Skip to main content

Navy Estimates

Volume 655: debated on Thursday 15 March 1962

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Vote 1 Pay, Etc, Of The Royal Navy And Royal Marines

Motion made, and Question proposed,

That a sum, not exceeding £69,133,000, be granted to Her Majesty, to defray the expense of the pay, etc., of the Royal Navy and Royal Marines, which will come in course of payment during the year ending on the 31st day of March, 1963.

If there were time, I might consider that, but we will see how we get on.

I want to deal with what, for the men in the Navy, is the all-important matter of the pay of the lower deck. In February, 1960, the Government announced, in Command 945:

"The Government agreed that Service pay and pensions should be reviewed regularly at intervals of not more than two years, and have carried out the first of these reviews."
There was then a 7s. increase for the ratings. Today, there should be another 5s., but 2s. 6d. has been refused. The Government, having now carried out the second of these reviews, frankly admit that there should be an increase, in round figures, of 5 per cent. in the pay of the other ranks in all three Services, but they refuse to honour their contract, arguing that there must be a pay pause because of their own failure to increase our exports.

My first question to the Civil Lord is: what is the connection between exports and the pay of the seamen in the Antarctic Survey Service, the soldiers in Kenya and the airmen in Singapore—to give only three examples? The answer is that there is no connection. That is a polite expression. If I were on the lower deck I should use a much more emphatic term. There is no question at all but that the Services should have been granted their full 5 per cent., which happens to coincide with a 5s. increase in pay, in the same way as the pay was increased, rightly, for the police and the firemen.

The explanation is that the Service men have no trade unions to fight for them, and they look to the House of Commons to fight their battles—and battles they are—for a proper and good standard of living in their homes for themselves and especially for their wives and for their children, who are the important next generation. But Tory M.P.s have always opposed proper rates of pay for other ranks in the Services. In my young days as an able seaman the pay was Is. 8d. per day, and the rate remained at that figure for over sixty years, from the Crimean War of 1854 to the First World War of 1914.

Did the hon. and gallant Member fight in both those wars?

I am ready to take on any interjection, but I did not hear what the hon. and learned Gentleman said.

I wondered whether the hon. and gallant Gentleman fought in both those wars.

I am the third generation of ex-Service men who served on the lower deck, and I am taking no nonsense from the other side of the Committee about that.

My grandfather fought in the Crimean War of 1854 and was invalided out. My father served in the Navy and was invalided out. I am the one who, fortunately, was able to complete a full period of thirty years' service. If the hon. and learned Gentleman wants the details—because they can never be repeated—I can give them: orphanage boy, seaman boy at 6d. a day, ordinary seaman, able seaman, leading seaman, petty officer, warrant officer and then commissioned officer, with twenty years on the quarter deck, finishing in H.M.S. "Hood", the largest warship in the world and the fastest battle cruiser at that time. I am having no humbug from hon. Members opposite tonight.

The basic rate of naval ratings' pay was not increased until the middle of the First World War, and then only after trouble in the Grand Fleet. When the Liberal Government of 1912 considered an increase in the basic rate, Tory Members of Parliament, probably looking forward to the Orpington result, argued in this House that if any more money were paid to naval ratings it would be spent on wine, women and song. The increase was a meagre 3d. a day, but only then for ratings over the age of 21.

I ask the Committee to imagine what my married able seamen mess-mates on Is. 8d. per day, and with no marriage allowance, were able to do about more wine, women and song, with the further princely sum of 3d. a day. It was Id. a day extra for each item—wine, women and song. [Laughter.] I want to make certain that this is on the record; it must be worth it if it is causing all that amusement on the Tory benches. It was 1d. a day extra for each—wine 1d., women 1d., and song 1d. Even at the lower rates in those days, that did not take them very far.

9.45 p.m.

The Minister of Defence has claimed that as the other ranks have no trade union, he will look after them. Golly, what a foster-father! That is just what he has not done. He has shirked his responsibility in this matter and completely let down the other ranks. The plain fact is that the Tory Party, as always, pays lip-service to the good work of the men of the three Services and then trades on their patriotism by refusing to pay the proper rate of pay for a strenuous job and adverse conditions under which they perform their duties.

On a point of order, Sir William. Is it in order for the hon. Member to waste the Committee's time with this nonsense, when we have other important matters to discuss in a very short time?

I think that the hon. and gallant Gentleman is entitled to make his remarks along the lines that he is doing.

I should have been much further ahead but for the interruptions, Sir William.

There is no question but that these men are 100 per cent. entitled to the full 5 per cent. increase in their pay. But the Government say that they would pay only 2½ per cent. for a year. At first sight, this appears to be only a loss of 2½ per cent. for twelve months, but with the biennial assessment an increase was due a year ago. What is to happen next year, and at the next biennial review in 1964? Are there to be more cuts? If so, I warn the Government that there will be serious trouble.

What does this reduction of 2½ per cent. in pay mean to the men in the Service in hard cash? I am taking the basic figures from Cmnd. 945, Service Pay and Pensions, 1960, page 20. The pay of an ordinary rating is only £5 5s. per week.

We are debating these Estimates and the information is at the back of them if the hon. and gallant Gentleman wishes to refer to it.

To reduce the amount of time that I am taking up I have ruled out from my notes, "The same figure is given in the current Estimates, page 225," so I am on common ground with the Civil Lord. When I want to get ahead full speed, with all boilers alight and both engines going, the Civil Lord, of all people, makes that idiotic remark. The hon. Lady the Member for Plymouth, Devonport (Miss Vickers) made the statement last night. Is it necessary to tell me twice the elementary facts of life about naval affairs?

This £5 5s. a week is 15s. per day for unlimited hours up to 24. Fortunately, there are no more than 24 hours in a day, or he could be called upon for duty for even a longer day, so the hours' factor does not come into it. Generally, they are watch on deck and stop on; not watch on deck and watch below.

That brings to my mind the efforts which we made before the First World War in Devonport Barracks. This is not in my notes! In those days the commodore of the barracks saw everyone entitled to leave at the end of his first period of twelve years. One day he had a stoker up before him. The commodore—"Tin Eye" Wemyss—used to open his eye and drop the tin eye down. It rang a bell when it hit a button on his coat. He had it adjusted for that purpose. "Tin Eye" said to the stoker, "My good man, you have been in the Navy for twelve or more years?" The reply was, "Yes, Sir". "Tin Eye" said, "You have got a very good character". The reply was, "Yes, Sir". "Tin Eye" said, "And you are going to leave? Why not take on? There is a pension".

