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Lords Chamber
18 February 1958
Volume 207

House Of Lords

Tuesday, 18th February, 1958

The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.

Prayers

Lord Brecon

David Vivian Penrose Lewis, Esquire, having been created Baron Brecon, of Llanfeigan in the County of Brecknock—Was (in the usual manner) introduced.

Business Of The House

2.45 p.m.

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My Lords, the Government propose, if it is convenient to your Lordships, to interrupt Business this afternoon for two statements: one at 3.30 p.m., or as soon afterwards as possible, by my noble friend the First Lord of the Admiralty, about dockyards; and the other, the time of which depends upon when the Foreign Secretary can rise in another place, on Cyprus. I hope that that course will be convenient to your Lordships.

Disposal Of Krupp's Assets

2.46 p.m.

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My Lords, I beg to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government (1) whether they will state the amount of the personal property, steel, iron and coal producing assets of Herr Alfred Krupp von Bohlen and Halbach which has now been sold, and to what persons or concerns; (2) whether any of the assets have been sold to members of Herr Krupp's family or to persons acting on his behalf; and (3) what deconcentration measures have so far been taken by the Federal authorities in accordance with provisions in the agreed plan.]

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My Lords, on the first part of the Question, the position is that which I described to your Lordships on December 11, 1957. The Emscher-Lippe mine was sold to a German State-owned Company, the Hibernia Aktiengesellschaft, in 1954 for some £2·3 million. Krupp's controlling interest in the Constantin der Grosse mine was sold for some £3 million in 1956 to the Bochumer Verein. And stock owned by Krupp in two subsidiaries was disposed of in 1953. I cannot state its value, but I hope that this will be included in the fuller information which the Federal Government are to provide.

As regards the second part of the noble Viscount's Question, the deconcentration plan provided for the equal division of the stock in the two subsidiaries to which I have referred, between a sister of Herr Krupp and, in trust, a nephew of Herr Krupp who was then a minor. To the best of my knowledge, none of the other assets have been sold to members of Herr Krupp's family or to persons acting on his behalf.

As for the third part of the Question, deconcentration measures are in the first place a matter for the disposition trustees in accordance with the provisions of the plan. The trustees have disposed of the assets I have enumerated, and the five-year disposition periods still have a year to run. The approach of the Federal Government to the three Western Governments early in 1957 about the difficulties now being experienced shows that they are alive to their responsibilities under the Bonn Settlement Convention.

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My Lords, I beg to thank the noble Earl for his comprehensive reply. Arising out of it, may I ask him this further question? Having regard to the fact that on December 11 the noble Earl informed me that Her Majesty's Government were fully aware of the importance of the question of the decentralisation of the Krupp assets, may I now ask him whether, in any consultations with the French and the American Governments, the policy of Her Majesty's Government will be, and will so be stated, that Herr Krupp should not be released from any of his undertakings under the 1953 Agreement?

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My Lords, as I told the noble Viscount on December 11, we are considering these issues along with the French and United States Governments, and we are awaiting fuller information from the West German Government. I feel that whilst these talks are going on I cannot make any statement, one way or the other, which could in any way prejudice the result of the talks.

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My Lords, I thank the noble Earl, but, as he has said that, may I ask him whether any direct approaches have been made on behalf of Herr Krupp by the West German Government to Her Majesty's Government, and if so, what was their nature?

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My Lords, the West German Government have made no approaches to Her Majesty's Government specifically on the question of Herr Krupp; the only approaches made have been about the decentralisation question as a whole.

The Employment Situation

2.49 p.m.

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My Lords, I beg to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government whether the rapid increase of unemployment in the U.S.A., reaching now to over 5 per cent., is expected to affect the employment situation in this country; whether the Government have made, or are making, plans for providing alternative employment, and what is the present balance in the funds available for the payment of unemployment benefit.]

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My Lords, any fall in activity in the United States of America is bound to have an effect on the level of world trade, and thus could affect our exports generally. But the level of employment in this country depends on the level of total demand, of which exports are only one component. The Government will continue to watch the situation closely. The figure of registered unemployed in January was only 1·8 per cent. of insured employees. I am advised that the balance of the National Insurance Fund at the end of the last financial year was about £350 million.

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My Lords, is the noble Lord aware of the grievous experience of this country in the years 1929 to 1931 as a result of the great recession then, in peace time, in the United States, and what dire effect it had upon us? Is he aware, also, that at the present time their unemployment runs to 5·8 per cent. of their immense population; that steel production there at the moment is no more than 55 per cent. of their normal, and that they are going into new ventures for cheap money to try to restore the position? With regard to the home situation, it may be that the overall percentage of unemployed for the United Kingdom is 1·8, but has the noble Lord seen the statement in The Times to-day: that in Scotland it has reached the highest figure for a long time, 70,000, which represents something like 3·6 per cent. of the insured population? Is he aware, too, of certain representations made by some localities concerning the little being done for them to deal with the severe unemployment in their districts?

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My Lords, I am aware of all those facts. I am aware that there are certain black spots in this country, in Scotland, in particular, and in certain parts of North Wales, which have been occupying the particular interest of my noble friend Lord Brecon. Her Majesty's Government are well aware of these black spots and are doing their best to meet these difficult conditions. I would remind the noble Viscount of some remarks of President Eisenhower on February 12. He said:

"I am convinced that we are not facing a prolonged downswing in activity. Every indication is that March will commence to see the start of a pick-up in job numbers, and this should mark the beginning of the end of the downturn in our economy."
That was the President's statement, and I am sure we all echo those sentiments.

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My Lords, it sounded to me, when I read that speech, as if the President was whistling to keep up the people's courage generally, and that there was not much more in it than that. May I ask for a more detailed answer to the second part of my Question:

"whether the Government have made, or are making, plans for providing alternative employment?"
If the noble Lord and his colleagues are aware of the serious effect that almost must come in this country as a result of a great recession in America, what are their plans to provide alternative employment in this country?

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My Lords, I think the noble Viscount takes too gloomy a view. I fully agree with the implication in his question, that plans should be made, and, as I have said, the Government are watching this matter carefully. The detailed plans are obviously too complex to be given across the table in question and answer. Should the noble Viscount wish to know more about the plans, he will no doubt put down a Question. I would again reassure him that the Government view this matter as seriously as he does.

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My Lords, I am obliged to the noble Lord. I will look carefully at what he has said, and perhaps put down other Questions. I do beg, on this great issue, that the Government will be careful not to be doing too little, too late.

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My Lords, may I ask whether the noble Lord is aware that one of the best ways of helping the black spots would be to do everything possible to increase trade with China?

The Independent Televisionauthority

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My Lords, I beg to asked the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government what Minister is responsible to Parliament for the activities of the I.T.A.]

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My Lords, the 1952 White Paper, which dealt with the Memorandum on the Report of the Broadcasting Committee, said this:

"The Government agree that there should be no Minister for Broadcasting as such. The Postmaster General will continue to be responsible for the exercise of the Government's powers under the general authority and direction of the Prime Minister".
That is still the position

Children Bell Hl

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My Lords, I beg leave to introduce a Bill to make fresh provision for the protection of children living away from their parents; to amend the law relating to the adoption of children; and for purposes connected with the matters aforesaid. I beg to move that the Bill be now read a first time.

Moved, That the Bill be now read 1a .—( The Lord Chancellor.)

On Question, Bill read 1a , and to be printed.

Forth Road Bridge Orderconfirmation Bill

Read 3a (according to Order), and passed.

Housing (Financialprovisions) Bill Hl

House in Committee on recommitment of the Bill (according to Order): the Amendments made by the Joint Committee on Consolidation Bills agreed to.

Import Duties Bill

2.58 p.m.

Order of the Day for the Second Reading read.

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My Lords, this Bill is an unexciting but important measure. It is designed to bring up to date the statutory foundation for the United Kingdom protective tariff. It is over twenty-five years since our general protective tariff was established, and Parliament has not since had an opportunity to consider as a whole the legislation which governs the tariff. As a consequence the legislation has, like Topsy, "just grow'd"; there are five major Acts, and almost a hundred other statutory provisions. These laws are now almost unintelligible—even to the pundits. The first and main purpose of this Bill is therefore to clear away this "legislative jungle". A glance at the repeals in the Seventh Schedule to this Bill, a real "dog's dinner" of a Schedule, if ever there was one, will show what I mean. There is an overwhelming case for replacing this mass of legislation by a single measure which will simplify and bring up to date the structure of our protective tariff.

The Bill has two other important purposes: to give a clear authority to re-cast our present complicated tariff in a new, complete and simpler form—known as the Brussels Nomenclature, which is an international vocabulary for the tariff mystique; and to lay down permanent arrangements for dealing with tariff applications. The Bill itself does not charge protective duties or change their present rates, but it does provide powers to impose duties or to change them. In essence, therefore, the purpose of the Bill is consolidation.

