a minority have not read the Report. I have sat throughout the proceedings here today with a feeling of despondency and disappointment. Not only hon. Members in the House, but a good many people in the country, believe, rightly or wrongly, that there is not sufficient control of Government spending. We all have letters from our constituents and others bringing to our notice disgraceful examples of wasteful Government expenditure and all that kind of thing. I know that when we have gone into these problems, we have, in the majority of cases, found that there was nothing in them.

Some hon. Members have for a considerable time, indeed, for a number of years, been pressing for more time in which to discuss the extent to which this House does or does not control Government expenditure. It therefore seems to me a great pity that when the Government have yielded to their pressure, I think very properly, when we looked round the benches today throughout the whole of this sitting, we did not see present those hon. Members who were most prominent in years gone by in demanding time for such discussions.

I think that, in fairness, it should be said that my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), who is particularly keen on this subject, would have been with us for the whole debate—and had, indeed, wished to make a contribution—but for the fact that he is at the 87th birthday party of my right hon. Friend the Member for Woodford (Sir W. Churchill). I think that the House would accept that as a very good reason for absence.

I had not mentioned the noble Lord by name, although I was thinking of him, among others. I envy him his experience tonight; I would rather be where he is than where I have been all day.

But the noble Lord is not the only hon. Member whom I have in mind. My hon. Friend the Member for High Wycombe (Mr. John Hall) lamented the fact that so large a number of those hon. Members who have taken part in this debate have been members of the Public Accounts Committee, and I am sure that I am speaking for the entire Committee when I say that we would much rather have had a much higher proportion of contributions from hon. Members who have not served on the Committee—

I am sorry about that, but all those hon. Members cannot be at the birthday party of my right hon. Friend the Member for Woodford (Sir W. Churchill). I hope that the Government will not draw, from the relatively sparse attendance, conclusions which would, in my opinion, be entirely wrong and, indeed, disastrous. This day for debating Government expenditure, on the Report of the Public Accounts Committee, is an exceedingly important part of our Parliamen- tary system, and I repeat the hope that the Government will not draw any wrong conclusions from what has happened today.

In some respects this has been quite an astonishing debate. I heard my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) say that the Report of the Public Accounts Committee was a sorry record of human failing. He spoke after the hon. Member for Chesterfield (Sir G. Benson) who, on the other hand, said that, in a sense, it was quite astonishing that when dealing with an expenditure of about £6,000 million so little had come to light. That shows the tremendous divergence of opinion.

Mention of the hon. Member for Chesterfield reminds me that I have not yet had an opportunity to pay my tribute to him. A little while ago, we had a dinner to celebrate the centenary of the Public Accounts Committee—

—when I am reminded that there was no expense on public funds. There was no one else there who could in any way match the length of the hon. Gentleman's experience in that Committee, and I felt on that occasion, as I do now, that it is not given to many of us, whether on the back benches or in a more exalted position on the Front Benches, to feel that our names will live after we have gone. That is a distinction that the hon. Member has, and I am bound to say to his face that I feel very proud that a bit of history is on friendly terms with me.

There have, in the past, been differences in various parts of the House as to whether or not control of public expenditure could result in some reduction in the burden of our taxation. The right hon. Member for Huyton dealt with that last year, and called some weighty witnesses from the past to his support. Speaking in our debate on 19th December, 1960, he recorded that Lord Haldane, who was then Mr. Haldane, said in 1904:
"It is no use having an inquiry into expenditure; it was a matter of policy."—[OFFICIAL REPORT, 19th December, 1960; Vol. 632, c. 896.]
That is probably true, but it is also true that if we in this House, and people in the country as a whole, relaxed our constant control of and probing into Government expenditure, waste would become very much greater than it is.

In Haldane's days Government expenditure was very much less than it is now. Reference has been made to the Budget in Gladstone's day—£60 million, against £6,000 million today. In 1904, it was more than the Gladstone figure, but very considerably less than the present-day figure. I think that in those circumstances the Treasury was able to exercise far more control over the spending Departments than could conceivably be the case today. If that be true, and I believe it is, the need for the Committee of Public Accounts is today greater than it has ever been in our history.

The right hon. Member for Huyton said that it was important to remember that the Committee wars not concerned solely with events of the past. That put me in mind of a criticism which is sometimes made of the Committee—that it deals only with the events of the past and checks the money only after it has been spent.

I suppose that here I should declare a kind of interest. I earn my bread and butter by being a professional auditor; in other words, I count the results of events of the past for my living. It is from that point of view that I wish to comment on the question whether or not it is any good simply checking the cash after it has been spent.

It is true that in an auditing career which goes back forty years I have come across only three or four cases of fraud, and that, with the exception of one case, the amounts involved were very small. But I cannot say—and no man can say—how much fraud has been prevented by the certain knowledge that the auditors were coming along later.

It is true that the remit given to professional accountants by Parliament through the Companies Act, to say whether or not a set of accounts represents a true and fair view, is different from the remit of the Public Accounts Committee, which is concerned very largely with waste but also with fraud. But just as it may be that, as the hon. Member for Chesterfield said, the total amount of the things which the Committee finds wrong with the spending Depart- meats is very small, I believe it none the less to be profoundly true that if it were not for the Committee, the "report" of a non-existent Public Accounts Committee would be most exciting, very long and cover a very large sum of money. I have no doubt that, though it may be after the event, the work which the Public Accounts Committee does is extremely valuable. No man can say how much, but I am sure that it saves a very great deal of money indeed.

I now turn to one of two specific matters. First, there is aviation research and development, referred to in paragraphs 46–57 of the Report. This subject, and, in particular, the subject of design studies, was 'touched upon by the hon. Member for Stockton-on-Tees (Mr. Chetwynd), and I shall have a word to say about what he said.

I should first, however, like to refer to what was said in the equivalent debate last year by the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti). Dealing with guided weapons, he said:
"One is venturing into wholly unknown territory, and the only thing one can state with any certainty is that whatever estimate is produced it will be wrong."—[OFFICIAL REPORT. 19th December, 1960; Vol. 632, c. 930.]
I could not agree with him more. I am not a technical man, not an engineer, but an accountant. None the less, aircraft matters have been a hobby of mine all my life, and I have no doubt that what is true of guided missiles is also true these days of aircraft when they are moving into the realms of twice or three times the speed of sound. I found some of the evidence given by the accounting office of the Ministry of Aviation on the subject of design studies a little puzzling.

I was bold enough to suggest a definition of what a design study must be. I am not sure how many of us know what it is. In Question No. 2,176 I suggested that a design study was
"A technical appreciation of a particular design claimed to meet certain functional requirements."
The witness was not entirely satisfied with that. He said that he thought we ought to add to that definition
"… to enable us also to assess the time scale and the cost of development."
That I readily accept.

There is no question, however, I would have thought, but that in dealing with these new problems, of which man has no practical experience, design studies before a prototype is built are of the highest possible importance. I was puzzled and worried, therefore, when, in answer to a question by the Chairman of the Committee, the witness indicated that the general use of design studies in the Ministry of Aviation was relatively new.

The right hon. Member for Huyton asked the witness:
"Most of the big cases, then, that were reported last year were not design studies first?"
The witness replied:
"So far as I know, they were not."
In his next question, the right hon. Gentleman asked:
"But today, if you were starting anew on them, you would probably have a design study?"
The answer was, "Yes".

I must confess that I was astonished that, in this day and age, it has taken until 1961 for the Ministry of Aviation to realise the vital importance of design studies. I am glad that, in that Department at any rate, the importance of design studies is now realised, as I shall indicate in a moment. I wonder how far that extends to other Departments.

The hon. Member for Stockton-on-Tees thought that it would be a good idea if, instead of these design studies—which are very expensive, and may go on for many years—going to private contractors, they went instead to the Royal Aircraft Establishment, at Farnborough, or a place like that. I wonder how thoroughly the hon. Gentleman read the evidence given to the Committee and, indeed, the Treasury reply.

The answer given by the Treasury is one to which I subscribe wholeheartedly. It pointed out that design study has not only got to be a theoretical and technical possibility, but also a practical possibility, and that no organisation which has no practical engineering experience should therefore be entrusted with a design study which, if it comes out of an entirely theoretical place, may be a practical manufacturing impossibility. I entirely accept that view.

I agree that there is a dilemma here, and I did not state that a design study should go to a Government establishment instead of to private contractors, but in addition to going to private industry. We must bear in mind that the research establishments can contribute a great deal to this matter, which they are unable to do at present.

I accept that entirely, but the Treasury Minute covers the point quite clearly when it says, on page 7:

"It is usually"—
that is cautious language, admittedly—
"most efficient for equipment of this kind to be designed and developed by the organisation which is to produce it, since development must be tailored to what is practicable in terms of what is efficient and economical production."
That is the opinion of the Treasury and I entirely agree.

It is a fact that as one concludes a design study, one starts development, and then one moves into the production stage. It is difficult to draw a line between the design study, development, and production.

I may add that if Farnborough were asked to do the job as well as industry, the Government would be paying twice over.

With the greatest respect to the hon. Member for Stockton-on-Tees, I must say that the weight of the evidence of expert witnesses, and of the not-so-expert witnesses of the Public Accounts Committee, was quite unanimous and conclusive. My worry is that the Ministry of Aviation, which one would have thought should be in the van of progress, has only just started the general use of design studies, and if the Ministry of Aviation is only at that stage, what about other Government Departments? What use is being made of design studies in the War Department and other Departments dealing with technical equipment?