The commodore went on and on and the stoker got more and more "fed up" with him. The stoker was not conceding anything. He then said to the stoker, "What are you going to do outside?"

Even that is not original, because it was said last night.

The stoker said, "I am going to have a cart and two donkeys and I am going to do the rounds". So the commodore said, "Why do you want two donkeys with one cart?" The stoker replied, "Because I am going to work them watch on and watch off"—in other words, watch on deck and watch below—"not like I have been worked in this blank-blank regiment, watch on deck and stop on".

This 15s. per day is the rate for the men who defend this country and numerous other commitments entered into by this Government when the Government claim that we are in an affluent society and that the average wage is above £10 per week. The Service man's pay is only half that of his relations and neighbours in "civvy" street.

That position is bad enough without the Government making it any worse by high rent increases, increased National Health Service charges, and Welfare State charges for wives and children, if not for the man in all cases. Most of them affect the Service man indirectly, if not directly.

According to my board school education and arithmetic, which was always good on money when I was getting only 6d. a day, but I am quite prepared to be corrected by the other side on arithmetic, a 2½ per cent. loss on £5 5s. a week is 2s. 7d. a week.

Somebody said, "Good". I know that the Tory Party supports these cuts.

I thank the hon. Gentleman. A 2½ per cent. loss on 15s. per day is 4½d. per day—not 4½. per hour, but 4½d. per day. Do the Tory affluent Government refuse to pay the trained man in the Service the paltry sum of 4½d. per day, or half-a-crown a week, to which they admit that all these men are wholly entitled?

I am sorry that the hon. Member for Devonport is not in her seat tonight. When I challenged her last night to give these figures to the Committee, she said:
"I understand that, in general, those employed by the Admiralty are not so fussy about the pause, but they are worried about their pensions."—[OFFICIAL REPORT, 14th March. 1962; Vol. 655, c. 1442.]
Not so fussy? This is a new one on me, fifty years man and boy, about pay. But we live and learn from the Tories—and I hope that the Western Morning News and the Western Evening Herald will publish these remarks. I do not know what generals the hon. Lady has consulted but, because of the limited time—

I will simply say, "Tell that to the Marines because the matelots will not 'wear' it. "We have had ten years of Tory Government, with the hoardings shouting" Conservative Freedom Works". Do the Government now really admit that we have reached the dire straits when they must refuse hundreds and thousands of Service men the sum of 4½d. a day to which they are, admittedly, entitled? Is that what hon. Gentlemen opposite support? Why are they not intervening now?

I know what it was then. We are not discussing 1950, but 1962. One of the first things that the Labour Government did when they took office in 1945, in spite of the financial crisis after the worst war we had ever gone through, was to deal well with Service pay, particularly with old-age pensions, and that hon. Gentlemen opposite will not do.

What is the national position today? The flagrant display of wealth is greater now than at any previous time. Fortunes are made overnight in take-over bids—

Hon. Gentlemen opposite with business connections spend more than five guineas on a single meal.

Order. I hope that the hon. Member will restrict his remarks to the Estimates.

Nevertheless, they support the Government's niggardly policy of denying the Service men this meagre 4½d. a day to which they are fully entitled. The Government's object is perfectly obvious; to undermine the standard of living of the working and middle classes, just as the Tories did in 1931 when they undermined the numerous hire-purchase commitments of Service men.

Dissatisfaction with the pay pause and other serious Tory delinquencies has been expressed in the recent by-elections at Lincoln, Blackpool, Middlesbrough and by yesterday's crowning defeat of the Tories at Orpington. The writing is on the wall for the Government. Stand not on the order of going, but go—and the Service men's votes will help to decide the next General Election as they did in the Labour success of 1945.

Years ago the Service and dockyard voters decided the ins and outs of Liberal and Conservative candidates in the naval ports. Next year the Service and ex-Service voters, the old-age pensioners and the other under-privileged people will decide in the General Election to oust this irresponsible Tory Government which have no concern for equity or the welfare of the common man on whom the future of the country depends.

The hon. and gallant Gentleman would do well to remember that we have well contented men in the Service who are reasonably rewarded and very well trained. The very fact that two out of every three sign on to continue their service in the Royal Navy surely shows that they are content with the conditions that now exist. When the White Paper is published the hon. and gallant Gentleman wild see that the rewards ace mot unreasonable, but are commensurate with the cost of living. Not only have we contented men in the Navy, but there are "characters", even today, both on the lower deck and on the quarter deck, as the hon. and gallant Gentleman met in his time.

It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Report of Resolutions to be received Tomorrow.

Committee also report Progress; to sit again Tomorrow.

Fiduciary Note Issue

10.1 p.m.

I beg to move,

That an humble Address be presented to Her Majesty, praying that the Fiduciary Note Issue (Extension of Period) Order, 1962 (S.I. 1962, No. 395), dated 26th February, 1962. a copy of which was laid before this House on 2nd March, be annulled.
The waters into which we now move are, perhaps, less stormy but they are somewhat difficult to navigate. The Motion concerns one of a succession of Orders made under Section 2 (7) of the Currency and Bank Notes Act, 1954. The Act provided that the amount of notes in circulation should be the sum of the gold coin and gold bullion for the time being in the Issue Department of the Bank plus the amount of the fiduciary note issue as determined by the Act.

What the Act provided was that there should be a statutory figure, without any Order, of £1,575 million and that that could be added to by Treasury minutes from time to time, that those Treasury minutes should each have a duration not exceeding six months, but might be renewed and that the power to issue the minutes and, accordingly, to raise the statutory limit was to remain in force only for two years, but, at the end of two years, could be renewed by an Order. It is one of those renewing Orders that we are discussing tonight.

When considering the Order, I am entitled to consider what has been happening under the preceding similar Order. There are two points about it which puzzle me and which I ask the Economic Secretary to be kind enough to deal with in reply. I see that in May and June, 1960, the amount of Bank of England notes outstanding, according to Table 142 in the Monthly Digest, was £2,250 million plus £400,000. Those notes were partly in circulation and partly in the Banking Department. There seems to be no reasonable doubt that they were issued.

