Commons Chamber

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House Of Commons

Monday, 8th July, 1968

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Suez Canal

asked the Secretary of State for Foreign Affairs if he will make a statement about the continued blockage of the Suez Canal.

The Special Representative of the United Nations Secretary-General is continuing his efforts to promote a settlement in the Middle East on the basis of the Security Council Resolution of 22nd November, 1967, which amongst other things affirmed the necessity for guaranteeing freedom of navigation through international waterways in the Middle East.

As the Israelis object to letting these ships out of the northern end of the Canal, can the Foreign Secretary say what steps the Government have taken to try to arrange for the clearing and the unblocking of the southern end of the Canal by forces which are neither Egyptian nor Israeli but international under United Nations supervision, because this, if there is any logic in the case, seems to be the only way to overcome the present problem?

I do not think that I can pronounce on that way of dealing with it, but I am in touch with all the Governments concerned and with some of the private interests concerned, and I hope that we shall be able to make progress.

Why does not my right hon. Friend consider doing something about the suggestion which has just been made? Have not Israel, Egypt and the United Nations agreed to let the ships go through the southern passage and are not the only people causing difficulties about the northern passage the Egyptians, who will not agree to abide by the Security Council's decision?

It would not be sensible for me to make pronouncements about the exact responsibility of any party at this stage. We must hope that the work which Dr. Jarring is doing will produce results.

asked the Secretary of State for Foreign Affairs what further progress he has made in securing release of British Ships trapped in the Suez Canal.

asked the Secretary of State for Foreign Affairs what progress has been made with securing the release of British ships trapped in the Suez Canal.

40.

asked the Secretary of State for Foreign Affairs with which Governments Her Majesty's Government are negotiating on freeing British vessels laid up in the Suez Canal.

49.

asked the Secretary of State for Foreign Affairs what further steps he has taken in the last month to bring about the release of the British ships blocked in the Suez Canal.

Her Majesty's Government have continued their efforts to bring about fresh arrangements for the release of the blocked ships, but I remain unable to forecast when the ships will be released.

Having regard to the fact that Her Majesty's Government have obtained no satisfactory answer from Nasser, is not the policy of the Foreign Office again demonstrated to be a total flop? Will the Foreign Secretary now give the House an assurance that no British money will be lent to Egypt until our ships are freed from the Canal?

No, Sir. I do not think that that would help.

It would help, you know.

If I wanted advice on how to handle the Suez Canal, I should not look across to the other side of the House to get it.

Is the Foreign Secretary aware that his party's record at the time of the Suez intervention was disgraceful? [AN HON. MEMBER: "Who's talking?"] Does the Foreign Secretary think that the latest statement by the Israeli authorities on their attitude to an attempt to release the blocked ships is significant? Will he comment on that? Is he further aware that we shall be more inclined to take seriously alleged peaceful professions from President Nasser when he shows himself cooperative in releasing these ships?

The answer to the first part of the question is, "Certainly not". With regard to the remainder, there have been, both in the statement to which the hon. Member has referred and from other quarters, signs that we may be able to make progress. I think that everyone will understand, however, that this is a difficult and complicated matter, and it would not be helped by pronouncing judgments of the kind pronounced by the hon. Member at the end of his question.

Can the Foreign Secretary say what last communication he has had from Dr. Jarring about this question? If unsatisfactory answers continue, will the right hon. Gentleman raise the matter again in the Security Council?

I shall be seeing Dr. Jarring tomorrow and I shall have to consider whether any further steps of the kind suggested by the hon. Member are appropriate after that.

Would not the Foreign Secretary agree that one of the problems may well be that the Israelis are unwilling to allow dredging ships and other equipment to move from Port Said down to Ismailia so that the channel may be cleared?

Of course, that is one of the difficulties, but my hon. Friend will realise that it is not the only one.

Is my right hon. Friend aware that those of us who have been on board these ships and have been working with Lloyd's in this matter have come to have a high regard for the work of the Foreign Office in this complex problem?

I am obliged to my hon. Friend for what he has said.

Would not the Foreign Secretary agree that there are some hopeful signs in the statement made by Col. Nasser in Moscow and also the evidence of increasing American pressure on Israel? Does he not realise, however, that what upsets people in Britain is the feeling that we, who have so many ships there, are unable to have the same effect on the protagonists as have the Soviet Union and the United States?

I am not sure that that is true. This matter, unhappily, has remained unsettled despite the Security Council resolution and despite the interests of a great many Powers. We shall all have to continue to work on it.

United Nations

Abolition Of Slavery (Convention)

asked the Secretary of State for Foreign Affairs whether he will make proposals at the United Nations, with a view to the establishment of machinery to implement the Supplementary Convention on the Abolition of Slavery, comparable with that relating to the Convention on Refugees.

The Economic and Social Council has recently decided to establish a list of experts to advise States concerned with liquidating slavery and the slave trade. I think we must see how this works before proposing new measures. But I shall meanwhile try to arrange for my hon. Friend's interesting idea to be considered in the course of a study of measures to implement the slavery conventions which will shortly be initiated by the United Nations Sub-Commission on the Prevention of Discrimination and Protection of Minorities;.

I thank my right hon. Friend for that Answer. Does he not agree that every day during which the Supplementary Convention remains a dead letter is a further day of personal tragedy for millions of people? Will he make sure that it does not continue to remain a dead letter?

I expect that this sub-commission which I mentioned will have a very close look at the implementation of the two Conventions.

Nuclear Weapons (Non-Proliferation Treaty)

asked the Secretary of State for Foreign Affairs what reasons have been given to him for the delay in the signature of the Treaty on non-proliferation of nuclear weapons by members of the United Nations.

There has been on delay. The Treaty was opened for signature on 1st July and remains open for further signatures. More than 60 countries have already signed in one of the capitals of the depositary Governments.

Can the right hon. Gentleman assure the House that all our Commonwealth and N.A.T.O. allies have signed and accept that our signature safeguards their legitimate interests?

I cannot give that assurance, because the fact is that all the Commonwealth countries and all the N.A.T.O. members have not yet signed. Some N.A.T.O. members like France have made their position clear. France will not sign or ratify the treaty but will observe its terms. It is only two weeks since the United Nations recommendation was passed and in these matters—in one or two cases Governments are still under formation—it will take a little time. I am, however, confident that the great majority of countries will ratify the Treaty in due course.

22.

asked the Secretary of State for Foreign Affairs if he will make a statement about the effect of the non-proliferation Treaty upon the transfer of nuclear weapons from America to Great Britain.

Under Article I of the non-proliferation Treaty, nuclear-weapon States party to the Treaty undertake not to transfer nuclear weapons to any recipient whatsoever. The domestic legislation of the United States Government already prohibits such transfers.

As one nuclear Power can assist another nuclear Power in the manufacture of nuclear weapons under this new Treaty, does that mean that America could allow Britain to manufacture American tactical nuclear weapons in this country under licence?

The passing of information between two nuclear States is not ruled out. What is ruled out is the passing of any information whatever by a nuclear State to assist a non-nuclear weapon State to acquire nuclear weapons. It is, however, possible for information to be exchanged between nuclear weapon States. On the serious question that the hon. Gentleman has raised, it would be unwise to answer hypothetical questions of that magnitude off the cuff.

The Minister can answer a question of fact. Is it not a fact that the United States would be allowed to assist us in manufacture and would also be allowed to give us the delivery systems for nuclear weapons?

I should make it clear that the non-proliferation Treaty is concerned only with the explosive warhead element. There is no prohibition on the transfer of the means of delivery which, in the simplest sense, are combat aircraft.

33.

asked the Secretary of State for Foreign Affairs if the Government will ratify the nuclear non-proliferation agreement at an early date; and if, following the draft treaty, he will maintain the Government's policy of the abolition of the British independent nuclear force.

35.

asked the Secretary of State for Foreign Affairs what is the policy of Her Majesty's Government regarding the permanent retention of nuclear weapons, following their signature of the non-proliferation agreement.

Her Majesty's Government signed the non-proliferation Treaty on 1st July and intend to ratify it at an early date. We do not, however, think that we would make any significant contribution to progress on disarmament and the strengthening of world peace by unilaterally abandoning our nuclear weapons at this time, nor is this required in any way by the non-proliferation Treaty.

I welcome this big step forward, but will my right hon. Friend give the House an assurance that the guarantee to the non-nuclear nations should not be used as an excuse for abandoning our election promise to give up the so-called independent nuclear deterrent—which would probably be the best contribution that we could make to a nuclear disarmament agreement?

I have made it clear on previous occasions, as have many of my hon. and right hon. Friends, that we do not see our nuclear weapons in any independent category at all. In fact, our giving the security assurance to the United Nations and to the non-nuclear weapons States was done in concert with the other nuclear Powers and in no sense is this to be interpreted as a desire to keep an independent nuclear capability.

Is my right hon. Friend aware that the Labour Party has long argued that the signing of a nuclear non- proliferation treaty between the Soviet Union and the United States would give Britain an opportunity to take unilateral nuclear action? If the Minister is now saying that it is Britain's intention to maintain her nuclear weapon as a means of underwriting her guarantees to non-nuclear States, is not this a contradiction of our original intention?

With respect, my hon. Friend is not quite clear about the purpose of the non-proliferation treaty. It is to prevent a spread of nuclear weapons to powers which at the moment are not nuclear weapon States. I give the assurance that we should not let our nuclear policy in the future be coloured by this security guarantee. If for other reasons it became appropriate for us to cease to be an independent nuclear weapon State, I am sure that a satisfactory arrangement in that respect could be made.

Can the Minister confirm that we have the ultimate right to use our independent nuclear weapons in defence of this country's vital interests, and to that extent is not our nuclear weapon a British independent nuclear weapon and not a "so-called" one?

These points have been argued on many occasions. I cannot conceive of any circumstances when any British Government would wish to use nuclear weapons independently. I have constantly asked hon. and right hon. Gentlemen opposite to make suggestions as to when they think it could conceivably be in our interests to do so and so far I have had no answer.

Since the Committee of 18 has spent six very dangerous years on what it calls "collaterals", will the Government now seek to turn their attention to the abolition of weapons of mass destruction by general agreement, to which Conservative Governments committed themselves for so many years?

I hope to make some very positive suggestions on 16th July when the 18-Nation Disarmament Committee reconvenes. I can give my right hon. Friend the assurance that there will be no delay in progress on account of the United Kingdom Government. We shall be very happy to support initiatives in any direction that looks fruitful

Is it not time to give us the facts? Are not the facts that we have the legal right to withdraw our nuclear weapons from the N A.T.O. Alliance, to which they are subscribed, at any time we might wish to protect our vital interests? Is not that the situation.

If we look at the N.A.T.O. Charter we see that the commitment on member countries in legal terms is very little. It is only in the event of an attack to consider what help to give I hope that the right hon. Gentleman will not go right back and seek to start N.A.T.O. all over again. We have painfully built up an instrument of collective security and I have heard no suggestion that it should be broken up.

May I pursue this matter? Is it not a fact—and the right hon. Gentleman has only to say "Yes" or "No"—that we have a right to withdraw these nuclear weapons should we so desire for the protection of our own vital interests? Is not that the fact of the matter?

As the right hon. Gentleman knows very well, the position is that all N.A.T.O. members have the right to withdraw their forces, including nuclear weapons, from the defence of the alliance, but I hope that that is not a course that he is recommending to the House.

Will my right hon. Friend bear in mind that whatever further improvements in respect of nuclear disarmament hon. Members might have, this is a step in the direction of creating confidence, and without confidence among the nuclear Powers no further positive policy is possible? The Government should be congratulated on their achievement.

I am grateful to my hon. Friend, and the House should be grateful to him for underlining a most important aspect of the non-proliferation Treaty, namely, that it has become possible through close co-operation between the nuclear Powers at a time when there are many other difficult international problems.

Sea Bed (Maltese Proposals)

32.

asked the Secretary of State for Foreign Affairs if Her Majesty's Government will support the proposal of the Government of Malta at the next United Nations General Assembly for a declaration on national rights over, and exploitation of, the marine environment for the benefit of mankind.

The Maltese proposal related to the sea bed only. Her Majesty's Government are actively considering their policy towards this most interesting subject in the light of the ad hoc committee at the United Nations set up to study this whole question.

Is my hon. Friend aware that if there is to be an adequate flow of capital and investment certain urgent problems of international law, especially patent law, must be solved?

I agree. A large number of complex and difficult questions—some technical and others legal—will have to be very carefully studied both in the ad hoc committee of which we are a member—having been the co-sponsor of the Resolution setting it up—and also in the several States.

Would it not strengthen the Government's hand enormously at the United Nations if they had their own proper study of marine technology, like every other major maritime Power? In spite of the fact that the Government have been pressed by hon. Members on both sides, we have had nothing except the vapourings of the Minister of Technology.

I do not accept the hon. Member's implication. I am aware of his keen interest in the matter. I suggest that through the existing Departments and the special bodies that the Government have set up this matter is adequately taken care of.

European Convention On Human Rights

34.

asked the Secretary of State for Foreign Affairs when the United Kingdom now proposes to ratify the fourth protocol to the European Convention on Human Rights.

Her Majesty's Government do not at present propose to ratify this protocol.

Is it not a fact that this protocol has already been ratified by many countries, including Norway, Sweden, Denmark and Germany? What is the stumbling block for Her Majesty's Government?

Five countries have so far ratified this protocol, none of which has quite the same difficulties as we have over immigration.

Will my right hon. Friend do all in his power to obtain a United Nations Commissioner for Human Rights in Human Rights Year? Does he think that the chances of doing so are favourable?

We have expressed our support for this proposal. Although I cannot confidently say so, we expect that this will be implemented some time this year.

Council Of Europe (Greece)

asked the Secretary of State for Foreign Affairs whether he will make proposals at the Council of Europe, with a view to the conducting of an investigation into allegations of torture by security police at Dionysos Camps.

Questions of violation of Human Rights in Greece, including allegations of torture, are already being considered in the European Commission of Human Rights.

Does my right hon. Friend agree that this is a completely new allegation and that if it is true, it is a very serious matter? Does he agree that if it is true, irrespective of the political complexion of the Government which has committed these offences, questions of human rights are not pronouncements about political differences?

I agree that those considerations should be kept apart, but I do not think that my hon. Friend appreciates that the matter was formally put to the Human Rights Commission by the Danish, Norwegian and Swedish Governments on 25 th March and that the independent judicial investigation is in their hands and that we cannot attempt to interfere with that process.

Will the right hon. Gentleman say whether he had any comments on the tortures from the all-party delegation which went to Greece?

We had reports from the all-party delegation, but I do not think that its members would claim to be in a position to submit an independent investigation of the kind which we hope the European Commission is now conducting.

Ussr (Mr Gerald Brooke)

asked the Secretary of State for Foreign Affairs if he will make a statement about the latest position in regard to Mr. Gerald Brooke.

Yes, Sir. The Soviet authorities gave their consent to a meeting in Moscow by the Acting Consul with Mr. Brooke, which took place on 20th June, and lasted for 35 minutes.

Is it not rather deplorable that this was the first meeting which Mr. Brooke had been allowed to have with a British consular officer for more than a year? Can the Foreign Secretary give the House any assurance about Mr. Brooke's state of health and the likelihood of more frequent meetings with consular officers in future?

I think that it was deplorable that it was so long since the previous visit. I raised this matter with Mr. Gromyko when I was in Moscow recently and this visit subsequently occurred. I think that one can say that Mr. Brooke's health is as good as can be expected and not as was at one time feared. As to more frequent visits, the Soviet Government is aware that we are ready to exchange ratifications of the Consular Convention within a month of its informing us that it will do the same. When that Convention is ratified, Mr. Brooke and others in his position will be entitled to regular visits.

South Yemen

asked the Secretary of State for Foreign Affairs what final financial settlement has been made between Her Majesty's Government and the Government of South Yemen.

No final financial settlement has yet been made between Her Majesty's Government and the Government of Southern Yemen.

In the meantime, can the Minister say whether pensions are being paid both to those resident in Aden and to expatriates, and whether British commercial operations are being allowed to function properly?

The answer on both counts is, Yes.

Rhodesia

asked the Secretary of State for Foreign Affairs what further discussions he has had, and with what results, with representatives of all foreign non-Commonwealth countries trading in arms, in oil, in manufactures, and in other merchandise with Rhodesia, thus defeating United Nations' mandatory sanctions; and whether he will make a statement.