I now move to a much more sombre subject, the question of bribes far agricultural work consisting of cutting grass, cutting hedges, laying field drains, and so on, mentioned in paragraphs 86 to 89 of the Report. There is no need for me to recapitulate these offences, as all hon. Members who have read the Report in detail will be familiar with them. Four Air Ministry officials were found guilty of receiving bribes for awarding a contract to a firm which might otherwise not have got the contract. They were duly punished and that is all right; But it is all right only up to a point.

I wondered whether the Ministry concerned had taken steps to warn other Government Departments that they should not touch this particular firm of contractors with a barge pole. The answer we got was that nothing definite had been done. We pressed not only the accounting officer, but the Treasury, and we now have a full answer from the Treasury on page 7 of the Treasury Minutes, where it is said:
"… My Lords are bringing to the notice of all Departments the desirability of issuing an appropriate confidential warning to other Departments as soon as prosecution of any firm of Government contractors is decided upon."
That is much too late. In private enterprise, where people have to be careful of their own money and not merely careful of somebody else's money, one takes action at a much earlier stage. There are credit inquiry firms and, if one is a manufacturer or trader of any kind and one gets an inquiry from someone of whom one has never heard, inquiries can be made through the trade protection association, or the credit inquiry, or whatever it may be, and one can get a confidential reply to give a line on the sort of customer with whom one is dealing. These people do not wait until prosecution is started and I must confess my surprise when I heard that there was no kind of central organisation in the Treasury to which useful information of this kind could go.

In fact, I think that there is a committee to which that kind of information can be given, although it does not seem to be given it at the moment. In Answer 2509, the Treasury witness said:
"There is a body called the Contracts Coordinating Committee which sits under Treasury chairmanship …".
I would have thought that that was an ideal body to which other Government spending Departments could send along a message in time if it had doubtful dealings with any kind of person with whom it had contractual relations.

There should be no waiting until proceedings have been instituted for bribes or other criminal offences. As soon as there is a doubtful transaction, the firm should at once be investigated by the Contract Co-ordinating Committee. I shall be very glad to hear that something on those lines is being done, or, at any rate, that something will be done considerably in advance of the Treasury Minute.

The last of the matters mentioned in the Report to which I wish to refer is the inquiry into the cost of the Atomic Energy Authority and the manner in which it recovers expenditure. I refer to paragraphs 105 to 109 of the Report. I agree that the Authority is in considerable difficulty. On the one hand, it has questions of security to consider, which mean that the minimum of information has to be given, but that means in turn that control of expenditure by the House is restricted and difficult. Another difficulty with which it contends is that it is operating in a very new sphere.

I was talking about aeroplanes flying at three times the speed of sound, but even that is not as new as the developments in the field of atomic energy. I appreciate that, and it may well be that working in a new sphere accounts for some of the substantial losses the Authority has incurred, such as the over-provisioning of material for the nuclear power programme referred to in paragraph 108.

It has many problems to contend with, and, for that reason among others, I was glad to see, on page 9 of the Treasury Minute, that it has called in—and here I must plead a kind of general interest—independent professional advice. This is a good thing. This independent professional advice will help the Authority not only with a commercial costing system, but with the preparation of trading accounts and profit and loss accounts which will be useful to the Exchequer, the auditor, the Public Accounts Committee, and to the House, without being any breach of security.

I am pleased to see that professional advice has been sought, but I wonder to what extent not only the Atomic Energy Authority, but also other Government Departments, make use of management accounting consultants. Here, I do not have to plead an interest because I have no interest, direct or indirect, in them. I know that this is a relatively young profession, but already some of the nationalised industries have called in their assistance with considerable benefit to those industries. To what extent have management accounting consultants been called in by spending Departments of the Government and by the Atomic Energy Authority?

There is one point about the possibility of the production of a profit and loss account for the Atomic Energy Authority. It is this. A good many hon. Members regard the word "profit" as a dirty word; as something which should not occur very often. Profit is not merely something which finds its way into the pockets of the greedy capitalist. It is also a measure of efficiency. Industry for industry, one can tell fairly well what amount of profit return should result on the capital employed.

Speaking as an auditor, profit is a measure of efficiency, and a very useful one. Whether particular departments or companies having similar trades and businesses are making more or less profit, forms a tremendously useful guide to us in our auditing activities. If the Atomic Energy Authority can produce something of that kind, difficult though it may be in a new and growing sphere, it will be very useful.

There is a special point about the Atomic Energy Authority which I should like to mention. It is rather like the long lease given to the petrol companies of London Airport until 1991. I am referring to the arrangements with the electricity boards whereby fuel for their nuclear power stations was supplied at a fixed price for a long term of years, as a result of which the Authority lost £10 million. I cannot see any reason why the Authority should in that way have subsidised the electricity boards. It is all very well to transfer money from one Government pocket to another, but that does not deal with the main point. Unless one has proper accounting, one cannot see whether they are being efficiently run or not.

There is no doubt a temptation for the Atomic Energy Authority to shelter behind the word "security". I welcome the accounting system refered to, and I look forward to the comprehensive trading accounts referred to in the Treasury Minute.

I turn now to something which is not in the Report of the Committee, and which is not in the evidence, at least not in the evidence as published, but which was of definite importance to us. On the face of it, it is a very small thing, but it was something that cropped up a year previously. That is the omission of the shillings and pence from the appropriation accounts that we have to study. The right hon. Member for Huyton smiled. I do not know whether it was a friendly smile or a sarcastic smile. Admittedly, this is a very small matter, but there are in Clauses I to 5 of the Appropriation Accounts 1959–1960, 333 pages, in nearly every one of which shillings and pence used to appear. They do not appear today. I say that undoubtedly, although I deal with figures every day of my life, I found them very much simpler and easier to read without shillings and pence. I should like to see that small improvement extended widely over the whole field of Government accounting.

At the beginning of this year I had a discussion with the Financial Secretary on just that point; perhaps not quite that point but very nearly the same. I suggested that in the Estate Duty affidavits, instead of having 10s. 1d. or 9s. 11d., the figure should be rounded down to the nearest £ where it was less than 10s. and up to the nearest £ where it was 10s. or more. One would not think that that was a world shattering alteration to suggest, but the correspondence which I have had has been staggering, and the time obviously taken up in the Treasury out of all proportion, I would have thought.

I do not know whether I am committing any breach of confidence in saying this, but the answer that I got was surprising. I speak with some experience, not, it is true, in dealing with accounts totalling £6,000 million, but with fairly large sums, and I suggest that in any given column of figures, however many figures there may be in that column, it would be only by the most extraordinary stroke of fate, if we rounded up and down as I have suggested, that there could be a variation of more than £2 in the total sum.

The answer that I got was that, on the other hand, there might be a significant difference. My hon. Friend, in due course, yielding to the tremendous pressure that I put upon him, agreed that for the future we should omit pence and round up or down to the nearest shilling. I do not think that that is going far enough. I think that we might be bolder and extend this principle much more widely. It has been most acceptable to the Public Accounts Committee and to everyone who has had to study the Appropriation Accounts.

I turn, finally, to where I started. Is there any use in looking at the matter after the money has been spent? I have not the slightest doubt about that at all. In this matter, as in other affairs, a deterrent is necessary. I believe that the value of the Public Accounts Committee lies perhaps not so much in what is said in its Report as in what might well be the urgent subject matter for much longer and far more sensational reports if it were not for the deterrent effect of that Committee.

9.23 p.m.

We have had a wide-ranging debate, and I shall, first, make a few general comments on the debate and the speech of the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), and then endeavour to answer a selection—although, I fear, nothing like all—of the points raised.

I am sure that the House would wish to express its pleasure to the right hon. Member for Huyton. Although we read that he is no longer to be a leading spokesman of the party opposite on economic affairs, he is none the less to continue in office as Chairman of the Public Accounts Committee. Perhaps you, Mr. Speaker, without ruling me out of order, will permit me to say that during the last few years the right hon. Gentleman has said some hard things, often expressed with great wit, about this side of the House, and we have said things back. I am sure that he does not regret anything that he has said, and I doubt if we regret anything that we have said in return. The speeches of the right hon. Gentleman on economic affairs have been a very real and distinctive feature of the life of this House during the last five or six years. Further, I believe that the quality of our debates on Finance Bills has been enormously helped not only by the skill of the right hon. Gentleman but by his great understanding of the procedure of this House.

Perhaps I may be permitted to make one more remark about him. He has often spoken to us about the vices of what he calls inessential investment. Well, whatever may be the controversies that we have had on that subject, he is now moving to a field in which, as some people think, there is one particularly conspicuous example of inessential investment—between East and West Berlin—which will now occupy his attention.

I very much agree with what has been said about the importance of the Public Accounts Committee. The right hon. Member for Huyton was right in what he said about the in terrorem function of this Committee. I also agree with my hon. Friend the Member for Wycombe (Mr. John Hall), who regretted that more Members did not take advantage of our debates on the Public Accounts Committee's Reports. I put it to the House that if its Members are to take full advantage of the opportunities to discuss public expenditure they will have to do a good deal of detailed work. It is one thing to express broad views about this subject; it is quite another to do detailed work. I am sure that debates of this kind can be of great value to the House and to the country.