The authorised limit at the time was £2,250 million and accordingly the authorised limit, so far as it depended on the provisions of the Act, was exceeded by £400,000. Exactly the same happened tin February, 1961, with the same figures, both as to the amount of notes in issue and also as to the authorised limit at the time.

There used to be a considerable amount of coin or bullion in the Issue Department, but, to quote words of the right hon. Gentleman who is now the Minister of Pensions and National Insurance but who at the time, in 1953, was Financial Secretary to the Treasury,
"Since 1939, the gold reserves of the Bank have not been kept in the Issue Department, except to a very trifling extent."—[OFFICIAL REPORT, 3rd December, 1953; Vol. 521, c. 1323.]
One does not know, of course, what is very trifling in the eyes of the Bank of England. To me, at any rate, £400,000 is quite a large sum and more than a very trifling amount.

If one turns to the Radcliffe Report on "The Working of the Monetary System" and the memorandum from the Bank of England, one finds the same thing said, that
"the whole of the gold reserve held in the Issue Department (except for a token amount) was transferred to the Exchange Equalisation Account"
and that is given as the reason why the fiduciary issue had to be raised to a level virtually equal to the total note issue and why it became necessary to make frequent changes, as have in fact been made in the past two years, in the amount of the fiduciary issue.

My first question, therefore, is: what is the justification for the excess £400,000? If I have the figures right, is this what is called a very trifling extent or, in the words of the Governor of the Bank, a token amount? My tokens are not worth nearly so much, but perhaps the Bank of England is in a different position.

I come now to my next question. Section 2 of the 1954 Act provides for the directions given by the Treasury, not, of course, the Order we are considering now but the effective directions which are made by the Treasury from time to time. They are dealt with by subsection (9) in these terms:
"A direction under this section shall be given by a minute of the Treasury which shall be laid before Parliament."
I think that we may take it that it was the view of the House at the time, as it was the view of members of the Radcliffe Committee, that the amount in question is of some importance. I have here the various directions which have been issued. There are two to which I wish to draw the hon. Gentleman's attention. The first is headed, "Copy of Treasury Minute dated 28th August, 1961, relative to the Fiduciary Note Issue", and it is signed at Treasury Chambers, 17th October, 1961, "Edward Boyle". That is a very long interval after the issue of the minute. Moreover, when one turns overleaf—these are single sheet documents and there is no question of misbinding or anything of that sort—one finds on the back not a Treasury minute dated 28th August, 1961, but a Treasury minute dated 19th September, 1961.

From that, one continues to the next in the series, and the sheet is headed, "Copy of Treasury minute dated 19th September, 1961, relative to the Fiduciary Note Issue". It appears to have been signed by the same person in the same place on the same date, 17th October, 1961, which perhaps is not quite so unreasonable for a direction issued on 19th September. Turning to the back of it—I say again that these are single-sheet documents—one finds the missing link, Treasury minute dated 28th August, 1961.

These are documents of importance. They have to be laid before Parliament. When I go to the Library to obtain copies, these are two of the documents which emerge from the search. The conclusion to which I come is that someone in a Government Department made a slip and never bothered to correct it, and that two documents, separated by about a month in their original form, do not appear to have been signed until about a month after the date of the later of them, and then laid before Parliament in a most misleading and inaccurate form.

That is not the way in which matters of this importance should be treated, and I shall be glad to hear the Economic Secretary's explanation of what happened and as to why, if there was an error, it was not corrected. I will now hand the hon. Gentleman the Treasury minutes in question.

That relates to particular points in the use made of these powers. I now turn to a rather broader matter. Looking at the operative documents issued under the power which we are asked to renew tonight, we find that there are, as one would expect, very marked seasonal variations in the note issue—a fairly sharp rise during the holiday season between July and August and another rise in December. But, allowing for those variations and tracing the curve as a whole, there is a steady rise since the last Order was made with effect from 14th March, 1960.

I should like the Economic Secretary to explain how this fits in with another figure. However, before I deal with that, I wish to quote what the Economic Secretary said on 5th April, 1960, namely, that the note issue represents
"a remarkably constant proportion to the size of the money national income… banknotes are… the small change of the monetary system."—[OFFICIAL REPORT, 5th April, I960; Vol. 621. c. 343–4.]
That is exactly what one would expect. But this rise has continued over the past two years, apparently, so far as I can judge from the figures, completely unaffected by any of the Chancellor of the Exchequer's measures.

On the other hand, if we compare it with another figure which appears to be the correct figure with which it should be compared, namely, that for national production, national production was almost exactly the same when the two-year Order was last introduced as it was in the autumn last year, which is the latest date for which figures are available. Adjusted seasonally, it was 112 in March and April, 1960, when the Order was introduced, and again 112 in October and December, 1961. Moreover, during June to August, 1961, it rose by three or four points, but has since fallen.

The result is that the note issue is completely out of line with national production and, apparently, with any measures taken by the Chancellor of the Exchequer.

For the benefit of the House, could the hon. and learned Gentleman relate the figures to national income as opposed to national production?

It is harder to relate them to national income, but I think that the note issue corresponds with the national income much more closely than it does with national production. It appears that the Chancellor of the Exchequer's measures have had no effect on and apparently have made no difference to the national income. All that they have done is to bring down production, keeping it down to what it was a couple of years ago, or to bring it down from the figure which it reached in the interval. That is the conclusion which I draw.

I turn to what the House will be glad to hear is my last point. However, before doing so, I should deal with the evidence of the Bank of England, and particularly of Mr. Cobbold, who was its Governor at the time, before the Radcliffe Committee. Mr. Cobbold said—and I had better quote his own words—
"The size of the note circulation is very important. … I regard the size of the note issue as a barometer of the success or failure of the authorities and a very important barometer but not as a weapon in their hands."
This was in answer to Question 1759 in the Committee's Report.

I would respectfully agree with that, and if the conclusion which I am asking the Economic Secretary to comment on is right, the barometer appears to show that while the national income and the note circulation went up together, production, on the contrary, either stayed put or fell according to the period over which one takes it. When we are told that the note issue is the barometer of the success or failure of the authorities, I would say that that is a barometer which would require someone much better versed than I am in these matters to read with any effective accuracy.