I have nothing to add to the reply which my right hon. Friend the Minister of State for Foreign Affairs gave to my hon. Friend the Member for Wandsworth, Central (Dr. David Kerr) on 20th May.—[Vol. 765, c. 3–5.]

Is the Foreign Office prepared to allow this matter to go by default? Is the Minister aware that the Rhodesian market, today lost to Britain, is now flooded with Japanese, West German, French and Italian motor cars and manufactured goods to our detriment? Why is he handing over this valuable trade to our foreign competitors?

The recent resolution on comprehensive mandatory sanctions will have two effects: to improve the operation of sanctions against the illegal régime and also to correct the disbalance of trade, which the hon. Member has so eloquently described.

13.

asked the Secretary of State for Foreign Affairs whether he will move to refer to the International Court of Justice the question of the legality of mandatory United Nations sanctions against Rhodesia.

No, Sir.

Does the right hon. Gentleman think that Mr. Dean Acheson is a bad international lawyer? Has he taken account of the views of him and of other very distinguished legal luminaries that this whole matter is lawless? Are the Government afraid to submit it to an international tribunal?

We are, of course, aware of Mr. Acheson's opinion, and, much as we may respect him, nothing he has said has given us, or any other member of the Security Council which agrees with us, cause to reconsider our opinion. The hon. Member will recollect that, differently from the first resolution on sanctions in 1966, this was one which was voted for by every member of the Security Council. None of them had any doubt about the legality of their action.

Middle East

12.

asked the Secretary of State for Foreign Affairs if he will make a further statement on the situation in the Middle East.

14.

asked the Secretary of State for Foreign Affairs whether he will make a statement on the situation in the Middle East.

23.

asked the Secretary of State for Foreign Affairs if he will make a statement of policy on the situation in the Middle East.

39.

asked the Secretary of State for Foreign Affairs if he will make a statement on the present situation in the Middle East.

Since my Answer to the hon. Gentleman the Member for Westbury (Mr. Walters) and the noble Lord the Member for Berwick-upon-Tweed (Viscount Lambton) on 20th May, the Special Representative of the Secretary-General, Dr. Jarring, has started on a new discussion with the parties principally concerned in New York and in Europe. As this round of discussions is continuing, I should prefer to make no statement for the time being.—[Vol. 756, c. 8–9.]

Is the Foreign Secretary satisfied with the influence which the British and United States Governments are having at present on both protagonists, who have been making more conciliatory statements recently? Particularly with regard to Israel, is it not unfortunate that the Israeli position should have excluded Jerusalem from negotiations in advance, which seems to make the negotiations almost impossible?

I am in touch and I hope that we are having all the influence we can with the parties concerned. I must say again, however, that I am not prepared to make ex parte pronouncements on particular aspects of the dispute.

Would not my right hon. Friend agree that the resolution which we sponsored at the United Nations continues to provide the most helpful basis for a solution to the Middle East crisis and that we should bring home to all the parties involved that their full cooperation is necessary if the resolution is to succeed?

Yes, that we have done and are doing. My hon. Friend will be aware that the resolution contains, as was inevitable, some parts which are more acceptable to one side than to the other, and that the reverse applies to other parts of the resolution. The task is to get all parties to accept all that is implied in the resolution.

Would not the most useful thing for the Foreign Secretary to do at this moment be to facilitate direct negotiations between Israel and Jordan to secure a lasting territorial settlement of the Palestine question?

The hon. Member will, I think, realise that there are difficulties about that. For the present, I think that our best course of action is to give all the encouragement we can to Dr. Jarring.

Would my right hon. Friend give the House an assurance that Dr. Jarring's mission is still within the limits of possible success? Secondly, can he say that one of the vital elements in its success would be for Israel to abide by United Nations resolutions concerning Jerusalem within the general package of the British United Nations resolution of 22nd November?

As I said just now, the essential of a settlement is that all parties concerned shall respect all the parts of the resolution.

Will the Foreign Secretary take this opportunity of saying whether there has been any reconsideration of our defence treaties in the Middle East with the independent States in view of the Russian infiltration of that area?

That goes rather outside the limits of the Question. The noble Lord might like to put that Question down.

Has my right hon. Friend seen the report from Moscow that President Nasser has now made a fresh speech and said that he will never have diplomatic relations with Israel? Will my right hon. Friend not agree with me that this would be a most deleterious step, and will he make his best diplomatic recommendations in order to impress upon the Egyptians that such an attitude is not conducive to any kind of peace settlement at all?

I have seen the report of this speech and I should like a little longer time in which to check it and to evaluate it before commenting upon it.

Is it not a fact that, as we stand and sit here, the various parties to this dispute will not themselves get together to discuss this matter and that therefore a third party must be used, and that, for the time at any rate, it would be wise to give Mr. Jarring full authority to do what he can?

I am sure the right hon. Gentleman is right.

International Organisations (British Delegations)

15.

asked the Secretary of State for Foreign Affairs on what basis the Government appoints British representatives and delegations to international organisations; how many professional civil servants, how many members of the public, how many peers and how many Members of Parliament have been so appointed during the past year; and whether he will publish in the OFFICIAL REPORT full details of all those at present having such responsibilities.

These appointments are generally decided, after any necessary consultation, by the Minister responsible for United Kingdom relations with the organisation concerned. The delegations consist of officials, experts from Government service or private organisations, and, in some cases, Members of Parliament. During the past year 246 professional civil servants, 34 members of the public, 8 peers and 54 Members of Parliament, including members of Her Majesty's Government, have been so appointed.

I will, with permission, circulate in the OFFICIAL REPORT a list of our permanent representatives to international organisations in the economic and social field.

While thanking my hon. Friend for that reply, may I ask him if he will agree that it is rather unsatisfactory that the House does not have more detailed information available about these faceless, however dedicated, men negotiating international policy on our behalf, and that it strengthens the argument for a Select Committee which can keep in touch with all these aspects of detailed policy?

I am not aware of any view that says such a thing as faceless people. Information on representation at all international organisations is public knowledge and all Members of Parliament should be aware of it.

Following is the list:

United Kingdom Permanent Mission to the United Nations, New York

The Rt. Hon. Lord Caradon, G.C.M.G., K.C.V.O., O.B.E.
Sir Leslie Glass, K.C.M.G.
Mr. M. E. Allen
Mr. D. H. T. Hildyard
Mr. J. I. McK. Rhodes
Col. H. J. Sweeney, M.C.
Mr. E. Youde, M.B.E.
Mr. J. D B. Shaw, M.V.O.
Mr. H. G. Darwin
Mr. J. G. Taylor
Mr. P. J. S. Moon
Mr. B. L. Barder
Mr. W. C. Squire
Mr. T. N. Haining

Mr. R. A. C. Byatt
Mr. S. L. Egerton
Mr. R. N. Posnett
Miss S. E. Harden, M.B.E.
Mr. D. F. Milton
Miss J. H. Mather

United Kingdom Mission to the Owce of the United Nations and other international organisations in Geneva

Sir Eugene Melville, K.C.M.G.
Mr. C. L. S. Cope
Mr. P. H. R. Marshall
Mr. D. J. C. Jones
Mr. A. A. Acland
Mr. B. J. P. Fall
Mr. G. C. Warner
Mr. D. O'Connell
Mr. B. Hampton
Mr. J. R. H. Evans
Mr. D. H. Easton

United Kingdom Delegation to O.E.C.D., Paris

Sir Edgar Cohen, K.C.M.G.
Mr. J. C. A. Roper, M.C.
Mr. O. L. Williams
Mr. R. E. G. Burges-Watson
Mr. P. E. Dougherty
Mr. J. Brasnett

United Kingdom Delegation to the Council of Europe, Strasbourg

Mr. E. B. Boothby, C.M.G.
Miss P. M. Hutchinson.
Miss B. M. Deavin, M.B.E.

United Kingdom Delegation to the European Communities, Brussels

Sir James Marjoribanks, K.C.M.G.
Mr. F. H. Jackson.
Mr. G. W. Ford.
Mr. J. Mellon.
Mr. P. W. J. Newing, M.B.E.
Mr. P. J. C. Evans.
Mr. D. H. A. Hannay.
Mr. A. E. Heath.
Mr. R. O. Barrit.
Mr. D. H. Hill.
Mr. H. J. O. R. Tunnel.
Mr. R. C. McIvor.

International Labour Organisation United Kingdom governmental members of

the I.L.O. Governing Body.
Mr. A. S. Marre, C.B.
Mr. A. M. Morgan, C.M.G.

International Atomic Energy Agency and United Nations Industrial Development Organisation

Mr. J. F. Wearing (resident in Vienna), Alternate Governor, I.A.E.A. and United Kingdom Representative, U.N.I.D.O.

Mr. N. M. Hansford (resident in Vienna), Adviser to the Alternate Governor, I.A.E.A. and United Kingdom Deputy Representative U.N.I.D.O.

International Bank for Reconstruction and Development, and International Monetary Fund

Mr. E. W. Maude, Executive Director, I.M.F., and I.B.R.D.

Mr. M. P. J. Lynch, Alternate Director, I.B.R.D.

Mr. V. G. Huntrods, Alternate Director, I.M.F.

Mr. I. Craik.

The Western European Union

United Kingdom Representative on the Permanent Council.

The Viscount Hood, K.C.M.G.

Food and Agriculture Organisation

Mr. A. A. W. Landymore, United Kingdom Permanent Representative to the F.A.O., Resident in Rome.

U.N.E.S.C.O.

Mr. L. C. J. Martin, United Kingdom Permanent Delegate to U.N.E.S.C.O.

Miss S. K. Guiton, United Kingdom Deputy Permanent Delegate to U.N.E.S.C.O. (resident in Paris).

Dame Mary Smieton, D.B.E., United Kingdom Member of the U.N.E.S.C.O. Executive Board.

World Health Organisation

Sir George Godber, K.C.B. (Chief Medical Officer for England and Wales), United Kingdom Member of the W.H.O. Executive Board.

World Meteorological Organisation

Dr. B. J. Mason (Director General of the Meteorological Office), United Kingdom Congress Member and United Kingdom Member of the Executive Committee.

International Civil Aviation Organisation

Mr. R. S. F. Dickenson, C.M.G.
Mr. R. J. Broughton.
Miss M. White, M.B.E.

South Africa (Supply Of Arms)

16.

asked the Secretary of State for Foreign Affairs, in view of the deterioration in the balance of trade with the Republic of South Africa month by month between 1st January and 31st May, 1968, if he will now reconsider the embargo on the export to that country of arms for external defence.

No, Sir.

Is the Foreign Secretary not aware that this is the first year in which we have had an adverse balance of trade with South Africa, and will he not agree that the arms embargo is a contributory cause of that? Would it not be a good thing to abandon this nonsense and put the trade balance right?

No, the arms embargo is not a contributory cause of it. The cause of the unfavourable balance is the substantial increase in our imports from South Africa. Exports from the United Kingdom to South Africa, it is true, for the first five months of this year were somewhat lower than they were in 1967, but this was true of exports of nearly all other countries to South Africa at that time. There was an exceptional spurt of imports into South Africa in 1967 following the relaxation of certain restrictions. Figures this year are well above those for 1966.

Is not the fact that our imports from South Africa are increasing one more argument in favour of import controls? Would my right hon. Friend have a word with the President of the Board of Trade, who seems to have an obsessive inhibition against import control?

That is a good deal wider than this Question.

Malaysia

17.

asked the Secretary of State for Foreign Affairs if he will hold consultations with the United States of America with a view to enlisting American support, political and financial as well as military, for the Five Power arrangements agreed at Kuala Lumpur for the future defence of Malaysia.

It would not be appropriate for the United Kingdom, one of five participants in the Conference, to take such an initiative.

In congratulating the hon. Gentleman on having his new post, may I ask him whether, in view of the importance of the talks which were recently taking place in Kuala Lumpur, he would agree that it is essential to associate the Americans with the defence arrangements which were made there? How else would they be credible, and in what way will they fit into S.E.A.T.O.?

I thank the hon. Gentleman for his kind remark. I think that if he will examine again the communiqué after the Five-Power Conference, he will see that they are matters primarily of adjustment among the Commonwealth countries concerned. Clearly this is a first step in discussing the new situation when we withdraw from the Far East. S.E.A.T.O. has been informed and is aware that this is a first step in these discussions.

Nato

18.

asked the Secretary of State for Foreign Affairs if he will appoint a study group within his Department to draw up British proposals for revitalising the North Atlantic Treaty Organisation.

48.

asked the Secretary of State for Foreign Affairs what proposals he is putting forward with a view to strengthening the North Atlantic Treaty Organisation.

Last year we took an active part in the studies on the Future Tasks of the Alliance, which resulted in a Report approved by the North Atlantic Treaty Organisation Ministers last December. Copies of this Report are in the Library of the House. A further comprehensive report by the Permanent Council on work accomplished so far in carrying out these tasks was examined and approved by Ministers at Reykjavik on 24th and 25th June. This work still continues. I therefore see no need for a special Study Group or a fresh initiative at this stage.

While welcoming the achievements at Reykjavik, may I ask the right hon. Gentleman if he would not agree that the first essential in maintaining the validity of N.A.T.O. over the next decade is to maintain the United States on this side of the Atlantic? Would he also agree that if this is to be achieved it is essential for Europe, including Britain, to assist the Americans in other parts of the world?

No. I do not think I could assent offhand to such a large proposition as that, which seems to go a great deal further than these proposals of the Study Group.

As our efforts to enter the E.E.C. are so abortive, surely the Government should do all they can to build up a North Atlantic Authority? Is not one way not to weaken our defence forces for N.A.T.O., and is that not dis- turbing to N.A.T.O.—that we are to reduce our forces still further?

I do not think the hon. Member has noticed that we have recently increased our commitment to N.A.T.O.

Would my right hon. Friend not agree that to work towards the establishment of a European peace and security council and the abolition of both the N.A.T.O. and Warsaw Pacts would be more in the interests of the ordinary people of Europe?

I think that may be at some time in the future, but I believe it is right to maintain the strength of N.A.T.O. at the present time, but N.A.T.O. is not only a defensive organisation. As was made clear in the Report of the Reykjavik Conference, it is concerned with securing détente between East and West.

Pending the politicians firmly making up their minds, and contrary to what the hon. Member for Ealing, North (Mr. Molloy) said, surely a good deal of effective work is being done by the officials and officers of N.A.T.O.?

I am not quite sure that I follow that question. This is something which happens all the time. It is partly, I think, what we owe to what is called the Harmel Report, and further progress at Reykjavik.

United States (Baltimore Consular Facilities)

19.

asked the Secretary of State for Foreign Affairs what action he is taking to improve the consular facilities in Baltimore, United States of America.

The post was inspected in March, and, as a result, the vice-consul has been promoted and authorised to take on a full-time secretary.

While thanking my right hon. Friend for that reply, may I ask him whether he is aware that I have had a complaint from a constituent who has had to take business associates into this office which, I understand, is situated above a warehouse? May I thank my right hon. Friend for removing from the consular office the sofa without stuffing in it?

I am obliged to my hon. Friend. I thought at first that he was trying to take the stuffing out of me.

Persian Gulf

20.

asked the Secretary of State for Foreign Affairs if he will make a statement on the proposed Federation in the Persian Gulf.

38.

asked the Secretary of State for Foreign Affairs if he will make a statement on progress towards a Federation in the Persian Gulf.

Discussions are continuing between the Rulers of the States concerned on putting into effect the Agreement, signed at Dubai on 27th February, to set up the Union of Arab Emirates. Her Majesty's Government welcome all moves towards greater cooperation and unity between the States of the area.

I wish the discussions well. Could the Minister say whether it is intended to have a Federal defence force to take over the British Treaty responsibilities? If so, would it not be wiser to leave British troops in the area until the defence force is available and in action?

The hon. Gentleman will not expect me to agree with the last part of his supplementary question. On the first part, one would expect and hope for, and, if asked, we will advise on, the formation of a unified force for the internal security and external defence of this area.

Bearing in mind the traditional differences in the area, does the Minister agree that good progress towards federation has been made to date?

I think it is fair to say that. My information is that while there have been inevitable disagreements among the nine Rulers about the future form of federation or union, nevertheless, a constant factor of agreement is that there shall be a closer association amounting to a federation.

Did not the Minister give an assurance to these very leaders last year that it was not our intention to withdraw from the Persian Gulf? Why is the Minister now not agreeing with what he said last year?