I also agree with what the right hon. Member for Huyton said about the high quality of the new generation of accounting officers. I agree, too, with the hon. Member for Chesterfield (Sir G. Benson)—whose presence in these debates we value so much—in what he said about the high quality of our Civil Service. My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) asked me whether, in serious cases, officials can be dismissed from the Service. I do not think that there has ever been such a case, and I think it would be a pity if we followed the example of the Press, in cases where departmental mistakes may appear to have been made, by making the error of personalising those mistakes too much.

Of course, wrong decisions may be made, although it is extraordinary how easy it is to exercise hindsight when considering this kind of question. I am given a chance tonight to make a point that I have long wished to have an opportunity of making. I have always thought, having read the Crichel Down Report, what a pity it was that there was so much personalising of the issues of that case. The one subject that was never discussed was the basic issue of policy—the question whether or not it had been right to farm Crichel Down as a single independent unit. On such an issue it is easy to make errors of judgment. it is a mistake in this sort of case to think too much in terms of individual personalities, especially when we are dealing with matters essentially of judgment rather than demonstrable questions of right or wrong.

I suppose that in a case of corruption—and one case was referred to in the Public Accounts Report—there would be a dismissal. I understand my hon. Friend to say that there is no dismissal in a case where a mistake has been made which has led to the overbuying of lead or copper to the extent of £25,000.

I would rather not deal with the legal aspect of the question. I would rather my hon. Friend pursued that with the Attorney-General. I do not think that the kind of case which he envisaged has ever happened.

The hon. Member for Stockton-on-Tees (Mr. Chetwynd), who made a very helpful and interesting speech, spoke of the value of discipline, and of the value of heads of Departments having to prepare for questioning by the Public Accounts Committee. I am sure that is right. It is also a good thing for more Members of Parliament to have experience of the Committee.

He also made the point that the permanent secretaries should have better access to their colleagues. There is no reason why civil servants other than accounting officers should not make their contributions to the proceedings, if they so desire, although in practice these matters are left largely to the discretion of accounting officers.

The only other general point was made by the right hon. Member for Huyton, when he spoke about Treasury control and the relationship between the responsibility of the Treasury and the responsibility of individual Departments with regard to the Estimates. My answer to his point is that both must do their job. Today we give a large measure of responsibility to individual Departments in the preparation of Estimates, and that is quite right. Frankly, I think that it would be impossible for the Treasury to exercise the same degree of surveillance over the whole sphere of Departmental estimates. The Treasury must, to some extent, concentrate its system of supervision regarding Departmental Estimates. But the important point is that both the Treasury and the individual spending Departments have an essential job to do and neither can do the other's work.

I wish to make it clear to the House that the investigations of the Public Accounts Committee are taken very seriously by the Treasury and by other Government Departments. The questions under examination are carefully prepared and I think that as a result members of the Committee are brought very closely into touch with the detailed working out of policy as it affects expenditure in a way which is not possible in the general debates in this House. I think that this contact between a Committee of Parliament and the Executive—what the right hon. Gentleman once called the House of Commons reaching out to the Executive—this contact over quite a wide range, is valuable, quite apart from any criticisms or suggestions which may emerge.

In this House in full Committee of Supply naturally we tend to debate general policy of a political content rather than particular aspects of the control of expenditure. But for a great deal of the time Departments are grappling with the detailed implementation of these policies and the expenditure problems to which they give rise. I believe that, by means of the Public Accounts Committee, Parliament is able to take a direct practical interest in the way in which moneys are actually spent and controlled.

I wish now to come to one or two of the detailed points which have been raised in debate, and I will begin with a subject which has attracted by far the greatest amount of attention, namely, the pharmaceutical service. The point was raised by the right hon. Gentleman in his opening speech. It has been referred to by my hon. Friend the Member for Dover (Mr. Arbuthnot), by the hon. Member for Devon, North (Mr. Thorpe) and a number of other hon. Members.

This is a difficult question and a matter on which both the Treasury and the Ministry of Health feel very concerned. As I think the House will know, shortly before the Committee examined the Ministry of Health, certain modifications to the voluntary price regulation scheme had already been agreed with the industry.

From about 1955 when the nature of the problem in relation to ideas for the first voluntary price regulation scheme were being worked out, the Treasury has felt that it would be difficult to safeguard Exchequer interests here by concentrating too much on the concept of what one might call a reasonable profit on capital employed. One reason for that, as has been mentioned, is the need for research in this field. I think that it is for this reason that the best line of attack, the best way to approach these firms seems to lie in direct negotiations about prices of widely used drugs. It is exactly that sort of approach which is provided for by the new modified scheme.

Already, the Ministry of Health has thoroughly investigated the figures of the cost and profits of certain companies so far as it can do in the light of the information given. On this point of information, I should like to make it plain that the Ministry of Health is not proposing to drop this subject. It has put some specific questions to the drug companies with regard to costs incurred through advertising and I agree that that is an extremely important point. I hope that in this matter of seeking information, which I agree is highly important, the House will pay attention to what I think were the genuinely wise warnings issued by my hon. Friend the Member for Dover, on this subject. Of course, industry must be frank with Government Departments. The Public Accounts Committee must look at the amounts spent and draw its conclusions accordingly, but I think that it may be genuinely difficult for the industry to say just what its costs in all cases are. All I can say to the House is that the Treasury and the Ministry of Health are certainly not going to drop this matter.

There is this inquiry into advertising costs which the Ministry of Health means to pursue. That is an important part of the field, but I hope that when the House looks at the question hon. Members will remember the special features of research and other aspects dealing with export trade which make it a difficult matter to try to get at the truth.

It is, of course, desirable to do these things by negotiation, and, as the hon. Gentleman knows, when I had to do price control I gained some experience about that, but the essence of the matter is that one must have figures where they are available. When the hon. Gentleman says that quite definitely there are difficulties about research, and so on, he should realise that what the House wants to know—making all allowances for those difficulties—is: are the firms being completely forthcoming with the figures available, or are they being obscurantist and refusing to supply them?

Would the hon. Gentleman also say whether the Ministry has statutory powers as the Board of Trade had, and has, for getting information, and, if so, whether it will use those statutory powers? Failing that, will it not use the power of the purse, because £80 million is involved here and surely one cannot go on using that money until one is satisfied with all the information available?

As I understand, the Ministry of Health has not in this field the same statutory powers as has the Board of Trade. I certainly say that in fields such as advertising expenditure, where the Government and the Ministry of Health feel that the industry could provide information, that would be of service in looking at this matter, the industry has a precedent.

Certainly, the industry and the Government recognise the importance of frankness on the part of the industry, just as we must recognise the difficulty of the industry in saying just what all its costs are. I do not think that I can carry this particular topic very much further this evening, although, as I say, I certainly realise that it is one to which the House attaches particular importance.

I have listened with great interest to the hon. Gentleman's argument. Can he give an indication whether the Ministry of Health, possibly in consultation with the Attorney-General, will look into the question of the patent period to see whether the period is right or should be shorter?

I am certain that the Ministry of Health and the Law Officers will consider the points which have been made in the debate.

I come next to the question about research and development practice, which always occupies us for a certain amount of time in these debates. I agree with what was said by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens). We have been into these questions carefully with the Ministry of Aviation. I think that the Treasury Minute is right to say, in a fairly flat statement, that it is Government policy to rely on private industry to a great extent when it is a matter of design studies for complicated new weapons and equipment, subject of course—and this is important—to the checks which Government establishments can operate at various stages of the process and also to check financial and contract controls throughout.

I believe the Treasury Minute is quite right when it says that research, development and production are integral parts of a continuous process, to all stages of which the Ministry's research establishments contribute by virtue of their specialised knowledge and facilities. In Question 2191 in the Minutes of Evidence, hon. Members will see a further statement which I think of value. It was made by a senior official of the Ministry of Aviation. He said:
"one of the essential elements at the design study is … to transfer the thing for study from the scientist to the engineer and to find out in engineering terms how the design can be made as a practical proposition for production; and research, development and production is a continuous spectrum, but it is in fact much easier and more sensible to relate design to production than to relate it to research."
That was just the point which my hon. Friend the Member for Exeter (Mr. Dudley Williams) was making in his speech.

I should like to answer the interesting and helpful speech of the hon. Member for Stockton-on-Tees, who suggested certain principles to be followed in controlling these contracts. I can give him fairly encouraging answers on the points which he raised. I agree with him that rising costs should be notified immediately in the case of a research development contract, and I also agree that the need of the project should constantly be checked and re-checked all along. Competitive tenders should be used wherever possible, though there may well be particular reasons why they are not always possible.

Finally—the only point on which I express any doubts—when he spoke about the Ministry possessing effective sanctions my answer is that this has been much in the Ministry's mind and where there are sanctions we shall use them, but having been for a time Parliamentary Secretary to the old Ministry of Supply, I know that where a project proves abortive or unsuccessful, it is often extraordinarily hard to pin-point the precise moment at which something went wrong and why. In this question of imposing sanctions we are in rather a difficulty, but in general I think his statement of principles were extremely fair.

The third point raised by the right hon. Member for Huyton was the question of Post Office contracts. One must remember that the relative positions of the Post Office and the Treasury have changed since the recent Post Office Act, as he is aware. It is not for me to answer in detail matters which are more for the Postmaster-General, but where one is concerned with practices which impinge on the whole range of Government policy towards industry, this must be a matter for the Government as a whole, and it is certainly a matter which the Government collectively must take seriously. I agree with him there.

Many hon. Members have raised the question of airport accounts and, in particular, matters dealing with London Airport. My hon. Friend the Parliamentary Secretary to the Ministry of Aviation was here during much of the debate, and I have no doubt that he noted a number of the detailed points which hon. Members raised.