We have to consider at the end of the proceedings today whether we push this Motion to a Division and we have to fact the issue of what is likely to happen if the Prayer succeeds. This is a question that appears to have puzzled Government spokesmen for some time. In introducing the then Bill and in referring to the points which we are discussing today in the 1954 Act, as it became, the right hon. Gentleman the then Financial Secretary to the Treasury said:
"… the lower we place it "—
that is, the statutory limit of £1,575 million—
"the greater degree of control we leave in the hands of the House."—[OFFICIAL REPORT, 3rd December, 1953; Vol. 521, c. 1378]
We must, therefore, assume that in the view of the Government, at any rate at that time, we had some effective control over what is done about this. I am not sure that we have.

Then considering the question which I have been asking today, the right hon. Gentleman the then Financial Secretary, commented on 26th January, 1954, that it was perfectly clear that the consequences of the annulment of an Order of this kind
"might be highly inconvenient."—[OFFICIAL REPORT, 26th January, 1954; Vol. 522, c. 1691.]
I do not think that the Government of the day ought to fob us off like that. I should like to know what the consequences would be if we exercised the degree of control that the right hon. Gentleman hoped would be left in the hands of the House and we exercised it effectively by having the Order annulled.

Am I to be told that the answer is that the Government would issue an exactly similar Order next day? I should regard that as conduct more contemptuous of Parliament than even this Government are accustomed to. I have looked at the 1954 Act and I have had little guidance there. I come to the conclusion, quite obviously, that both the Governor of the Bank of England and, nowadays at any rate, the Chancellor of the Exchequer would be put in the Tower immediately. That is the least that we could do in the circumstances. I agree that when we are approaching the annual Budget that would be highly inconvenient. It would be a form of purdah which would be new to the right hon. and learned Gentleman the Chancellor of the Exchequer. But is that all? What would happen to our bank notes? I have been searching everywhere to find the answer. I am a little reassured—and it is the only place where I could find any reassurance—by the words of a well-known author called Puffendorf who in his "Law of Nature and Nations" wrote:
"The law itself may be disannulled by the author,"—
I suppose that we are the authors—
"but the right acquired by virtue of that law whilst in force must still remain; for together with a law to take away all its precedent effects would be a high piece of injustice."
In the circumstances, I hope that, resting on Puffendorf, I may have in my bank notes, if I happen to have any at the time, a little more confidence than I would have without recourse to that learned and distinguished author.

All the same, it is a very queer way—and here I am being serious—of giving Parliament control over a matter of some considerable importance to present us every two years with an Order without telling us how it is to be exercised in the interval, and with the threat hanging over us that if, by any chance, we exercise control and annul the Order, something too dreadful for words will happen.

The Government are acting as a sort of bogyman in this. They have the most awful consequences in mind—so horrible that they dare not tell us what they are. I am almost forced to the conclusion that not only the Chancellor of the Exchequer but also the Financial and Economic Secretaries might suffer the most grievous capital gains if we carried this matter to a conclusion.

10.20 p.m.

Those who attend these debates are usually few, but fit. There seem to be fewer tonight than ever, but no doubt, having listened to the hon. and learned Gentleman, they are fitter than usual. I remember past debates on this subject, particularly one conducted by the hon. Member for Loughborough (Mr. Cronin), which did not seem to me to be anywhere near the point, whereas tonight the hon. and learned Gentleman addressed himself to it most clearly and directly.

I set the hon. and learned Gentleman's mind at rest on one point. He has referred to the fiduciary note issue as a barometer and, therefore, he is very tempted to use the barometer as a ring gauge. The fiduciary issue is a measure of the loose change in the banking system. The exact parallel to the rise in the fiduciary issue is the graph of average earnings, and I can arrange for the hon. and learned Gentleman to see a graph where there is an exact parallel line on which these two things are plotted, with the average weekly earnings on one side and the size of the fiduciary issue at Christmas—its highest point—on the other. That may be some solution.

I will save the hon. Gentleman the trouble. I have done half of it for myself.

The hon. and learned Gentleman has done a great deal for himself, and a great deal for us, too.

There is no mystery about the fiduciary note issue. It is a requirement of the system. He has posed the question of what would happen if this Motion were to succeed. I hope that no hon. Member is being kept from his bed by fear of that disaster. As I work it out, the fiduciary issue at the moment is about £2,376 million, and the permitted figure, as we know, is £1,575 million. So, if the Prayer were to succeed, £801 million of notes would have to be withdrawn from circulation.

I worked it out, and I based myself on the most recent Bank Rate, but was not able to get the most up-to-date version of the Monthly Digest of Statistics—no doubt because the hon. and learned Gentleman was working on it himself. Basing myself on the latest bank returns, I worked out that there is the £800 million or so I have mentioned, plus about £406 million which is the cash bankers have in their own tills and £63 million in cash held by the Bank of England. This makes a total of £469 million in cash. In addition to that, the banks have £247 million on deposit at the Bank of England. These three figures come to a total of £715 million, and, therefore, there will be a deficiency of £85 million.

I suppose that if we could order every man in the country, or every wage earner, to forward by express post the sum of £5 in notes, if all were equally law-abiding and in a position to pay, they would cover that deficiency, but I hope that, in considering his reply to the Prayer, my hon. Friend the Economic Secretary to the Treasury will not rely too much on the ability of the Post Office to deliver these registered letters at the right time, because we might find ourselves held up by the pools, and in that case very serious consequences;, which the hon. and learned Gentleman has pointed out to us, would follow.

We should find ourselves in the position of having to run our lives with no small change at all, and that would seem to be a great improvement for the prospect of introducing cheques. I can see no other great advantage in it. I suppose that we have departed from the rather unsophisticated days when Governments, hell-bent on inflation, did it by printing notes, but I feel that this Order still reminds us that, though those days have long past, they are still not forgotten We do right to remind ourselves, perhaps once every two years, that the temptation to print notes is one on which we must keep a check, and I can only wish that the Order we are considering tonight were capable of preventing the Government, if in trouble, from having recourse to the printing press. If it were so, we should be doing a really useful service, but it is not, and it is, therefore, merely an academic exercise.

