asked the Minister of Overseas Development what is the estimated current cost to Great Britain's balance of payments of the Government's overseas aid and development programmes.

I would refer my hon. Friend to my predecessor's reply to the hon. Member for Antrim, North (Mr. Henry Clark) on 2nd February, 1967. Put shortly, about one-third of any increase in the aid programme would have a direct effect on our balance of payments.

Does my right hon. Friend not agree that in the present economic context the cost to our balance of payments is being grossly over-estimated and that it is high time that some detailed work was done on this matter to illustrate the true cost?

Yes, Sir. I think that we ought to do some study into this. It is very difficult to get precise figures. Approximately one-third of the aid programme is a direct cost to the balance of payments in the short run, but in the longer term there are other advantages to the balance of payments accruing from aid, and that is something on which we ought to have more data. I will put in train studies to that effect.

asked the Minister of Overseas Development when he will restore the cuts made last winter in Great Britain's overseas aid and development programmes.

The total amount of aid next year will be higher than this year, but I cannot give a precise figure yet as several aspects are still being worked out.

Does not my right hon. Friend agree that the cuts made last winter were out of all proportion to the economic problems with which we are confronted in Britain, and does he realise that there will be no satisfaction in the House until they are restored at the earliest possible opportunity?

I cannot say at this stage whether the figure for next year will be more or less than the £225 million target for last year. The aid programme of any Government is bound to be conditioned, among other things, by its own balance of payments situation.

Will the right hon. Gentleman give us a little more information about that? When will the Government be in a position to announce the figure for next year?

There are three main factors. There will be an extra £5 million of food aid as a result of the Kennedy Round. We know that. There is the question of I.D.A. replenishment, and there is a Question on the Order Paper about that. There is also the mitigatory aid for Singapore and Malaysia on which we are at a very early stage of our talks with those countries.

asked the Minister of Overseas Development what studies his Department has made to ascertain whether items of equipment, no longer economic at United Kingdom labour/ capital/fuel cost ratios, would still be economic in developing countries; how their scrap values compare with their potential value overseas; and whether the Government would consider adding such items to the existing aid programme.

The use of our aid funds depends on development priorities in the receiving countries. There has been no significant demand for supplies of secondhand machinery or for studies concerning its use. We would be ready to consider any such requests with every sympathy.

Could not the United Kingdom Government take an initiative? Is it not the case that much of the equipment scrapped is economically obsolescent but not physically worn out? Will he not initiate studies, particularly into the capital goods which could be used for infrastructure?

Some studies have been made under U.N. auspices and there is the work in this country of the Intermediate Technology Group, with which my Department is in close touch. If these lead to a conclusion which would result in our doing more in this direction, we should certainly consider doing so.

asked the Minister of Overseas Development what progress is being made in negotiations between the World Bank and contributors to the International Development Association regarding replenishment of the funds of the Association; whether he is satisfied that a solution to the problem will be found before the forthcoming United Nations Commission for Trade and Development meeting; and if he will make a statement.

A meeting of representatives of the Part I donors has just concluded in The Hague. Further meetings are planned in the hope of reaching a settlement before the second UNCTAD. Throughout the discussions, Her Majesty's Government have stressed to their fellow Part I donors the urgency and importance we attach to I.D.A. replenishment. We have notified the President of the Bank that, subject to satisfactory conditions, we are prepared to invite Parliament to make provision for the proportionate British contribution to a replenishment of I.D.A. at double the present level.

Would the Minister give particular attention to this matter inasmuch as the effect on our balance of payments is very considerable—a favourable effect, if anything—given that the untied aid results in a considerable increase in British exports?

Yes. I can confirm that we get a good deal more back in terms of orders as a result of I.D.A. activities than we put into the Association. For that reason and many others, because of this effect of aid, we want to see a substantial replenishment and we want to see this matter resolved urgently.

Will my right hon. Friend ensure that there is co-ordination with the President of the Board of Trade, because there is no point in giving overseas aid to under-developed countries, on the one hand, and shutting out their products with tariff barriers, on the other hand?

That is an important point but I do not think that it arises directly from the Question.

asked the Minister of Overseas Development what requests for aid he has had from Mauritius; how much has been granted; and how much will be spent on atolls of special scientific interest.

I would refer my hon. Friend to the reply given by my right hon. Friend the Minister of State for Commonwealth Affairs on 1st November to a Question by my hon. Friend the Member for Kingston-upon-Hull, West (Mr. James Johnson)—[Vol. 753, c. 5–6] I understand that there are no atolls of special interest forming part of the territory of Mauritius.

If my hon. Friend is referring to atolls in the British Indian Ocean Territory, this is not a matter for me but for my right hon. Friend the Commonwealth Secretary.

Is there, then, no financial relationship or understanding with Mauritius on the question of Aldabra?

None that falls within the scope of the work of my Ministry.

Can the hon. Gentleman say when the amount of aid to be given to Mauritius on independence is to be worked out?

No, Sir. I have no statement to make about that at this stage.

asked the Minister of Overseas Development what aid his Department gives to the Seychelles; and how much of such aid provides help for Seychellois fishermen fishing waters round atolls.

Aid to the Seychelles from my Department amounted to £476,000 in the last financial year. This was in addition to grants-in-aid of the Seychelles budget, amounting to £80,000, which were provided by the Commonwealth Office.