But inevitably, given the passage of time since the enactment of the various tariff measures which it is designed to replace, it must be more than that. Though some of the present duties go back to the First World War, the general framework of our protective tariff was laid down in 1932. This country, as your Lordships will remember, was then in the throes of an acute economic depression with a tragically high rate of unemployment. The Government of the day decided that a general protective tariff was necessary, primarily to assist the transfer to this country of work which was being carried out abroad.

The action taken in 1932 is now, of course, a matter of history. In the first place a general ad valorem duty of 10 per cent. was imposed by the Import Duties Act on all foreign goods not specifically exempted. In addition to this general duty, substantial duties were imposed—adapted to the need to protect different industries—by Orders made under that Act. Thus we were able to give worthwhile Imperial preference (and, over a very wide range of goods, valuable rights of duty-free entry) to our friends in the Commonwealth. Following the Imperial Economic Conference at Ottawa in that year, the "Ottawa" duties were imposed in order to give further Imperial preferences to the Commonwealth.

It is not the object of this Bill to upset what was done in 1932 or since. Why then, it may be asked, is there any need to change the present provisions? The answer, of course, is that conditions have changed and it is therefore necessary to change the provisions. Full employment is now a fact, and all Parties are committed to maintain it. We no longer need to express our tariff legislation in the restrictive terms which were appropriate when the creation of jobs at home had to be a major object of tariff policy. It would obviously be wrong and anachronistic to maintain those words in the 1932 legislation which, in practice, required those responsible for framing tariff policy to regard the creation of jobs in particular industries or particular areas as an end in itself. But this, of course, does not mean that employment considerations will be ignored, or even discounted, in the process of framing tariffs. On the contrary, Clause 1 of the Bill empowers protective duties to be imposed "in the national interest", and it is clearly in the national interest to maintain full employment in the economy as a whole.

There is another fundamental change in the situation since the early 1930's which requires some modification of existing tariff legislation. It can no longer be said, as the 1932 legislation said, that it is in the national interest to restrict the import of goods into the United Kingdom. The leading trading nations now recognise that one of the solutions for their economic ills lies in the direction of expanding world trade. We need the maximum flexibility in our legislation so that we can continue to play a full part in any international negotiations for the reduction or stabilisation of tariffs. But there will be no dismantling of our protection without compensation. In general, existing tariffs and preferences will be maintained except where we can hope to gain substantial advantages for United Kingdom industry in negotiation with other countries or where, after inquiry, there is clearly a case for change. In framing our tariff policy we also need to take advantage of every chance of maintaining and promoting our export trade, of achieving the most efficient use of our resources at home—this means, of course, increased technical efficiency—and of serving the legitimate interests of consumers. These, very briefly, are the considerations which the Government now apply, and which have been written into Clause 1 of the Bill.

Looking into the future, we have had another major point very much in mind in drafting this legislation. As your Lordships know, we hope to negotiate a free trade area with other European countries on industrial products. This issue does not arise directly in relation to the Bill. This is not a "Free Trade Area Bill". The Bill has, however, been drafted in such a way that the powers conferred on the Government to adjust tariff rates should be generally adequate to enable this country to participate in a European industrial free trade area.

So much for the general philosophy underlying this tariff structure Bill. I now turn to a number of more concrete matters. The first is that, as I have said, it is not the object of this legislation to change existing tariff rates. If this Bill is passed, one of the first jobs will be to introduce a new tariff, reproducing the substance of the existing duties. This will be expressed in an internationally-agreed form, the Brussels Nomenclature, to which I have just referred.

The new tariff will come into effect on January 1, 1959, but it is important that traders and others should become familiar with it as early as possible. It is therefore proposed to lay Orders introducing the new tariff in June of this year and to publish an advance print in July. The Government have published a White Paper setting out the advantages which we see in this form of tariff. The present customs tariff is not set out as a single list of goods with their appropriate duties; in fact, it consists of a number of separate lists. These reflect the piecemeal way in which the various duty systems have been introduced. An importer who wants to know how much duty he is required to pay on a particular article cannot be sure that he has found the answer when he sees a description covering it; the article may also be liable to duty under some other part of the tariff. The Bill sweeps away these separate and overlapping protective duty systems and replaces them by a new comprehensive duty charging system. In the new tariff, each article of commerce will be classified in one place and in one place only. This will be a great advantage to importers and others, and will save them a lot of office work.

The details of the new tariff have been discussed with all interested parties. I do not think there is any objection to what is proposed in detail. Indeed, my impression is that, but for a score or so of duties which are still under discussion, the many hundreds of trade associations who have been consulted not only concur in but positively—and in many cases emphatically—welcome what Her Majesty's Government are proposing to do.

So much for existing tariff rates and the new tariff. I now turn to the third main object of the Bill: that is, to lay down permanent arrangements for dealing with applications for changes in duties. Before the Import Duties Act, 1932, we had no general protective tariff. That Act imposed a general duty of 10 per cent. ad valorem, and left it to an independent Committee established under the Act, the Import Duties Advisory Committee, to make recommendations for the erection of a more detailed tariff adapted to the needs of particular industries. At the outbreak of war in 1939, the operations of this Committee were suspended under emergency legislation, and since the war the functions of the Committee have, in effect, been undertaken by the Board of Trade.

We cannot now go back to an independent body which will make recommendations. The conditions governing changes in our protective tariff are quite different from those before the war. Internationally, the trend is towards reducing barriers to trade. The United Kingdom, together with the leading nations of the world, have made important contributions by reducing tariffs on a large number of items. In all we have undertaken that the duties on about half of the items in our tariff will not be increased above stated levels. In return for these concessions, which successive post-war Governments have considered worth while, our export trade enjoys tariff concessions and other advantages in the principal markets of the world. To hand over to an independent body the responsibility for decisions on tariff applications would, in effect, mean delegating responsibility for tariff policy. A recommending body would therefore be impracticable to-day.

When this Bill was first introduced in another place it proposed the establishment of a body to examine the facts relating to tariff applications, but not to make recommendations. While it was generally accepted that we could not go back to a body like the pre-war Committee, it was argued that it would be better to have no body at all than a "halfway house" of the type that was originally proposed. The Government accepted this argument and the Bill, as now drafted and as now before your Lordships' House, places upon the Board of Trade the responsibility for dealing with all stages of tariff applications.

Broadly speaking, the Board of Trade propose to continue as they have since the end of the war. What they have done seems to have met with the general approval of industry. Applications will be made to the Board who will sift out the non-starters after a preliminary inquiry. Where an application is worth full investigation, they will advertise it so that all concerned are aware of it and may make any objections or comments in writing or orally. After weighing up all the evidence, the Board of Trade will decide whether to make a recommendation to the Treasury. If the Board do so, an Order will be laid to implement it. Clause 4 of the Bill requires the Board of Trade to lay annual reports before both Houses on the exercise of powers with respect to import duties, both their imposition and relief from them.

I should next like to say a few words about Imperial Preference. It is, of course, the Government's policy to promote the maximum possible development of trade between Commonwealth countries. The Bill fully safeguards our powers to continue the existing Commonwealth preference system under which, on a mutually advantageous basis, the countries of the Commonwealth (including the United Kingdom) enjoy preferential tariff advantages in each other's markets. The United Kingdom's part of the bargain is to admit most Commonwealth goods free of duty, and to maintain duties on certain foreign goods for the benefit of Commonwealth producers. The Government do not propose to depart from these long-established arrangements.

Apart, therefore, from the imperative need to unravel the existing legislative cat's-cradle, the purpose of this Bill is to give us a new tariff instrument which will do three very important things. First, it will enable a Brussels-type tariff to be introduced, which will save a lot of paper work and a lot of quill-driving for both industry and Government. Secondly, the new legislation will make clear to industry at home and to our friends abroad the general principles by which the Government's tariff policy is guided. Thirdly, it will clear the way for the major enterprise of the negotiation and implementation of an industrial free trade area with Europe which, as the Government have made clear on other occasions, represents a major object of United Kingdom policy. Though the present Bill is necessary on other grounds, I have no hesitation in saying to the House that without a measure of this kind we could not, in practice, embark on a free trade area if, as we all hope, the efforts of Her Majesty's Government to negotiate one prove successful. My Lords, I beg to move.

Moved, That the Bill be now read 2a .—( Lord Mancroft.)

3.15 p.m.