Will my hon. Friend explain one point to me? As he rightly said, restraining the Government in the printing of notes does not have any effect on the demand on resources—purchasing power. Would it not be true to say that if, in fact, the House did have a power to restrain the Government in the issue of Treasury bills, which, working through the banking system, do increase liquidity and the ability of the banks to make advances, then the House would have a direct control on the inflationary tap which it does not have at the moment?

10.27 p.m.

The points which I had it in mind to raise have probably been covered by the observations of the hon. and learned Member for Kettering (Mr. Mitchison), and I look forward to reading what he had to say when I see the OFFICIAL REPORT tomorrow.

Perhaps I may also put this point. The only outstanding matter which I should like to put to the Economic Secretary is that I happen to have two of these Treasury minutes, one dated 4th January, 1962, and the other dated 11th January, 1962. If a glance at the very large figures that are included in the two Orders gives me the correct information, there is a little matter of £50 million difference between the two Orders. As there is only a matter of a week between them, I should like to ask my hon. Friend the Economic Secretary to explain to me why it is that we have to have Orders in consecutive weeks.

10.29 p.m.

I will do my best to answer the several points put to me by various hon. Members. As I think the hon. and learned Member for Kettering (Mr. Mitchison) made clear at the outset of his speech, the purpose of the Order that we are now considering is to extend for a further two years the powers of the Treasury to increase, by direction and on the recommendation of the Bank of England, the amount of the fiduciary issue over the limit, to which the hon. and learned Gentleman referred, laid down in the Act of 1954.

It is now two years since we had a debate on this subject in the House. At the risk of seeming patronising, I hope I can say that I think the House of Commons is becoming increasingly well versed in the technicalities of the matter, though I thought that at one or two moments I detected a point which had been raised on previous occasions.

The hon. and learned Member for Kettering asked whether it really was true that the extent of the fiduciary note issue was in any sense a barometer of economic activity. It has been said in the past by many people—some of whom, I would have thought, ought to know better—that the fiduciary issue is an important economic indicator. I think that this may well have been so at one time, but I should be inclined to agree with what I thought was the sense of the observations of the hon. and learned Gentleman, that today this is no longer true.

There are two reasons for this. First, we have now a great many other economic indicators of one kind or another which are far more important—the index of production, statistics relating to employment, indexes of retail sales, investment expenditure, and so on.

Secondly, while I would agree that the proportion which the total money supply—that is, the volume of bank deposits plus cash—bears to the national income is very important, and also that the volume of cash—which normally has a fixed relation to the total money supply—is a significant component of that supply, nevertheless the volume of the note issue is purely a reflection of the public's demand for cash.

The point was well made by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). Consequently, as an indicator, the amount of the fiduciary note issue indicates solely the volume and proportion of assets which persons and companies decide at any particular time to hold in the form of cash.

The Bank of England supplies to the clearing banks all the notes which its customers want to hold. This quantity varies according to the demands of such things as holidays and other seasonal events which affect the need of persons and companies to hold more or less cash than normal.

Before the hon. Gentleman leaves the question of barometers, I was only quoting the former Governor of the Bank of England—Mr. Cobbold as he then was—who said that the size of the note circulation is very important and that he regarded it as a barometer of the success or failure of the authorities.

I did not want to weary the House by quoting from what Lord Cobbold said to the Radcliffe Committee, but on the last occasion when this subject was debated I quoted from an observation by the Governor in which he said that "this does not alter the fact that the present rôle of the Issue Department in the supply of currency is passave". This seems to me to be an important and, indeed, overwhelming consideration when one is trying to ascertain what, if any, significance the level of the fiduciary note issue has. What I am saying is that all it does is to indicate, as it were, the amount of cash, or what my lion. Friend referred to as "small change", which at any particular time individuals and companies wish to hold.

My hon. Friend the Member for Rye (Mr. God man Irvine) referred to the fact that between 4th and 11th January this year the fiduciary note issue fell from £2,425 million to £2,375 million.

Although I have not had an opportunity to consider the matter at leisure, I think that this was merely a reflection of the fact that following the activities which preceded and followed Christmas individuals and companies did not require so much cash to carry out their transactions.

If I may take a slightly wider bracket, on 12th December, 1961—that is a few weeks before Christmas—the note issue stood at £2,475 million, I think the highest that the figure has ever stood, and this was because of the coming of Christmas. By 19th January, 1962, it had fallen to £2,325 million. The figures which my hon. Friend gave, and those which I gave, reflect the seasonal demand for cash.

I thought that at one point in the speech of the hon. and learned Member for Kettering I detected a suggestion that somehow the amount of the note issue in circulation was some evidence of inflation. I do not think that he would go so far as to say that it was a direct cause of inflation, because I do not think that anybody would hold that view, but if the volume of cash is related generally to the total volume of money, being the volume of bank deposits plus cash, then, if total incomes increase as a result, for instance, of increases in population and increases in real wealth, so, also, will the supply of cash increase, along with the supply of money generally.

I am told by those who study these matters that the size of the note issue in recent years has borne a remarkably constant proportion to the size of the national income, and I think that this is the result one would expect, taking the view, as my hon. Friend the Member for Walsall, South said, that bank notes are really the small change of the monetary system.

My hon. Friend the Member for Walsall, South referred to the possibility of a Government as it were having recourse to the printing press to get out of their difficulties. He is right. There is no doubt that, in theory, it is possible for a Government to use their note-issuing powers as a means of deliberately inflating the money supply for their own purposes, and this has been done in other countries. Even though I think it is generally agreed that no Government in sight at the present time is likely to use their note-issuing powers in dangerous ways, it is important that there should exist some parliamentary control over this theoretical risk of abuse by an executive of its powers.

My point was that this Order gives Parliament no control whatever in this matter.

If, by joining the hon. and learned Member for Kettering, my hon. Friend means that dire consequences would follow if this Prayer were to succeed, in that sense it is true that those who look at this matter with responsibility and appreciate the consequences which would follow have less control than they might otherwise have.

On the other hand, this gives the House of Commons the opportunity every other year to consider the matter, and I have not the slightest doubt that if the Government of the day were to print bank notes simply for their own purposes—the sort of fears which my hon. Friend had in mind—this debate would perhaps loom larger than it does now.