A point which was most in hon. Members' minds concerned the leases to the oil companies concerned. I remind them of the forthright statement made by the Minister of Aviation on 20th November. In answer to questions by the right hon. Member for Huyton and the right hon. Member for Dundee, West (Mr. Stnachey), the Minister said,
"I would not suggest that a lease entered into by the Government ought to be torn up just because we think that we, or somebody else, might have arrived at a better agreement."
He went on to say:
"There is substance in the suggestion that new agreements should be related to the volume of sales, and our agents are discussing that in the case of Prestwich."—[OFFICIAL REPORT, 20th November, 1961; Vol. 649, c. 919.]
Whatever we may think about the past, and I do not deny that over the whole issue there may have been some shortcomings, the fact remains that this is an issue which the Government have token a good deal more seriously during recent years. In the last year or so big improvements have been introduced. I think that the arrangements now emerging are on the right lines. The Government's recently published proposals for handing over the major airports to a public corporation are very relevant to some of the criticisms of the Committee. I assure the House that the Ministry and the Treasury are generally in sympathy with the approach of the Committee to the various matters discussed in this part of its Report.

I agree. If the Government make an agreement they must stick to it, even when it is a bad one. I said that in this context in the debate on the pay pause on 23rd October. The hon. Member will realise the relevance of that in the context of 23rd October, and I will not pursue it tonight. I am glad that he said that be accepts that (this was a bad agreement and that it will be used as a model to be avoided for the future. Will the Government give consideration to a suggestion of my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwysnd) that since the oil companies are getting away with a lot under this agreement for the next thirty years, the Government could ask them to reconsider their position with respect to an ex gratia return? Failing that, when he next talks to the Chancellor of the Exchequer will he ask him whether this is something which we should look at with regard to taxation at some time?

The first part of the right hon. Gentleman's question is clearly a matter for my right hon. Friend the Minister of Aviation. I was merely setting out to explain the principles on which the Government would act for the future. I have no doubt that if my right hon. Friend the Chancellor of the Exchequer were here, he would say, as he often does to the right hon. Gentleman, that he had taken note of his suggestion.

My hon. Friend the Member for Dover raised the question of Bailey's. A number of hon. Members have raised the point in a fairly critical mood. I quite understand their feelings, although, if one looks at the whole story, it may be that on one or two aspects of the case there is a little more to be said on the other side than some hon. Members have suggested. I will not put it higher than that.

When the Public Accounts Committee produces a critical Report on any firm, it is up to the company concerned to say what it wishes. There are, however, more useful ways of pursuing the matter than by selective quotations published in the form of an advertisement in the Press. If one went in for the art of selective quotations, others could have been produced. For instance, my hon. and gallant Friend the Member for New Forest (Col. Sir O. Crosthwaite-Eyre), who could hardly be accused of being one of the most dangerous enemies in this House of capitalism, put Question No. 631, in which he said:
"The fact is that, surely, over £1 million out of the working capital has been extracted by Bailey (Malta) under their Articles of Association, which you saw, and used for purposes which obviously neither you nor this Committee agree with. Is that not fair?"
Sir Hilton Poynton replied "Yes", and then Mr. Galsworthy added some more. This is a matter in which, perhaps, there is a little more to be said than is said in the Report. I rather hope, however, that if a similar case occurs in future, the controversy will not be pursued in precisely this kind of way, because I do not consider it the most helpful way of pursuing it.

My hon. Friend the Member for Lang-stone raised a number of questions of which he was kind enough to give me notice. The last of his major points concerned the Atomic Energy Authority, about which important issues of policy have been involved. These are, first, the Authority's purchases in recent years of large stocks of uranium, which will now, because of the fall in world prices, involve heavy losses; secondly, bulk purchase contracts for other materials, like graphite, which have proved to be in excess of requirements and will, therefore, involve losses; and thirdly, expenditure on research and development for civil power in relation to the prospect of recovering it from customers, notably the generating boards.

The Public Accounts Committee quite reasonably centred its attention on the extent to which the results of those operations are publicly available, bearing in mind the requirements of both military and commercial security. We are looking at this matter extremely carefully and the Treasury and other Departments, too, keep constantly under review the question of what must be secure for military or commercial reasons. The major part of the Authority's net cost of operations, which in 1959–60 amounted to nearly £60 million, represents its total research and development effort in both the civil and military fields. It is not possible to publish the figure for civil research and development alone, because if it were published it would be easy to estimate the level of military research. I can, however, assure hon. Members that decisions on all matters concerned with the disclosure of information are taken after regular periodical reviews. Of course, we realise the importance of this issue to the Public Accounts Committee.

I can tell the House, too, that in principle the Authority hopes to recover its research and development expenditure on civil reactor systems. It is quite true as the Report states that the Authority waived royalties on the first four nuclear power stations, amounting to £10 million, but this was a decision taken with Government approval because those early stations were much less economic than conventional stations and there was really no hope of getting the electricity boards and consumers to pay the full costs. But in the light of experience so far, the Authority, and certainly the Treasury, will look at the prospects of recovery very carefully when authorising further expenditure on the development of reactor systems.

One or two other points were raised by my hon. Friend the Member for Langstone. First, he referred to the Air Ministry fraud case and questioned whether there should be some sort of central black list of unsatisfactory contractors. I think that my hon. Friend has been a trifle tart. I think that the Treasury Minute is quite right in not going as far as he wants to go. We are bringing to the notice of all Departments the desirability of giving confidential warning to all Departments as soon as the prosecution of any firm of contractors is decided on. But the Departments feel, and I think that they are right, that they might well get into difficulties and possibly legal difficulties if they took formal steps which might injure a company's business and commercial reputation simply on suspicion which might conceivably turn out not to be well-founded. We shall keep this point in mind, but even from the legal point of view, let alone a matter of proper dealing by Government Departments with companies, I think that my hon. Friend's solution would be going too far.

My hon. Friend speaks of legal difficulties. I imagine that he has in mind possible libel actions and things of that kind, but would those lie against a Government Department particularly if the matter on the grey list were market "Confidential"?

I cannot possibly fulfil the function of a Law Officer of the Crown on this subject. We have taken the best advice we can about this and I should have thought that experience has shown that the word "confidential" does not always completely solve the difficulty. I can think of a good many questions we have discussed in the House where the word "confidential"—and I think even of cases resulting from hon. Members' correspondence—does not cover quite as many things as my hon. Friend would wish.

My hon. Friend also spoke about the omission of shillings and pence from Appropriation and other accounts. We told the Public Accounts Committee of 1959–60 that, with its approval, we proposed to do this, and we are extending the practice to all other possible accounts, including White Paper accounts, covering a wide range of transactions, which are laid before the House. I assure my hon. Friend that this sort of improvement in the presentation of accounts is much in our minds. We will press on with this improvement within the limits allowed by audit requirements and constitutional limits, and we have the assistance here of the helpful advice of the Comptroller and Auditor General.

My hon. Friend the Member for Dover raised a point concerning the form of notes to the Appropriation Accounts. There was here only one point on which the Committee and the Treasury were not at one. Although we do not think that in general, on a matter which does not affect policy but is purely concerned with the production of information for Parliament and the public, we could profitably or justifiably refuse to meet the Committee's wishes, we are proposing to interpret the words "Losses etc." in a rather narrower way than they have been interpreted for this purpose in the past. My hon. Friend the Member for Dover asked me whether we are not whittling away by the back door—I think that was his metaphor—what we have conceded, I suppose he would have said, through the front door. I will not try at this hour to pursue the metaphor, but I believe certainly not. If my hon. Friend would like to pursue the matter with me, I have very considerable hopes that I could convince him that we are not whittling away anything by the back door. If he would like to see me about this or pursue it with me, I will certainly try to convince him.

It is the Committee which has to be persuaded, because we have to take account of the Treasury Minute. Obviously the hon. Member for Portsmouth, Langstone (Mr. Stevens) is a very important Member, but the Financial Secretary knows that the Committee does not accept the Treasury Minute just like that. We have to go into it very thoroughly.

I shall be glad to discuss this with representatives of the Committee, of which I am formally a member, if they desire, because I believe that I can persuade hon. Members that the Treasury's proposals in this respect are quite reasonable.

I have tried tonight to cover at any rate a fair selection of the points hon. Members have raised. I am sure that the hon. Member for Anglesey (Mr. C. Hughes) will forgive me if I quote what he said to me downstairs at supper-time this evening. He said that this debate reminded him slightly of a debate on Welsh Supply, so great was the variety of points raised. It has been a useful debate. I hope that we shall be able to have a similar debate to this in another Session and I hope that on that occasion even more hon. Members will be moved to take part.

I thank the Financial Secretary for his very helpful speech. We do not accept every word of it but it was a very fitting reply to a useful debate.

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Main Question again proposed.

I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Committee Tomorrow.

Lead In Food

9.57 p.m.

I beg to move,

That an humble Address be presented to Her Majesty, praying that the Lead in Food Regulations (S.I., 1961, No. 1931), dated 9th October 1961, a copy of which was laid before this House on 16th October, in the last Session of Parliament, be annulled.
Would it meet with your approval, Mr. Speaker, if these Regulations were discussed with those affecting Scotland?
That an humble Address be presented to Her Majesty, praying that the Lead in Food (Scotland) Regulations (S.I., 1961, No. 1942), dated 10th October 1961, a copy of which was laid before this House on 17th October, in the last Session of Parliament, be annulled.