What I said to the Rulers of the Gulf in November last year was that we could not set a time limit to our military presence in the Gulf. In January I was able to give this time limit. It is a time scale which allows more than three years in which the Rulers will, if they wish it, have our advice and guidance to set up a successor system.

Is my right hon. Friend aware that, whatever the motives might be, most of the sheikhs in the Persian Gulf, including the Ruler of Muscat and Oman, are inclined in an extremely friendly direction towards this country? As we have not as many friends in the world as we would like, will the Minister do nothing to impair the friendship that already exists?

That is quite true. I think that is a fair and important comment on the previous supplementary question. The people and Rulers of this area hold us in high regard and are anxious, when our present treaties and agreements come to an end, to substitute for them treaties of friendship.

Spain (Gibraltar)

21.

asked the Secretary of State for Foreign Affairs if he will make a statement about the renewed Spanish blockade of Gibraltar and the representations he has made to the Spanish Government.

After the debate in this House on 7th May my right hon. Friend called in the Spanish Ambassador on 8th May, and told him what Her Majesty's Government and this House thought of the latest Spanish restrictions. My right hon. and noble Friend Lord Caradon has set out our position in detail in a letter to the Secretary-General of the United Nations on 21st June, of which a copy has been placed in the Library of the House.

Does the right hon. Gentleman agree that experience in the last three years has shown that the screw is being tightened and tightened on Gibraltar and that this will continue unless counter-measures are taken? Is the Minister also aware that the people of Gibraltar are beginning to feel that we are letting them down?

I cannot agree with the hon. Gentleman's last observation. As the hon. Gentleman knows, the Chief Minister and the Deputy Chief Minister of Gibraltar are here having talks today with my right hon. Friend the Commonwealth Secretary. As the Commonwealth Secretary told the House on a previous occasion, we do not rule out retaliation provided it meets two tests: first, that it should not do Gibraltar and Britain more harm than Spain; and, secondly, that it should offer the prospect of persuading Spain to change her policies.

Can the Minister say whether the Spanish authorities have been operating any frigates near the Rock recently?

I am sorry, but I cannot give a recent assessment without notice.

Is the Minister aware that what he has said amounts to nothing at all? Could he tell the House what has happened since we had the debate six or seven weeks ago? Great things have been done for the economy of Gibraltar. Why do not the Government get down to it and take the same attitude as they do towards Rhodesia?

I do not think that the two matters are in any sense the same. As I have said, the Chief Minister of Gibraltar is having talks with my right hon. Friend the Commonwealth Secretary, and questions about the internal aspects of Gibraltar must be addressed to my right hon. Friend.

Greece

24.

asked the Secretary of State for Foreign Affairs if he will make a statement about the policy of Her Majesty's Government with regard to the régime in Greece.

25.

asked the Secretary of State for Foreign Affairs if he will now make a further statement on Her Majesty's Government's policy in relation to civil rights and constitutional rule in Greece.

We shall continue to work for a return to constitutional rule and democratic liberties in Greece.

Will the Foreign Office use its influence with the Prime Minister to revert from the language of the gutter to the language of diplomacy and so facilitate the restoration of King and constitution in Greece?

I cannot accept that the two points of the hon. Gentleman's question are necessarily related. The House spent a considerable time on this matter last week, and I do not think that any useful purpose will be served by going into it again now.

First, will the Minister give the House an assurance that he will not behave in such a simpering and sycophantic way as advocated by the hon. Member for Chelmsford (Mr. St. John-Stevas)? Secondly, as this régime is neither civil nor constitutional and uses torture to break body and spirit, is it the intention of my right hon. Friend to raise this matter at the N.A.T.O. Council, as he indicated, in reply to a previous supplementary question, that he does?

I can give my hon. Friend the assurance that I will not conduct myself in a syohophantic way. I do not think I have ever before been charged with this particular crime.

I do not think at this juncture that it would be useful to raise the matter at the N.A.T.O. Council.

Can the Minister confirm that it is still the firm intention of Her Majesty's Government to maintain our present favourable balance of trade with Greece?

I thought that my right hon. Friend the President of the Board of Trade set out with admirable clarity our desire to separate political and trade issues, and to trade not only with Greece, but with any other country with whom we can do it on a neutral basis.

I think my right hon. Friend is aware that I was in Athens this morning. Is my right hon. Friend aware that recent statements have caused widespread indignation and offence in Greece among critics of the Government and others and among British residents in that country? Although the present Government did not come to power by democratic methods—[Interruption]—is my hon. Friend aware that they are not insensitive to public opinion and that statements of this kind are hardly calculated to assist British exports and orders under negotiation at the present time?

I am glad to learn from my hon. Friend the importance of public opinion.

To put the whole matter in perspective, in a way that is done better in debate than in answer to questions, the Government's position was admirably set out on 11th April by the then Undersecretary. I would counsel hon. Members on both sides to see that we set out our position clearly and that we do not approve of the régime and our reasons for it.

Will the Minister take this opportunity of saying whether the conversations on this matter between the King of Greece and the Prime Minister were private and whether the Prime Minister had the permission of the King of Greece to quote his interpretation of the talks?

Such discussions are always private—so private I was not there, so I cannot assist the hon. Gentleman.

May I press my right hon. Friend on the question of raising this in N.A.T.O.? Is he aware that the N.A.T.O. Treaty contains a firm commitment to preserve individual liberty, democracy, and the rule of law? The philosophy of the N.A.T.O. Treaty is meaningless unless we raise this sort of thing within the Council.

I agree that this is a matter of great concern to many N.A.T.O. countries, and it has been discussed in N.A.T.O., but as the Council of Ministers, which would have been the most appropriate forum, has just risen, it is unlikely that it would be acceptable to call a new Council on this issue at this moment of time.

Cyprus (United Nations Force)

26.

asked the Secretary of State for Foreign Affairs if he will make a statement on Her Majesty's Government's policy regarding the future of the United Nations force in Cyprus.

The rôle of the United Nations Force in Cyprus continue to be very important. We recently supported the extension of the Mandate up to 15th December. We hope that progress towards a settlement will permit further reductions in its strength, and in the end a termination of its task.

As the Cyprus situation has, fortunately, been improving, and as the life of the United Nations force has hitherto been extended at short notice for short periods, are the Government considering carefully the need, when the time comes, for a well-organised and perhaps gradual withdrawal?

Yes, Sir.

Vietnam

27.

asked the Secretary of State for Foreign Affairs what information he has received, as co-Chairman of the Geneva Agreement, about civilian casualties in Saigon as a result of recent Vietcong military activity.

I do not receive information of this sort in my capacity as co-Chairman of the Geneva Conference. However, the Vietnamese Ministry of Defence has stated that civilian casualties in the Saigon area from 5th May to 30th June, from both ground attacks and the rocket and mortar attacks, were 612 killed and 4,812 wounded.

I am sure that the House will be appalled at those figures. Will my right hon. Friend ask the Soviet co-Chairman to make representations to the North Vietnamese Government to try to stop the indiscriminate rocket attacks against civilians in Saigon?

When I was in Moscow I urged the desirability of the North Vietnamese Government being prepared not only to do this sort of thing, but to make some response to the move made by the United States.

Is my right hon. Friend aware that reports from Quakers who are doing amputee work in Saigon are to the effect that 80 per cent. of the amputations are necessary as a result of American attacks, and only 20 per cent. as a result of Vietcong attacks?

I am afraid that it is often difficult to get exact reports, and even if I accept those figures that does not rub out the shocking cruelties practised in Saigon and indeed Son Tra recently.

Does not the right hon. Gentleman agree that the crucial point is that the Vietcong attacks on the civil population of Saigon have been stepped up at a time when the American bombardment of North Vietnam has been very substantially reduced?

That appears to be so, and that means that it is not only a matter of cruelty to human beings, but that it is halting the possibility of progress towards peace.

28.

asked the Secretary of State for Foreign Affairs whether he will, with the Union of Soviet Socialist Republics as co-Chairman of the Geneva Agreement, undertake joint action to call upon both belligerents in Vietnam to reduce the scale of their military activities, with a view to improving the atmosphere for successful peace talks.

37.

asked the Secretary of State for Foreign Affairs what initiative he now proposes should be taken by Great Britain and the Union of Soviet Socialist Republics, as co-Chairmen of the Geneva Agreements, following recent developments, in bringing about a peaceful settlement in Vietnam.

Among the prerequisites for action by the co-Chairmen are a clear understanding of how best we can help a settlement; an equal readiness on the part of us both to act jointly; and a reasonable expectation that the parties to whom action is directed will respond. This is not the situation at present, but I maintain close contact with the Soviet co-Chairman, who is well aware that we are ready to help negotiations in any way we can when this is the wish of the parties concerned.

Can my right hon. Friend say whether he has observed any pressure on the other co-Chairman, Russia, to dissociate herself from the North Vietnamese following the stepped-up attacks by the Vietcong on South Vietnam? Has there been any pressure on Russia to dissociate herself from these attacks, in the way that we are so often pressed to dissociate ourselves from America?

No, Sir, I have not. I am still waiting.

29.

asked the Secretary of State for Foreign Affairs what action he proposes to ensure the continuing safety of British subjects in Saigon in the light of increased North Vietnamese attacks on the city.

Her Majesty's Ambassador and his staff keep in close and constant touch with the British community in Saigon on all matters affecting their security. Plans exist to meet as many contingencies as possible, though hon. Members will realise that there are limits to what can be done to give protection against random rockets and shells.

My right hon. Friend expressed the admiration of the House for the way in which the Ambassador and his staff conducted their duties. Can my right hon. Friend give an assurance that the physical condition of the Embassy itself as regards shelters, safety, and that kind of thing, is able to take care of those who might wish to take shelter there on occasion?

I echo why what my hon. Friend said in the first part of his question. It would, I believe, be possible to give shelter to some in the Embassy, but at present we have made plans to meet as many contingencies as possible.

30.

asked the Secretary of State for Foreign Affairs what communication he has received in his capacity of co-chairman of the Geneva Agreement from the Secretary General of the United Nations about the acceptability to both sides of the United Nations rôle in ending the war in Vietnam.

None, Sir. As I reminded the House on 20th May, North Vietnam has consistently rejected any suggestion that the United Nations should concern themselves with Vietnam. The United States on the other hand have kept the United Nations informed of their action in Vietnam.—[Vol. 765, c. 2–3.]

While regretting the nature of the reply which my right hon. Friend has had to give, may I ask him to give an assurance that our Ambassador at the United Nations will keep this matter constantly before the Assembly?

Certainly, Sir.

Would any belligerents be willing to observe a total cease-fire while negotiations were pending on Vietnam?

As I understand it, the United States, having made the move they did at the end of March, if that could now be matched by a further step of de-escalation it might be possible to make further steps on both sides, leading possibly to what my hon. Friend has suggested.

Holy See (Her Majesty's Mission)

31.

asked the Secretary of State for Foreign Affairs whether he has considered translating Her Majesty's Mission to the Holy See from a legation to an embassy.

46.

asked the Secretary of State for Foreign Affairs, in view of the number of Commonwealth countries now having ambassadors accredited to the Holy See, whether he will consider upgrading the Minister to the Holy See to be an ambassador so as to give him an equal rank with Her Majesty's other representatives.

This matter is being kept under review, but we are not convinced that this is the right time to seek any change in existing arrangements.

As legations are now rare in diplomacy, and since other Commonwealth countries have embassies to the Holy See, has not the time arrived for this change?

I do not think the time is yet ripe, and while the hon. Gentleman is right that some Commonwealth countries have embassies there, a number of other important Commonwealth countries are not represented there at all. The legation serves the function of keeping us in touch with the Holy See on international matters, and we have the greatest regard for the contribution it has made.

Is it true that the number of embassies is about 57, of which eight are from Commonwealth countries, and that other Commonwealth countries are waiting until we give the lead? The only Ministers there are from Monaco, San Marino, Ethiopia and Britain. Can that really mean that we are doing our best to be friendly with the Vatican and help it in what it is trying to do for peace in the world?

I must deny any idea that the hon. Gentleman has that we discriminate against the Vatican in this way. There are only 35 resident ambassadors, and 18 non-resident ambassadors. The fact that we have a resident Minister there enables us to keep in touch with them, and they with us. The existing arrangements could not be substantially improved by what is proposed, but we are willing to keep this under review because we clearly want to make a change at a time that is generally acceptable.

Will the right hon. Gentleman bear in mind that there are far too many ambassadors today, and will he put in hand a review to reduce many embassies to legation status in order to save money and staff?

That is an interesting way of looking at the matter, to have more legations and fewer embassies, but it would be wrong to start a change of policy of this kind to meet this particular difficult situation.

Is there any constitutional limitation imposed on the proposed action by the Act of Settlement or the Bill of Rights?

The hon. and learned Gentleman was told in answer to a previous question that there was no such legal bar.

Going back to the Minister's original reply to my hon. Friend, does he realise that it is exactly the same reply that was given by the Foreign Secretary when he was last at the Foreign Office some years ago? Will he ask the Foreign Secretary why he has not used the intervening period of contemplation to advance his thought on the matter?

One of the endearing characteristics of my right hon. Friend is that he is very consistent in his views. I am sure that he has thought much about this problem, but the hon. Member will know that other matters have exercised the minds of members of the Government in the last 18 months.

On a point of order. In view of the unsatisfactory nature of that reply, I shall seek leave to raise it on the Adjournment.

Trucial States

36.

asked the Secretary of State for Foreign Affairs when he hopes to complete the renegotiation of United Kingdom defence agreements with the Trucial States in the Persian Gulf.

We have offered to replace our treaties of protection by treaties of friendship. It will be some time before discussion can be completed because the States are considering the form of their future association among themselves.

What will be the meaning of this treaty of friendship? Do we intend to maintain a special relationship with the Trucial States after we have implemented our unilateral decision to withdraw our forces from the Persian Gulf?

I would hope and expect that our relationship with this area and with individual States will, far from diminishing, increase. There is already evidence that the States concerned would warmly welcome treaties of friendship leading in future to an amplification of our social, commercial and cultural relations with them.

North Atlantic Treaty Organisation (Ministerial Meeting)

41.

asked the Secretary of State for Foreign Affairs if he will make a statement on the North Atlantic Treaty Organisation talks at Reykjavik on mutual East-West reduction of military forces in Europe.

53.

asked the Secretary of State for Foreign Affairs if he will set out the provisions of the declaration recently adopted by Foreign Ministers of countries participating in the North Atlantic Treaty Organisation defence programme with regard to the basis of comparison between the forces of the North Atlantic Treaty Organisation countries and the Warsaw Pact Powers and the analyses of alternative ways of achieving a balance and reduction of forces; whether the Committee of Political Advisers has agreed on these; and if he will make a statement.

At Reykjavik the countries participating in the North Atlantic Treaty Organisation defence programme issued a declaration on mutual and balanced force reductions. I have arranged for this to be circulated in the OFFICIAL REPORT.

Why, after seven months' discussion, has no proposal been forthcoming? Why does not Britain take the initiative, and how can we know whether Russia is receptive if we do not offer any proposals?

If my hon. Friend will study the terms of this declaration he will see that it is one that involves a response. We could then proceed to more details.

Is the right hon. Gentleman aware that there is a good deal of disagreement in many quarters as to the relative strength of the conventional forces of the two sides? Some statements say that they are almost equal, some maintain that the West is a good deal less strong than the East. Is he aware that this causes a good deal of confusion among Members of Parliament on various delegations when discussing this matter? Could we be given some information as to whether agreement is being reached on a proper comparison of forces?

I will certainly consider whether more information could be made available.

Following is the declaration:

ANNEX TO THE COMMUNIQUÉ ISSUED AT THE END OF THE MINISTERIAL MEETING OF THE NORTH ATLANTIC COUNCIL ON 25TH JUNE, 1968.

DECLARATION ADOPTED BY FOREIGN MINISTERS AND REPRESENTATIVES OF COUNTRIES PARTICIPATING IN THE N.A.T.O. DEFENCE PROGRAMME.

1. Meeting at Reykjavik on 24th and 25th June, 1968, the Ministers recalled the frequently expressed and strong desire of their countries to make progress in the field of disarmament and arms control.