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My Lords. I think I was still at school when Gilbert wrote in Iolanthe the famous lines:

"…every boy and every gal
That's born into the world alive
Is either a little Liberal
Or else a little Conservative!"
It was somewhere about the same time that Benjamin Disraeli, speaking of Protection, said that it was "not only dead but damned." I, as a faithful "little Liberal," took the very strong view about Free Trade which I am not quite sure whether the Liberal Party still hold or whether they are still divided upon it. But we are living now not in the end of the nineteenth century; we are living in the second half of the twentieth century. A great deal of water has flowed under the bridge since Benjamin Disraeli's famous remark. This Bill is a sign of what has happened.

I think anyone reading the Bill rather casually may imagine that we are creating and giving to the Treasury, on the recommendation of the Board of Trade, some wide new powers, and I can imagine persons who object to delegated legislation thinking that a very heinous offence. On studying the Bill more carefully and reading the debate on the Second Reading in another place, a Member of your Lordships' House will no doubt realise, even apart from the descriptive speech of the noble Lord who introduced the Second Reading in the House this afternoon, that the Bill is very different from what it appears to be. Apart from this change in nomenclature, which everyone I think must welcome, whatever their views on Free Trade or Protection, the Bill makes little real, effective change in the control of the tariff-making machinery of this country.

The noble Lord referred in his speech to Clause 4, in which the Government have to lay before the House of Commons the details of any use that has been made by the Treasury of the powers conferred upon it in this Bill. But of course the really important part is Clause 13, subsection (4). The power to which the noble Lord referred was annual, of course; this one is not annual:
"Where an order of the Treasury under this Act imposes or increases any duty of customs, or restricts any relief from duty under section five of this Act, the statutory instrument shall be laid before the Commons House of Parliament after being made,…"
and then it proceeds with the usual particulars. That certainly means that the Treasury have not absolute power to create new legislation or impose new tariffs; it really does rest with the House of Commons to decide whether any proposals for increasing tariffs shall or shall not become the law of the land.

I think that that is the sheet anchor of those who do not want to see devolved legislation coming into effect, because if any duties are passed by the Treasury in an Order based on recommendations of the Board of Trade, they will not become permanently effective until they have sanction at any rate by the Negative Resolution Procedure, in the House of Commons. It is because that is embodied in the Bill that we on these Benches, following the lead of our colleagues in the other place, take no exception to its passage into law. I do not know what will be the attitude of noble Lords on the other side of the passage that divides us. They may still take the purely rigid Free Trade point of view and oppose the Bill. That is for them to decide. But we shall not oppose the Second Reading. I understand that on these certified Bills there is no effective Committee or Report stage; but, of course, we shall examine the Bill in considerable detail before we reach the Third Reading, and if there should be any further important points that we want to raise on that occasion we shall bring them to the attention of your Lordships' House. My Lords, with those few words I think there is nothing further that I need say with regard to the Bill.

3.21 p.m.

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My Lords, I wish to make two apologies for speaking this afternoon. First of all, what I have to say is strictly not within this Bill, though if I am pressed I think I can be covered by the Fifth Schedule to the Bill, which relates to drawback orders. My second apology is to the noble Lord, Lord Mancroft, in that I have not given him notice of a rather technical point. I do not ask for an answer, but I hope that he will pass on to the appropriate Minister what I have to say.

As we well know, goods come into this country which eventually will be re-exported. These goods do not incur duty charges. Duty is paid when they are brought into the country, but is refunded when the goods are re-exported; or the goods can be brought into this country and kept in bond. This is a very good arrangement, but I believe that it is being abused by certain Continental manufacturers, to the detriment of this country and its export trade.

Let me give an example. As we know, trade with Japan is extremely difficult; it is governed by import licences and currency restrictions. Every year the Board of Trade negotiate agreements with the Japanese Government, and I believe that this year there was an allocation of approximately £30 million for British textiles, a part of which was for cotton goods. It has come to my knowledge that certain Continental manufacturers are shipping goods into this country against orders they have received from Japan. There is no licence and currency available for those manufacturers, but what they are doing is to send the goods into this country with no country of origin stamped on the goods. The goods are then being re-exported from this country by traders using British invoices, and using the allocation of sterling which is for goods manufactured in this country; they are using this money to cover their own exports to Japan.

I do not know whether I have put the case quite clearly to the noble Lord, but I believe that what is going on is to the detriment of the British exporter and manufacturer. I was told only yesterday that there is a suspicion that this sort of business is going on with Scandinavia: that goods from the Continent are being brought into this country and are being re-exported to Scandinavia. If this practice does exist—and I believe it does, because I have been asked to do the very same thing in business—I think the Government should look into the matter and put a stop to it.

Changes In Royal Navalestablishments

3.25 p.m.

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My Lords, may I have the permission of the House to make a statement about the future of the Royal Dockyards, naval air establishments, and the structure of the Home Air Commands?

Her Majesty's Government have decided, with great regret, that the Nore Command should be abolished; and that Sheerness and Portland Dockyards, the Aircraft Repair Yard. Donibristle, and five other air establishments in the United Kingdom, should be closed.

The decline in naval repair work resulting from the planned reductions in the Fleet will not require the closure of any other dockyard in the United Kingdom. Singapore and Gibraltar Dockyards will be retained. The future of Malta Dockyard is still under consideration.

The Nore Command will be abolished by April, 1961, and its remaining functions transferred to other authorities. At Sheerness, the dockyard will be run down gradually, closing April, 1960. At Chatham, the dockyard will be retained; but the barracks and other naval establishments will be closed—also by April, 1961.

At Portland, the dockyard will be reduced by July, 1959. The naval base will be retained. I have considered with particular care the final stage of the concentration at Portland of under-water research and development, and have decided that the Torpedo Experimental Establishment must be transferred there from Greenock, in order to achieve the closest co-ordination in the development of under-water weapons. This move will take place towards the end of 1959.

The tasks of the Home Air Command will be concentrated in larger groups at fewer bases. The Aircraft Repair Yard at Donibristle will be closed by the end of 1959. The Royal Naval Air Stations at Ford, Bramcote and Eglinton will also be closed in about a year's time. The Air Station at Brawdy, which will be kept in reserve, and the Air Electrical School at Worthy Down, will close later.

I am well aware of what these decisions will mean for Chatham men of the Royal Navy and many Fleet Air Arm ratings, and for the civilian employees of the establishments to be closed. My right honourable friend the Minister of Labour will arrange as necessary to open special employment offices inside these establishments before discharges begin. I shall also be in touch with the Northern Ireland Minister of Labour and National Insurance. With the assistance of my right honourable friend the President of the Board of Trade, everything possible will be done to bring the facilities, which will be available, to the notice of suitable industrial interests. We shall enter into consultation immediately with the staff associations and trade unions.

Details of these plans, and of their effects, are included in my Explanatory Statement on the Navy Estimates, which will be available in the Printed Paper Office later this afternoon.

The result of the reorganisation will be a total reduction of about 2.700 naval posts ashore and of over 7,000 civilian posts. Thus more men will be available to serve at sea, and an annual saving of about £7 million will be achieved. The Government are confident that, although some hardship will be unavoidable, all those in the Naval Service will appreciate the necessity for these drastic measures for the purpose of maintaining the strength of the seagoing Fleet.

3.29 p.m.

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My Lords, I am quite certain that there will be at least more than half the Members of your Lordships' House who will have heard that statement with the greatest of regret, and with deep sympathy for those whom it is going to affect individually. There was talk several years ago, when the personnel strength of the Fleet was not to be any larger than is now contemplated—about 89,000 to 90.000—of closing down Sheerness, on the ground that it was not soundly strategically based. But it was less hit by bombs in the last war than almost any dockyard in the country. In the island of Sheerness a community has been built up since 1809 or 1810 when the building of the dockyard was finishing. I know of a co-operative society that was founded by the first naval dockyard employees in 1815 and which is now an enormous establishment in the Island of Sheerness.

Apparently this decision has been taken almost without any real thought of the consequent rooting-up of families who by tradition have been based upon this place for 150 years. This is an exceedingly grave and difficult situation for those people to face. I agree that Portland is not so historical or traditional, but I am quite sure that this decision will have an effect on ordinary citizen establishments on shore there. I hope that perhaps a more detailed statement will be made on what the plans of the noble Earl the First Lord may be. I should like to know more about the future of the torpedo exercises, as well as about the submarine and anti-sub-marine work which has always been carried out there. I should like to know more about the under-water work at Portland and the closing of Greenock—where the work is in future to be carried out.