A fisheries expert was sent to the Seychelles in 1965 to undertake a survey of the fishing industry and I understand that his report is being studied by the Seychelles Government. No financial aid has been sought for fisheries projects.

Do I understand that there is no clause referring to Aldabra in any financial agreement that we have with the Seychelles?

As I indicated in reply to a supplementary question on the last Question, none that I know of in relation to my Ministry's work.

Since the Question refers to aid to the Seychelles, can the hon. Gentleman say what progress has been made with the negotiations which have been under way for some time about the provision of refrigeration facilities for the fishing industry?

That is another question and I would be obliged if the hon. Gentleman would place it on the Order Paper.

asked the Minister of Overseas Development if he will make a statement on the progress of the 400,000 acre resettlement scheme in Kenya which is largely financed by British loans.

In order to give the hon. Gentleman as much information as I can, I am circulating a statement in the OFFICIAL REPORT.

I am grateful to the right hon. Gentleman for that Answer. Can he say whether most of the problems, which we have debated, in regard to valuation and the fairness of valuation, have been resolved? Does he agree that valuation has to be seen to be fair as well as being fair?

As the hon. Gentleman said, these matters have been debated considerably in the House. We have often stated our confidence in the professional valuers in Kenya who are doing this work. I am looking forward to meeting the hon. Gentleman next week, when we will be able to discuss these matters at length.

asked the Minister of Overseas Development how many experts provided under technical assistance are now in post advising overseas governments on the development of co-operative societies; and if he will give their names, type of co-operative advice covered and post of duty in the OFFICIAL REPORT.

Six experts provided under Technical Assistance are now in post advising overseas governments on cooperative development. I will, with permission, circulate the information requested in the OFFICIAL REPORT. In addition, there are approximately 45 British officers serving in posts concerned with co-operatives in overseas administrations under the Overseas Service Aid Scheme.

Why is there a decrease of two this year compared with last year, and why are there none in Asia?

Two have recently returned at the conclusion of their tour of duty. As to why there are none in Asia, I should be grateful if my hon. Friend would give me notice of that question; but I would make the point that we pro-

asked the Minister of Overseas Development how much Government aid is currently being provided to Zambia; and whether such aid carries any conditions requiring the Zambian Government to desist from supporting armed infiltration into Rhodesia.

The total expenditure on development aid for which my Ministry is responsible is expected to amount to about £4·4 million, for the current financial year. Some other items of Government assistance are given to Zambia and these are the responsibility of my right hon. Friend the Commonwealth Secretary. The answer to the second half of the Question is, "No". It is not the practice to attach conditions of this kind to aid.

While noting that Answer, may I ask the right hon. Gentleman if he does not agree that it is deplorable that a country in such generous receipt of British taxpayers' money should, nevertheless, pursue a policy which can only make a settlement with Mr. Smith's Government all the more difficult and, therefore, be acting against the British national interest?

We have made it clear on several occasions that we disapprove of any violent solution to the Rhodesian problem. We have made our view clear to the Zambian Government and they stated several times that they are not giving help to infiltrators. Apart from that, we should regard the policy of development aid, certainly in the long term, as being designed to help people's standards of living and not to turn it on and off like a tap because of a temporary difficulty.

vide such experts in response to requests from overseas Governments. Thus, the geographical distribution is not, so to speak, a matter of our direct disposition.

While appreciating that this is on another point, may I ask whether the right hon. Gentleman can say what is the value of the business which Zambia is doing with Rhodesia?

Not without notice.

As this country is legally responsible for the people of Rhodesia, may I ask the right hon. Gentleman to reconsider this decision and say to the Zambian Government that, if they want aid from us, they must stop terrorists going over the border to create havoc and murder?

No, Sir. We have a number of responsibilities in this matter. We accept responsibility for helping the development of Zambia so that the people living in poverty there can have a better life. This should be considered as important by hon. Members on both sides of the House.

asked the Minister of Overseas Development what proportions of the total sum of £205 million allotted by the Government for Overseas Aid in 1967–68 are to be in currency, advisory services, capital goods, and consumer goods, respectively.

Figures for 1967–68 will not be available until after the end of the year. Following the hon. Gentleman's classification as closely as I can, the proportions for the calendar year 1966 were as follows: budgetary aid, 13 per cent.; technical assistance of a broadly advisory nature, 12 per cent.; bilateral financial aid, most of which is for the purchase of capital goods, 59 per cent.; and other aid, 16 per cent.

I thank the hon. Gentleman for that reply. Will he say how it is intended to spend the additional £20 million, the increase which the Minister has publicly undertaken to grant in the coming year?

In answering an earlier Question, my right hon. Friend indicated the three main categories of such increases as we are looking forward to in the coming year.

asked the Minister of Overseas Development what proportion of the capital goods distributed as Overseas Aid in 1967–68 is materials of a military nature.

None, Sir. Military aid is not part of the economic aid programme to developing countries administered by my Department.

While thanking the right hon. Gentleman for that Answer—and I am delighted to have the assurance contained in it—may I please ask him to say what type of aid is contemplated for Singapore and Malaysia to replace our reduced military commitment in the area?

Broadly speaking, it will be aid directed to the development of the economies of those two countries, but the details are still being discussed with them.

asked the Minister of Overseas Development what proportion of Government aid overseas is currently allocated for technical assistance programmes.

About 19 per cent.