2. Ministers recognised that the unresolved issues which still divide the European continent must be settled by peaceful means, and are convinced that the ultimate goal of a lasting, peaceful order in Europe requires an atmosphere of trust and confidence, and can only be reached by a step-by-step process. Mindful of the obvious and considerable interest of all European States in this goal, Ministers expressed their belief that measures in this field including balanced and mutual force reductions can contribute significantly to the lessening of tension and to further reducing the danger of war.

3. Ministers noted the important work undertaken within the North Atlantic Council by member Governments in examining possible proposals for such reductions pursuant to paragraph 13 of the "Report on the Future Tasks of the Alliance", approved by the Ministers in December, 1967. In particular, they have taken note of the work being done in the Committee of Political Advisers to establish bases of comparison and to analyse alternative ways of achieving a balanced reduction of forces, particularly in the central part of Europe.

4. Ministers affirmed the need for the Alliance to maintain an effective military capability, and to assure a balance of forces between N.A.T.O. and the Warsaw Pact. Since the security of the N.A.T.O. countries and the prospects for mutual force reductions would be weakened by N.A.T.O. reductions alone, Ministers affirmed the proposition that the overall military capability of N.A.T.O. should not be reduced except as part of a pattern of mutual force reductions balanced in scope and timing.

5. Accordingly, Ministers directed Permanent Representatives to continue and intensify their work in accordance with the following agreed principles:

(a) mutual force reductions should be reciprocal and balanced in scope and timing;

(b) mutual reductions should represent a substantial and significant step, which will serve to maintain the present degree of security at reduced cost, but should not be such as to risk destabilizing the situation in Europe;

(c) mutual reductions should be consonant with the aim of creating confidence in Europe generally and in the case of each party concerned;

(d) to this end, any new arrangement regarding forces should be consistent with the vital security interests of all parties and capable of being carried out effectively.

6. Ministers affirmed the readiness of their Governments to explore with other interested States specific and practical steps in the arms control field.

7. In particular, Ministers agreed that it was desirable that a process leading to mutual force reductions should be initiated. To that end they decided to make all necessary preparations for discussions on this subject with the Soviet Union and other countries of Eastern Europe, and they call on them to join in this search for progress towards peace.

8. Ministers directed their Permanent Representatives to follow up on this Declaration.

Nato (Non-Proliferation Treaty)

The following Question stood upon the Order Paper:

60.

TO ask the Secretary of State for Foreign Affairs to what extent the United Kingdom's decision to sign the Non-Proliferation Treaty took account of commitments to the North Atlantic Treaty Organisation; and if he will make a statement.

With your permission, Mr. Speaker, and that of the House, I would like now to reply to Question No. 60.

Her Majesty's Government are aware that the confidence of members of the North Atlantic Alliance in the collective security arrangements of the alliance is an essential factor in considering their accession to the Non-Proliferation Treaty.

I therefore welcome the oportunity to reaffirm Her Majesty's Government's continuing and wholehearted commitment to the collective security arrangements of the North Atlantic Treaty Organisation.

I also wish to make clear our interpretations of the basic Articles I and II of the Non-Proliferation Treaty.

These Articles would not prohibit North Atlantic Treaty Organisation nuclear consultation and planning or the permanent committee established for this purpose.

They would not disturb existing bilateral arrangements for deployment of nuclear weapons within allied territory, as these arrangements do not involve any transfer of warheads or control over them up to the point where a decision to go to war is made. The Non-Proliferation Treaty would not be relevant to such a decision and would not be operative once it were made.

These Articles do not deal with the transfer of nuclear delivery vehicles, provided that there was no transfer of nuclear weapons or control over them.

rose—

May I remind the House that we have a mass of business before we get to Orders of the Day? Brief questions will help.

While thanking my right hon. Friend for making the position of N.A.T.O clear, can he say what effect, if any, this Treaty will have on the development of political union in Europe?

I am much obliged to my hon. Friend. A federated State would not be barred from succeeding to the former nuclear status of one of its components. A federated State would have to control all of its external security functions, including defence and all foreign policy matters relating to external security.

Can the Minister say which of the N.A.T.O. Powers have not accepted the Treaty?

A number of countries belonging to N.A.T.O. have not yet signed, but the only N.A.T.O. country which has indicated that it is unlikely to sign is France.

Would my right hon. Friend not agree that it is a matter of regret that the Government should be so definite at this time in their support for the continuation of N.A.T.O.? Is it not clear that the time for looking again at N.A.T.O. and the Warsaw Pact has come? Would he not reconsider the Government's point of view in relation to this matter?

My statement today is concerned with the interpretation of the Treaty which has been agreed within N.A.T.O. On the broader question, my hon. Friend will know that mutual force reductions are under study within N.A.T.O. and that we hope to make further progress in this regional European disarmament area, as well as in the broader categories.

Since this Question has obviously been put down to allow the Foreign Office to make the situation clear on this very important Treaty, would it not have been much wiser to make a statement to the House and allow a debate to take place, so that hon. Members could appreciate the enormous importance of this, and the great complexity of the Treaty, which has not yet been debated?

Matters of debate are not for me. I would welcome the prospect of debate. I think that my right hon. Friend the Lord Privy Seal has said that he is hoping to arrange a foreign affairs debate before the end of the Recess, when I hope that this will be one of the matters to which attention will be turned.

While we all strongly support the action taken by the Government in signing the Non-Proliferation Treaty, and all efforts to bring about general disarmament, will my right hon. Friend make it clear to the House that unilateral disarmament is not the policy of this Government, this party or this House?

I am very happy to make it clear that we do not stand for unilateral disarmament. We could not make progress towards real disarmament if we tried to follow a thesis of that kind.

Perhaps I could correct a previous remark, when I said that there would be a debate before the end of the Recess. I meant before the beginning.

What effect can this statement have upon the re-equipment of the British Army of the Rhine with tactical nuclear weapons?

This has no direct bearing because, as the hon. Gentleman will appreciate, when he studies my reply, this means, in effect, that the N.A.T.O. policy, as at present pursued, is not affected by Articles I and II of the Treaty.

Nigeria

(by Private Notice) asked the Secretary of State for Commonwealth Affairs what progress he has made in persuading the Federal Government of Nigeria to permit an emergency air lift of food into the famine stricken areas, and whether he will make a statement.

Discussions are at present going on in Nigeria between the Federal authorities and the International Red Cross. Lord Hunt is in touch with both. It is already clear from these discussions that all relief operations can best be channelled through the International Red Cross.

These discussions are, as I am sure the House will appreciate, extremely delicate, and I do not want to say anything today which can be an obstacle to their success. Lord Hunt arrived in Lagos on Saturday morning and has already made certain preliminary recommendations, which will enable us to save valuable time.

I can assure the House that this whole subject is being dealt with as a matter of the utmost urgency.

While we are grateful to the right hon. Gentleman for that statement, does he agree with two assertions: first, that there is starvation now in Biafra, people are dying there, and that the situation cannot really wait for the Hunt Commission to report, or for a land corridor to be established; and, secondly, that food is already stockpiled in Fernando Po and in Federal Nigeria? If so, can he tell the House, while we appreciate his difficulties, what are the obstacles to sending immediate relief?

If it be that Colonel Ojukwu will not accept food from Federal Nigeria, because he thinks it is poisoned, and Federal authorities will not allow direct flights into Biafra because they think that arms may be smuggled in, may I ask the right hon. Gentleman whether any thought has been given to both sides providing observers, travelling under safe conduct with every mercy mission, to ensure that only food is carried, that it is not poisoned and is being distributed properly?

Is the right hon. Gentleman aware that if there is a shortage of suitable aircraft he will have the fullest support from both sides of the House, and from the whole nation, in offering the Federal Government the use of R.A.F. aircraft for an emergency airlift?

I accept both the hon. Gentleman's preliminary assertions, with this qualification about his statement that there is starvation in Biafra: there is starvation on both sides of what is at present a line where very little fighting is, fortunately, taking place. I have just had a direct report this morning to say that most of the relief organisations are agreed that the situation around Ikot Ekpene, which is on the Federal side of the line, is now desperate and as bad, if not worse than, anything in rebel-occupied territory. It is important for the House to be aware that human need is not simply in the Ibo-held territories, but also on the other side of the fighting line.

The question of observers facilitating the relief operation is among many things being actively studied and one of the reasons why I do not feel in a position to give the House too much information today.

To answer the hon. Gentleman's question about the possible use of the R.A.F., I assure the House that I have been continuously in touch with my right hon. Friend the Secretary of State for Defence. I have already said that, in principle, the R.A.F. could take part and could engage in various forms of operation, so long as they took place with the agreement of the Federal Government, on the one side—with their agreement to enter their air space, a right which every sovereign State has and which should not be taken lightly—and equally so long as there were absolute guarantees from the Biafrans that they would not be fired upon.

Is my right hon. Friend aware that as a result of many stories which have appeared in the Press and elsewhere over the weekend there is widespread concern that the Government are being much too dilatory in dealing with this serious position? Is he aware of the widespread feeling of revulsion at the fact that while this desperate situation is going on, with Colonel Gowon threatening to shoot down planes carrying food to the starving people, Her Majesty's Government are continuing to supply arms to this area?

To answer the last part of my hon. Friend's question, I cannot think of anything that Her Majesty's Government could do which would be more disastrous, in terms of the anxieties of both sides of the House to see progress mace on relief, than to choose this moment unilaterally to cease the supply of arms. I could not accept that Her Majesty's Government are being in any way dilatory. We have been working on this throughout the weekend, and if there has not been as much progress as all of us would like to see I cannot accept for a moment that this is in any way the fault of Her Majesty's Government.

Is my right hon. Friend aware that an ever-increasing number of British people are now horrified at the numbers of people who are dying daily in Biafra from starvation? Is he also aware of the large number of British people outside the House, and hon. Members on both sides, who cannot understand the slowness with which Her Majesty's Government are considering an emergency airlift to Biafra? In view of the great anxiety that exists about the continuous loss of life in Biafra, would my right hon. Friend agree to make a further statement, either tomorrow or Wednesday, about an emergency airlift?

I hope that my hon. Friend will accept that nobody on these benches is more anxious than I am to try to see relief given to those who are suffering. I remind my hon. Friend that this suffering is taking place not only in Biafra, but equally in those areas which are now held by the Federal Government. We have been doing everything that can possibly be done to bring about practical progress towards relief.

I think that the right thing at this stage is for us to allow Lord Hunt, in whom we all have the greatest trust, to go ahead with the delicate discussions with the Federal Government.

Cannot pressure be brought to bear on Colonel Ojukwu and the Ibo leaders to allow food in by land and have a Commonwealth force there to see that it is properly administered?

I remain firmly of the opinion that the scale of the suffering requires a long-term land lift and that the suffering cannot be adequately met in any other way. However, this does not diminish the need for an emergency interim airlift. We are doing all we can, both directly and indirectly, to persuade Colonel Ojukwu to reconsider the unfortunate position which he has taken in this matter. In particular, we are asking him to reconsider his refusal to allow members of Lord Hunt's mission to go into Ibo held territory to see for themselves what the position there is and to report to us so that we can give the maximum help.

Is my right hon. Friend aware that those of us who have any links with Nigeria do not blame Her Majesty's Government at all for procrastinating? Would he agree that there should be a realisation in the House that this is a civil war and that it would create no advantage to anybody if we attempted to come down on one side or the other or evaluate something over which we have no understanding? Would he agree that the only thing that really matters is to proceed in the shortest possible time to stop the killing and dying?

I am much obliged to my right hon. Friend and I commend his initial wise words to the House. At present, there is virtually a cease-fire operating on the borders of the Ibo territories. The loss of life is taking place mainly through starvation, and not through military activity. This means that the utmost priority must be given to getting the relief operations working. The prime responsibility in this respect rests at present with Colonel Ojukwu.

I am grateful for the right hon. Gentleman's assurance that he would consider using Transport Command if that should prove necessary to help with an emergency airlift. Is it not true that the best chance now of geting both sides to agree is to allow Lord Hunt to make a report in the next few days, and for the right hon. Gentleman to make another report to the House shortly?

Yes, Sir. I am much obliged to the right hon. Gentleman for those comments.

If we are trying to stop the fighting in Nigeria, why would it be disastrous—the word used by my right hon. Friend—to stop sending arms to the Nigerian Government?

If the reason is not clear to my hon. Friend, then I think that it would be difficult for me to go into a longer explanation here. I would have thought that when Lord Hunt is engaged in delicate negotiations in Lagos this was absolutely the wrong time to raise that particular question.

Would the right hon. Gentleman consider making the International Red Cross the chosen instrument for these negotiations and allowing it to have the use of aircraft, and so on? In view of the difficulties facing our High Commission, on both sides, would not the Red Cross be the best instrument to use in this situation?

Would the right hon. Gentleman also consider making an approach, on humanitarian grounds, to the Emperor of Ethiopia and President Tubman, who have great influence with the Organisation of African Unity?

The Organisation of African Unity has for some time been seized of the problem of making its own contribution to peace in Nigeria, and I do not think that I should comment further on that matter at this point.

My right hon. Friend the Prime Minister emphasised—in his answer given over the weekend to Oxfam's anxieties—our belief that the International Red Cross is the best instrument for co-ordinating this operation. Indeed, we have been supported in this view by a message from Lord Hunt this morning, in which he says how important it is for the success of his mission; and that private individuals and organisations in this country who wish to do so, should make offers of help through the International Red Cross.

The International Red Cross has been accepted by the Federal Government as the most effective co-ordinating organisation and I am sure that, if this were done, it would greatly help to create the sort of atmosphere which would allow the relief work to go forward.

Railways Dispute (Settlement)

(by Private Notice) asked the Minister of Transport whether he will make a statement on the settlement of the railways dispute.

3.46 p.m.

As the House will by now be aware, agreement was reached between the British Railways Board and the N.U.R. last Friday evening as a result of which the Union agreed to instruct its workers to resume normal working at once. The terms of the agreement are already well known to the House. Later that evening a similar agreement was reached with a negotiating Committee of the A.S.L.E.F., and this was ratified by the Executive Committee of the A.S.L.E.F. on Saturday.

I welcome this settlement, which brings to an end a fortnight in which the travelling public, and particularly commuters in the South-East, were put to a great deal of inconvenience and in some cases hardship.

The Government have throughout been concerned that any settlement should conform to three principles:

(1) The Board and the unions must reach agreement between themselves without Government intervention.

(2) There would be no financial help from the Government to finance any settlement. Indeed, there could be no such help because, under the terms of the Transport Bill, the Board will be "on its own" from the beginning of 1969.

(3) Any settlement must be in accordance with the productivity prices and incomes policy.

The settlement reached accords with these principles.

I should like to emphasise three points on this settlement.

(1) The agreement includes a specific instruction from the B.R.B. and the N.U.R. to their negotiators to secure implementation of the pay and efficiency agreements by 2nd September.

(2) The agreement also provides that, both immediately and after the con- elusion of the pay and emciency agreements, bonus and mileage payments will be contained at existing levels for existing performance.

(3) The Board tells me that the immediate extra cost of the settlement as compared with its offer of 22nd June is estimated to be about £170,000 in this year. In effect, what has been done is to redistribute the money which was already on offer to the unions. But nothing in the Penzance agreements conflicts with the self-financing basis of the main productivity deal, of which they will form part.

I am particularly pleased that the Board and the unions were able to reach agreement themselves without Government intervention, and I hope and believe that this settlement creates conditions in which we can all look to a brighter future for industrial relations on the railways.

What estimate has been made of the cost of the dispute? Which of the four criteria on incomes policy justifies this award? Does the Minister agree that the concession of an interim award to all railwaymen after 14 days of rail chaos, when it was refused to them beforehand as a matter of principle, will serve only to encourage other unions to think that the only way in which they will get a wage increase is to go in for go-slows, industrial disputes, or strikes?

With the greatest respect, the hon. Gentleman should draft his supplementary question after he has heard the Answer. It is not true to say that this is a new move. What has happened here is that the original offer has been redistributed. Some of the money which would have gone to the lower-paid workers has gone to the higher-paid workers. There is no difference in principle at all. The total cost is about £170,000.

Is the Minister aware that the flat 3 per cent. increase has been given without any specific productivity agreements, which have still to be settled? Is he aware that on 24th June, Sir Henry Johnson, Chairman of the Railways Board, when asked whether he would give a general increase on account of later productivity agreements, said:

"No, no! I am sorry but we have been up that avenue before. There will be no further pay rises until the unions"—

Order. There can be no quotations in supplementary questions.