I feel that we shall have to speak at greater length on these matters when we come to the general debate on the Defence White Paper, but I must say that I am filled with great concern about what is to be regarded as the future strength and rôle of the Royal Navy, not only its great strategic rôle but its rôle as "maid of all work," which the Royal Navy has always been. That matter fills me with a good deal of gloom, though I will not say despondency, for I know what the Royal Navy can do, even in difficult circumstances like this. As I see it, nearly the whole of the £7 million to be saved by this series of operations and reductions represents salaries and wages, but we have not yet been given any information as to what is to be realised on the other side, or what is to be done with those places which are finally to be closed down. I hope that when we come to the other statement we may learn something more about that. In the meantime I hope that something is going to be done especially for established men in the dockyards. Could we know the plans of Her Majesty's Government for those men, who have been established for anything from five to thirty-five or forty years? Are they to be moved, or how are they to be dealt with?

I am sure that there will also be very grave concern about the proposed closing of naval barracks. We shall debate the abolition of the Nore Command on a wider debate later, but so far as I can see we are to have just as many men in the Navy as were allocated to me by the good will of the Treasury in 1929; and at that time we had full use of the barracks at Chatham for Naval purposes, as well as barracks in the other ports. What are Her Majesty's Government going to do about the actual housing of Naval men? I do not know what my colleagues think of the administrative arrangements, for I have not yet been able to consult them, but I am very sorry that Her Majesty's Government have come to this pass, at a time when they seem to prefer to make a bargain with themselves that their main defence policy in future shall be based on nuclear fission, whether or not it leads to suicide.

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My Lords, if I might reply to one or two of the detailed questions put by the noble Viscount, Lord Alexander of Hillsborough, first let me say that I am aware of a great many of the points he has made. I have endeavoured deliberately to give as much warning as I can of what is to take place, and I am sure that that is the right attitude. For instance, it w ill be two years before Sheerness Dockyard closes and three years before Chatham Barracks closes. As much notice as possible has been given, and it would be wrong to say that these decisions were taken without a great deal of thought and consideration. I cannot maintain any establishments on shore for which there is no use for the Royal Navy, and it would be quite wrong to do so no matter what the circumstances, though I very much regret having to take this step.

I would assure the noble Viscount that the experimental work on under-water Asdic and acoustic frequencies will continue at Portland, and there will be a concentration of work in that area. I can assure him that there will be no relaxation at all in the efforts of the Royal Navy to produce proper under-water weapons and techniques. All established men will be retained in Naval employment, and nearly half the men at present employed at Sheerness are either established or apprentices who will be transfered to some other place. The noble Viscount's remark about the Royal Navy being a "maid of all work" is quite true. None the less, in these days we must try to see that our resources are used to the best advantage, and the purpose of these decisions is to get as many men as possible to sea and to ensure that our resources are put to seagoing ships.

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My Lords, the noble Earl the First Lord has covered all the points I had intended to raise. I would only add that it is rather melancholy to see the noble First Lord chipping away his kingdom, inch by inch, and making his little island still smaller. However, I am glad that Her Majesty's Government have had the courage to do what they consider necessary, and in view of the matters which the noble Viscount, Lord Alexander of Hillsborough, has asked him to bear in mind I feel that there is little further to say at this stage

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My Lords, having regard to the noble Earl's reference to Greenock, may I ask whether these decisions are irrevocable, or are they still open to discussion and negotiation in the course of debate?

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My Lords, the decisions I have made are irrevocable, in the sense that I have examined them with the utmost care and Her Majesty's Government have come to the conclusion that these are the right decisions to make. If the noble Lord wishes, I can explain in greater detail why the decisions have been made in each case.

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My Lords, could the noble Earl say what is the purpose of the discussions with the local authorities and trade unions?

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My Lords, there are a great many subjects to be discussed, particularly with the appropriate Whitley Council, as noble Lords will be aware. All kinds of problems are involved. Until now we have not been able to have discussions with the Whitley Council, for naturally I have had to tell Parliament of these decisions first and as soon as I could. Discussions with the Whitley Council will have to proceed and a great many matters will have to be dealt with by them.

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My Lords, in discussions with local authorities, especially with regard to Sheerness, consideration may have to be given as to whether what is done should be done with Naval or with general funds—whether Sheerness should be made a special area. Except for some agriculture, the whole area lives on the dockyard.

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My Lords, I am sure that that is quite right. Sheerness is a very difficult case, and it is for that reason that practically nothing at all will happen there for two years, which will give the President of the Board of Trade quite a lot of time to get the machinery into operation.

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My Lords, I am sure that anyone who has had any association with the Royal Navy feels very sad about this announcement. I am not going to say much until we have an opportunity to debate this matter. But is it possible, or is it intended, that any of the persons likely to be dismissed from their present posts can be absorbed in some of the other dockyards? I should also like to hear something more about Brawdy, which I believe is about the only naval establishment we have in Wales, and how many men are likely to be discharged from that naval station. I, too, am anxious about the established men, and I am very pleased with the reply which has been given by the First Lord with regard to them; I will leave the other points until such time as we may have an opportunity to debate them.

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My Lords, the noble Viscount is, of course, quite right. There will be a considerable absorption in other yards. But it will be established men who will be absorbed in the other yards from the places which are being closed down. The noble Viscount is aware of the position of established men, and we shall, of course, honour fully the undertakings to those people. With regard to Brawdy, this establishment will be maintained on a care and maintenance basis. A small party will be retained there, and about 150 men are to be discharged in that area. In many respects we are very sorry to be leaving Brawdy. We shall not be leaving it until a later date—I think it will be three years from now before we shall leave Brawdy—and by that time we hope there may be other developments in the area which will affect the labour situation.

Import Duties Bill

Debate on Second Reading resumed.

3.42 p.m.

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My Lords, I see that I am next on the list to speak on this Bill, if your Lordships have finished questioning the First Lord of the Admiralty. I do not propose to say many words on this subject. My noble friend Lord Pethick-Lawrence has satisfied me that there is nothing very Machiavellian about the Bill, although I am certain that the noble Lord who introduced the Bill here felt that he was making a really great move towards preparation for the European Free Trade Area.

Ono is a little anxious about Clause 13 (4) and about the laying before Parliament of the report on the impositions, the increases, the variations, and so on, after they have been in operation for the whole or part of the year. This is the first time, apparently (apart from the general provisions) for certain of the Orders to be laid and for there to be opportunity to annul them in certain cir-circumstances. One is to be permitted, for the first time, a sort of "look back" at what has happened and given the opportunity to be able to move Amendments. I hope that the remarks already made by my noble friend Lord Shepherd will be taken into account. He is not pressing for a reply to-day, but I thought his remarks were important. I suppose that there will be no Committee stage upon this Bill, and we can leave anything else we have to say until Third Reading.

3.44 p.m.

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My Lords, I want to intervene for one moment. I think that this is a good and practical and sensible Bill, and I agree with what the noble Lord, Lord Pethick-Lawrence; has said about it. I consider it important that there should not be any variation of duty, certainly not any increase of duty, without the approval of another place. I think that Clause 13 is clear in its provisions. As regards the Negative Resolution procedure, I think the point made by the Leader of the Opposition is not a sound one, because it rests with the Opposition to be vigilant, as the Opposition in this House is, and there is no need for anything to be allowed to continue for a year without objection. It is true that if something goes on for a year and nobody has objected to it, it then becomes the law of the land. But a vigilant Opposition, or any vigilant Member of Parliament who wishes to take exception to something that is embodied in an Order, can immediately table a Motion for a Negative Resolution and that matter then has to come forward for debate. Once there is a general tariff, whether you like it or not, adjustments have necessarily to be made from time to time, and those should be made with rapidity, provided they are adequately known and discussed. I, therefore, commend the Bill.

I was greatly interested in the point raised by the noble Lord, Lord Shepherd. I think it is relevant to this Bill, because it can well be brought within a Second Reading discussion of the question of drawbacks, which is dealt with by one of the clauses in the Bill. That is a point of cardinal importance. I very much hope that the Minister of State, if he is not able to answer it to-day, will answer upon another occasion; and if the noble Lord, Lord Shepherd, will raise the question on another occasion I shall be glad to support him, in a desire to obtain clear elucidation on this point. Let it be made perfectly clear both what the law is, or has been hitherto, and what has been at any rate the intention of Parliament.

Where there is a great sterling area who are bankers in the trading centre of the world, it is very desirable that trade should be as free as possible—in the sense that all the mercantile and financial institutions of London, Liverpool and Manchester, indeed of the whole Kingdom, should be used as widely and as freely as possible. That is certainly so, and for that reason the whole system of having goods placed in bond, and of drawbacks and so on, should be made as easy to work as possible, so that the maximum of international trade will be conducted in sterling and through the machinery of this country.