Would my right hon. Friend accept that probably the most valuable form of assistance we can give to developing countries is the sort of assistance which provides for the export of "know-how" rather than simply supplying budgetary aid? Will he seek to ensure that, in future years, this welcome increase in this type of aid is continued?

Broadly speaking, I agree with what my hon. Friend has said. The amounts of technical assistance have been increasing in recent years, and although there are several other factors which may affect the future level of aid —whether or not it can be increased—I assure my hon. Friend that we certainly regard this as among the most valuable things we do.

asked the Minister of Overseas Development when it is proposed to start work on the new airfield in the British Virgin Islands.

I hope that work on the improvement of Tortola Airfield will start towards the end of March, 1968. It will be carried out by the Royal Engineers.

While I am glad to hear that news, may I ask the hon. Gentleman to give an assurance that the foundations will be sufficiently strong for the airfield to be extended to take really big aircraft at a later stage? Will the money come out of the special C.D. and W. grant?

The Royal Engineers did a feasibility study on this project and I have no doubt that they took into account the sort of point mentioned by the hon. Gentleman. On the financial side, this is still a matter for discussion between my Department and the Commonwealth Office; but I assure him that there will be no difficulty in the provision of finance for this project.

Since I take it that this airfield is meant to contribute to the development of the Virgin Islands, may I ask whether it will be used solely for civil purposes?

I am not sure about the extent of the airport's use, but it is intended to be largely in connection with the development of the islands, particularly with the development of their tourist trade.

Since the Chief Minister there recently said that the Government are failing to understand and meet the needs of this small territory, and since he complained that no British Minister had been there, can the hon. Gentleman say if there is any proposal for a Minister or senior official of his Department of the Commonwealth Office to visit this territory?

There is no proposal for a Minister to visit the territory at present, but we have a Development Division in the Caribbean and officials from that Division are constantly available should their presence be necessary.

asked the Minister of Overseas Development whether he will seek powers to grant interest-free loans to United Kingdom residents in receipt of pensions from Pakistan, who have had their pensions reduced as a result of the devaluation of the Indian rupee, until their pension cuts have been restored.

The responsibility for paying these pensions at the former rate is without question a matter for the two Governments concerned. We have made strong representations to the two Governments.

Do the Government still stand by the undertaking given in 1955 by the Government that such pensioners can have faith that the Government will look after their interests should they fall on evil times?

Yes, Sir; we stand by that undertaking. In relation to this specific difficulty—we regret, of course, that these people have had their pensions reduced in this way—I will, exceptionally and without derogating from the position that Her Majesty's Government have no direct responsibility in the matter, nevertheless consider the possibility of making loan advances as a temporary arrangement to any individual pensioner who is suffering serious hardship because of the reduction in his pension.

Will my hon. Friend look at the whole case and not just the exceptional ones? These people have done their service on the sub-continent. Will my hon. Friend look at the whole matter? Will he also say how many are involved and what the expense would be?

We are constantly looking at the whole case. We have constantly been in touch with the Governments of both Pakistan and India on the matter, and the High Commissioners have recently been in touch in Rawalpindi and New Delhi. So there is no question of our not having done all that is possible. As to the numbers, 21 have made their cases known to us. I would stress that this is a matter for the Pakistan Government, and we have no full information from them about the full number.

Is it correct to say that this is solely a matter for the Pakistan Government? Does not this House always show a keen interest in the pension arrangements of overseas civil servants who have served both their countries abroad and this country very well? May we associate ourselves with the suggestion by the hon. Member for Bristol, North-West (Mr. Ellis) that the whole question should be looked at again to ensure that justice is done to these public servants?

There is no doubt where the responsibility for these pensions lies, and that is with the Pakistan Government. The difficulty about the pensions arises out of the settlement with the India and Pakistan Governments at the time of independence in 1947.

asked the Minister for Overseas Development if he will make a statement on the aid given to Botswana.

I would refer the hon. Gentleman to the Answer given by my predecessor on 6th February this year to my hon. Friend the Member for Stretford (Dr. Ernest A. Davies), when he said that the British Government had offered to provide the Government of Botswana with up to £13 million budgetary and development aid in the three years beginning the 1st April, 1967. This offer was accepted by the Government of Botswana.—[Vol. 740, c. 233–4.]

While I welcome the generous aid given to Botswana, may I ask the right hon. Gentleman whether he is aware that recent security difficulties have been created because of the arrest of armed infiltrators? Will he consider a further grant to enable the very efficient Botswana police force to be increased in size?

Some part of our aid is already used for assistance to the police force. I know that the Botswana Government are concerned about the situation to which the hon. Member refers and are taking extra steps to deal with it.

Would not my right hon. Friend agree that in the context of the political tensions in Southern Africa we should take every opportunity to extend the aid programme to Botswana in order to give real political substance to her independence and release her from exclusive reliance upon the Union of South Africa?

I have sympathy with that. The aid to Botswana is on a relatively generous scale. We give about 90 per cent. of the aid received by her. I recently had talks with the Vice-President of Botswana, and he expressed appreciation to Her Majesty's Government for what we are doing.

asked the Minister of Overseas Development whether he will make a statement on the effect of the increase in university and other fees for students from overseas.

Yes, Sir. I propose to introduce with effect from the academic year 1968–69 a new scheme of awards for students from the developing countries. The awards will cover full fees at universities and other institutions in this country, but not maintenance or travel or other costs. The awards will be held for an average period of two years. Funds for the scheme will be provided over and above those already allocated to overseas aid. I am inviting the universities and other bodies to discuss the details of the scheme with me.