Sir Henry said that there would be no further increases until productivity agreements had been made. Will the Minister say whether or not, if the productivity agreements are not made by 2nd September, the flat increase will remain?

Perhaps I can repeat this point again. The Railways Staff National Tribunal made an award which allowed for an interim payment on account of a productivity agreement being subsequently made. What has happened is that virtually the same amount of money is now available as a result of the negotiations as was available before. It is not true to say that this is a new principle.

As to the productivity agreement, very large sums of money indeed—up 1o 24s. a week—are available to a large number of these men, which cannot be paid out until such time as a productivity agreement is signed. All the evidence at present points to the unions being very anxious to conclude a productivity agreement.

The fact that an agreement was reached over the weekend will give every commuter some satisfaction today, but will my right hon. Friend say whether he and his right hon. Friend the Secretary of State for Employment and Productivity will be keeping a very close watch on this situation so that we do not have a recurrence after 2nd September?

I can only say that what will happen after 2nd September will be very big improvements in British Railways because of major changes in practices. The Government made it clear throughout the dispute that they would back the Railways Board in standing firm on the basis that it could not pay out money which it did not have.

Will my right hon. Friend say whether what we thought we heard down here below the Gangway he actually said, which was that the justification is that the money in total is about the same and a settlement has been arrived at by taking what the lower-paid men would have got and giving it to the higher-paid men? If he really says that, how does he expect us to go on defending the incomes policy?

I am sure that my right hon. Friend will be the first to support the incomes policy, which he invented. The agreement provides for very large increases, of up to 10½ per cent.—24s. a week—for the lower-paid workers, and the interim agreement will be absorbed into the subsequent agreement. What has happened is the redistribution of the interim award which will subsequently be subsumed by the main agreement, and the main agreement provides for very big distinctions between lower-paid and higher-paid workers.

That is no answer.

Because the very large increases to which the right hon. Gentleman refers depend absolutely on the acceptance of these productivity agreements, and they can only be successful if the swollen railway staffs are much reduced, will he not be absolutely candid with the House and say that he expects that under these productivity agreements there will be a substantial reduction in the number of railwaymen?

All Ministers are always candid with the House, and it would not be for me to breach the tradition. The productivity agreements range over a wide number of different fields. In most cases they are directed towards encouraging the more efficient use of labour. The most significant thing that the Board has already got out of this settlement is the acceptance of bonus and mileage payments being related to basic rates.

Is the Minister aware that the greatest personal contribution he can make to industrial peace on the railways in future is to keep quiet, and let the trade unions and the employers get on with the job?

The last time I made a statement in the House I did not invite the Question that was put down. I expressed the Government's view that they intended to leave the negotiations for the Railways Board, and subsequently there were criticisms from various quarters to the effect that the Government should have been doing something about it. My hon. Friend is totally right. This is a matter to be negotiated between the Railways Board and the unions, and this is what happened.

As the Minister of Transport acknowledged that commuters in the Southern Region have had to put up with a 50 per cent. reduction in service for a fortnight, will he now recommend that the Board should extend the life of existing season tickets for a few days so as to give some compensation to those travellers who suffered?

It is not for me to enter on this matter, except to say that, while commuters were caused an incredible amount of inconvenience, what emerged from this dispute was that they all eventually got to work.

Will the Minister do his best to ensure that the Railways Board will have sufficient manpower to carry its present traffics, and greatly to increase them in the early future?

I certainly hope that the House will give every possible support to British Railways to ensure that it is able to expand its capacity. One can only say that the present dispute has done a great deal of damage to the railway industry and to the future of railwaymen, as well as to commuters.

rose—

Order. The Chancellor of the Exchequer.

Sterling (Bis Discussions)

With permission, Mr. Speaker, I would like to make a statement.

The House will be aware that discussions have been taking place this weekend at the Bank for International Settlements, in Basle, amongst the representatives of the central banks of certain countries about a new facility for sterling.

The proposals which were considered were to provide new means for offsetting fluctuations in the sterling balances of sterling area countries. I should make it clear that the facility under discussion is not one which would provide finance to meet any deficit in the balance of payments of the United Kingdom. It is not a loan. It is not an arrangement which could or will lead to any increase in our total of overseas indebtedness. The object would be to strengthen the position of sterling and thus of the international monetary system as a whole.

I am glad to be able to tell the House that considerable progress has been made in these discussions. As a result, the Bank for International Settlements and 12 central banks, speaking where appropriate with the authority of their Governments, have given firm assurances of willingness to participate in the arrangements which are to be completed as soon as satisfactory consultations have taken place with sterling area countries.

These proposals are of great importance to all sterling area countries, and it is, therefore, right that consultations should take place with them all. These will be pursued urgently, but until they have been completed it would be wrong for me to make any further public statement.

I should like to express my warm appreciation of the constructive attitude of the countries with which these discussions in Basle have been conducted. I believe that the arrangements now contemplated, and the firm assurances we have had from these countries, offer the prospect of greater stability in the functioning of the international monetary system. While they in no way lessen the need to bring our own policies for restoring the balance of payments of the United Kingdom to a successful conclusion, they make it possible to pursue these policies without being adversely affected by fluctuations in the sterling balances. They are a major step forward in dealing with this longstanding problem.

As there are many negotiations still ahead, I would not wish to press the right hon. Gentleman today in detail on this matter? Is he aware that the announcement by the Bank and his own statement are disappointingly vague? May I ask three short questions, to see if he can give further information to the House?

The right hon. Gentleman referred to a new facility for sterling and told us three times what it is not. Can he tell us what it is? Is it best described as a medium-term standby? Is it about £800 million to £1,000 million? What sort of time-scale has he in mind? Are the talks geared to the I.M.F. meetings and later meetings of the Commonwealth Finance and Prime Ministers?

I am grateful to the right hon. Gentleman for saying that he will not press me unduly, because these negotiations and talks have to be carried out. He asked what was the nature of the arrangement. He himself gave the term, a medium-term standby. I would not wish to quarrel with that. Nor would I wish to quarrel with the sum he mentioned, which has been mentioned elsewhere, as approximately that envisaged. So far as the time-scale is concerned, my intention is that consultations should start in a matter of days. I hope that they will be completed within a few weeks afterwards. I shall report back to the House as soon as I have anything to report.

Is my right hon. Friend aware that many hon. Members, other than those who wish to make party political gain out of this, wish to congratulate him on his attempts to achieve stability in balance of payments? Will he assure the House that, regardless of the June trade figures, and in view of the already high level of unemployment, he will give no promise of any further deflationary measures?

No question of that has arisen.

Is the Chancellor aware that, despite the comment of his hon. Friend the Member for Heywood and Royton (Mr. Barnett) we all, on both sides of the House, wish him well in these difficult negotiations? Having said that, is the right hon. Gentleman aware that the successful outcome of these negotiations will only have the effect that the sterling balances will pass from creditors over whom we have some measure of control, into the hands of creditors over whom we shall have no control whatsoever? Therefore, this is a logical consequence of the policies that have been pursued by the right hon. Gentleman and his predecessor over the last four years.

Despite the encouraging and placatory introduction, I do not fully agree with the hon. Baronet. In the first place, he should wait and see exactly what the scheme is. In the second place, what we are here dealing with is a problem with which this country has been confronted for two decades or more. These are debts which were accumulated mostly over 20 years ago. They have been a source of instability in the international capital system and a source of difficulty to countries generally. If we can solve them on a sensible basis it will be a great advance for the world as a whole.

Will my right hon. Friend undertake to present to the House a White Paper in due course setting out the full terms and conditions of this agreement particularly as it will affect the level of unemployment, the rate of economic growth and the amount of public expenditure in the years ahead? Secondly, is he aware that the T.U.C. and the large number of his hon. Friends would much have preferred it if the Government had chosen instead to mobilise our immense assets in North America and use them for buying out the volatile sterling balances rather than incur further obligations to foreign bankers?

I shall consider how best to inform the House, whether by means of a White Paper or a statement or otherwise of what has emerged from the consultations. I assure my hon. Friend that there will be nothing touching any of the points he mentioned.

On the second point, I have discussed in the House the proposition about liquidating part of our overseas portfolio which he has put to me in the past and I have indicated that I think there would be disadvantages and disruption associated with this method. I think that we have achieved the benefits without the disruption.

Is the Chancellor aware that any guarantee arrangements which improve the position of sterling and thus our trading position will be warmly welcome, but is he also aware that the House as a whole will look with great interest to see what, if any, strings are attached, particularly with regard to the movement of capital between individual members of the sterling area or of converting it into other currencies?

Is the Chancellor not convinced that the support for sterling that is needed from foreign bankers is proof positive of the impossibility of this country forever maintaining sterling as a reserve currency? We must use the breathing-space in setting up a new international reserve currency.

I am grateful that at least one Leader of an Opposition party very much welcomes anything which strengthens sterling. I think, however, that the right hon. Gentleman is being a little over-sensitive and worried about strings. This does not arise.

As far as the right hon. Gentlemen's second and broader question is concerned, I have expressed my views. We have to be very careful about disrupting the position of the reserve currencies and about responsibility to sterling area countries and we have to have regard to the changed nature of sterling in the modern world.

While congratulating my right hon. Friend on the nature of the negotiations and the way in which they are being carried out, may I ask how the proposals at present being discussed are likely to affect the whole of the sterling balances and what thought he has given to the problem of distinguishing between capital outflow for investment and fluctuation of sterling balances themselves?

I think that my hon. Friend, and indeed the House, will not think me unforthcoming if I say that I think it right to discuss these problems with the holders of sterling balances before discussing them with anyone else.

As there have been references both to balance of payments and trading arrangements of this country, will the right hon. Gentleman make clear that these arrangements cannot have any net influence on current account or the basic balances?

Yes, I thought that I made that clear in my statement. They in no way obviate the need to get the balance of payments surplus at the earliest possible time we can. They cannot fail to be helpful both for us and for sterling area countries.

While congratulating my right hon. Friend on the admirable progress he has made in these negotiations, may I ask whether, if these negotiations proceed successfully, he will give more consideration—without committing himself now—to turning his back gradually on the deflationary policies which have had such a limited effect on our economic position up to now?

As I said to my hon. Friend the Member for Lewisham, West (Mr. Dickens), questions of that sort do not arise under this arrangement.

Referring back to the question asked by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), is not the basis of this agreement that we are turning obligations expressed in sterling into obligations expressed in gold?

No, and I think that the right hon. Gentleman, also, should wait to see the agreement.

Can the Chancellor say whether his next statement will be made before the House rises for the Summer Recess?

No I cannot give a definite undertaking on that, but I did indicate the time scale. There are over 30 sterling area countries to be consulted. We propose to do this as urgently as possible. I assure my hon. Friend and the House that I shall be only too ready to report to the House at the earliest possible moment.

The Chancellor said that there will be no increase in overseas indebtedness. Does he mean that to the extent to which sterling balances are run down they will not be replaced by loans which will be repayable?

I meant that there would be no increase in overseas indebtedness.

Can we take it from my right hon. Friend's statement that no letter of intent is involved and no guarantees are given to the international bankers on this occasion?

That can indeed be taken. When a letter of intent was involved, I, with the full concurrence—indeed, at the suggestion—of my right hon. Friend the Home Secretary, published it within 24 hours.

Will the Chancellor of the Exchequer bear in mind in his discussions with other sterling area countries that, despite the views of the United States, the possibility of a change in the price of gold in the fairly near future cannot be ruled out? Will he ensure that no undertakings are entered into which would make this more onerous for this country?

I know the hon. Gentleman's views about this: he has reiterated them on many occasions. However, I do not think that this arises directly and I have no comments to make on this subject today.

rose—

Order.

Deep Sea Fishing Industry

With permission, I shall make a further statement on the Government's review of future policy for the deep sea fishing industry.

As my hon. Friend the Joint Parliamentary Secretary announced on 15th May, we are satisfied that the industry can make an increasing contribution to import saving, given the assurance of adequate support and a continuing improvement in efficiency.

We propose to give an assurance of continued support to the deep sea fleet for a minimum period of five years. If the industry is to justify this support, it is essential that it should take all possible steps to improve its efficiency, both through technological development and through changes in structure and organisation which will promote better management and training. We intend, therefore, to operate the support that is being provided so that the benefit will go to those companies which can make the most productive use of these resources.

In addition, the Industrial Reorganisation Corporation, which has been studying the industry, has informed me that it is willing to help the industry to find the best means of improving its efficiency. The industry, for its part, has assured me of its readiness to co-operate to this end.

On this basis, and on the assumption that the industry will make satisfactory progress towards the objectives I have described—a matter which we shall be reviewing from time to time with the Industrial Reorganisation Corporation—we propose to introduce for the three years beginning 1st August, 1968, a new form of operating subsidy. This will take account both of fluctuations in the industry's profitability and of the need to preserve an incentive to efficiency.

This will be done by adjusting a basic subsidy of £2 million by reference to operating profits in the preceding year. If these are less than £4 million, the basic subsidy of £2 million will be increased by half the shortfall; if they are more than £4 million, the basic subsidy of £2 million will be reduced by half the excess. The total annual subsidy, however, will be limited to £4 million and will not be allowed to result in an annual level of profit plus subsidy exceeding £7 million.

The distribution of the subsidy will be related to the operating efficiency of vessels and not as at present to their classification. The detailed arrangements will be worked out with the industry. The method of support after the first three years will be subject to a review in 1970 with the objective of maintaining a corresponding level of return in the two years commencing 1st August, 1971.

Legislation will be introduced early next Session to give effect to the proposals I have announced. Meanwhile, a scheme will be laid before Parliament providing for the maximum basic and special subsidies payable under existing legislation for the subsidy year beginning 1st August, 1968. These subsidies will in due course be set against the total sum due to the industry for that year under the new policy.

Is the Minister aware that his statement is not only extremely important to the fishing industry, but also extremely complicated? Will he, therefore, ensure with the Leader of the House that we have an opportunity to debate it before the House rises for the Summer Recess?

May I ask the Minister some very brief points which I think call for immediate clarification. First, he has referred to the deep-sea fishing industry; and reference was made to this in the debate. The right hon. Gentleman will recognise that this is a phrase which we have used in the past. Will he make it quite clear that this covers all except the inshore fishermen, so that there can be no doubt about it?

Secondly, when does he propose to start paying the subsidy? We note what he has said with regard to the payment under the existing scheme, but when does he expect to start paying the new rate of subsidy? Will he bear in mind the need to make a very early payment if the distant water industry is to remain in being?

Thirdly, is there to be a division between owners and crews as before? If so, how does the right hon. Gentleman propose to achieve it?

The payment of the subsidy will have to await the passage of the Bill which, I hope, will be brought before the House shortly after it resumes in the autumn. My right hon. Friend the Leader of the House has heard what the right hon. Gentleman has said about a debate and has, I understand, indicated that he is prepared to consider having a debate before the Summer Recess.

As to the distinction between the inshore fleet and the deep sea fishing fleet, my statement is applicable to the deep sea fishing fleet.

Is my right hon. Friend aware that his complicated but nevertheless generous scheme will give immense satisfaction to all Members representing fishing ports and, indeed, to the House as a whole? Will he confirm that this scheme involves double the generosity of any award made by any former Government? Will he further confirm that this will provide a solid basis acceptable to the owners and also give a basis for a decent wage for the workers, including deck-hands, in the industry? Lastly, can he tell us—

Order. Briefly, please. We have many fishermen.

When will the further talks take place, and what will be the content of those talks?

I am grateful to my hon. Friend for his expression of appreciation of what is a new policy and one which I am sure will be appreciated by the whole industry. The purpose of the discussions with the industry will be to find the best way of distributing the total sum to individual vessels so as to encourage efficiency of operation.

I cannot pre-judge the result, but I think that the objective is quite clear. The question of the payment of the fishermen is a matter between the employers and the unions. The unions will be brought into these discussions. The important thing is that the industry should be prosperous and efficient. This is the best way of improving conditions and wages in the industry.

Can the Minister confirm that the sums he has talked about are for operational subsidies only and that building subsidies will continue? Is his Ministry looking into the question of import control as part and parcel of this scheme?

The answer to the first part of the hon. Gentleman's supplementary question is in the affirmative. I am glad to be able to announce today that we have asked our principal E.F.T.A. suppliers to discuss the import position with us.

My right hon. Friend will be aware that his statement will give great pleasure to the industry as a whole, offering the promise of long-term, or at least reasonable-term, security. Has further consideration yet been given to the minimum price scheme? Can he add a little more about the rôle of the Industrial Reorganisation Corporation?