I am grateful to you, Mr. Speaker. I have the permission of my Scottish colleagues—they have done me an unusual honour.

The Instruments against which we pray are both based upon the revised recommendations of the Food Standards Committee. The original Committee was appointed in 1947 and the Metallic Contamination Sub-Committee in 1948. The first Report of the Sub-Committee was presented in October, 1951, ten years ago. Then in the usual way representations were received from trade and other interests throughout the country so that the Minister could be advised. This advice was ultimately given to him seven years ago in July, 1954, and recommendations were made and detailed which I have here and which I have perused.

After these seven years we have these Regulations. Only a very small change has occurred throughout the seven years as between the original detailed recommendations and these Regulations. There is only one matter of substance, and this is a matter on which I cannot congratulate the Minister. It refers to canned meat. Seven years ago the Sub-Committee reported that South American and Australian packers of canned corned beef had advised the War Office, their largest customer, that they had for some years accepted a specification limit of 7 parts per million. At that time the Committee advising the Minister believed that the lowest practicable limit which should be set was 5 parts per million.

Therefore, I ask this question. Why is it that in Part II of the Schedule to the Regulations we find a limit, as from April, 1962, to April, 1964, which is set at 10 parts per million, and why is it that only after 1964 is it to be set at 5 parts per million, when we have evidence that so long ago assurances were given that 7 parts per million was quite practicable? I want to ask for a reassurance and an answer on this point—why seven years have had to go by before the Regulations have been brought before us?

We are dealing with a most dangerous and deadly poison, one which is not needed in the human body, the physiology or economy of the human system. It is found in minute quantities virtually everywhere and in almost everything, but which can be stored and is stored in the human tissues, particularly in the long bones. It is, in certain circumstances, released rapidly especially in acute illnesses and fevers, bringing about poisoning. I admit at once that to expect our food to be entirely free from lead and this dangerous poison is impossible, because it is secreted in tiny quantities in the milk of a mother when nursing a child, it is found in virgin soil, in the air, in the coral rocks in the South Sea Islands, in vegetation, and in the roots, the bark and in the leaves of trees. It is found in all the seas and oceans, and, therefore, inevitably, in the fish that swim and live there.

I believe that so polluted is the Thames Estuary that it reaches 1 part per million—1 milligramme per litre— and it is understandable why some types of crustaceans living round our shores have fairly large amounts of lead in them. We understand why they are exempted specifically in these regulations, because it is natural to them.

It is very probable that oysters can be found with 80 parts per million in them in very polluted water, but as oysters are no longer the food of the poor, and as my constituents, therefore, who support me, are not as directly interested as they were before, I will not make too much of that, except to warn those who are not my constituents and those who do not support me.

We accept that we cannot avoid some lead in the intake of the air we breathe, the food we eat and the drink we take into our systems.

These Regulations are brought before us ostensibly to protect the public from excessive intake of lead. I wonder whether we should not at once make this claim, whether we have a right to make this claim or this demand, from a Ministry which was once the greatest protector of the public health in the country, not many years ago, but which now, having got rid of many of its expert advisers, on grounds of economy, falls down and is so ignorant that it makes gross mistakes.

We have a right to say that whatever is natural and unavoidable shall not be added to by our own gross mistakes in the manufacture and handling of food, and that we should avoid the use of lead or lead alloys in food. Surely we can do that. We ought to look very carefully at the use of lead pipes for conveying water, beer or cider, and at the use of lead sprays—arsenate of lead—on fruit such as apples, pears and grapes, and should consider what we are doing.

It has not always been accepted by any means by advisers to the Ministry of Health, that this type of regulation, which indicates by figures the amount of lead allowable, is the right way. Indeed, in 1938, in the first document advising the Minister of Health of that time on the contamination of food by lead, the then Chief Medical Officer specifically said that it was a mistake to have Regulations, and to bring forward Statutory Instruments of this kind.

That Chief Medical Officer first made clear that we did not know what quantity of lead might be considered negligible. He inferred that it was reasonable to say that the harmful effects of continued small doses started from the moment the lead was absorbed, and so on. He spoke of the ultimate chronic end result when saturation point was reached and then used these words:
"For this reason it would seem inadvisable to set up standards by specific legislation which, by fixing permissible limits of contamination, would inevitably impede efforts to secure the reduction of lead in food to the lowest possible amounts. Our object must be to reduce the amount of any toxic substance in food to the smallest that can be achieved in practice, and this in many cases may be attained more effectively by administrative action than by the prescription of specific standards."
The Chief Medical Officer then gave an interesting example of lead in sardines. It was found in the early 1930s and because of the way in which sardines were processed—that is to say, they were cooked on grills containing alloys with lead in them—they tended to get as much as 80 parts per million in their flesh by the time they were offered for eating. At that time, therefore, the Chief Medical Officer pointed out that, because of the need to get changes in processing, 20 parts per million were allowable.

He went on to say that shortly afterwards, at a second meeting, it was discovered that so successful had this advice been that the manufacturers had brought the lead content down to 5 parts per million—from the 20 parts per million that had been allowed them only a very few years before. He finished with this sentence:
"It is intended ultimately to reduce the provisional limit still further, and to require that sardines shall be free from lead or contain only negligible traces."
Why, then, do we find—as I shall show in a moment—that there has been no advance in all these years, and that the Ministry still will not accept 5 parts per million for all canned fish? Obviously, the promise made by the Chief Medical Officer, advising the Minister of Health, has not been kept by the Minister of Agriculture, Fisheries and Food.

I want to ask a question about water. Why is no limit placed on the amount of lead in our drinking water? Those of us who drink beer may be drinking it knowing that we are at risk. Those of use who drink wine are obviously warned, when we look at these Regulations, that we are at risk—especially if we drink vintage ports, which are left out of the Regulations for reasons, perhaps, that I shall mention later.

The Americans think that one-tenth of 1 part per million of lead is as much as should be allowed in drinking water. I think that I am right in saying that in this country we have, on average, three-tenths of 1 part per million in our drinking waiter. Why is that? If it is true that some of the water we drink has lead-solvent properties, why do we not take action? It can be done, and at not very great expense. There are metals other than lead that can be used to conduct water to us. I thought that we were living in the plastic age; by using copper or plastics for conveying our drinking water, we could got greater protection.

We know that beer can be very heavily contaminated if lead pipes are used. The best public houses would, of course, not dream of using them. Cider and perry are even more dangerous, because they can be, and are, contaminated in three ways—by one of the three ways or all three ways. One is by the fact that the fruit is sprayed with arsenate of lead, another is by further contamination in manufacture, and the third is— heaven forbid—if a lead pipe is used in a barrel to bring the cider up for consumption.

I should like briefly to offer two sets of facts which will, I am sure, be of interest to the House. It has been thought in Britain that the daily average intake of lead by human beings is 0·4 milligrams. That is what the Subcommittee thought when it reported. This figure is probably higher than the true one; at least, I hope it is. The most careful work has been done over a lifetime by a group of people led by Dr. Robert Kehoe, of Cincinnati University. I have been studying three lectures—the three Harben Lectures, as they were called—which he gave this year to the Royal Institute of Public Health and Hygiene. His view was that, certainly for the United States, the average is 0·15 to 0·35 milligrams per day, which is rather lower than has been thought to be our own intake. That is only from food, but one must add what we get from water and what we get from inhalation. People who frequently walk down Oxford Street get a very considerable amount by inhalation.

If this is our intake, what is dangerous to us? As a result of recent research, we are on surer ground here. An average daily intake of 1¼ milligrams will give poisoning—that means chronic lead intoxication—in ten years or less; an average of 2⅓ milligrams per day will bring about poisoning in about four years; it was found that an average of 3¼ milligrams will give lead poisoning in eight months; and two cases which were examined had a daily intake of 5 to 10 milligrams and acute intoxication—that is, acute lead poisoning— occurred within one month.

The Parliamentary Secretary may take it from me—I have very great experience of lead poisoning as medical adviser of the Pottery Workers' Association of Great Britain, having seen some hundreds of cases and examined them for lead—that lead poisoning can be both acute and chronic. It is possible to be ill without knowing why one is ill, and to spend years of illness, from time to time, as the lead which one has stored is released from one's tissues and bones, falling into fatigue, chronic illness, lassitude and sleepiness—all the things about which the Front Benches on both sides of the House complain from time to time. It is, of course, partly to protect the two Front Benches that I am now speaking.

There is intake and there is excretion. We excrete lead as well as take it in, but if intake is greater than excretion, sooner or later one gets chronic intoxication.

As I do not wish to be too long, I would refer the Parliamentary Secretary to the Schedule. I have already mentioned canned meat. It is outrageous that we cannot have our techniques so improved that we can prevent solder getting into the meat. That is where I said that there are 10 parts per million.

Then there is wine. Why should wines at 1 part per million still be allowed, but vintage port left out? As long ago as 1954, the Sub-Committee said about wine that they had bandied it over and discussed it with the wine trade and vintners generally and felt that they had better allow 1 part per million but that quite soon it ought to be half that. In these Regulations there is no suggestion at all about when, if ever, wine is to become safe to drink.

Now, what sort of wines, and why is wine so effected? I think that we now know the reason. There are good wines which contain lead. Although there is great tensile strength in lead, when wine is fermented the lead tends to come out and is left behind when the wine is drawn off into bottles. Thus we have new wine without lead. But then comes the unhappy business of the lead cap over the cork of the bottle, and the bottles are put on their sides for storage. The under side of the lead cap is attacked by the solvent properties of the wine and by auxiliary attraction it goes back that is why good claret contains more lead than cheap raw wine, and why, I suppose, the Ministry has left vintage port out.