Would my right hon. Friend agree that the new scheme is a very adequate reply to the many criticisms heaped on the head of his right hon. Friend the Secretary of State for Education and Science last January? Can he tell us how many awards will be made?

Yes, Sir; I am grateful for what my hon. Friend says. The scheme arises from the undertaking given by the ex-Secretary of State for Education and Science that we would keep the whole question under review. I would expect about 1,000 students a year to qualify for the scheme, which means that when it is fully in operation there may be about 2,000 students in Great Britain under it.

Since this is the best possible form of aid, can the right hon. Gentleman say how much it will cost?

I expect it will cost about £500,000 in a full year.

asked the Minister of Overseas Development what aid will now be sent to South Vietnam in 1968.

The size of our medical and nursing team at the Children's Hospital at Saigon will be expanded from 11 to 18. We are providing complete X-ray, and other equipment—about £35,000 —for the new hospital block. Also as a capital grant, about £75,000 of road-making equipment.

Other projects are under study.

In view of the very widespread concern about casualties and damage in South Vietnam, is it not rather disgraceful that our material contribution to the relief of suffering in that country should be so small?

In the last sentence of my reply I said that other projects were under study, and I expect that these will result in a fairly substantial increase in the next financial year in the amount of aid going to South Vietnam compared with this year.

Will my right hon. Friend define the reasons why road-making equipment is being sent out? Will he give an assurance that the main assistance will be purely along the lines of medical aid, because any other aid would be considered as an interference in the situation and show that our so-called rôle of neutrality was absolutely nonsensical?

I do not see any reason why our aid should be confined to medical aid. [HON. MEMBERS: "Oh."] Projects under discussion cover other forms of aid. However, they are all projects of an economic and social nature, and none of them is directly related to the war. That is what I had in mind in my reference to road-making equipment.

The right hon. Gentleman mentioned the children's hospital. Some of us have seen the help given and appreciate it. Can he say whether one of the projects under consideration is the extension of the clinical laboratory there, which ought to go along at the same rate as the hospital?

I have announced some extra help to the hospital. I think that our future help to the hospital and that with regard to clinical laboratories will be considered with other projects. There are many more suggestions than we can take up. However, I hope to take up some of the new ones. I agree that medical assistance is most important, and by that I mean not only actual medical assistance but helping local personnel to have a rôle in this field.

asked the Minister of Overseas Development what further requests have been received by him from the Government of Tanzania asking Her Majesty's Government to assume responsibility for the pensions of British expatriate officers who have served in Tanganyika in the past.

None, Sir. The position remains as stated in my reply to the hon. Gentleman on the 26th June.—[Vol. 749, c. 25.]

Since the Minister of Finance in his Budget Statement urged that the British Government should look into the whole question and assume their proper share of the payment of pensions, should not the whole question of pensions be looked at again in respect not only of Tanzania but of all our pensioners and reduce aid accordingly?

I am sure that the hon. Gentleman recognises that even in relation to one territory a suggested change in the apportionment of costs in a matter like this raises very great difficulties, not least in the case of Tanzania, because of the lack of communications but also because of the point that he mentioned in his supplementary question, that a considerable question of precedent arises out of this particular case.

asked the Minister of Overseas Development what response Her Majesty's Government propose to make to the recent official proposal of the President of the World Bank that a new international committee of experts should be set up to review the whole field of economic aid and assistance, on the lines of the Franks Committee which preceded the Marshall Plan.

Mr. Woods' important proposal deserves close and urgent consideration, but, as Mr. Woods' speech was made only on 27th October, it is too soon for me to give a considered statement of Her Majesty's Government's views.

That response is welcome as far as it goes, but will the right hon. Gentleman recognise that we are now reaching a time of decision in the whole world structure of economic aid and assistance and it is, therefore, imperative for this country to show an early response and take a lead in meeting this initiative?

Yes, Sir; I welcome the general views expressed in Mr. Woods' speech. As regards the proposal itself for a panel of experts—a grand assize, as he put it—this is a matter which we are urgently considering, and I shall bear in mind the reasons given by the hon. Gentleman for as much urgency as possible.

But would not the right hon. Gentleman agree that, at a time of growing anxiety in the developing countries about the adequacy of aid and of cynicism in the developed countries about its efficacy, there is the highest possible merit in the suggestions made by the President of the World Bank? Will he note that we on this side at least welcome that initiative and hope that the Government will take it up?

Yes, Sir, I shall bear that view in mind. Perhaps I may add —I am sure that I carry hon. Members opposite with me in this—that, if there is to be a grand assize of this sort, it should not be a reason for postponing other decisions outstanding, for instance, on the question of I.D.A. replenishment about which we had Questions a little earlier.

asked the Minister of Overseas Development what representations he has made to the Government of Ceylon concerning the deductions for income tax from the pensions of former members of Her Majesty's Overseas Service which are considerably greater than the assessments on those pensioners.

The British High Commission in Colombo has been asked to make representations to the Ceylon authorities in a number of individual cases which have arisen.

Is the Minister aware that in a number of cases the delays run to years rather than months? Is not this unfair on people who served this country well when we were in charge of Ceylon?