I am in touch with the White Fish Authority about its proposals for a statutory minimum price scheme. I have received the industry's assurance as to its readiness to co-operate with the I.R.C. I have made it clear that I shall be looking from time to time, with the I.R.C, at the progress of these discussions. The object of this exercise by the I.R.C. is to help the industry to improve efficiency.

May I press the Minister a little further? He said that his statement was about the deep sea fishing industry. I understood that the Government were having an inquiry into the whole fishing industry. Is not this so? Can he give an assurance to the House and to the inshore fishermen that some action will be taken to reconstruct that industry as well as the deep sea industry?

The hon. Gentleman must distinguish between inshore fishing and deep sea fishing. There is here a very important distinction. I refer the hon. Gentleman to the speech made by my hon. Friend the Joint Parliamentary Secretary on this point, among others, on 15th May. The inshore fleet has done much better than the trawler fleet, but to encourage expansion we are proposing to maintain the existing level of inshore subsidies for the year commencing 1st August next. There is no question of cutting subsidies for the inshore fleet.

My right hon. Friend's statement is very welcome, but will he take it that it will be even more welcome if it has a more positive showing on the settling sheets of the crews in the near future? From the longer-term point of view of the industry, when may we hope to see some of the positive results of the negotiations with the I.R.C, so that we may have a strong and viable industry in the years ahead?

I hope that the I.R.C, which is now having detailed discussions with the industry, will report as soon as possible. I have had an assurance from Sir Frank Kearton to that effect. The important fact is that, taking the statement which I have made today with my hon. Friend's speech on 15th May, we have now created a new and forward-looking policy which will inject new confidence into the industry.

The right hon. Gentleman's statement will be generally welcomed, but will he be preparing a similar statement for the longer term to secure the future of inshore fishermen? Second, how will the operating efficiency standard be worked?

As I have said, inshore fishing is in a much better state than the deep sea fishing industry, and we believe that it is fully secured by the policies which we are now operating. I have heard no arguments to the contrary. As the detailed working out of the scheme is complex, perhaps, with your permission, Mr. Speaker, I might give a little more detail to help the House.

The amount of Government aid is a basic subsidy of £2 million payable if the industry's profits are £4 million. If the industry's profits are more than £4 million, the subsidy declines, and for each £1 million of industry profit above £4 million the Government will deduct £½ million from the basic subsidy of £2 million. Thus, if the profits are £5 million, the subsidy is £2 million minus £½ million, giving £1½ million subsidy.

Again, if the industry's profits are less than £4 million, the subsidy increases. For each £1 million by which the industry's profits fall below £4 million, the Government will add £½ million to the basic subsidy. If the profits are, for example, £3 million, the subsidy then is £2½ million.

I hope that hon. Members will read that in HANSARD tomorrow in elucidation of my original statement.

Order. An additional detailed statement of that kind might well have been circulated in the OFFICIAL REPORT.

On what criteria for subsidy purposes will the concept of operating efficiency of a vessel be judged?

I ask my hon. Friend carefully to read the statement which I have made, in which I have tried to help the House on this complex subject.

The right hon. Gentleman's statement is welcome as a step forward, but does he realise that the crux of the matter will still be what can be done about imports, especially as other countries will always subsidise their fishing much more than we do?

The question of imports is important, and I shall be having discussions about it. However, the fact remains that it will be largely the Exchequer which will benefit now if there is any restriction of imports.

Will the right hon. Gentleman clarify his use of the term "deep sea fishing"? Does it cover all sea fishing other than inshore fishing? Second, will he state clearly whether the new subsidy proposals, with the ceiling which he has announced, will in no way affect the inshore fishing fleet?

My statement was not applicable to inshore fishing. It dealt only with deep sea fishing, that is, fishing in near, middle and distant waters.

Business Of The House (Supply)

Ordered,

That this day Business other than the Business of Supply may be taken before Ten o'clock.—[Mr. Grey.]

Business Of The House

Ordered,

That the Proceedings on the Motion relating to the Medical Profession may be entered upon and proceeded with at this day's Sitting at any hour for a period of One and a half hours after they have been entered upon, though opposed.—[Mr. Grey.]

Orders Of The Day

Supply

[24TH ALLOTTED DAY],— considered.

Industrial Reorganisation Corporation

4.25 p.m.

I beg to move,

That this House, while upholding the independence of the Industrial Reorganisation Corporation, deplores its action in intervening with public money on behalf of one bidder in a merger operation, and regards such action as a dangerous precedent for the future.

In moving the Motion, we intend no criticism of either the management of the Industrial Reorganisation Corporation or of any of the managements of the firms involved in the episode to which we shall refer. We direct our criticism at the Government for the width of the legislation which they put through Parliament and the extent of the powers which they gave to the Industrial Reorganisation Corporation. We opposed that legislation because we feared that the powers given to the Corporation would enable it to compel mergers and to impose the dead hand and distortions of public control on some sections of industry.

We on this side admit that, during the first year or more after the Corporation was in action, we were reassured to some extent by its conduct. There seems little doubt that it carried out a useful task of easing mergers within the market mechanism. But what reassured us on this side evidently disenchanted the Government, since there were rumours in the Press of disillusion on the part of Ministers and of further legislation. The Industrial Expansion Act, as it now is, was brought to Parliament to give the Government powers to carry out what they had hoped the I.R.C. would achieve, but which the I.R.C. had been unwilling to set its hand to.

The achievements in the first phase of the I.R.C.'s life are listed in its annual Report, covering several pages. We cannot judge the degree of the contribution by the I.R.C. to each of the mergers mentioned in that Report, but, on the whole, at the time of the first Report, our fears were not realised.

We think that it is a clear gain to the nation that the Socialists now in Government have begun to realise that mergers, like most things in life, may be good, bad or indifferent, and there is nothing to be hysterical about in mergers as such. Since the Socialists came to power, there has been a veritable torrent of take-over bids. We hate to think of the uproar there would have been had such a torrent of take-overs occurred when the party opposite was on this side. It is a clear gain to the nation that the Socialist Party is now willing to judge take-overs on their individual merits.

Further, we reckon that the dialogue which the I.R.C. has been conducting confidentially with different parts of industry has probably been extremely useful. We recognise that the I.R.C. has, during its life so far, examined, among other sectors of industry, the firms making instruments and process control equipment. We recognise that this sector, or double sector, of industry comprises a wide range of inter-connected firms, and we know that within this double sector various negotiations were started and came to nothing.

The story on which we shall concentrate today began with the bid by the Rank Organisation for Cambridge Instruments, a bid which the Rank Organisation saw as a move to strengthen its already successful subsidiary Taylor Hobson. Cambridge Instruments, entirely legitimately and within its rights, opposed the bid both because it claimed that the price offered for the shares was not enough and because it preferred a partner different from the Rank Organisation.

It was then that Kent made its bid, which, like the Rank Organisation bid, was partly in cash and partly in shares. The I.R.C. then declared its support for the Kent bid. As I have said, the Corporation had certainly had discussions with different parts of the industry before. The I.R.C. then went into the market and bought Cambridge Instruments shares and Kent shares as well, which seems to have had the effect, to some extent, of raising the value of the Kent bid. After bids and counter-bids, and considerable share purchases by the I.R.C, Kent won control of Cambridge Instruments.

There seems little doubt that, but for the I.R.C., the Rank Organisation would probably have won control of Cambridge Instruments. We feared shot-gun weddings when the I.R.C. was introduced. What we had was the first example of a short-gun separation. The First Report of the I.R.C. on page 5 says that the I.R.C.'s aim is:

"… not to impose theoretical blueprints of its own on industry,"

But, surely, that is exactly what, I am sure with the greatest of good intentions, the I.R.C. has in fact done.

Would it not be correct to say that the real shot-gun wedding would have been if Rank had been successful in taking over Cambridge Instruments?

What is done by private capital within the law is one thing: what is done with public capital, we shall argue, is quite a different matter and, as I shall seek to persuade the House, leads to all sorts of distortions.

I now turn to a quotation from page 6 of the Report, which states:

"… the I.R.C.'s task is to seek out those sectors of industry where structural change should be happening but is not—to identify the obstacles and try to eliminate them."

Precisely, but in this industry, the process control and instrument industry, structural change was just about to take place.

I shall comment on the bare facts which I put before the House, with which we are all familiar, but before I do so it would be fair to warn the Minister of the two questions with which I shall finish my speech. These are the two questions which we on this side hope that the Minister during his speech will clearly answer. Is it likely, in sectors of industry requiring, in the I.R.C.s view, structural change but where no such structural change is happening, that the I.R.C. will make a bid on its own behalf? Secondly, are we to expect that the I.R.C. is likely to make the same sort of intervention as it did in the Cambridge Instrument bid in a contested bid in the future? Those are the two questions which we hope that the Minister will answer. I bring this out part way through my speech only to give him the knowledge in advance.

I turn now to comment on the facts as I have portrayed them. We do not for a moment question the integrity and good intentions of I.R.C. We quite understand that the scientific instrument industry overlaps the process control industry, and we quite understand that Kent naturally wants to strengthen its process control capacity by marrying a creative scientific instrument company. We further understand that the I.R.C. is concerned to secure a British competitor for the great international companies like Honeywell and Foxborough. But there is no case here of an industry failing to regroup itself. Regrouping was taking place.

The Rank Organisation's bid was contested by Cambridge Instruments, which did not want a merger with the Rank Organisation, and the bid was contested by a rival bidder. The I.R.C. clearly did not intervene to save one company from a disasteful bidder. If that were the view of I.R.C. it could not possibly have intervened as it did in the G.E.C.-A.E.I. conflict. It is not the job of the I.R.C., and I am sure that they do not think it is their job, to rescue industrial maidens from distasteful captors.

The I.R.C. intervened because it thought that the Kent/Cambridge Instrument link would be better in the national interest than the Rank Organisation/Cambridge Instrument link, and we on this side of the House concede that it may well be so. On the other hand, no one, not even the I.R.C, can be sure that it will be so. No one can predict which grouping would be better. [An HON. MEMBER: "I would prefer to take the I.R.C.'s view, not the right hon. Gentleman's."] The hon. Gentleman says that he would prefer to take the I.R.C.'s view and not mine. I am not asking the House to take my view; I am asking the House to leave it to the market. The right hon. Gentleman the Member for Belper (Mr. George Brown) will have, I hope, his chance to catch the eye of the Chair.

The point we seek to make is that no one can be sure which grouping would be better in the national interest. Kent/Cambridge Instruments may make a huge success in process control; we hope it will. The Rank Organisation, rebuffed in one direction, may expand successfully on a parallel or a different tack. But if Kent had lost, perhaps Rank, with its marketing and financial as well as other strengths, would have enabled Cambridge Instruments/Taylor Hobson to have become an international leader, not in the process control industry but in the scientific and optical instrument world, and who can tell which would have been better for the national interest?

Who can be sure? If the Rank Organisation had been successful, Kent might have found a successful growth in another linkage altogether, not in the process control world. I have even seen it suggested that an ideal grouping would be Hilger and Watts, Cambridge Instruments and the instrument section of A.E.I. But for the I.R.C., two of these three would have been in one stable by now. Now, two of these three are locked out of each other's reach. I am not quite sure whether the Hilger and Watts/Rank Organisation bid is complete, but assuming that goes through—and that may be an assumption which I am not entitled to make—Hilger and Watts will be locked into Rank, and Cambridge Instruments will be locked into Kent.

Even supposing that one solution, the Kent/Cambridge Instrument solution, is preferable, much preferable or marginally preferable than the solution which the market would have achieved, the Rank/Cambridge Instruments solution, I ask the House and the right hon. Gentleman the Member for Belper as well as the Minister to consider, even supposing that, was it wise that the I.R.C. should fight for this solution, considering the ill-effects, because there will be ill-effects? The very fear of a petition of what the I.R.C. has done may distort future contested mergers. If I.R.C. enters the market in the future the battle will be virtually over. Who will go to the expense of bidding when such a potentate with such a purse enters the fray? The I.R.C. can not only buy shares in the company bid for, it can buy shares in the favoured bidder and so enhance the value of the bid.

The I.R.C. has had to inject finance into Kent by several ways, including the guaranteeing of deferred stock, but the I.R.C. will put a director on the board. What if all does not go well? The I.R.C. will find its money locked in and another firm will be subsidised with public money to compete unfairly with private enterprise. (The market solution would have produced none of these problems.)

The I.R.C.'s most important assets are, surely, confidence and the good will of industry. Suppose a man consults a family adviser about a girl and finds that the adviser helps a rival to carry the girl off. Will that man consult the family adviser again? It is most unlikely.

On the other hand, one must recognise that the fact that the I.R.C. has shown itself willing to back one of several bidders with public money may to some extent increase the queue of people seeking to get the I.R.C. on their side. One way and another we reckon that the Cambridge Instrument episode has damaged the I.R.C.'s standing with industry and has reduced its capacity to do good.

Will the right hon. Gentleman use arguments in support of his thesis that the market, which is not a specialised agency, is a better judge than an agency specially set up for the purpose, especially when it is itself operating within the market?

Yes. I am saying that it is not possible to tell whether one group is more likely to benefit the national interest than another, since we cannot tell what the other alternative would produce. I suppose that it is conceivable that there could be a bid which would be so flagrantly against the national interest that even I would have to concede that an outsider could judge, but this was certainly not one of them.

The I.R.C. has and has had distinguished and devoted management and membership. Vigorous, intelligent, honourable men will not always abstain from using powers that are given to them. Shakespeare's Ulysses describes in six words the exact slope that we fear that the Government's legislation has given to the I.R.C—

"Power into will, will into appetite".

The I.R.C. was set up to help bring about sensible mergers. It was not set up to stop mergers which in its view are not ideal. The I.R.C.'s main weapons should be influence, confidence and good will. The I.R.C. is not a business. It is a public agency charged with the delicate mission which can lose more than it gains for the nation if it is clumsy, however good its intentions. If the I.R.C. forgoes or is legally denied the power to intervene by share purchase in a contested bid, no doubt there would be occasional second-best solutions or what would seem to be second-best solutions achieved by the market. Might not the occasional second-best solution be better than the errors, distortions, and lost good will of a fighting I.R.C?

Sir Frank Kearton is a redoubtable, determined and honourable man. Mr. Charles Villiers, the managing director of the I.R.C, is an outstandingly able man of wide experience and of the highest integrity. However, we still say that the Kent/Cambridge Instrument episode is a bad precedent. The resources and the power of the I.R.C. could in less honourable hands be instruments of dogma and damage. We condemn the Government for giving the I.R.C. powers that are too wide.

When we are the Government, if the I.R.C. is still performing a useful function, we shall reconsider the width of its powers very carefully. A facilitating I.R.C.—that is, facilitating the market mechanism—is one thing and may be useful. A fighting I.R.C. is another animal altogether, because it uses the taxpayer's purse to back its judgment on what, in almost every case, can only be a hypothetical and marginal difference in national interest.

I come back to the two questions that I warned the Minister that we shall look to him to answer. Is it likely that the I.R.C. will intervene again with share purchases on behalf of one of two or more rival bidders? Is it likely that the I.R.C. will make bids on its own behalf if mergers do not happen in sectors where it would like mergers to take place?

Because the I.R.C.'s powers seem to us to be too wide, I hope that my right hon. and hon. Friends will vote in support of the Motion. Meanwhile, we await the Minister's reply with great interest.

4.43 p.m.

When I first read the Motion before us today, I was struck by two things. The first was the obvious contradiction between the expressed desire to uphold the independence of the I.R.C. and the strong criticism of its use of its powers which, if I was to agree, would oblige me to reduce its independence. Second, I was struck by what looks like a significant shift in the Opposition's attitude to the I.R.C. itself. They have asked the House to uphold the I.R.C.'s independence, and this can only mean, as, I think the right hon. Gentleman's speech made clear, that the Conservative Party has come to the conclusion that the I.R.C. has a rôle to play in improving the structure and efficiency of British industry.

I was waiting, therefore, with considerable interest for the right hon. Gentleman's speech. I was hoping to hear from him how I could at one and the same time uphold the independence of the I.R.C. while intervening in its affairs, and as I would judge it, restricting its operational flexibility. I was hoping for a clear and candid account of the evolution of the Conservative Party's thinking about the rôle of the I.R.C.