The hon. and learned Member asked what would happen if the Prayer were to succeed. If it succeeded, the Bank of England might not be able to supply the clearing banks with the notes required by their customers, and this would lead either to increased use of cheques, bankers' drafts, postal orders and other means of payment, or else to a run on the banks, if nothing were done about it. There can be no question of trying to control the volume of money—deposits plus cash—by saying that people who want to withdraw some or all of their bank balances should not be able to obtain banknotes to the value of their credit balances.

Two specific points were raised by the hon. and learned Member. He suggested that the legal limit of the fiduciary note issue was exceeded in May, 1960, and February, 1961. As he no doubt came to this conclusion late this evening, and had no opportunity of giving me notice that he would raise the point, all I can tell him is that, so far as I have been able to ascertain—although I am pretty sure that it is the case—the note issue in circulation has never exceeded the limit set by the Act and by the Treasury minutes. Having said that, perhaps I may be allowed to look into the matter a little further in order to write to the hon. and learned Gentleman and explain the reasons which have led me to that conclusion.

His other point concerned two Treasury minutes laid before Parliament under Section 2 (9) of the 1954 Act. He said that they were laid on 17th October, 1961, although they related to what had taken place a considerable time before. Here again, without notice it is difficult to be sure of the explanation, and I put this forward only as a possibility: it may be that it was because on 28th August and 19th September—the two dates to which he referred—the House was in recess. On the other hand, the hon. and learned Gentleman is always very fair, and I will tell him that I think that that fact should have not have precluded us from laying the minutes.

There is another point—the front of the Order describes the back quite wrongly.

It seems very clear to me. Perhaps the hon. and learned Gentleman would like to write to me on that point.

At any rate, as I think it is abundantly clear from the course of the debate that the matter of the fiduciary note issue is increasingly well understood in this House, I hope that the House will accept the Order, and that the Prayer will be withdrawn.

Not because of any financial purpose, but in order to save the life and liberty of the right hon. Gentleman the Chancellor of the Exchequer and the Economic Secretary, I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Milk Sales (Half-Pint Bottles)

Motion made, and Question proposed,

That this House do now adjourn.—[Mr. Finlay.]

10.44 p.m.

I do not wish to detain the House unnecessarily at this late hour, but the matter I wish to raise is one of some importance to my constituents and to those of my hon. Friend the Member for Dewsbury (Mr. Ginsburg) and my hon. Friend the Member for Batley and Morley (Dr. Broughton). It concerns the delivery of milk, retail, in half-pint bottles.

I remember when milk used to be delivered at my home in the morning, having been taken from the cow that same morning, and in the evening after having been taken from the cow in the afternoon. I admit that that is going back over many years. The war came along after that. Steps were taken to eliminate the necessity for several milkmen to visit one street, and in order to bring about more efficiency the retailers of milk came to a common agreement. But we have now reached a rather serious situation, which, to some extent, is affecting most of the country. It is the refusal to supply milk in half-pint bottles.

I live in my constituency and I continue to get milk delivered by the Leeds Industrial Co-operative Society. But already the Express Dairies has stopped delivering milk in half-pint bottles in West Yorkshire. It is serious because the dairy has a monopoly. When I have inquired why other milk suppliers do not come into the district I have been told that there is a gentleman's agreement, and so the customers are at the mercy of the larger suppliers.

I am all in favour of having a pint of milk a day. But we must bear in mind that pensioners and people with very limited incomes, including spinsters, cannot afford to buy a pint a day. The suppliers suggest that they should buy a pint of milk every other day. If the milk is to be delivered every two days, it will be at least sixty hours old. I think that that is very unfair. To take the argument to a logical conclusion, why not stop using pint bottles and deliver the milk in quart bottles? The argument about increased efficiency would hold good and there would probably be more profit for the supplier.

I attended a large meeting of pensioners and I have spoken to the dairy people who argued about the loss of bottles and the question of cost. I should like the Parliamentary Secretary to understand that the pensioners and others are becoming very militant over this matter. That is why, having asked Questions on the subject, I thought that it should be debated in this Chamber.

I have received a number of letters in connection with this matter, and an indication of the intensity of feeling on the subject is revealed by the fact that in Nottinghamshire thousands of women have banded together to fight this pernicious system. I received a letter from a milk dealer who wrote:
"On reading the article in the Yorkshire. Evening Post re the stopping of half-pint bottles of milk I was delighted to hear of your concern. I have recently bought a milk business in Outwood and am greatly concerned, along with my colleagues, in this area about the whole business. We approached Craven Dairies. Leeds, to supply us with milk but much to our dismay they told us that they have a gentleman's agreement not to deliver into this area."
My hon. Friend the Member for Dews-bury and my hon. Friend the Member for Batley and Morley are interested in this matter. I am informed that the Ossett Borough Council, the Dewsbury Borough Council, the Normanton Urban District Council, the Dewsbury Trades Council, the Spen Valley Trades Council, the Ossett Chamber of Trade, and the South-West Federation of Townswomens' Guilds, which includes 24 guilds with 2,000 members, and a number of welfare organisations in the area, are concerned.

Where do we go from there? I have received a letter from the Parliamentary Secretary telling me that we could not debate the legality of selling milk in one-third pint bottles in this debate. I thank the hon. Gentleman for that note. What he says is quite true, but I hope that he will do what he can to expedite the introduction of new weights and measures legislation to make that possible.

I should like the Parliamentary Secretary to tell us what we can do. As it is, we are in the grip of a large monopoly. If the Government were to subsidise the pensioners and the spinsters so as to enable them to buy a pint of milk a day, I would have no objection. If the retailers were prepared to reduce the price, I am sure that the people concerned would take a pint of milk each day. As it is, in very many cases they have very limited incomes and are flatly told that they have to buy their milk a pint at a time or go without.

Many of these people cannot afford refrigerators, and that means that in the summer time the milk they buy goes sour. The milk we get today is not altogether fresh; in some cases, it is 24 hours or 48 hours old when it is delivered. If the present situation is allowed to continue it will be a very serious matter for the people for whom I am speaking, and anybody interested in public service should take cognisance of it.

10.51 p.m.

I support my hon. Friend the Member for Normamton (Mr. A. Roberts). The action of Express Dairies (Northern) Ltd., in discontinuing half-pint milk bottling has caused very grave concern in my constituency. Like my hon. Friend, I have received numerous protests on the subject. I have had representations from the council of the county borough of Dewsbury, from the mayor of Ossett, on behalf of old people's welfare organisations, from the Dewsbury Youth Council, from old people's welfare organisations in Dewsbury, and from the local milk retailers as well. Those representations are on an all-party basis.