I recognise that there have been serious delays, but I assure the hon. Gentleman that we are constantly making representations. We have recently sent a reminder to the High Commission in Colombo about all outstanding cases. However, we have to rely on the Ceylon authorities in the last resort to deal with the actual cases which arise.

asked the Minister of Overseas Development what support his Department has given to research into the basic problems of economics, administration and education which very poor countries face in endeavouring to develop their resources.

My Department makes a grant for research and training to the Institute of Development Studies at Sussex University amounting this year to £90,300. In addition, it is spending about £170,000 this year in support of research into the economic, educational and social problems of the under-developed countries as part of our programme, now running at just under £3 million, for assisting research into problems affecting development.

How much of the money being spent in Sussex and elsewhere is spent on teaching and how much is put into research? Second, are we certain that we have answers available to teach people who come to these courses? In particular, have we experts who could take part in the kind of team suggested in Question No. 19?

The grant for Sussex is for research and training. Without notice, I cannot break it down further, and I am not certain that a precise line could be drawn. The hon. Gentleman may be glad to know that it will be considerably increased next year as the institute gets further into its stride.

asked the Minister of Overseas Development what discussions his Department has had with the Zambian and Tanzanian Government on the construction of the Tanzania-Zambia railway by a British and European or American consortium rather than by the Chinese.

None, Sir.

Is it not in the worst interests of this country, Tanzania and Zambia that the Chinese should build this railway and that large numbers of Chinese Communists should move into the areas involved, where they can cause only disruption and tension? Ought not an initiative to come from the Western world in this matter?

I should not like, on this Question, to comment on matters which are for the Governments of those countries to decide. So far as this country is concerned, clearly, the amount of money required for this project would be right outside the scope of our present aid programme. If a consortium were formed in which we were invited to take part, we could at least consider it, though I should not like to prejudge the answer.

Does not the right hon. Gentleman agree that, despite the considerations mentioned by my hon. Friend the Member for Antrim, North (Mr. Henry Clark), it would be most unwise on our part to get into an economic involvement on this subject in order to meet what may prove to be transient political needs?

Yes, Sir; in any case, we have not been invited to give financial aid for this project by either Zambia or Tanzania, so, in a sense, the question does not arise.

asked the Minister of Overseas Development what progress is being made concerning the university in Fiji.

Very satisfactory progress has been made with the agreement of all the Governments concerned. The interim council for the planning and construction of the university held its first meeting in September and reached decisions on a numbers of important matters. We are sending out an architect to help with the physical planning and have provided £50,000 to help convert buildings and provide the necessary equipment for the first courses, which will begin in March, 1968.

I thank the hon. Gentleman for that reply, but can he say whether any hostels are being built for students from the other islands, as it is better for students in the Pacific Islands to go to a university in that area rather than come to this country, though they might, perhaps, come to this country for post-graduate education?

Hostel accommodation will be in the overall plan, but I should like notice of the question whether it is provided in the actual planning of this £50,000 expenditure.

asked the Secretary of State for Economic Affairs when he expects to receive the report of the Hunt Committee on the operation of investment grants, Selective Employment Tax and premiums upon grey areas such as North-East Lancashire.

asked the Secretary of State for Economic Affairs whether the Hunt Committee on grey areas has yet begun its work; and when he expects it to report.

I understand that the Committee's work is well under way. It is too soon to say when a report is likely to be available, but the Committee is very conscious of the urgency of its task.

Are not long-term decisions detrimental to the grey areas being taken now owing to the clumsy division between black and white areas? Will the Minister impress upon Mr. Hunt and his colleagues that they should report in a matter of weeks rather than months?

The Committee is already deeply conscious of this need and is doing everything it can to accelerate its rate of work. In the meantime, the Department of Economic Affairs is watching the situation to see whether it will be necessary for a Minister to take any interim action.

I welcome the urgency which my right hon. Friend has attached to the establishment of the Hunt Committee, but will the Minister assure us that action will be taken, if necessary, to deal with certain of the more urgent problems in the grey areas before the Hunt Committee makes its final report?

Yes, Sir. I am deeply aware of my hon. Friend's concern about his own area. My right hon. Friend the Secretary of State has made clear that, if necessary, interim action would be taken.

How does the Minister define a grey area?

This is what the Committee is sitting to decide.

Will not my hon. Friend agree that what North-East Lancashire needs, and needs desperately and urgently, is short-term measures not only to encourage new industry to come into the area, but, equally, to discourage existing Lancashire firms from developing outside, as is happening at the moment?

This is somewhat beyond the scope of the present Question, but, of course, the real objective is to ensure that top priority is given to the redevelopment of the development areas, and against that background to do what we can for other localities.

To what level must unemployment rise in Lancashire before any interim action is taken?

I can only repeat what I said, that we are constantly watching the situation in all areas to see whether action is required.

Is it not a waste of time of the people concerned to have this Committee, when there is little it can tell us which existing committees, such as the North-West Economic Planning Council, do not tell us? What is going to be done while we are waiting, perhaps, two years for the report?

My hon. Friend is far too pessimistic about the time scale. I think that it will be substantially earlier than that. It was to examine the effect of new measures as much as old measures that this Committe was set up.

Will the hon. Gentleman take it that the people of Lancashire will be far from satisfied with what he has told us today? Does he know that, in the meantime, that part of the country is decaying industrially? When are we to hear from the Minister for the North what he is doing about it?

I cannot answer for my right hon. Friend. [HON. MEMBERS: "Why not?"] It is not my task to do so. I can only repeat that the Government's job is to ensure that the priorities are observed for the areas which have the greatest problem at the moment, and this is what our policy is geared to attain.