On the first point, the right hon. Gentleman's speech has certainly not helped. He has made it clear that he wants me to reduce its independence in one very important area, and about that I shall have something to say a little later on. On the second point he has been a little ambiguous. Nevertheless, we are entitled to draw the important conclusion that the attitude of right hon. and hon. Gentlemen opposite towards the I.R.C. has changed, and I for one welcome it greatly. I note that it is in very sharp contrast to the unconstructive and negative approach that they adopted 18 months ago.

As the right hon. Member for Enfield, West (Mr. Iain Macleod) is sitting on the Front Bench opposite, I would remind him of his own attitude at that time, when he said:

"Our attitude towards the I.R.C. is that of a preacher about sin—we are against it."— [OFFICIAL REPORT, 15th February, 1966; Vol. 724, c. 1228.]

Now, apparently, like many other good things that this Government have done, the I.R.C. has come increasingly to be accepted. The only thing now which is of concern is how it conducts itself and whether it may jeopardise the good will that it has already won in industry by being too assertive. As I see it, that is not a very formidable charge, although it is one that I shall try to deal with as my speech develops.

Before moving to the main point of disagreement, which is the rôle that the I.R.C. has played in the Kent-Cambridge merger, I would sketch out what I see as the common ground existing between us, and I would wish to put the LR.C.'s action in a slightly broader setting where it can be properly judged.

In the first place, I think that we are agreed that many sectors of British industry are in need of restructuring. Certainly this is now widely accepted in industry. More businessmen than ever before are thinking in terms of larger units. This is not a matter of size for its own sake—certainly I would not wish to make a fetish of size—but size in order to achieve economies in production and in marketing to enable more intensive research and development programmes.

In this age of increasingly rapid technological advance and fierce competition in world markets from giant foreign firms, we must seek energetically to overcome those disadvantages that arise from structural defects.

Secondly, while it is obvious that companies themselves will be the main source of initiative in promoting structural change, it is clear that public agencies have also an important part to play. Recalling in the past decade the reorganisation of the cotton industry, the aircraft industry, shipbuilding and steel, only doctrinaire believers in a market economy will still affirm that there is no place for public intervention in the promotion of structural change.

The I.R.C, with its broad remit, has two special contributions to make to the process of industrial reorganisation. First, it can help to bring about mergers which would not otherwise take place or which would take place too slowly. Second, it is able to view the need for reorganisation more widely against a national economic and industrial canvas and not simply in relation to the opportunities and constraints which happen to face individual firms at any one time.

When the idea of the I.R.C. was first mooted about two and a half years ago, there was considerable scepticism and indeed hostility, not only from the Conservative Party but from substantial sectors of industry. Indeed, as the hon. Member for Eastleigh (Mr. David Price) will re- call, he described the I.R.C. at that time as

"… this unwanted waif of instant politics."—[OFFICIAL REPORT, 22nd November, 1966; Vol. 736, c. 1241.]

Since then, there have been encouraging and significant changes.

Over 400 companies have approached the I.R.C. in the 18 months since it was set up. It has supported two of the biggest mergers in British commercial history—the merger between G.E.C. and A.E.I., which has opened the way to the much needed rationalisation of the heavy electrical industry, and the merger between B.M.H. and Leyland Motors which has strengthened the British owned sector of the motor industry which is of key importance for the balance of payments. In the merger between English Electric and Elliott Automation, I.R.C. has supported the creation of one of the strongest European groups manufacturing automated equipment. If I may give one further example, I.R.C.'s support has enabled the Whessoe Company to secure more export orders and to save over 700 jobs in a development area—

Is the right hon. Gentleman suggesting that these very important mergers would not have taken place if it had not been for the intervention of the I.R.C?

I think that it is very probable that these mergers would not have taken place. However, I think that we would all accept that this is something about which there can be no absolute evidence. There cannot be an absolute demonstration of an assertion that a merger would or would not have taken place without the intervention of the I.R.C. But the evidence very strongly suggests that those mergers would not have taken place. It is these and other achievements which have earned the I.R.C. its present high standing with industry.

Thirdly, there is agreement that it is essential for the I.R.C. to be completely independent of the Government in its day-to-day operation. As this is in the terms of the Motion, the Opposition must agree with that. Of course, Government Departments contribute to the I.R.C.'s work. They can and do feed in suggestions about sectors of industry which prima facie may need structural change. The reports of the E.D.C.s and other independent bodies are also relevant. But the decisions are for the I.R.C. itself. Further, the confidentiality of its relations with firms, the skilled commercial judgment required and the speed with which decisions have to be taken all require that the I.R.C. should be left to exercise its commercial judgment in the light of its statutory obligations.

How is Parliament to comment on the expenditure of public money if it thinks that an organisation such as the I.R.C. is not spending that money wisely?

As the hon. Gentleman knows, Parliament has the opportunity to debate these matters, as it is doing today. It also has the opportunity to initiate a debate on the annual report of the I.R.C. and it can and does question Ministers about week-by-week conduct of the I.R.C.

While I emphasise the need for operational independence, I also accept that the I.R.C. must observe certain principles and guide lines. Some of these are set out in the Act. Others are provided in the I.R.C. White Paper and in the various undertakings given by the Government during the debates on the I.R.C. Act. I am myself in close touch with the I.R.C. and I have no doubt that it is fully aware of the importance which we attach to projects which offer good prospects of early returns in terms of increased exports or reduced imports and equally aware of the importance which we attach to regional policy. Under Section 2 of the I.R.C. Act, as the right hon. Gentleman knows, I have power to issue general directions to the Corporation, but I do not have the power to intervene in particular cases.

I come now to the area of disagreement: whether it is right for the I.R.C. to back its independent judgment in support of one party in a contested takeover bid. In reaching a conclusion on this there are a number of relevant considerations. First, has the I.R.C. acted within the powers which Parliament has given to it? There can be no doubt about the answer to that. In fact, the Act enables the I.R.C. to take the neces- sary steps for the fulfilment of its statutory functions, and these include the promotion and reorganisation of any industry in the national economic interest. In the words of the Act:

"The Corporation shall have the power to do anything whether in the United Kingdom or elsewhere which is calculated to facilitate the discharge of its functions … including the acquisition, holding and disposal of securities."

We need not argue about that.

Secondly, were there good and substantial reasons for the I.R.C. to want to promote this particular merger? As the House will be aware, the instrument industry is not only important to the balance of payments, but important to general industrial efficiency. The I.R.C. judged that a merger between these two companies, Kent and Cambridge, would be of great benefit to British industry. The alternative, a take-over of Cambridge Instruments by the Rank Organisation, would not, in the I.R.C's judgment, have created a manufacturing unit with the comparable technical significance and value for the economy. The board of Cambridge Instruments also favoured a merger with Kent's, as the right hon. Gentleman has reminded us.

The I.R.C's judgment that this merger was in the national interest had the support of my right hon. Friend the Minister of Technology, who is responsible for the instruments industry. There are several reasons for this judgment. The industrial measuring and scientific instruments industry is a fast growing industry which has large opportunities for export earning and import replacement. Industrial measuring instruments are also of strategic technological significance because of their rôle in the development and application of automated industrial systems, which will be of increasing importance in our overall industrial performance.

In this work, the activities of Kent and Cambridge are strongly complementary. Kent is the largest British-owned firm making industrial control systems, while the strength of Cambridge is on the scientific side. The acquisition of Cambridge will give Kent a stronger research base for the development of future industrial control systems and should, accordingly, improve its competitive position both at home and overseas.

We can argue across the Floor of the House about this, about the merits of the rival groups. My hon. Friend the Joint Parliamentary Secretary to the Ministry of Technology who is to reply to the debate will, no doubt, say more about the advantages of this grouping as seen from the direct knowledge which his Department has gained in its dealings with this industry, but in the last resort I hope that it will be conceded that the Board of the I.R.C. is particularly well equipped to make the right judgment, and a disinterested judgment, in this matter.

The Board of the I.R.C. consists of men of wide and varied industrial and business experience. Their decision to support the Kent-Cambridge grouping was taken after a detailed examination of the industrial activities of the companies and against the background of considerable knowledge of the scientific instruments industry. Their conclusion was that the balance of advantage for the development of this extremely important industry lay decisively with the Kent-Cambridge rather than with Rank-Cambridge.

Does the right hon. Gentleman appreciate that a most important principle in this matter is that the I.R.C. should reveal its own reasoning for the decisions which if reaches? Will he not say what were the reasons for this decision, or is he to wait until the Joint Parliamentary Secretary winds up the debate? The House would prefer to have the reasons now.

I have given some of the reasons and my hon. Friend will be adding to them. As the hon. Gentleman will be aware, the I.R.C. issued a succinct but informative statement on Friday giving its reasons for its course of action.

Having reached this judgment, that the best development of the scientific instruments industry would be on the basis of a Kent-Cambridge rather than a Rank-Cambridge merger—and this is the crux of the matter—should the I.R.C. have abandoned its judgment when Ranks made a further bid for Cambridge instruments? This is the question. As Kent on its own had insufficient financial resources, the choice before the I.R.C. was either to abandon this attempt to restructure the scientific instruments industry, or to support Kent with its own resources. If it had chosen the former course, in the light of the judgment which it had already reached, it would have been open to the serious counter-criticism that it had failed to do its duty. It would have meant accepting the second best—and I use the right hon. Gentleman's word—merger simply because one company, the less suited, had a longer purse than the other company, the more suited.

Its opinion of the second-best.

I accept that. I said earlier that this was a subject in which one could not hope to be able to put forward overwhelming evidence. It has to be a balance of judgment.

In the first instance, the I.R.C. attempted to find an agreed solution acceptable to the parties, but when this was rejected, the question had to be faced and it was at this point that the I.R.C. decided, and rightly decided, to use its funds in support of Kent.

The fourth question which one would want to answer in arriving at a judgment is whether there is anything inherently unfair about an I.R.C. intervention in such a contest. I do not think so. The point is made that the I.R.C. has large resources—under the Act, £150 million—but this is far from being a bottomless purse. When one considers its resources in relation to the need for restructuring in British industry and the many reorganisation and development projects which have already come before it, they can be described only as modest. But, more important, the I.R.C. is expected to operate on a commercial basis overall. It has to service the capital provided under the Act and it cannot afford to subsidise companies or projects and therefore in making share purchases it cannot go beyond a higher price than could be commercially justified.

What I have said so far demonstrates that the I.R.C. acted within its powers in this case, had good and sufficient reason for the course that it took, that it was not operating from any special position of advantage and that it acted according to the general rules which are expected of financial institutions in these matters.

Against that background, let us see what the Opposition are asking. They are saying, apparently, that it is all right for the I.R.C. to act where there is no contest. They are also, I assume, saying that there is no objection to the I.R.C. expressing a view about a contested merger—at least, I heard no criticism from the opposite side of the House when the I.R.C. supported the G.E.C. bid for A.E.I. Apparently, therefore, what the I.R.C. must not do is to become involved financially in a takeover struggle. That is the right hon. Gentleman's position.

The Opposition have nothing against take overs or disputed mergers in general. It is perfectly all right for any company, British or foreign, with sufficient spare financial resources to engage in a takeover struggle. It is all right for everyone, that is, except the I.R.C. Such an exception would clearly need to be argued very convincingly before it could be accepted. It certainly has not been done today. The crucial difference between the I.R.C. and other financial bodies is that the I.R.C. is a statutory body with a statutory obligation to have regard to the wider economic interests of the nation. The Opposition argue that this requires the I.R.C. to have less freedom than a commercial company. My belief is that it argues the exact contrary—namely, that the I.R.C. should have more freedom. All that we are seeking to establish is that it should have equal freedom in its commercial activities.

Moreover, if I were to impose a limitation of the kind that the Motion suggests, the credibility and effectiveness of the I.R.C. would be seriously impaired. One could readily envisage a situation in which the Corporation has been working for months to bring about an important and agreed merger. Then a new party of takeover bidders with a longer purse appears and from that moment the I.R.C. would have to abandon the project and withdraw. It would, indeed, be a paper tiger. I am not prepared to skin it.

I have reached the point where I can answer the right hon. Gentleman's questions point blank. First, if I may take them in reverse order, I am not prepared to give a general directive to the I.R.C. to prevent it from taking part in contested bids of the kind that Kent/Cam- bridge illustrates. In reply to the first question, this is certainly at present a hypothetical matter and I would, obviously, consider very carefully the views of the I.R.C. upon it.

All I can say is that it is the job of the I.R.C. to get on with the task of promoting structural change. It will clearly always bear in mind the question of whether there are people who are willing and able to help to carry out the job in a certain industry. Quite clearly, however, the I.R.C. has the powers under the Statute as I have described.

To sum up, I am satisfied that the Corporation has responsibly exercised its judgment in this case and I do not see any reason to question its interpretation of the requirements of the public interest under the Act. I see no cause to limit the action of the I.R.C. in the way suggested for the future.

It is, however, right for me to stress one point. The I.R.C. itself prefers to proceed by agreement, and most of its work is in persuasion and in the search for an agreed solution. But there will be situations, however infrequent, when total agreement will be lacking but where the I.R.C. will need, in the national interest, to use its financial power either to promote changes which are desirable or to resist changes which are undesirable. It must, therefore, have the resources and the freedom to use them if it is intended to make its contribution to increasing the efficiency and competitiveness of our industries.

I have not yet heard the right hon. Gentleman answer one of the most important points made by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph): that if the I.R.C. was to behave in the way that it has behaved in the Kent/Cambridge affair, many companies which might in the past have considered consulting it will decline to do so.

I understand that point, but this is precisely one of the matters on which one can expect that the judgment of the I.R.C, given its experience and its background, would be sufficient to enable it to form a view as to how best to conduct its own operations.

The I.R.C. is one of the pacemakers in the process of change and it would be folly, just when it is getting into its stride, to restrict the use of the powers already conferred by Parliament. Those who dislike change will dislike the I.R.C., but those who wish to see Britain become competitive in the modern industrial world will welcome its efforts and wish it every success.

5.6 p.m.

I listened with great care to the Secretary of Stale for Economic Affairs during what, I thought, was a very disappointing speech, but as the subject of this debate, which has been chosen by the Opposition, was to inquire into the rationale of the takeover by George Kent of the Cambridge Instrument Company, we on this side were more than disappointed that no meaningful evidence whatever was produced by the right hon. Gentleman in this respect.

The Motion deals first with the I.R.C. in the terms that it wishes to preserve its independence. I should like to say how strongly I support the sentiment. I wish the I.R.C. to be so independent that it withers away. I feel that the Industrial Reorganisation Corporation Bill as a whole when it was introduced into this House was based on ignorance of the market and prejudice against the operations of the market.

When my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) suggested that we might make a review of the I.R.C. when we on this side returned to government and that there might be a place for what he termed a facilitating I.R.C, I only remind him at this stage, to help him in his consideration of the matter, that we voted against the Bill both on Second Reading and on Third Reading. I hope that my right hon. Friend will take that into account.

There is, I suppose, a place for an I.R.C. which acts as a kind of talking shop. What I am against is an I.R.C. which acts in a direct and interventionist way. The Secretary of State has proudly acclaimed himself as an interventionist. That is what I object to.

There is nothing wrong with the market system, and, indeed, there is nothing wrong with the economy, that cannot be altered by other arrangements. We have just had the Brookings Report on the shortcomings of British management and the report of the Donovan Commission on the trade unions. There is nothing in either of those two documents so far as they affect the economy which cannot be put right by a reduction of tariffs, a tightening of monopoly legislation and a complete recasting of the taxation system.

There is no evidence whatever of any shortage of capital in the free market either for short-term, medium-term or long-term projects. This is in entire contradistinction with the position in other countries and certainly in all our competitor countries, with the exception of the United States. In France and West Germany there is an acute shortage of private capital for industrial ventures. It is noticeable that only in Italy is there any form of organisation which is comparable to that of the I.R.C. The I.R.I. was founded in the first place long before the war only because of the complete absence of capital from the private system.

I well remember that in the Committee on the Industrial Reorganisation Corporation Bill the Government did not quite know what the criteria of the I.R.C. would be. It was only because of pressure from this side that the word "profitability" was inserted into the Bill at all as one of the criteria on which the I.R.C. should act. We can but observe that in the course of this particular affair the I.R.C. is attempting to become directly competitive with merchant banks, and this is the point with which I wish to concern myself for a moment.