The issue is a very serious and human one. Whilst statistics do not give the full pictude, it is worth pointing out that according to the Ministry of Labour's figures the average pensioner spends about 3s. 5d. per week on milk. Therefore, to the average pensioner, the ending of half-pint bottling is not an academic matter. It is very regrettable that Express Dairies (Northern) Ltd. took this action unilaterally and without prior consultation with the organisations in the area. However, I am pleased to say that the firm has recently responded to the considerable local and national pressure that has arisen, and, according to a letter I have just received from the Town Clerk of Dewsbury, it has agreed to supply milk in half-pint measures in cartons for the summer months at 5d. per half-pint. The prospect of this debate has, there-fore, already served a very useful purpose.

The picture is still not yet wholly satisfactory. Even if we allow for the price concession made by the milk retailers to old-age pensioners of three half-pints of milk to be charged at the price for a pint and then of a half-pint, the supply of milk in cartons in the summer months will cost pensioners another 6d. per week, to which must be added another 2½d. or 3d. as a result of the increased milk prices announced today. An extra 9d. a week is quite a substantial amount for pensioners to have to pay.

As my hon. Friend the Member for Normanton has said, I hope that this debate will prevent any piecemeal attack by the milk companies, area by area and constituency by constituency, aimed at ending half-pint bottling.

The Minister can help in this matter. He can use his influence, especially with the Milk Marketing Board, and with the chemical and packaging companies, to explore the possibility of using non-returnable cartons, perhaps of a plastic kind which, if manufactured on a much larger and national scale and not purely a local or constituency scale, could be substantially cheaper than the cartons which are promised for the summer months.

Finally, as my hon. Friend said, the Minister could legalise the ⅓ pint, which is available to schools, but is not a legal measure at the moment because of the delay over the Weights and Measures Bill. This debate has served a useful purpose. It has indicated the value of pressure of this kind. It has also shown that there are positive steps which the Minister can take. I hope that he will say something about it this evening.

10.56 p.m.

My hon. Friends are to be congratulated on raising a matter which may seem small but which is important to a certain section of the community. As my hon. Friend the Member for Normanton (Mr. A. Roberts) said, the danger is that we may be in the grip of a large monopoly which may become indifferent to the needs of pensioners and people who could be affected by the cessation of half-pint milk bottling. One of the great privileges of the House is that the hon. Members can on the Adjournment raise matters which affect human beings. These questions may not seem to people outside the House to be political issues, but my hon. Friends have raised a question which should be examined.

I hope that the suggestion made by my hon. Friend the Member for Dews-bury (Mr. Ginsburg) will be followed up. An approach should be made to the Milk Marketing Board and to the chemical and packaging companies. They could do something about this. I hope that the Minister will be sympathetic, because we think that this is an important issue. I know that the Minister will be sympathetic, because I know him as an individual. I hope we shall have a satisfactory answer.

10.57 p.m.

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

The hon. Member for Normanton (Mr. A. Roberts) was very courteous. He told me in advance the gist of the argument he wanted to deploy this evening. This has not only made it easier for me to reply, but has also made the debate much more valuable, because he has raised an important issue. Here I shall declare my interest. I not only sell milk. I also drink it. I hope that there is nothing which prevents all people, old and young, from drinking as much as they want.

The supply of milk in half-pints has been raised at Question Time on a number of occasions. It is in some areas a matter of great concern. It is a wider question than that of any particular area. It is on this basis that I should like it to be considered this evening.

The hon. Member for Normanton made a plea particularly on behalf of retirement pensioners and others living alone who want to buy only half-a-pint of milk at a time but find themselves unable to do so. That is the gist of his case. I am sure that we all agree with the hon. Gentleman about this. At various times we have all, when we have been alone in London, experienced the same difficulty. Either we cannot get half a pint of milk, or we get more and waste it, which is part of the difficulty the hon. Gentleman has mentioned.

We must none the less preserve a sense of proportion, because it is not the case that half-pints are unobtainable everywhere. Many dairymen are willing to supply them, either to all their customers or to those whom they know are in special need of this service and will take it regularly. On the other hand, sometimes a dairyman finds it uneconomic to supply half-pints of ordinary pasteurised milk, but is willing to supply the T.T. or the homogenised milks, which are slightly more expensive. I certainly would not deny that in some places it is difficult or impossible to buy half-pints, but this is by no means the situation in all parts of the country. Although I gather that in one particular area there has been some difficulty, we hope that that difficulty will be less by next summer.

As the hon. Member for Normanton said, the extent of the problem depends on whether or not one has a means of keeping milk fresh a day or two longer if one must buy it in a larger quantity. There is, too, the question of convenience. Some people find it just as easy to buy their milk in larger quantities, while others do not. It is undoubtedly becoming more rare to find this truly difficult situation because, as the result of the care taken in handling milk at all stages and modern techniques of heat-treatment, the keeping quality of pasteurised milk has improved. The hon. Member spoke about throwing milk out after 24 or 48 hours, but the keeping quality of milk today is better than it was when it was taken straight from the homely cow into a jug and straight to one's doorstep which, although it did not help the milk to keep fresh, enabled people to buy it in any quantity they desired. As I say, the modern techniques, with heat-treatment, certainly improve the keeping quality of milk, and there is no doubt that ordinary pasteurised milk, as sold, should keep for two days.

The National Institute for Research in Dairying, when I visited their establishment some time ago, showed me a bottle of milk that had been bottled ten years previously.

It looked all right, although they did not offer it to me to taste. Nonetheless, new techniques and continuing experimentation have undoubtedly improved the keeping quality of milk, and sterilised milk keeps considerably longer than ordinary milk. I appreciate that it is not obtainable everywhere and that not everyone likes the slight difference in taste. I mention this to show once again how modern methods of handling are steadily improving the keeping quality of the milk which is delivered to us.

The National Dairymen's Association advise that if the milk delivered does not keep as it should the householder should complain to the dairyman because he is just as interested in his customers as any responsible trader should be. The hon. Member for Norman ton mentioned the special difficulties for retirement pensioners. The problem here is really the same with many people who live alone or, perhaps, those who are carefully counting their pennies and are not anxious to buy something which will go to waste. This is by no means the problem of the elderly, but one for many people who live alone.