Does my hon. Friend realise that the contraction in the cotton textile industry is just as serious as that in the coal industry? Will he, therefore, recognise that urgent steps are needed to help grey areas such as the Central and East Lancashire belt?

I am aware of that. The point to be borne in mind is that we have to consider the general viability of the locality within which the decline is taking place, and there is no denying that the position of the development areas is substantially worse at the moment than that of the grey areas.

asked the Secretary of State for Economic Affairs if he will make a statement on the work of the industrial reorganisation corporation.

Mr. Joel Barnett, to ask Question No. 27.

When I saw the Order Paper today, Sir, that was my first intimation that I had been awarded a knighthood. I understood that my right hon. Friend the Prime Minister had not intended to do this sort of thing.

Order.

During its first year of operations, the I.R.C. has successfuly established good working relations with industry in furtherance of its principal function of promoting industrial reorganisation. The Corporation has examined the structural problems facing various industries, and has been working in concert with many firms to bring about some measure of rationalisation. It has participated financially in a merger in the electronics industry and has, at the Government's request, made an investment in the Rootes Group. These activities have laid an excellent foundation for the Corporation's future activities.

I understand that the new Industrial Expansion Bill is to come under a different Ministry. Would it not perhaps be helpful to have one Ministry to deal with the I.R.C. and the new Bill, because presumably the same sort of people will be dealing with the Government under both Measures?

My hon. Friend had better await the Bill. The I.R.C. has as its primary objective the rationalisation of industry. Nevertheless, discussions are being held with it about the precise rôle that it might play in relation to the powers conferred by the new Bill.

Why is the Bill to be handled by the Minister of Technology? Is it true that this is because the Board of Trade would have none of it?

That is a different question. This Question relates to industrial reorganisation.

asked the Secretary of State for Economic Affairs if he will make a statement on progress on the National Plan Mark 2.

I would refer the hon. Gentleman to my reply to the hon. Member for Moray and Nairn (Mr. G. Campbell) on 24th October.—[Vol. 751, c. 440.]

How is it possible to proceed with the National Plan until it is known whether we are to enter the E.E.C. or not and, if so, on what terms?

If the decision were taken that we should join the E.E.C., the initial major impact would not be felt within the period of the Plan. Other imponderables of international trade are making the base far more doubtful at the moment for devising planning techniques.

asked the Secretary of State for Economic Affairs what estimate he has made of the cost of the regional employment premium and of the amount which each region is now expected to receive.

Total payments of the regional employment premium by the Exchequer to the development areas are estimated for 1968–69 to be approximately £100 million. This total is distributed as follows: Scotland £40 million, Northern £28 million, North Western £18 million, Wales £12 million and South Western £1·6 million. Under separate arrangements the Northern Ireland Government will receive £11 million in 1968–69 from the U.K. Exchequer towards the cost of the scheme.

How many jobs does my hon. Friend expect to see created in the first 12 months of the operation of the scheme? Can he form an estimate also of the cost per new job created?

With a new type of incentive such as this, it is difficult to make any precise calculation at this stage. It would be better to see the scheme in operation for a few months.

How is this statement to be reconciled with the Green Paper on the regional employment premium which said that the scheme would be self-financing?

I do not think that arises out of the Question on the Order Paper. Obviously, the aim of the scheme is to enable the regions to expand while holding inflation down in the over-heated areas, and the term "self-financing" as used in that context has not the same meaning as in the sense suggested by the hon. Gentleman.

asked the Secretary of State for Economic Affairs whether the special measures of assistance to colliery districts by encouraging industrial development will now apply to Thorne, where the local colliery has been closed for several years causing unemployment and hardship in that area.

My right hon. Friend is still consulting with regional economic planning councils about the areas to be covered by the Government's new measures.

Will my hon. Friend bear in mind that this is a matter of extreme urgency, since in this area unemployment is about 9 per cent. and prospective employers are being actively discouraged from settling in the district?

We are aware of this and hope to be able to make a statement fairly soon.

asked the Secretary of State for Economic Affairs what will be the criteria for the definition of the new development areas or special areas within the development areas.

The areas selected are those where, in the absence of special measures, colliery closures are likely to cause very high levels of unemployment which would persist for at least two or three years.

Will my hon. Friend look at this again? We were much encouraged in Sunderland by the visit of my right hon. Friend the Chancellor of the Duchy of Lancaster and convinced him of our special difficulties. Would my hon. Friend look at other areas, apart from those with mine closures, which have particular difficulties?

The intention of the scheme is to deal with a rapid and high rate of unemployment created by technological conditions or the decline of an industry. If similar circumstances should emerge in other industries, we would take the appropriate action.

Does not my hon. Friend agree that the fact that the regional employment premium is related to the proportion of manufacturing industry workers in the development areas is one of the reasons that we still face this special development area problem in such areas as the far South-West?

The point of the premium, surely, is to enable manufacturing already existing in these areas to become more competitive and that it should act as an extra inducement to firms to move into those localities.

asked the Prime Minister if he will dismiss the Governor of the Bank of England.

No, Sir.

Will my right hon. Friend now repudiate Sir Leslie O'Brien's statement that the Government have accepted that there must be a larger margin of unemployed than in the 1940s and 1950s?

I dealt with this in the debate on the Gracious Speech and I want to make the position clear again. We regard the present transitional level of unemployment as unacceptable. We do not seek a pool or reserve of unemployment and no one in any official position has ever suggested it.