The Home Secretary needs special protection. He has talked about vintage port. Why should he and his friends not have protection? Therefore, I put forward seriously the practical suggestion that if we give the trade some time—and the Ministry can check up on what I have said, for I am only repeating research recently done—we may find that we could use plastic covers instead of lead. Even aluminium would be safer. It is sheer nonsense to go on with this. I urge the Minister to help us to take action, otherwise I shall almost be compelled to avoid a decent bottle of claret.

The regulations governing bottles of beer, in this day and age say that 1 part of a million will be allowed. That is neither safe nor desirable. I have spoken of canned fish, which is still at 5 parts of a million. It is wrong that we cannot do better than this. As was said in 1951, it should now be negligible. Pectin liquid is allowed 10 parts of a million. Is this not the basis of jam making? Why add lead to jam? There is no need to if we take care. I know that at one time it was higher. Samples of fifty years ago had 13 parts per million. That was very bad, but are we any better now?

The Regulations are not reassuring. We know well that an intake of approximately 2 milligrammes per day of lead will, certainly in most people—and more in women than in men—ultimately give rise to chronic lead intoxication. If a man eats 8 ounces of canned meat per day he gets 2 milligrammes; two ounces of sardines, one third of a milligramme; two pints of beer, roughly another milligramme. With the water he may drink and the air he breathes he has 4 milligrammes in that daily intake.

That is grossly unsafe and poisonous. We are at risk and the Ministry has shown no sense of urgency. By its complacency it has shown that it seems to be entirely ignorant of the needs of the nation.

10.19 p.m.

The House will be grateful to my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross) for giving us once again the benefit of his wide and exceptional knowledge of health hazards in our methods of food handling. He has asked the Parliamentary Secretary several pertinent questions and there are only one or two further points I want to put. I hope that, even if the Parliamentary Secretary cannot answer tonight the technical points raised by my hon. Friend, they will be looked into by his Department.

The point which I myself intended to mention, and which I therefore back as strongly as I can, is why we cannot, in the planning and design of new premises which will have pipes carrying liquids—public houses, restaurants and so on—ensure that no lead pipes are used. As my hon. Friend said, plastic or polythene piping should be used wherever possible.

However, this issue goes much further than that. I am not sure that enough research is being undertaken into the use of food containers. I am not satisfied that we need have lead anywhere near food, but I am not an expert on this matter and there may be technical reasons why lead should still be used. However, I am sure that there should be more research into the use of containers for processed foods.

The use of insecticides is another issue which I want to raise. I know that the Department of Scientific and Industrial Research is concerned and I understand that a joint committee of the people engaged in the trade and the D.S.I.R. has been set up to see what can be done to eliminate not only the risk of the use of lead, but other risks which might be found by research to be present in certain types of insecticides. From time to time we should like to be told what that Committee is doing. I understand that it still has to set up a research organisation and will not be starting work until next year. However, next year is not now far off and this is something of tremendous importance these days.

In the definitions of fish and flavouring of food and food colouring and fruit juices and so on, the Regulations have given us, perhaps unwittingly, something for which we have been asking for some time. One of the complaints of many of us who are interested in what is now called consumer protection has been that manufacturers, particularly soft drink manufacturers, have described their soft drinks in their advertising as fruit juices. For the first time the Regulations have defined a soft drink as something which is not a fruit juice. I am glad that that is the case as we all know that there is very little fruit juice in most of the soft drinks which are advertised as fruit juices. Having at last got this definition clear, I assure the Parliamentary Secretary that the matter will be raised from time to time.

In view of Section 6 of the Food and Drugs Act, which allows him to take action in respect of any label or advertisement which is misleading to the public, on the basis of the Regulations will the Minister now proceed to take action, first warning people—we do not want to take legal action without the trade having had the chance to put things right—against manufacturers of soft drinks who advertise their soft drinks quite misleadingly, as fruit juices? That is quite important.

The whole purpose of the administration of these and similar Regulations is to persuade the trade to reach high standards of health and hygiene in food handling. We require legal sanctions only as a law of last resort to deal with people who do not conform to the good practices of the trade. In this law of last resort we must set high standards, and I sincerely hope that the Parliamentary Secretary will tell us that the food trades concerned are themselves doing all they can to ensure that none of the hazards mentioned by my hon. Friend will be inflicted upon the food consumers of the country.

10.24 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food
(Mr. W. M. F. Vane)

The hon. Member for Stoke-on-Trent, Central (Dr. Stross) gave us the benefit of his very great knowledge and experience in this matter and left some of us wondering how it was that we were still alive, bearing in mind the dangers—

—half alive—which appeared to have faced us and our forefathers through generations.

It is true that lead ingested with our food is extremely injurious to health, and what we are trying to do in these Regulations is to achieve the same object as I believe he and other hon. Gentlemen would like to achieve, the elimination as far as possible—but of course complete elimination is impracticable—of the lead content in our food.

I think I should say at the beginning that the general trend is to drop proceses in manufacturing which have been shown, by the standard of these Regulations, to leave a high lead content in food, and to adopt in substitution plastic pipes instead of lead, and so on. I assure the House that the general trend throughout the food processsing trade is to do this, and there is a clear realisation, as there ought to be, of the need to produce our food with the minimum practical lead contamination.

That is our aim in publishing these Regulations. They have taken us some time to produce. The hon. Gentleman referred to the time lag, and I am not going to pretend that this has all happened very quickly. On the other hand, the whole trend has been moving the way we want it to go. There has been no case for what might be called "crash action", and therefore there was a lot to be gained by producing Regulations which set standards which have been known during the negotiations, and are published with the good will and cooperation of all those concerned.

I do not want to harry or pursue the hon. Gentleman, but he is not conversant with the facts. The truth is that, almost word for word, these Regulations are the same as the Report of 1954. The recommendations were made in 1954—seven years ago—and at that time discussions with the trade had been completed. The only change between then and now is that he has made the position worse as regards the amount of lead in canned food.

The House will appreciate that I was not taking credit for speed. There were representations from the trade, which were referred several times to the Sub-Committee, and although in the end the Regulations have come out with small modifications from the original recommendations, there has been a good deal of negotiation in the interval.

In general, it must be admitted that the Regulations represent a big step forward in protecting the consumer from risks to his health. We have made Regulations governing arsenic—I think a year ago we discussed the Arsenic in Food (Amendment) Regulations—colours, antioxidants, fluorine in food, and I hope that they will soon be joined by Regulations on emulsifiers and stabilisers, and revised Regulations on preservatives. I hope that the hon. Gentleman will realise that a good deal of work is going on both in the Department and in contact with experts outside to try to make our food as safe as is humanly possible.

I cannot claim the technical knowledge of the hon. Gentleman, and I am sure that he would not expect me to give technical answers off the cuff to all his technical questions, but I underline what he said about lead being a serious cumulative poison. I am sure that the House will agree that it is important to keep the amount of lead as low as possible, because, unlike some poisons, lead remains stored in the body. As the hon. Gentleman said, and I think all laymen can understand, whereas when we are healthy we may not notice much serious defect from lead poisoning, the fact is that a time might come when we are in poor health, or suffering from various fevers, and the lead in our bodies can be released suddenly and have serious effects.

Ideally, the solution would be to have no lead, but as there is lead in the atmosphere and almost everywhere, it is not possible to achieve this. Therefore, we have to ensure that the lead in our food is reduced to the practical minimum. As the hon. Gentleman said, organisms like shellfish and Crustacea—which, I seem to remember, contain a good deal of arsenic—also absorb lead compounds which are present in sea water. Unfortunately, lead is always present in the atmosphere. The hon. Gentleman referred to Oxford Street, but I do not think that it is limited to Oxford Street. It can be contacted elsewhere.

In case anyone makes a mistake about Oxford Street, may I say that, as the hon. Gentleman knows, it is places where the traffic is heaviest and where lead alloys are used.

I am not quite certain whether the steam emitted from railway steam engines would be declared to be entirely free from lead.

The lead enters the food through the use of lead, lead alloys and lead compounds in food processing plants and in the piping by which water and other fluids are conveyed. Water is not food within the meaning of the Food and Drugs Acts, which answers one point. These Regulations are based on a report received from the Food Standards Committee and they follow closely the recommendations of the Committee. Hon. Members will appreciate that various trading interests concerned were entitled to make representations because in the process of transferring from one process, it may be an old-fashioned process, to another, one does not want to disrupt a business more than is necessary. Were there danger to health that would be another matter. But if there is not, one does not want to disrupt a perfectly legitimate business.

It was thought proper to have a limit of 2 parts per million, but that lower limits should be specified for most drinks, since it is highly probable that lead is more readily absorbed from liquid than from solid food. I understand that the first pint in the old-fashioned type of public house where lead piping is still used would be a case in point, although the hon. Member would have to drink the first pint every time the public house opened for a long time before he felt any ill effects. I say that because I do not want to frighten anyone unnecessarily.

In the main the recommendations of the Committee have been implemented. But a number of minor amendments have been made as the result of representations which have been received, and after further advice from the Committee on some of them. In particular, we have provided for some foods and drinks—mostly drinks—that the lower limits will apply two years from the date on which the Regulations come into force. This will ensure a smooth transition from an old-fashioned process to a newer process in the case of food. These lower limits are desirable, and there is no doubt that they can be attained. But some revision of industrial processes will be necessary. It is, therefore, only reasonable to give industry sufficient time to revise methods.