I have been concerned a good deal in years past in making trade agreements, quota agreements and otherwise. I was concerned with many agreements made with Japan, which the noble Lord has mentioned. Let us be quite clear as to the intention of such agreements. Where there are currency difficulties and import restrictions are imposed by other countries, then the Government of this country has to enter into agreements, covering the following year, on the amounts to be imported and exported, the amount of currency that is to be used—the amount of foreign currency in Japan, for example, and so on. In that connection one has to drive as good a bargain as one can.

But let us be perfectly clear about one thing: the currency that the Japanese propose to use is Japanese currency, or the sterling or dollar currency at the disposal of the Japanese. The object of what may be called a quota agreement is that, in return, the Japanese get a number of concessions concerning what may be imported from Japan. There is a certain amount of difficulty in Lancashire about that; but there has to be this kind of agreement, and on the whole it works well. However, such agreements work well on this clear understanding on what the Japanese buy; they agree that we shall be free to export into Japan so many million pounds' worth of British merchandise every year in return for the concessions that are made to the Japanese. Just as the Japanese have no intention, I am sure, of letting some other country benefit at their expense by the currency arrangements they have made, so it should be perfectly plain that what is sent into Japan under an agreement (and we are limited as to the amount that goes in by the agreement) should be British goods and nothing but British goods. It would be intolerable if the drawback and bonding arrangements made in this country, as the great trading centre of the world, were used—or abused, I would say—in order that the Japanese, or any other, quota intended for British goods should be filled by goods of some other country. There is not the faintest doubt that that is the whole purpose of these agreements. It is the business of the Government which negotiates them to make sure that the agreements are carried out in that manner. I rise only to ask that my noble friend Lord Mancroft, who I am sure is as much alive to this as the noble Lord, Lord Shepherd, or myself, should give us a complete assurance, either on this occasion or on some early occasion, that the spirit and intent of these agreements is in fact being carried out.

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My Lords. I think that every one of the Back Benchers in your Lordships' House must welcome a measure which is intended to, and I think will, render more intelligible and simple a large branch of our taxation procedure. What I should like to ask my noble friend is whether the Government have it also in mind to gratify the equally long-established, insistent and necessary demand for the modification and simplification of the Income Tax Acts.

3.52 p.m.

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My Lords, of course, the noble Viscount, Lord Alexander of Hillsborough, is quite right: there is nothing Machiavellian whatever about this Bill. The noble Lord, Lord Pethick-Lawrence, wondered whether it would impose anything fresh or take delegated legislation any further forward. I must be strictly accurate and admit that Clauses 5 and 13 probably are an increase in delegated legislation, but only in a small, technical way.

I am glad that in his helpful intervention the noble Earl, Lord Swinton, dispelled some of the small but sinister doubts that may have been in the mind of the noble Viscount, Lord Alexander of Hillsborough, on this point. If I may say so, with respect, I think that the noble Viscount was confusing the working of Clause 4 with the working of Clause 13 (4). Under Clause 4 the Board of Trade have to lay before Parliament a report on the year's working of this new measure and the attendant orders and regulations, but Clause 13 (4) does everything possible to give Parliament the power of expressing an opinion on these matters. Roughly speaking, anything which increases or imposes a new burden is subject to the Affirmative Resolution procedure; anything which withdraws or lessens the burden is subject to the Negative Resolution procedure. I am sure that that must be right.

The noble Lord, Lord Shepherd, raised an interesting point about the drawback for Japanese trade, a subject which I remember his discussing with me in an aeroplane flying out to Singapore. That is a very difficult matter, and I should be grateful if he would let me have full particulars of the case which he has in mind.

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My Lords, I am sorry; I have tried to find out, so as to have evidence which I could put before the Minister; but the noble Lord will appreciate that one would have to be a member of Scotland Yard (and even then one would have great difficulty) to produce this sort of evidence. All I can say is that as an exporter I have been asked to bring goods from Germany into this country and to ship them to Japan. The licences would be for British goods; therefore, they would have to come into this market without their country of origin stamped on them. I would issue my own invoices, and payments would be in sterling. I am certain that this is going on, but, frankly. I cannot produce evidence. That was one of the reasons why I mentioned this question this afternoon, in order to ask whether the Board of Trade would make inquiry into the matter, because I think that they are far better equipped to do it than any individual.

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Yes, my Lords, the Board of Trade are well aware of this difficulty, and I should be only too happy to help the noble Lord in this respect. The reason I asked for the details is because it is so difficult to get anywhere in this matter without as much corroborated evidence as One can lay one's hands on; and it is not easy to find it. The noble Lord need make no apology for raising this matter on the Second Reading of the Bill.

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My Lords, may we have it perfectly clearly from the noble Lord that it would be completely illegal, under the drawback law of this country, for a merchant, whether British or alien, to export from here goods which had been put into cold storage or bond from a foreign country in order to fulfil a British quota?

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My Lords, as I understand the law, the noble Earl is correct, but I should like to go into this matter carefully. It is important, and it comes up time and time again, not only in regard to Japan, but in regard to other countries as well.

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My Lords, I do not want to be finicky, but the noble Lord. Lord Mancroft, referred to "helping" my noble friend Lord Shepherd. Surely this is a matter of public interest. My noble friend did not raise it in his own interest; he raised it in order to be helpful to the national interest. I am sure that the noble Lord, Lord Mancroft, appreciates that.

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My Lords, of course I appreciate that. I said that I should like to help the noble Lord, Lord Shepherd, in a conversational tone because it was he who raised the matter, and it is to him I should like primarily to give my answer. I said that I would help the noble Lord, but of course I realise that there are others similarly concerned in trade in the country. I fully appreciate that. The noble Lord, Lord Shepherd, need not apologise for raising this matter on Second Reading or for the relevance thereof. If the noble Lord, Lord Saltoun, can put in a plea for the simplification of the taxation laws of this country on the Second Reading of an Import Duties Bill, then I think any noble Lord can raise anything.

On Question, Bill read 2a ; Committee negatived.

Overseas Resources Development Bill

3.58 p.m.

Order of the Day for the Second Reading read.

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My Lords, this Bill falls into two parts: the one enlarges the area where the Colonial Development Corporation may operate; the other increases its borrowing powers. I will deal with the area of operation first, not only because it comes first in the Bill but because it gives effect to points raised and pressed very hard by your Lordships during the Ghana Independence Bill debate and subsequently. It will be recalled that the pressure from all parts of your Lordships' House was satisfied only on the Government's saying that they would make a comprehensive review of the rôle of the United Kingdom in the economic development of the Commonwealth. This was done and a White Paper (Command 237) was published last summer.

I do not intend to go into any detail on the White Paper except in so far as it deals with the Colonial Development Corporation. In paragraphs 31 and 32, it was confirmed that the Colonial Development Corporation should continue to work in newly independent territories, and should be allowed to put up further capital for projects already started, but not new investments in new schemes. At the same time, it was accepted that the management skills of the Corporation should not be denied either to newly independent countries or to members of the Commonwealth, should they wish to take advantage of such expertise. It was felt, however, that in the event this should be made available on a commercial basis without commitment of the Corporation's funds. All of this has been given effect in the Bill in various subsections of Clause 1.

Some noble Lords may regret that the Corporation cannot enter into new schemes in independent countries of the Commonwealth. This point was examined exhaustively in the White Paper and, for reasons given there, it was decided that normally Government to Government financial assistance was not desirable. The Colonial Development Corporation, as a Government instrument, falls into this category. I will not go into the reasons—they are well known; and, of course, they are fully set out in the White Paper—but they include such factors as our economic difficulties, and our belief in the value of investment through private enterprise which has served so well in the past; and with this in mind our belief is that the new territories should stand on their own feet and establish their own credit in the markets of the world as soon as possible. Some may argue that this takes time, and may ask: what about the interim? The answer is that, anyhow, so far as the two recently independent territories of Ghana and Malaya are concerned, they both have useful sterling balances on which they can draw. Given that the policy as out-lined in the White Paper is Government policy, the Colonial Development Corporation support and approve the clauses in the Bill which cover the scope and area of action—indeed, the Bill has been drafted in close consultation with them.

Turning to the increase in the Corporation's borrowing powers, I may say that here again this meets with the approval of the Corporation, though they would have liked the Bill at the same time to clear up what I would call certain of their old troubles, including the special losses and the interest rate they are charged on loans. On these old troubles I have no comment to make to-day, beyond saying that I understand very well their anxieties. As my right honourable friend the Secretary of State for the Colonies said in another place:
"these matters are being studied afresh, and I am not in a position to say more about them at this stage."
They are important; they are recognised as such; but they raise very difficult matters both of accounting and policy. At best they will take a good time to work out. In the meanwhile, we felt that it was most important not to delay to fulfil the policy set out in the White Paper. Hence this Bill now.