As I explained to the House last week, and as my right hon. Friend the Chancellor of the Exchequer repeated on Tuesday, the "stop" phases of recent years and the consequent unemployment have resulted from over-heating and labour famine in the prosperous areas, where unemployment had fallen to figures around 0·5 and 0·6 per cent.

Our regional policies mean that we will be able to operate in future on much lower figures of unemployment in the development areas, where unemployment is and has been concentrated, and on a more realistic figure in the prosperous areas.

This will mean that total national unemployment will then be no more than what is justified by the frictional movement of workers from one job to another, seasonal factors and the short-term effects of structural change.

In view of the reported promotion of the Paymaster-General, will the Prime Minister consider appointing the Governor of the Bank of England to fill the vacancy? Alternatively, will he consider appointing a—[Interruption.]—real horse—[Interruption.]

I have no comment to make on reports about my right hon. Friend the Paymaster-General because no submission has been made to Her Majesty, but anything which might occur in future would not be dismissal but redeployment.

Does my right hon. Friend accept that in the speech of the Governor of the Bank of England, for which we ask repudiation, there is no reference whatever to regional policies? Does not my right hon. Friend recognise that, when the Governor, and the Chancellor, say that they have to have a larger margin of unused resources, this means more unemployed, and that is what we will not have?

No, Sir. The speech is not to be interpreted in that way. The Governor was not speaking in Rio de Janeiro about regional policies in this country. Since my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) is saying with authority what he thinks the Governor was talking about, I wish that, in his Motion on the Order Paper, he had not put what is quite inaccurate—that the Governor advocated a permanent pool of unemployment. In no report of the Governor's speech have I read any such suggestion. If my hon. Friend has seen a different report, I would be glad to look into it.

Can the Prime Minister tell us simply whether the speech of the Chancellor of the Exchequer on Tuesday represents Government policy?

Yes, Sir. My right hon. Friend was speaking in the regional context. It is true that there were some interruptions which made it a little difficult for him to develop his argument, but he said exactly on Tuesday what I said in the debate the week before.

Would the Prime Minister agree that it is misleading to speak of a general level of unemployment in view of regional variations, and would he further agree that no Member of this House has done more than the Chancellor of the Exchequer to tackle the real long-term problem of unemployment, which is the economic malnutrition of the regions?

I certainly pay my full tribute to my right hon. Friend, at a time of financial stringency, for the very great resources, financial and otherwise, that he has made it possible to devote to regional regeneration. I certainly agree that one cannot look on this problem except on a regional basis, as I made clear a number of times at Scarborough and elsewhere. The whole basis of our re-expansion programme is as a regional expansion programme.

Since the Prime Minister declines either to dismiss or disown the Governor, would he agree that it is unfair to criticise the Governor for making remarks which are merely a reflection of those expressed by the Chancellor of the Exchequer on Tuesday?

Criticism of the Governor has been unfair. Critics entirely fail to take account of the tremendous contribution to our national wellbeing made by a very devoted and highly professional servant of the State.

Is my right hon. Friend aware that while Members on this side of the House fully applaud the concept of tackling the regions—in any case a principle upon which we were elected—we will not accept the idea of a general overall level of unemployment of about 2 per cent. to 2½ per cent. which covers the whole country? Does he realise that this is not acceptable to the Labour movement?

My hon. Friend will agree that that is what I said in answer to the first supplementary question this afternoon. The position is, however, that if one has a great differentiation between prosperous and other regions, then one has to take action. This is the whole history of the "stop" phases under successive Governments. One has to take action when the prosperous areas get into a state of total famine of labour, skilled and unskilled. In every case when this has been done under successive Governments, including our own, the fact that there was already a pretty chilly atmosphere in the development areas has meant that unemployment there reached figures which we regarded as intolerable.

If one can get the two more into balance, which is the purpose of our policies, one can have a somewhat higher figure in the prosperous areas—and no one could complain about that, because it would not mean any people being involuntarily unemployed, apart from the cases that I have mentioned—while the development areas would be down to a tolerable level. The closer we can bring them together the lower the national average of unemployment will be.

Will it help the Prime Minister in these circumstances to be precise? Does he adhere to his statement of July 20th last year that after the redeployment, after the reabsorption, after the regional distribution, then a pool of up to 2 per cent.—470,000—unemployed is acceptable?

Not a pool. Not as a permanent figure. I said after the redeployment. The right hon. Gentleman once, inadvertently, quoted me in a public speech as saying that I looked on this figure as permanent. I do not. When we have got the proper balance between the regions we will be able to operate on lower figures. Since the right hon. Gentleman referred to the measures of last year, it is right to say that one of the main reasons, perhaps the reason, for the present level of unemployment, is the fact that, as every hon. and right hon. Gentleman knows, business firms are much more cost-conscious than they were. They have eliminated a lot of wasteful labour practices because production is now running above last year, whereas unemployment is higher. What has happened is that a number of men who were under-employed have been dismissed by firms and this is the problem that we have to deal with.

asked the Prime Minister if he will state the approximate number of unemployed the Government aims, or are likely, to establish in February, July and December of next year and in July, 1968.

I would refer my hon. Friend to the Answer I gave on 26th October to a Question by my hon. Friend the Member for Fife, West (Mr. William Hamilton).—[Vol. 751, col. 557–8.]