I should like to say that the food manufacturers have throughout realised that they have a larger duty to the consumer than merely ensuring that their products conform to these Regulations. Where they could do better they have tried to do better. They have an obligation to take positive steps wherever possible to minimise lead contamination by improvements in the technique of food processing and in the types of food containers and by the elimination of packing and wrapping materials that contain lead.

We have in general related the duty to the permitted standard rather than tried to define processes which may or may not be allowed. Throughout we have aimed at the purety of the final article of food as the practical test. For the reasons which have been given, it will never be possible to eliminate lead entirely from food. Our aim is to work towards lower tolerances and make it impossible for high lead contents to occur in food even under the worst conditions, or even if unusual circumstances arise in the course of manufacture and processing.

The hon. Gentleman asked about meat. I have evidence available after the summary recommendation of the Report, and in general it showed that the figure suggested was virtually impossible to attain in every case. I gather that lead contamination in certain of the smaller soldered containers which are rapidly going out does vary and that for the short period it was practicable to have a higher limit to enable the transfer to the modern type of cans with a much lower limit, which, I think, the House will agree, is acceptable. There is nothing sinister about the higher limit for the short term for certain tinned meats.

I have spoken about lead pipes and I have spoken about processing. I cannot give an answer "off the cuff" to the story about some unfortunate sardines which were mentioned. Water, as I have said, is not a food within the meaning of the Food and Drugs Acts. Port is a rather special case, and it is excluded from the Schedule, but it does, none the less, come under the general regulation of the limit of 2 parts per million.

Hon. Gentlemen should bear in mind that the consumer has been protected in the past under the general provisions of the Act. He will have greater protection from these Regulations. They will also, of course, be easier to enforce. The hon. Gentleman the Member for Sheffield, Hillsborough (Mr. Darling) asked, were we encouraging design so that modern, safer appliances were put into new buildings and being substituted for older ones. Of course, we are doing that. I hope that it will have the support of everyone. There is no evidence that, as it is shown that old-fashioned equip- ment is perhaps less desirable than modern substitutes, anyone is persisting therewith.

There certainly is research into this question of insecticides and we have had a study group in the Department dealing with this. The hon. Gentleman may find something of interest in a report which we may put out in the not-too-distant future. I agree that that is another field which, up to the present, we know far too little about—residues. There is no reason to be alarmist, but we still have not enough information about residues which may be found in certain foods.

Lead capsules on wine bottles. I am afraid I cannot give an answer, though I think it possible that in many cellars sealing wax is found just as good.

Is this not a matter which might reasonably be taken up with the wine trade?

I take the hon. and learned Gentleman's point, and I will see that the representations are made, but, as I have said, we have not concerned ourselves here with particular appliances; we concern ourselves with the end product.

With regard to fruit juices, of course local authorities enforce labelling and description under the Act already. I know there is a feeling in many quarters that drinks containing fruit juice often have a very small proportion of real, genuine fruit juice in them. A good deal of thought has been given to the subject recently. We encourage high standards wherever it is within our powers to do so, and manufacturers, I know, are thinking on exactly the same lines as we all are.

I think it should be something that we can all take satisfaction in, that with modern technical progress it has been possible for us to provide Regulations which might well not have been possible not so very long ago, because different means alone, which were then not available, are now. These Regulations have admittedly been the subject of lengthy discussions. They are, I would claim, a big step forward. The benefit to the consumer is obvious. I cannot believe any hon. Member, whatever his criticisms may be, could be averse to or could oppose their aim which is the protection of public health. And so I hope the House will not accept this Prayer.

In view of the kindly way in which the Parliamentary Secretary always deals with me, some of my indignation has evaporated and I therefore beg to ask leave to withdraw the Motion.

Motion, by leave withdrawn.

I understand that the hon. Member does not desire to move the second Prayer.

Pit Closures, Scotland

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

10.40 p.m.

I wish to thank my two hon. Friends concerned with the Prayer for dealing with it so expeditiously so that we can get on to this Adjournment debate before it is too late.

You may be aware, Mr. Speaker, that today is St. Andrew's Day. We are almost at the end of it. St. Andrew is the Patron Saint of Scotland. I hope that he is looking down on us tonight and willing this Government at least to try to give Scotland a square deal. Yesterday we spent a whole day discussing the coal industry in almost all its aspects. Tonight I want to deal with the social and economic consequences of pit closures. Whenever a number of pit closures have been announced over the past years, Scotland has always been the worst hit of any of the divisions of the National Coal Board. Again, with the latest announcement Scotland will suffer far more than any other part of Britain.

Next year, we are told, seventeen further collieries will close in Scotland. In those collieries at present about 5,000 men are employed. The National Coal Board has announced that it expects that it will be able to place the underground workers in other pits, but there is no guarantee at all that the surface workers in those seventeen pits will find work in the coal industry. I say to the Parliamentary Secretary to the Board of Trade that even if the whole of those 5,000 were absorbed in other pits, it would still mean that 5,000 job opportunities had disappeared from Scotland.

Of course, over the past month these matters have been raised time and time again with the Minister of Power. He told me on 20th November:
"I suggest that the hon. Lady puts Questions to my right hon. Friend the President of the Board of Trade about the activities of that Department, which, in my opinion, have been extremely successful."—[OFFICIAL REPORT, 20th November 1961; Vol. 649, c. 912.]
That shows that the Minister of Power has no idea of what has been happening in Scotland over the last ten years. When we suggested that even if the miners are placed they will have to travel long distances, his answer was quite callous. He said:
"There is a choice in front of each miner: whether he wants to travel to new work in the coal mines, whether he wants other work, or whether he wants to be unemployed."—[OFFICIAL REPORT, 13th November, 1961; Vol. 649, c. 20.]
I say that there is very little choice for the Scottish miner, particularly for the surface worker, who might not be placed in a pit, no matter how far away. He has no choice. With unemployment at present, all that is left for him is to go on the scrap heap with the other 69,000 unemployed in Scotland at present. Many of those who are put into other pits find that their wages are almost halved. Not only have they long distances to travel, but their income from their work, having changed from face work to oncost work, is halved.

Another point has been brought to my notice. Miners from the pits in my constituency whom I met last week-end said that sometimes when these closures take place men go to other pits which are not ready to take them and which become over-staffed. As one old Scotsman said to me, "It is a case of men doing a laddie's job but having to get men's wages". The men in Scotland are beginning to feel that when this happens in their pit, their pit will very soon become uneconomic and will be next on the list for closure. That is something which must be examined carefully.

If we go back to 1957 we find that 86,085 men were employed in the Scottish pits. On 18th November this year that figure had fallen to 68,117. In other words, in the mining industry alone in Scotland in the last four years we have lost 18,000 jobs. One can talk until the cows come home about miners being placed elsewhere, but the stark fact is that 18,000 jobs have disappeared from Scotland, and that means in areas such as mine that the opportunity for young men to enter the mining industry is less and less every year.

May we look at another side of the question which concerns the Board of Trade? Let us look at the number employed in civil employment and watch it grow. I cannot quote the figure for May of this year because the Scottish Office is so laggardly in letting us have figures that I can quote only May, 1960, but we find that in Great Britain as a whole there was a growth in the number in civil employment between May, 1957 and May, 1960 of 532,000. Almost half-a-million more people were employed in Britain in May, 1960, than in May, 1957. What was Scotland's share of this increase? Has the Board of Trade been doing a good job, as the Minister of Power told us? We have not had one single increase. Between May, 1957, and May, 1960, there were 32,000 fewer in civil employment in Scotland.

Those of us who are concerned about this have been trying to get the Government to understand this for many years. When one knows that there is a greater natural increase in population in Scotland than in Great Britain as a whole, and when one ties that up with the fact that 25,000 of our most highly skilled people leave Scotland every year—that has been the figure for the last ten years—one sees how serious is the position in Scotland.

Let us take another yardstick—the unemployment figures. On 13th November, 69,369 men and women were unemployed in Scotland. The rate was 3·2 per cent. If we take the increase in unemployment over the last month, from the October figures to the November figures, we find that for the United Kingdom the increase was 21,594. For Scotland it was 4,085. Although in Scotland we have only 10 per cent, of the population, we had 19 per cent, of the increase in unemployment in the United Kingdom. Does not that make the Government worry about the position in Scotland? What perturbed me intensely in the same tables provided by the Government was to find that of the ten regions listed, Scotland was the only region to show an increase in unemployment amongst school leavers in November. It is bad enough for an adult to be unemployed, but for a youngster leaving school to find that the nation has no use for him is much worse.

We have almost 70,000 unemployed but only 13,241 vacancies. At this moment, on St. Andrew's Day, Scotland has five people chasing every vacant job. In London and the South-East region, however, where there is a much lower rate of unemployment, there are more unfilled vacancies than there are unemployed. The position in the Midlands, too, is infinitely better than in Scotland.

The long-term unemployment figures for Scotland are shocking and worse than for any other area. Those unemployed for more than eight weeks account for 58 per cent, of all those unemployed in Scotland. If we were to get the figure of those unemployed for more than six months, again we would find that Scotland's figure was much worse in comparison with any other region.