Your Lordships will see that the borrowing powers of the Corporation are to be increased by £50 million; that is, from £100 million to £150 million. Of this increase, £30 million may come from the Treasury and £20 million from other sources. The idea of the Corporation raising money from other sources is not new; indeed, it was allowed for in the Overseas Resources Development Act of 1948. But this gives further encouragement to the Corporation to seek capital for its purposes outside Government sources, which the Corporation itself is anxious to achieve. I think we should welcome this outside capital wherever it may come, from, whether from the United Kingdom, from the Commonwealth or from foreign sources. The more money and people interested in the development of the Colonies, the better, particularly if this should be in collaboration with a United Kingdom partner, as would be the case here.

Noble Lords may ask how this outside money is to be raised and whether the Corporation could pledge its assets or whether there could be a Government guarantee. On the first point, the Corporation's assets stand in their balance sheet against their liabilities. By far the greater part of those liabilities are to the Exchequer in respect of advances made to the Corporation from the Exchequer. Though their assets are not formally pledged to the Exchequer, any pledge on their assets to another lender would affect, to a greater or lesser degree, the security for the Exchequer's advances to the Corporation. We do not say that for this reason there could be no question of the Corporation's being allowed to pledge any part of their assets when borrowing from sources other than the Exchequer; but this question would have to be considered in the light of all the relevant circumstances when a particular proposition is made.

On the second point, whether there could be a Government guarantee, provision for a Treasury guarantee of borrowing by the Corporation from sources other than the Exchequer has existed tinder the Overseas Resources Development Acts from the beginning. But here again the question of a Treasury guarantee for such borrowing would have to be considered in the light of all the relevant circumstances at the time, though it is not contemplated that a Treasury guarantee should become a normal feature of such loans. The intention is that the Corporation should raise money on their own credit: and this is certainly what they themselves wish to do.

I hope that the foregoing is enough in regard to the introduction, and now I turn briefly to the more important aspects of the clauses. Clause 1 deals with where and how the Corporation may operate. Subsection (1) excludes from the scope of the Corporation colonial territories which become independent. The Overseas Resources Development Act, 1948, defined the territories in which the Corporation could operate as territories to which the Colonial Development and Welfare Act, 1940, applied at the date of commencement of the 1948 Act. That is changed by this Bill. Colonies which since then have become independent—for example, Ghana and Malaya—are excluded; and those that may become so in the future—for example, Nigeria—will, on gaining independence, also be excluded from the normal scope of operations of the Corporation.

Subsection (2) confirms how the Corporation may continue a scheme already started in the newly independent territories, may put more money into it and may modify or extend its original purpose if the appropriate Secretary of State judges it expedient. In this case it would be the Secretary of State for Commonwealth Relations. Subsection (3) I have already touched on, and subsection (4) explains itself. Subsection (5) absolves the Corporation from certain responsibilities in regard to the interests of the inhabitants where the Corporation may be operating. Clearly, what may be appropriate in the case of a Colony for which we retain ultimate responsibility becomes less appropriate when the Corporation is dealing with a sovereign nation. It also gives the Secretary of State for Commonwealth Relations powers in certain circumstances, though in practice it is most unlikely that these powers will have to be used. Subsection (6) affirms the Treasury's usual interest in the work of the Colonial Development Corporation.

Clause 2 increases the long-term borrowing powers of the Corporation. Clause 3 deals with the Title and repeals subsection (4) of Section 3 of the Ghana Independence Act, 1957. It will be recalled, as I have already mentioned, how your Lordships pressed on this particular section. For various reasons, including the difficulty of time table, it was not possible to meet the wishes then expressed, but it is good that we are now able to give them effect. As I have already said, this Bill carries out the policy laid down in the White Paper, and I very much hope it meets your Lordships' main wishes. It remains for me to wish the Corporation every success in their new fields and to express the hope that the new money will prove valuable in the continued development of the Colonies. I beg to move that this Bill be now read a second time.

Moved, That the Bill be now read 2a .—( The Earl of Perth.)

Cyprus

4.10 p.m.

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My Lords, with the leave of the House I will interrupt business in order to repeat a statement which has just been made in another place by my right honourable friend the Foreign Secretary about his recent visits to Ankara and Athens. For simplicity I will use his own words:

"With your permission, Mr. Speaker, and that of the House, I wish to make a short statement on my recent discussions with the Turkish and Greek Governments about Cyprus.

"The House is familiar with the main factors of the situation affecting the three Governments. I sought to establish common ground on which to base a settlement which would also be acceptable to Greek and Turkish Cypriots. I have come back from these talks with the firm belief that in spite of all the difficulties this is possible. Further discussions are necessary. I propose to start them urgently. In the meantime all measures necessary to preserve law and order will be taken. I should add I was greatly helped in Ankara and Athens by the presence and advice of the Governor of Cyprus."

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My Lords, I am sure we are all obliged to the noble Earl for the statement he has made. I should like to know whether this is in answer to a question, whether it is a statement made by itself, separately, or part of a speech which is being made, and whether it is likely to be debated further to-day in another place. For my part, may I say at once that I have no particular comment to make upon it, except that I hope that the firm belief of the Secretary of State mentioned here really has some foundation. If that belief has foundation and he can make any further progress towards a settlement, I am sure we shall all be very glad.

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My Lords, this is a statement by itself. There may be supplementary questions in another place in regard to it, but the statement stands by itself. It will not be the subject of a debate or part of a speech.

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My Lords, I have little to add to what has been said by the noble Viscount, Lord Alexander of Hillsborough. Naturally, we all wish the Government the best of good fortune in its further expeditions in this field. But I feel that the language in which this statement is couched is a little surprising. It is satisfactory to know that the Foreign Secretary believes that a settlement is desirable—he even thinks that it is possible. If it is not possible, it must be made possible. The most important announcement, I think, which the Foreign Secretary has made is that further discussions are necessary. This he says on February 18, 1958. We are glad to know that he has realised that further discussions are necessary, and I hope they will be proceeded with

Overseas Resourcesdevelopment Bill

4.14 p.m.

Debate on Second Reading resumed.

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My Lords, not a great deal needs saying on this Bill, chiefly because it is only about six months since my noble friend Lord Ogmore—who is unfortunately abroad on professional business and cannot be here for this debate—moved a Resolution on the working of the Colonial Development Corporation. The ground which was covered then is in fact the same ground as is covered by this Bill, and to avoid repetition there are only a few points that need to be made.

I believe we can all say that the Bill, so far as it goes and within the limits imposed by the Government's policy, is one that we can welcome. We can welcome the scope—the very limited scope —allowed to the Corporation in the countries which have achieved independence. We can wonder, all the same, how that limited permission can be consistent with the Government's view that such countries should stand on their own two feet. Nevertheless, it gives some small scope. In the same way we can only applaud the decision to increase the upper limit of borrowing from £100 million to £150 million. It should be made quite clear that we on this side of the House—the Party to which I belong—profoundly disagree with the policy of the Government towards the Corporation and towards the scope of the work of the Corporation, and in particular to the question of the Corporation's ceasing work where a country achieves independence.

At the risk of some repetition, I think it should be made quite clear why we disagree with this. The reasons that have been advanced by the Government at various times are, I think, three. In July of last year the noble Earl, Lord Home, said that it would be no contribution to the independence and status of those emergent countries to give them the impression that they can rely endlessly on the British taxpayer. Nobody has ever suggested that they should. The period following independence in ex-Colonial countries: is obviously a difficult one. The period preceding the grant of independence naturally means the emergence of political Parties, political disputes and possibly racial disputes within the country; they all find expression in that period, and there is in various degrees political instability. That, clearly, would be a factor which would militate against the obtaining by the country of private capital from external sources. We are told that they should be encouraged to achieve credit-worthiness as soon as possible after independence. By all means they should; but there must be an interim period when help towards the development of their economies should continue from the original source; and, of course, there is no question but that the Colonial Development Corporation operates only with the consent of the receiving Government.

The question of attracting outside capital to a territory that has newly achieved independence is one that we cannot accept as a matter for the country itself. Time is needed for the country not only to achieve political stability but also to show the rest of the world that it has achieved that stability. I cannot fancy, for instance, in our own history, that England emerging from the Wars of the Roses would have been a very attractive proposition for outside capital, and it is in that sort of context that one must look at the countries which are emerging to independence.

Secondly, we have been told by the noble Earl, Lord Home, and by his Under-Secretary in another place, that the independent countries themselves do not want help from their former masters. My Lords, there has never been any evidence in support of that statement. Indeed, the only evidence we have seen is directly to the contrary—the evidence printed in the Colonial Development Corporation's Report of last year. I cannot believe that there is any substance in that argument, or that any serious objections have been raised. Indeed, all experience shows that independent countries are quite ready at any stage of their careers to accept economic help, provided, of course, it is without strings. We know that the Colombo Plan has resulted in Eastern countries receiving large amounts of help from Western countries.