Does the Prime Minister intend to restore full employment, that is to say, the level obtaining before the credit squeeze of last year, which was 260,000? If he does not, is he aware that his policy will remain totally unacceptable to many Members on this side of the House?

Yes, Sir. If we do not restore full employment it will be totally unacceptable to me, to my right hon. Friend and to the whole Government. As I have said, it is not possible to avoid serious balance of payments crises if in significant parts of the country one has such shortages of skilled and unskilled labour that delivery dates cannot be met and imports are sucked in. That is the situation that we are facing and have faced in the past. Equalise the regions and we can have full employment on the basis that I defined it earlier.

Would the Prime Minister concede that in view of overwhelming evidence, even now, of a massive amount of mis-employment and artificially sustained employment, this overwhelming concentration on the statistically visible index of unemployment is quite unproductive?

It is true that there is still some considerable misuse of labour in industry, but everyone would pay tribute to what has been done by both sides of industry over the past year in increasing productivity, which is now rising very very rapidly indeed. In one sense this is the cause of our problem—the level of unemployment. At the same time it is the biggest reason for hope of the expansion which has now started continuing without becoming uncompetitive.

Does not the Government's present policy inevitably mean that, for example, in London and the South-East the rate of unemployment is bound to be substantially increased, if not doubled?

What I was referring to was the fact that in some areas, and I was thinking particularly of certain Midland areas, 0·5 per cent., 0·6 per cent., is not a definition of full employment that any of us would regard as realistic, because when there are eight skilled vacancies for every skilled man, with the bottle-necks arising, obviously a higher figure will be tolerable without a single man being involuntarily unemployed?

Is the Prime Minister aware that the Chancellor's precise words on Tuesday were:

"We must have a somewhat larger margin of unused capacity than we used to try to keep. That is the truth of the matter."

Is the Prime Minister aware that every explanation that he has given this afternoon is totally incompatible with this statement?[HON. MEMBERS: "No."]

No, Sir. We have run into difficulties time and time again because we have too little margin of capacity in over-productive areas, which affected our overseas trade. My right hon. Friend was not referring to any national pool, and neither he nor anyone else has used the phrase "national pool" on any occasion.

May I ask the Prime Minister whether he realises that the Report recently issued about the inbuilt growth of the South-East Region, and the position in the old regional areas where unemployment is increasing while the older industries are undergoing technological change, is the fullest justification for a concentration upon the regions to help solve the unemployment problem?

Yes, Sir. And this means the most stringent measures, not only to build up employment investment in the development areas, but also to hold back an excessive deployment of investment in the prosperous areas such as were mentioned by my right hon. Friend.

Is this not just a further example of Ministerial double-talk?

The right hon. Gentleman told us last week that he did not understand anything about unemployment, and it is quite clear that he does not.

Since my right hon. Friend rightly lays stress on regional differentiation on this problem, and since most of the development areas depend to a great extent on coal mining, will my right hon. Friend reconsider the suspension or closure of pits for a further period until we get over the winter period and the early spring?

My hon. Friend will be aware, and I know of the deep concern in his own constituency and in surrounding areas, of what we have done for the difficult winter that we are facing. I am sure that he will be aware—and this will be gone into more thoroughly when our White Paper on fuel policy is available—that if one keeps pits open when they are uneconomical the total volume of coal production is more than can be burned except by heavy subsidies. We would simply be putting more coal on the ground and the result at the end of the day would be a very large expenditure of public money to keep it there.

Does the right hon. Gentleman recall that in at least five speeches between 1962 and 1964 he absolutely condemned any policy that allowed a level of unemployment above 500,000? Is not the present policy of his Government a complete betrayal of anyone who believed in them?

I explained on 20th July, 1966, what the consequences of these necessary measures will be. I do not think that any of us actually foresaw one thing, which is the increased unemployment figure. But this in its way is a very hopeful factor for our economy because of the very great increase in productivity, based on getting more output for less manpower. This is the basis on which we can go forward for the expansion which has now begun.

Can my right hon. Friend explain why, in spite of his interpretation of the statement of the Chan- cellor of the Exchequer, many of us fail to understand it? Is it our fault, the fault of the statement made by the Chancellor of the Exchequer, or the attempt of my right hon. Friend to interpret the statement?

To judge from what my right hon. Friend said on the radio at lunch time, it is the result of my right hon. Friend not doing his homework. It is most unusual for him; I do not think that it has happened before. If he had done his homework, he would not have signed a Motion which so completely misrepresented what had been said. I am sure that my right hon. Friend will now give very close study to what is a pretty difficult concept of this question of regional balance so far as the total of unemployment is concerned. When he studies it, I am sure that he will feel very much happier than he did at lunch time.

Does the Prime Minister still stand by his statement of 20th July, 1966, that he did not seek any policies of the kind which would bring an unemployment figure of over 800,000 to this country?

Yes. That was very clear, I think, from the answer to the first supplementary question today. I have not made—I wish that I could make, and I should like to make for the House —an estimate of what it is likely to reach during this winter. Obviously a lot depends on the weather. The right hon. Member for Enfield, West (Mr. Iain Macleod) made a brilliant forecast of 650,000 in 1959, and he was right almost to the last decimal point. The reason why it is not possible to make an estimate is that there has been a change in the trend in unemployment. The rise has stopped and it is difficult to make an exact forecast of what the underlying trend will be, apart from the seasonal increase due to bad weather.