One would think that with such a position, the Government, who say that they are trying to do something, would have been taking great steps to get industrial building humming in Scotland. We find, however, that Scotland has 3.2 per cent, unemployed, whereas London's figure is .7 per cent., which makes Scotland's rate of unemployment four and a half times greater than that of London and the South-East. One would expect to find far more industrial building in Scotland. The Government's latest construction figures show that Scotland has under construction a little over 7 million sq. ft. of factory space. In London, however, the figure is over 14 million sq. ft. In other words, London and the South-East, which has about one-fifth the Scottish rate of unemployment, has more than double the amount of factory space under construction.

Many people are noticing what is happening. Many journals are pointing it out. Today, the Daily Express had a leader remarking on pit and railway branch line closures. The Daily Mail has an article making the suggestion that was made last night by my hon. Friend the Member for Hamilton (Mr. T. Fraser). It states:
"The Toothill Committee has shown us the way ahead. It is essential that any kill or cure remedies should be tempered with sympathetic understanding."
All that was asked of the Government last night was to prevent these pit closures and whether the Government had inquired into the social and economic results, not only of those closures, but of what has been happening in Scotland over the years.

The article went on to say—looking at the benches opposite, I would not complain too much tonight, but it happens time and time again:
"The other point we would make concerns the silent men of the Commons, the Scottish Tory M.P.s, who, when important Scottish issues are being debated, are either absent or mute."
There is not any doubt that it is we on this side who are continually fighting for the interests of our people.

Unless the Government are determined to make much stricter use of industrial development certificates, we shall not have any chance. They should be determined to build more advance factories in Scotland. We are still waiting, however, for a beginning to the one they promised us a considerable time ago. I have raised this question because my constituency has been the worst hit by pit closures every time. My constituency has four out of the seventeen which are to be closed in the latest batch, unless the Government stay the N.C.B.'s hands for a little time. Time and time again I have spoken of the problems of the Harthill—Salsburgh—Newmains Shotts area. Another area has been hit this time in which there is no other industry—Caldercruix, Plains, Greengairs. These villages have always depended on coal and by these latest closures the employment provided by the mines will disappear.

I again stress that these closures should not take place until the inquiry is held and there is some hope of alternative work. I am asking for alternative work to be provided. I hope that the Government will be ready at last to take some direct action to ensure that this dismal picture in Scotland will be made brighter.

10.56 p.m.

The hon. Member for Lanarkshire, North (Miss Herbison) particularly asked for a Minister from the Board of Trade to reply to this debate on the closure of collieries in Scotland. She ranged widely in her speech. Some of her observations could perhaps have been better replied to by other Ministers, but I shall do my best to reply to the points she made.

The whole purpose of my speech tonight was to get the Board of Trade to provide alternative industry That is why I gave the right hon. Gentleman the facts.

As the hon. Lady knows, I can only reply regarding the way in which the Government have exercised, are exercising and will exercise in the future the powers conferred upon them by Parliament. I cannot go beyond this. It would not be right even in this debate to go beyond the powers conferred under the Local Employment Act, under which the Board of Trade may acquire land, build factories, and generally give assistance to industry in development districts, especially by loans or building grants.

Most of what the hon. Lady said until her closing remarks would have been better addressed to my hon. Friend the Parliamentary Secretary to the Ministry of Labour. As regards her remarks about factory space, I remind her that the control of factory building space which the Board of Trade exercises is limited to buildings of over 5,000 square feet. Many of the buildings erected in the London area are less than 5,000 square feet but are not recorded in the building figures of factory space.

Under the Local Employment Act the Board of Trade can exercise its powers in any locality in which in its opinion unemployment is high and is likely to stay high or where such unemployment is to be expected soon enough to justify the exercise of the powers. Such places are placed on the list of development districts, which we keep under constant review. We are looking at it at present.

It is well to remember always that our power is to steer and not to direct industry against its will to any place. We can only steer. In steering industry to new localities the Board of Trade is required by Statute to give priority to development districts. We are trying to steer industry also to such places affected by the closures, and broadly speaking we would certainly issue an industrial development certificate to any suitable firm wishing to go not only to a development district but to any of the districts affected by the closures or wishing to expand there. We are trying to steer factories to those districts as well. It is well known that there is only a limited number of firms at any one time seeking to establish themselves in new places; or, indeed, of firms which want to establish themselves, or even to expand where they are, and which can be steered elsewhere.

The hon. Lady referred to the effect of the closures already announced. As she said, some 5,000 jobs will no longer exist in the pits that are to be closed in 1962. She said that we should prevent the closures until there had been an inquiry, but it is right to remind her that 9 of the 16 pits of which the closure has already been announced for next year are being closed because their coal reserves are practically exhausted. In those cases, there could be no point in postponing closure. The reasons for closing the remaining 7 pits vary, but they really boil down to the fact that enough coal can be won more economically elsewhere from new or reconstructed pits; from those pits, in fact, in which investment has been made because those remaining pits are uneconomic. The output from the new or reconstructed pits is expected to increase by some 800,000 tons.

What is to become of the miners working in the pits that are to be closed? The hon. Lady said that she had been informed by the Board that there would be jobs for all the underground workers, and she wondered what would happen to the remaining workers. I am informed that the Board has stated that for the great majority of the men affected alternative work will be made available within travelling distance of the men's homes. They will not have to leave their homes to take it.

The closures in 1962 will be on much the same scale as those in 1959. In that year, 26 collieries were closed in Scotland, displacing some 5,000 workers. At the end of 1959, only 300, or thereabouts had not been placed in employment. That shows that the Board has done its very utmost to find alternative work for those who have been displaced, and again it says that for the great majority of the men affected alternative work will be found—or, at any rate, made available—in 1962.

The hon. Lady says that some 5,000 jobs will be lost, and she quotes the fact that some 18,000 jobs have disappeared, as she put it, over the last few years. It has to be said that to the extent that less coal is required in Scotland, it is inevitable that less men should be employed; that to the extent that mechanisation raises productivity, men can be released to other occupations and, to the extent that new jobs are being created in other pits, there is a compensating gain.

The hon. Lady talked about the number of jobs that had been made available in recent times, and in a moment or two I shall give her the figures of the jobs that have been created in recent years in Scotland through I.D.C.s

She drew attention to the hardship men will have in travelling a certain distance, and implied that industry should be brought to where the men lived. She referred—as I thought, a little unfairly—to my right hon. Friend the Minister of Power as having been callous in his observations on this matter, but I think that it has to be recognised that as industrial units tend to become larger and production more concentrated, it is inevitable that people who live in small towns and villages will have to travel more than they formerly did. Admittedly, the next generation may tend to set up nearer to the work, but these slow secular movements are bound to go on, and no amount of planning will prevent them. Obviously, the first thing to do to avoid undue hardship is to try to find work for those displaced, and that is what the Board is doing.

The hon. Lady suggests that we should build advance factories. What would certainly be wrong would be to build advance factories in every place where a pit was to be closed. Indeed, we should have no power to do so unless we had good reason to suppose that unemployment was going to be persistently high in those places. Many of the closures are to take place in development districts. There the advantages of the Local Employment Act are available. As to the other closures, we always keep the development districts under review, and we shall bear that in mind.

I think I should point out to the hon. Lady what the prospects actually are in those areas where the closures are to take place. For example, in North Lanarkshire, there are, admittedly, 6,070 unemployed, the unemployment rate being 4·1 per cent., a relatively high one. The men affected number 1,300. The jobs in prospect in the area number 4,800. In the Dalkeith, Musselburgh, Gore-bridge and Bathgate areas—some of the Bathgate jobs will be available to men living in parts of the hon. Lady's constituency—the men affected number 1,160, and the jobs in prospect are 7,400. That shows that jobs are being brought to Scotland.

As to other cases, in, for example, West Fife there should be, if all goes well, more jobs in prospect than there are men affected by closures. Admittedly, there are other places, such as Lesmahagow and Coalburn, where there are no jobs in prospect at present, and we shall have to look at such places most particularly. So I can tell the hon. Lady that we are doing quite a lot to bring jobs to Scotland.

The hon. Lady mentioned the industrial development certificate figures. Between 1st October, 1951, and 30th September, 1961, 88,858 jobs have arisen out of certificate approvals, the actually completed projects providing 69,791. That shows that a great many jobs are coming along.

The hon. Lady has mentioned those, and it is for me to mention the compensating ones which have come along.

Since 1945 English and American firms defined as new to Scotland have increased their employment by about 33,000. These are significant figures. This shows that, although there is this tendency for pits in Scotland to close because they are becoming worked out and uneconomic—a process which has been going on for decades, not just in the last few years—the Government have been attracting new jobs to Scotland with, I think one can say, considerable success.

This is what we are doing to help. First, we keep under constant review the list of development districts. Second, we are doing, and shall do, our best to steer industry to the development districts and shall assist the expansion of projects within them wherever it is appropriate to do so. We shall also consider the acquisition of land and the preparation of sites, but we do not intend to build more advance factories at present. As to those places which are not in development districts, the Board of Trade cannot acquire sites, but a county council or the council of a large burgh can, and we shall give industrial development certificates to any enterprise which wishes to occupy those sites once they have been bought and prepared in that way.

The broad picture is that we recognise the difficulties that the closure of collieries causes, great difficulties of travel to work and so forth, but more particularly the difficulties for the next generation, and it is to meet the requirements of the next generation that we are doing our best within the terms of the Local Employment Act to attract industry to Scotland.

Question put and agreed to.

Adjourned accordingly at ten minutes past Eleven o'clock.