Finally, there is the argument that the Corporation should concentrate all its resources on the remaining colonial territories and not divert its resources outside. People speak as if this were an expansion of the work of the Corporation, whereas in fact it makes no difference at all. A country that has been receiving help as a colonial territory becomes independent; it needs no more capital and no less. If help to independent countries is cut off, then indeed there would be more of the resources of the Corporation left to spread among the colonial territories. That certainly is so. But that has to be balanced against the proved needs of the emergent territories. For all those reasons, we want to make it clear that we profoundly disagree with the present Government's policy.

We disagree also with the Government's view that finance for colonial development should come primarily from private sources. Clearly, that comes out in every speech from noble Lords and others on the other side. But all experience shows that private capital flows not to where it is most wanted but to where it can earn the greatest profit. That, surely, was the source from which sprang the need for Government assistance. It became clear that private capital could not do the job. The Corporation was set up to cover just that field where private enterprise would not have entered. And yet the Corporation, having been given a commercial task of working at a profit, has been denied the commercial structure which would have enabled it to carry out its task.

I was glad to read that in another place both the Secretary of State for the Colonies and the Under-Secretary referred to the matters connected with the reconstruction of the Corporation's capital structure, and said that these are subjects for investigation and consideration at present. The noble Earl has told us just now—at least I understood from his speech—that there is still no news that he can give us of the result of those investigations and considerations. I should like him when he winds up to tell us what the prospects are of reaching some finality on these investigations, because, as he can imagine, this is a matter that seriously affects the Corporation and the whole future of its work.

A good deal was said by the noble Earl just now about the raising of outside capital, and although he emphasised the desirability for the Corporation to raise capital from outside sources, non-Treasury sources, he was not very helpful in suggesting under what conditions the Corporation would be allowed to borrow. He mentioned that on the question of the pledging of the assets of the Corporation each case would have to be judged on its merits. On the question of whether a Treasury guarantee would be given, I think he said it would be considered in the light of all the circumstances. Can he really not give rather more serious guidance as to the conditions under which the Corporation would be able to enter the golden field that he sketches out for them, with all the private capital waiting to be garnered and used for the purposes of the Corporation? I think we should like a little more firm hope and firm guidance upon what the Corporation can expect. Subject to those limits and the disagreement on policy, this Bill does some good and we shall support it.

4.30 p.m.

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My Lords, in rising to say that I support this Bill, I want to make a certain number of critical comments, partly on what is in the Bill and partly on what is not in it. I find myself in considerable agreement with the speech of the noble Earl who has just sat down. There is one thing he said, though, that I do not agree with; and that is his comment about avoiding repetition. I agree with him that almost everything that could be said on this subject has in our past debates already been said, but I am not so pessimistic as to think that the Government are entirely impervious to reason, and once more I want to make one or two points which I think ought to be made in that connection.

In looking back over the debates of the last few years on this subject one is apt to remember the proverb, or the saying, "Knowledge comes but wisdom lingers." My Lords, we have bought a lot of experience over the Colonial Development Corporation, and surely it would be no shame to us now to admit that the 1948 Act was imperfect in conception and unrealistic in its provisions. But apparently we continue to move about in worlds not realised, and if one looks back on many of the debates they are rather confused by eulogies of colonial achievements and so forth which, however true, are not relevant to the subject. Looking at the history of the Colonial Development Corporation I am reminded of waters, which were once familiar to me, of North Borneo, which are strewn with reefs, every one of which bears in its name a record of a ship that struck it in the uncharted days and sank. The early history of the Corporation is strewn with wrecks; with hopes that foundered on inexperience and haste that mistook rashness for enterprise. But I deplore recriminations on past mistakes. Indeed, I can hardly stand here and recriminate about them, because I myself was for several years a member of the Board of the Colonial Development Corporation, and I was present and therefore participated in some of the mistakes that were made. But I think we ought to try to avoid dogmatic determination to maintain conditions which multiply the possibilities of future failure.

The noble Earl who moved the Second Reading said that the financial conditions and position of the Corporation were under consideration, and he left us with the vague hope that, at some unspecified distant future, the Government might make up their mind to meet some of the criticisms. I do not think that that is enough to induce one not to say, once more, what one considers to be the weakness in the Corporation's financial position. Surely it is not businesslike to have a 100 per cent. loan structure for the fulfilment of risk-taking tasks. May I once more remind your Lordships of what was said in the 1951 Report of the Corporation? It read like this:
"The Corporation is constituted to operate commercially, but its financial circumstances and conditions are at variance with commercial practice and purpose; the crucial distinction lies in the fact that the capital structure includes no ordinary shares, hut only debentures; the crucial result is inelasticity; moreover, any loss—the normal result in the first phase of development—means failure to fulfil the obligation to pay interest and principal."
No margin is left in this structure for investigations and pilot schemes for which, surely, some part of the capital should be available with no fixed obligations as to interest or repayment of capital. There are special losses of over £8 million, lost on pre-1951 jobs, that were abandoned wholly or in part. Those still have to be repaid, and interest runs on. How can new projects which have difficulty to do more than service their own capital do any of this in addition?

The C.D.C. is also designed to serve certain political and social ends of public policy while, at the same time, remaining a commercial instrument. If it does not make money, at least it must not lose it. In such circumstances special rates of interest would seem to be justifiable. After all, these incompatible components, idealism and 10 per cent., are not the businesslike approach which is laid down in the Act to restrict the activities of the Corporation. The Corporation does operate, as we know, in a marginal field, and it is handicapped by the interest rules laid down for it. When once the estimated capital requirements for a project have been sanctioned, advances are made in instalments as the work proceeds. The rate of interest is that prevailing at the time of such advances, and remains so for the full term of the advance; so that original estimates may be falsified by a subsequent unforeseeable rise in interest rates. I have been speaking largely of things that are not in this Bill before us but which, in my view, ought to be there. We have been told that the Corporation's financial structure is under consideration and review. But can the Government tell us a little more explicitly when this review is likely to be completed, and whether it is proposed to introduce, for instance, any amending legislation this Session? Such a declaration would at least relieve some misgivings.

Now to look briefly at the provisions of this Bill. If we grant that the Government's myopia is incurable, the three purposes of the Bill at least are welcome, so far as they go. One is glad that in the newly independent territories existing projects, those started before independence, may continue, and that in approved circumstances fresh capital may be injected into such projects. One is also glad that managing agency business or advisory services may be performed in an independent territory; also that the C.D.C.'s long and medium term borrowing powers are increased from a maximum of £100 million to £150 million, and the Government's power to make advances similarly from a maximum of £100 million to £130 million, leaving £20 million, plus £10 million (temporary), to be raised otherwise. I have just sketched in that picture, because I wish to make some comments on it.

To return to what I have called "Government myopia," is it not regrettable that, at the time when they most need help—that is, on achieving independence—the emergent territories should be excluded from new projects? Why close that door? The Colonial Development Corporation is known and is experienced whereas these other organisations—the Commonwealth Development Finance Company and the rest—are not constituted or fitted for a similar purpose. After all, the control of the Secretary of State and the Treasury over the operations of the Colonial Development Corporation is, ultimately, complete, and they can regulate what sort of project is to be supported. It is surely chiefly in the emergent territories that opportunities will occur. The diminishing residue which will consist of smaller and poorer Colonies are more suitable subjects, I suggest, for Colonial Development and Welfare help. The Colonial Development Corporation is meant to be a business organisation: it is not a charitable or poor relief channel. I appreciate that private enterprise and self-help must do the bulk of development work in these emergent territories; but surely it is precisely the job of the Colonial Development Corporation to help colonial territories, whether past or present, to reach an economic stability which will be sufficiently attractive as a field for private enterprise.

I know that the original purpose of the Colonial Development Corporation is to help territories where we have a special responsibility, but surely this should include territories where, owing to too rapid political development, we have left our economic work incomplete. As I see it, help to such territories would not be, as has been suggested, a diversion from the proper course of funds meant for colonial territories but, so far from that, would be a fulfilment of original hopes and intentions in relation to these territories. Incidentally I cannot for the life of me see what can be the objection if we follow the example which has been set in other cases. If the name constitutes any obstacle, what objection can there be to changing the name to the Overseas Development Corporation? We have changed "Colonial Service "to" Overseas Service" and there are instances of similar changes. I see no reason why we should boggle if it is necessary to alter this one.