When referring to the problems of the pensioner it should be remembered that the National Food Survey did not show any substantial difference in the average quantity of milk drunk by the elderly as against those of us who are still a bit younger. The hon. Member has spoken mainly from the consumer's angle and criticised the decision of one of the dairy firms serving his constituency to discontinue the supply of half-pints.

This one dairy company is affecting the whole of southwest Yorkshire; the Express Dairies.

I was coming to that. He has spoken of a monopoly and has just again reinforced his earlier argument regarding the influence of one firm over a large area as creating a wide measure of inconvenience for a great many people. I hope I am not disappointing the hon. Member by saying that if he has any evidence of what he calls a monopoly—although I think he used the word in a general sense and not in a technical one—he should send the information to my right hon. Friend the President of the Board of Trade who will then be able to decide whether there is a prima facie case for reference to the Monopolies Commission. That is the purpose of that organisation. The hon. Member will not expect me to prejudge a situation of that nature; it would be wrong to do so. There is, however, machinery for dealing with the situation and for dealing with what the hon. Member called "gentlemen's agreements", which have to be registered with the Registrar of Restrictive Trading Agreements.

In contrast to what I have just said, which is in a sense critical, milk distributors have a fine record of service. I do not suppose that there is any other country in Europe, possibly in the world, where the dairy industry provides a better service throughout. It is alive to its responsibilities and, like any business, alive to the interests and requirements of its customers. When the industry does not supply half-pints, whether by wholesale or by retail, whether by delivery or, perhaps, in the shops if somebody cares to fetch the milk, there must be some difficulty in the way of doing so.

Let us consider the viewpoint of the industry. There has been a rapid advance in mechanisation of this business over recent years and nowadays bottling is customarily done by fairly complicated machinery. To switch from filling pints to filling half-pints can be a costly operation. The hon. Member spoke about cartons and different types of containers. We would all be anxious to see milk delivered in the most convenient form. We would not discourage or stand in the way of someone who wanted to do something novel but none the less practical. That, however, is purely a matter for the trade, because we do not stipulate the container in which the milkman should deliver his milk, provided that it does not offend against the various regulations.

It may be that where the number of half-pints in demand is not numerous, a change to half-pints could create great disruption of the bottling processes. The hon. Member suggested that we might soon have milk in quart or larger bottles. I was speaking this evening to somebody back from Canada who said that it was normal there to have three quart bottles a week in the household. It was assumed, however, that everybody had some form of refrigerator in which to keep it, and I believe that people have to fetch the milk. That is quite different from the form of service to which we are accustomed in this country.

I am told that the machinery of which I was speaking can fill 400 bottles a minute. The time involved in the changeover to half-pint bottles can therefore be an expensive matter. We must recognise that as with other commodities, if consumers in general are to get the full benefit of the economies which modernisation, mechanisation and streamlined processes offer, they must accept some measure of standardisation. They gain in one way, but perhaps they lose a little in another way.

On the retail side, it costs virtually as much to deliver half-pints as to deliver pint bottles. The difference in cost is very small. None the less, I would not argue that the demand of the few for a special service—in this case, those who prefer half-pints—should necessarily be sacrificed. It happens all too often nowadays that the interests of the few somehow get sacrificed to the preferences of the many.

This is a matter in which all the considerations must be weighed one against the other. The individual distributor knows the circumstances of his business, the interests of his customers and the extra costs of meeting their special interests. In the end, he is the only person who can say whether any particular variation of the service is worth while and who can make the decision.

I am sure that the hon. Member would like me to say where the Government come in in all this. The Government have no power to force a dairyman to deliver half-pints or bottles of any other size. In fact, they have no power to force a dairyman to deliver milk at all, or, for that matter, to require the dairyman to stay in the business if he does not want to stay in it. The suggestion that he should be required by law to carry half-pints or third-pints in order to meet a possible demand from customers is not, I think, reasonable or practical. The present requirement under the existing Statutes is that the retailer shall have his milk in half-pints or multiples of half-pints. The third-pint came into use because of the school milk service and, as yet, is not a legal measure in distribution generally.

Who knows what the future of our weights and measures law may be? In the discussions on the Weights and Measures Bill in another place, there was a proposal to legalise the general sale of milk in third-pint bottles, and perhaps that will come. But that, of course, would be permissive, not mandatory.

The Government are responsible for prescribing the maximum prices of milk as it is normally sold. Vending machines are excepted. Although I appreciate that the hon. Gentleman wanted to make his point that the retail price of milk is likely to be slightly increased from, say, this summer onwards, I did not follow his calculations, and I thought that he was putting a worse construction on the situation than it deserved.

There is no provision at present in the price control Orders for a higher price to be charged for milk in smaller quantities. The pint is the quantity which we consider. There may be two opinions about this. The Committee on Milk Distributors' Remuneration under the chairmanship of Sir Guy Thorold, whose Report was published last January, recommended that the Orders should be amended so as to permit a reasonable additional charge to be made for milk sold in small quantities. My right hon. Friend is considering this now along with the other recommendations in the Report. A number of organisations have had to be consulted, and it will be some time yet before decisions can be reached. At present, milk in a half-pint bottle is normally sold at half the price of the larger quantity, even though we must admit that, in proportion, the costs are somewhat greater.

At this stage, I only say that, while it may be reasonable to allow an extra charge to be made for milk sold in small quantities, it should not be too hastily assumed that, as a result, all dairymen would as a matter of course deliver half-pints, and, of course, in some respects this small additional charge, which could be the outcome, would not necessarily be welcomed by those who are at present enjoying the service of half-pint deliveries at a fractionally lower price. I mention these points to show that it is not as easy a matter as all that, and there are points to be looked at from both sides.

I have referred to the sale of third-pints, and in a letter which I wrote to the hon. Gentleman I tried to show that legislation would be necessary to legalise the general sale of milk in third-pints. I think that you, Mr. Speaker, would rule me out of order if I attempted to discuss that matter further now.

The hon. Gentleman may not feel that the current position is entirely satisfactory, but—

The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at thirteen minutes past Eleven o'clock.