To turn to subsection (2) of Clause 1, dealing with the management agency, surely the provisions here are quite unrealistic. Will any Government employ the C.D.C. in such a capacity if it is itself prevented from putting any money into the business? I quite understand that the bulk of development will come from private enterprise, but, as I have tried to say, the function of the Corporation is to help to create the economic strength which will attract private enterprise and always, if possible, to stimulate the participation of private enterprise and the local Government itself in a tripartite partnership.

Lastly, about borrowing powers, presumably the Corporation will be allowed to use money borrowed from sources other than the British Government to finance new development in emergent territories, though, as was said in another place, it may be necessary for them for that purpose to form a subsidiary company. If that is the case, what is the objection to increasing tile borrowing "ceiling" of the Corporation so that more money can be borrowed for this purpose? I should like to repeat a question. Will Her Majesty's Government tell us in what circumstances the Treasury will be prepared to exercise their powers to guarantee Corporation loans? In introducing the Second Reading the noble Earl, Lord Perth, gave a somewhat vague reply on that point. If I interpreted him rightly, he said that it would all depend on the circumstances at the moment, and that no-one could say in advance what would be the attitude of the Treasury. If that is the case, we might at least be told what criteria the Treasury would use in determining whether to give their consent to the amount, source, or terms of such borrowing. I understand that the C.D.C. cannot borrow outside their assets, because those assets are already pledged to the Treasury. On what security, then, can the Corporation borrow? If it is not contemplated that a Treasury guarantee should become the normal accompaniment of loans which the C.D.C. may secure from sources other than the Exchequer, what security can the C.D.C. offer other than such assets as may be created by such a loan?

I am aware that in these discussions the idea of Commonwealth participation has constantly been mooted, but, like the idea of a Colombo Plan for Africa, it does not seem to me that that can be relevant to a Bill such as this, because such plans would inevitably involve supersession of the C.D.C.—not its enlargement or amendment, but its complete supersession. Obviously, too, such an organisation could not work under the control of the Secretary of State and the Treasury; and in any case, as one knows, countries like Canada would want to manage their own investments in their own way and at their own time.

I suggest that those who talk of a Colombo Plan for Africa must also remember that the Colombo Plan for help to undeveloped territories is primarily concerned with helping them to help themselves and is not hampered by the need to make money or at least to "break even", as is the C.D.C. I suggest that the C.D.C. should undoubtedly have a separate fund of some kind to spend on investigation and pilot schemes. If, as is frequently the case, it were found that the proposed scheme when examined, could not proceed without the provision of roads, communications and services of other kinds, then, it seems to me, the Government of the territory should be approached and asked to make such provision, whether out of its own resources or with the help of Colonial Development and Welfare funds. It should not be part of the responsibility of the Colonial Development Corporation to do work of that kind, which I suggest is essentially Government work. And so, my Lords, I support this Bill, regretting only that the chance has not been taken to broaden its principles and enlarge its scope.

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My Lords, I should like to draw attention to one small word which was used by the noble Ear; speaking from the Front Opposition Bench. I claim no special knowledge of high finance or colonial affairs, but the noble Earl referred to these emergent nations as either wishing or not wishing to borrow money from their former masters. It struck me very forcibly that the term "masters" is a very old-fashioned one to use to describe our present relations with these other people. I do not imagine that the noble Earl intended for that word the meaning with which it struck me.

4.50 p.m.

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My Lords, this is, in a sense, an enabling Bill, and therefore, although various points have been raised by noble Lords, it is satisfactory to know that after making their various points they have given it their blessing. I would take one or two points which were raised both by the noble Earl, Lord Lucan, and by Lord Milverton. The first was the question whether the Corporation should continue to operate in countries after they have achieved their independence. I think there is a good deal of—I do not know whether the right term is "wishful thinking" about this situation or whether it is "unreality," but the fact is that the countries about which we are speaking, or the ones about which I assume we are speaking—namely, Ghana and Malaya—are both pretty well off. There is not any great problem, so far as they are concerned at this moment.

Also, I think we must keep a sense of proportion. The Corporation, generally speaking, makes advances of one kind or another—investments of perhaps £5 million or £6 million a year. The total investment in the Commonwealth is about £200 million, so that what we are talking about is, at best, some 3 per cent. of the total. The two countries to which I have referred have, in fact, resources of their own. There was some talk about the Wars of the Roses, strife and so forth, in them, and I must say that on their record that does not hold true. Whether one considers Ghana or Malaya, over the years before they became independent they both handled themselves in a way which one would expect.

Which is the country which has such a prospect in the near future? It is Nigeria. And Nigeria also happens to be rich—we are very glad about that—and has large sterling balances. Therefore, I think that all this talk about leaving these poor countries out in the cold once they have become independent has a good deal of unreality about it.

The second point raised was that of the noble Earl, Lord Lucan, when he said that his Party did not believe that private sources should provide the main investment for the Colonies. The implication from that was, I think, that it had not worked very well. When I consider the Colonies and the countries which have become independent over the more recent period of time, I should think that it worked very well—in fact, quite remarkably. We ought to have a sense of proportion about this matter. Gross capital formation in the Colonies in 1956 amounted to about £450 million. The greater part of that came from the Colonies themselves. They were able to make a tremendous investment themselves because, over the years, private sources of capital here had helped to develop them. But about £90 million of that £450 million did come from outside sources, and the greater part of that came I from the United Kingdom. Again, however, almost all of that money came from private sources, and quite rightly too. We believe that private investors have done a very fine job; they "know their stuff"; and I certainly think it would be a disaster if at this time we tried to change a trend which has been so well established and so successful.

Private sources invested in the Colonies fourteen times as much as the Colonial Development Corporation in the years 1954–56, and Colonial Governments on the London market raised four times as much as the Colonial Development Corporation invested. This, my Lords, is no criticism of the Colonial Development Corporation—far from it—but I think it is important that we should maintain a sense of proportion and appreciate what great work has been done by all those who have developed not only the Colonies, as we know them to-day, but also the Commonwealth; and that has been done through private venture and private sources.

The third point that was raised was on the question how the Corporation could borrow from outside and what the terms would be. Lord Milverton asked whether the Corporation would be able to pledge its assets. I did, as a matter of fact, choose my words on that point very carefully, and, rather than repeat what was a fairly long statement on that matter, perhaps it would be sufficient for the noble Lord to look at the record to see what I said. But, further on this point, it is very difficult to give any exact guidance or to lay down any principles. It really must depend largely on the circumstances and on what the Corporation itself may want.

I know that in some ways the whole of the question is tied up with the other point which noble Lords have raised—namely, that of capital reorganisation. Therefore I will just turn to that point and leave the question of whether and how the Corporation could borrow from outside. What I said previously was based on the recognition that in some measure it depends on the capital reorganisation, which I am going to speak upon now. I think that in order to make the record clear, however, I should say that I understood the noble Lord, Lord Milverton, to say that he assumed that the Corporation would be allowed to lend to emergent territories money which had been raised from outside sources. If the noble Lord said that (and that was what I understood him to say) I would say that that is not correct. Their powers are laid down in the Bill and they can invest in territories which are no longer Colonies only if it is for the purpose of continuing a project which has already begun or for the purposes of an already existing project which may be modified or extended in some small degree.

I turn, lastly, to the question of capital reorganisation. First let me say that, far from not wanting to hear the various points raised by the noble Lord, Lord Milverton, I think it is an excellent thing to have them repeated, because that puts a new slant on a problem which we are considering very carefully at the present time. I am not able to say exactly when we shall be able to make an announcement on what may be or may not be possible. It is one of these very difficult questions. I said this in my earlier statement, and I think I should repeat what I said: that on the capital reorganisation, we understand very well the anxieties of the Corporation. Points such as special losses or interest charged are important and they are recognised as such. But they raise very difficult matters of accounting and policy. At best they will take a good time to work out.

My Lords, we thought it would be better to go ahead with what we knew was the wish of everybody, particularly the Corporation, and to get the present Bill through rather than to wait for an unspecified time to deal with these other points as well, because we wanted the Corporation to get on with its job and to have the powers to do it. So there we are. It is a subject of which we are very well aware. We have a great deal of sympathy with the Corporation and its anxieties. I do not think I can say any more. Therefore, my Lords, it is my pleasure to wish this Bill well in what it sets out to do. I know that the Corporation will employ its new powers and its new funds to useful purposes. I beg to move.

On Question, Bill read 2a ; and committed to a Committee of the Whole House.

Post Office And Telegraph(Money) Bill

Read 3a (according to Order), and passed.

Isle Of Man Bill

Read 3a (according to Order), and passed.

New Towns Bill

Read 3a (according to Order), and passed.

Cayman Islands And Turksand Caicos Islands Bill

Read 3a (according to Order), and passed.

House adjourned at Two minutes past five o'clock.