I should like to ask the hon. Gentleman who is to wind up the debate what were the terms on which the I.R.C. was able to raise the money not only for this operation but for any other current operations it may have. The Government will know that it is quite impossible for the Government to raise money at under 8 per cent. in the market at the moment. It is my belief that, in fact, the money has been made available to the I.R.C. at a substantially lower rate than this and I should like the hon. Gentleman to say exactly what the rate is.

Furthermore, the terms of repayment are certainly terms which would not be available to any private merchant bank in the City, for during this particular negotiation a structure of deferred capital was instituted on which no dividends will be payable till 1973. Therefore the I.R.C., in this operation and, I believe, in others, is borrowing money more cheaply than it would be available even to itself in the open market, let alone to other companies, and as regards repaying the money, it is borrowing on terms which would certainly not be available to outside bodies.

The right hon. Gentleman claimed ad nauseam that this particular operation was in the national interest. I must say that this is one of the terms which always make my heart sink whenever the right hon. Gentleman or the party opposite use it in terms of commerce or industry. This merger of George Kent and Cambridge Instruments was apparently in the national interest, but the merger between Cambridge Instruments and Rank's was apparently not in the national interest. It cannot have been absolutely in the national interest because quite clearly the Government and the I.R.C. would not have been prepared to pay in more money unless they were certain it was going to be brought within their control, and I do not think that would have been the position.

Suppose, for example, Rank's had made a higher bid. Would it then have been open to the I.R.C. to support an even higher bid from Cambridge Instruments? I cannot believe that would have been the case, and that is why I would again say that the term "national interest" cannot be an absolute term, but only a marginal term, if there was a preference between one solution as against another.

What is the national interest in this context? Surely the only context in which it can be reasonably described as the national interest is the context of profitability. In this particular case it happens that the Rank/Taylor Hobson group of instrument manufacturers has increased its profits at the pre-tax level from 1962 to 1967 from £184,000 to £1·2 million, whereas the George Kent position in the same period was that its pre-tax profit rose from £623,000 to £1·2 million; that is to say the Rank/Taylor Hobson group was certainly six times as profitable in that time whereas the Kent Group only increased its profit by twice during the same period. So we can only suppose, from this arrangement, that profitability was not a criterion which was operating for I.R.C. in this case.

Does not the market take account of that? Was not the Rank price based on over 40 prices-earnings ratio?

I am sorry, but I do not quite follow the hon. Gentleman. All I am saying is that the Government were prepared through the I.R.C. to support a company whose profitability was much less than the other one, and on grounds of the term "national interest". That is the term which I am examining at the moment—"national interest".

Was the purpose, then, to save foreign exchange? Presumably, that is one of the criteria which the I.R.C. was using. It is perfectly true that imports of instruments are rising and rising very fast, and I think it is a matter of concern just as the increase in imports generally is one of concern; but, of course, it is true that imports of textiles and a host of other articles are rising, as is well known to the party opposite, and it is of great concern and trouble to the Government.

So the logic seems to have been that because two American companies, notably Honeywell and Foxboro, both make industrial and scientific instruments the solution was to find a scientific and an industrial instrument manufacturer and put them together, and then we would have a worthy competitor for those two American companies. In fact, both George Kent and Cambridge Instruments, as separate companies, have been very disappointing in their earnings records. The earnings on capital employed by George Kent between 1955 and 1967 was halved from 15·7 per cent. to 7·8 per cent., and the Cambridge Instrument record over the same period was even worse. Its earnings on capital employed fell from 31·3 per cent. to 13·5 per cent. I can really see no reason or logic for an amalgamation of two companies with a disappointing earnings record and for supposing that this is a guarantee of success in competing with Honeywell and Foxboro.

Now, of course, the position is changed, and George Kent has willy-nilly become a matter of national interest, and, whether it succeeds in competing successfully with those two large American corporations or not, it will have to get the support and backing of the I.R.C. or some other Government agency. I do not know whether the Government have made any estimate at all of the money which would be required if we are to compete with those two large corporations.

It must be asked, why this particular field has been selected when there are so many other fields which need subsidies. Is it to compete with American companies, or simply because imports are increasing to such a large extent in washing machines or socks or silk scarves all articles of which there are high imports? If the criterion is to save foreign exchange, then why should not any company which feels the faintest breath of competition from abroad also appeal for help? How, on this argument, can the appeal possibly be refused?

It will be said that the help can be given only if it fits in with the logical pattern devised by the I.R.C., and this is my second objection to this action because what is the evidence that this merger was in the national interest at all? What we have to ask is this. On the basis of information gathered by the I.R.C. a certain pattern was devised which I.R.C. considered to be in the national interest. We do not know who gathered this information. We do not know what the assessment was. Why not? Why is this information not being made available to the House? If this sort of action is taken in the national interest, why is it not being explained to the nation? All we have is what is vouchsafed to us by leak and by the Kent board in the reasons which it gave to its shareholders after the intervention of the I.R.C. This was most interesting because the Kent board said this:

"Kent, as already disclosed, is nearing the end of its expansion programme in the industrial field where market surveys suggest that demand will expand by 8½ per cent. a year over the next 10 years. The scientific, analytical and medical markets will have a much faster rate of growth of about 13 per cent. This is a cogent reason why an expansion-minded firm should look at scientific instrument manufacture."

If Kent was looking so avidly at Cambridge Instruments for expansion on scientific instruments, that was the reason why Rank/Taylor Hobson was also looking at Cambridge Instruments. I therefore ask: what practical reasons were there for declining or refusing to allow the Taylor Hobson bid to go through? I understand that the Rank people were interviewed by the I.R.C. on 29th April when the I.R.C. showed an ignorance of the Taylor Hobson Group which was quite astonishing. According to information given to me, the Rank board was never properly consulted or allowed to give other reasons why its merger should not be allowed to go through. This can only mean that Kent sees its future profitability in scientific instruments just as the Rank organisation did. Why did the I.R.C. support Kent? Presumably because it sees industrial instrumentation as a declining sphere and wishes to prop it up as it does other declining industries and as it does in an industry in some difficulties, namely, the computer industry. I suggest that, once again, it is the fear of American competition. I think it is time that there was some clear thinking on this subject.

First, we ought to realise the size of this problem. Some £10,000 million a year is spent on research and development in the United States. The figure for this country is about £850 million. It means that over the whole field it is likely that there will be more scientific discoveries made in the United States and more development is possible because of the scale of expenditure. When one considers the size of some of these corporations—Honeywell, for example, is very much interested in this sphere—one must seriously consider what the total cost to the country is likely to be if George Kent is to be propped up in this way. For example, the Honeywell Corporation has a total stockholders' equity of 384 million dollars, of which some 180 million dollars is on control equipment. It is, in other words, between four and five times as large as George Kent. But the Honeywell Corporation, in its operations from this country, is a net exporter of control systems. Therefore, we have to recognise that we are shoring up one company as against another which is employing British people and earning foreign exchange for this country.

My third criticism of this intervention in the market is the method of operation. I waste no sympathy on the Cambridge Instruments' shareholders. Frankly, I think they have been extremely fortunate in the whole of this proceeding. But the Kent shareholders have found, in the process, that their share capital has been considerably watered down.

I come now to a most extraordinary feature of this bid, namely, the holding of the Royal Society of some of the Cambridge equity. It so happened—I do not know how—that the Royal Society had a holding of some 11 per cent. in the Cambridge equity. It is a fact—and I have checked it for myself—that, after the I.R.C. intervened, at no time was the George Kent bid as valuable as the Rank bid. For that reason one must ask why the Royal Society ever accepted the George Kent bid. It must have been extremely badly advised. I appreciate that this is a matter for the Royal Society, but one of the most amusing ironies of the whole situation is that the head of the I.R.C. happened to be a fellow of the Royal Society. The confusion of interests must have been extremely hard for him. I have no doubt that he kept out of the recommendations altogether. But, if he had to give a recommendation, he would have had to advise the Royal Society to accept the Rank bid.

As I have said before, what irks me about this arrangement is that the I.R.C. has used money which is not available on the same terms to outside sources. I have already asked whether we might be told what the rate is.

There is no doubt that Cambridge Instruments should have gone to Rank on the basis of it being a higher bid, and the chances are that Rank would have made Cambridge Instruments a more profitable affair than George Kent will ever do.

As my right hon. Friend the Member for Leeds, North-East mentioned, the whole tone of the I.R.C. has changed under its new managing director. When Mr. Grierson was there, in his interim report he said that he would not impose a theoretically conceived pattern. This is precisely what the I.R.C. is now attempting to do. There is no logical end to this form of intervention that one can observe, but we are not even permitted to see the basis of the logic. That is what is so insufferable about the whole arrangement and the activities of the I.R.C.

I have no doubt that other companies will be reluctant now to give information to the I.R.C. on a confidential basis. That is up to them. What is certain is that, unless the market and the country as a whole has a clear conception of what the I.R.C.'s basis of operation is, it will act on the understanding that an intervention may be made in the market at any time by a group, accountable apparently to nobody in public, drawing up its theories in secrecy and yet never allowing them to emerge except in direct action in the market. As I started off by saying—

rose—

As I started off by saying, I am certain that this kind of direct intervention in the market is wrong. Therefore, I hope that my right hon. Friend, when he gives the matter further consideration, will adopt what was a perfectly proper attitude in the first place, namely, to scrap the I.R.C. at the first opportunity.

5.27 p.m.

The interesting thing about the two speeches we have had so far from the Opposition is the difference of approach. The Motion has been carefully drafted to exclude the I.R.C. as such from criticism or censure by the Opposition. The right hon. Member for Leeds, North-East (Sir K. Joseph) was careful in his speech to do the same. The right hon. Gentleman said that they might look at its powers or the way it acted, but he pretty well gave it a certificate that, should the Opposition, unhappily, ever come back to power, the I.R.C. would stay in business. His hon. Friend—

rose—

I will give way, but I should like to make one thing clear. The debate did not start until after twenty minutes past four. We have less than 2½ hours to discuss this matter and the first three speeches, including the two Front Bench speeches, have taken almost an hour and 10 minutes. If I am to be interrupted all the way through, this will preclude anyone else having a chance to speak. However, if I am allowed to go on—and I did not interrupt anybody—I can get through quickly.

I did add as a qualifying clause to our view of the I.R.C, "if it remains useful."

Then I shall look very closely in HANSARD tomorrow to see if those words are there, because I did not hear them. If they are there, then most of what the right hon. Gentleman said had no meaning at all. He was really making a speech facing both ways, like Joseph's coat of many colours, and he is back en accord with his hon. Friend the Member for Horsham (Mr. Hordern). In that case I will waste no more time on it, because it meant nothing. The right hon. Gentleman is telling me that he faced north and south at the same time.

The other thing that struck me about the Motion is that it is carefully drafted not to deal with the merits of the Com-bridge-Kent or the Rank-Cambridge tie-up. The Motion is carefully drafted to deal with the principle whether the I.R.C. should ever intervene in a disputed bid. We have, however, today been wholly concerned with a special piece of pleading whether Rank should have been the successful bidder or somebody else.

I know the Chairman of the I.R.C. I am associated with him in another capacity, and I am proud to be. When the hon. Gentleman referred to him being a distinguished Fellow of the Royal Society, I thought that that was really the sort of thing which disclosed the absence of any real case. Coming as it did from a Member of the party which contains two prominent Privy Councillors, one on the Front Bench who is not here today, and one on the back benches who is not here either, who were involved in this matter on the other side, I think that it would have been better had the matter not been introduced.

I cannot see why that matter should not have been introduced.

Apologise.

It is relevant to the issue we are discussing, and I should not dream of apologising.

If the fact that Sir Frank Kearton is a Fellow of the Royal Society is to be introduced to cast doubt on whether he was acting wholly independently—[HON. MEMBERS: "NO."]—In that case I see no reason for bringing in that fact. Nevertheless, I think the House should know that the right hon. Member for Barnet (Mr. Maudling) acted as adviser to Ranks, and that the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) is a director of Ranks and Odeon and took an active part in the market in support of the Rank rate.

What is wrong with that?

I cannot give way. If the issue is to be discussed on that basis, let us have it both ways and not put up with the kind of snide remarks that were made.

I propose to be brief, and I shall therefore not go over the arguments and the philosophy which lay behind and were deployed in setting up the I.R.C. I urge hon. Members to read those debates again and to consider how many others in the world are now doing a similar exercise, and for much the same reasons.

In view of what has been said, and in view, too, of my association with the establishment of this body, I should like to pay tribute to it for what it has done in its opening period. I think that the members of the Corporation were very wise in their careful phasing of the development of their activities, and I pay tribute to them for their meticulous and patient examination of the projects and ideas put to them, and also for the fact that, having established themselves, they have taken specific and determined action.

The hon. Gentleman said that he wanted the Corporation to be "so independent that it withered away". We, on the other hand, want it to be independent of Government direction or veto, but nevertherless so determined that it becomes a vigorous and effective part of our business.

I commend to hon. Gentlemen opposite and others a careful reading of the I.R.C.s Report I should like others who operate in what the hon. Gentleman called "the market" to produce reports in the same kind of detail. There are many City institutions—and I am not referring to the leading merchant banks—about whose activities I should like to know a good deal more. If I knew as much about them as the hon. Gentleman does about the I.R.C. we could have a much more efficient debate about the operation of the City.

I suggest that hon. Gentlemen opposite should read the very detailed, very full, and if I may say so without being patronising very commendable accounts, by Peter Wilsher in the Sunday Times, by Mr. Anthony Bambridge in The Observer, and the reports in the Economist during the last few weeks. Despite what the hon. Gentleman said, there is no doubt among informed opinion, among informed commentators, and among those who are not so personally involved in the financial consequences, that the I.R.C. in its first year has done a tremendous job. It is interesting to note that hardly any informed commentator has come out even against the Cambridge-Kent arrangement. Questions have been asked about the future consequences of this. It has been asked whether this will make the I.R.C.'s job easier or more difficult, but there is very little support among informed opinion for the view that the I.R.C. was wrong to try to bring about a solution in this case.

I believe that what has been done reflects great credit not only on Frank Kearton, Ronnie Grierson, and Charles Villiers, but on all their associates, board members, and staff members. I feel that on the first occasion on which we debate their activities it would not be a bad thing to give them credit for a considerable effort of a new kind. I think that it also provides some justification for those of us who pushed this idea through against much prejudice and opposition only a short 18 months or two years ago.

We have here an illustration of the way in which the Front Bench of the Opposition has now notably switched its view. In 1966 the Motion was to "decline to accept". The right hon. Member for Enfield, West (Mr. Iain Macleod) was against sin. This was sin, and that was that. Now, by clear implication, the Motion accepts the existence of this body, but goes on to argue about details of how it works.

The argument appears to be based on two things, both of which are fallacious, and in some respects downright objectionable. The first—and I think the right hon. Gentleman put this clearly—is that the Corporation should not intervene—that is to say, it should not use its judgment where there is more than one bidder in a take-over operation. Secondly—and this is an extension of the first thought—it should not use public funds to bring about one particular merger rather than another. The basic fallacy in that seems to me to lie in the fact that the right hon. Gentleman was thinking that a merger, or mere size, would be good in itself, whatever the consequences, and that the Corporation should be concerned only where such a merger was not coming about.

That cannot be accepted, for a variety of reasons. It is not the fact of a merger. There is no virtue in size as of itself. If there is to be virtue in a merger, or size, it depends on other factors. It depends on the kind of merger: on who is merging with whom. It depends on whether the managerial levels and the technical competence which will emerge are worth while. It depends on whether we are getting an effective integration of complementary forces. The hon. Gentleman had a lot of trouble dealing with the phrase "national interest", but that is what we mean. The whole basis for the future development of the integrated organisation must depend on whether the project is sound and advantageous, not just the happening of a merger.

As was pointed out by Mr. Wilsher, the history of our industry over many years shows case after case of unsuccess being married to unsuccess as a result of the market's free operation and the creation of a bigger failure than the two we had before.

Our industry suffers from two problems. First, it is too fragmented. Secondly, much of it has come together without any rational basis for doing so. In my view, developments cannot be left to the forces of the market. They cannot be left to be decided merely on the basis whether something is immediately profitable for somebody. When I had something to do with the writing of the White Paper in the early stages—it was subsequently taken over by others—which led up to producing the Act, we carefully specified that it was part of the I.R.C.'s business to exercise its judgment. We gave it authority to act upon its judgment when it had made it. Far from its being, in the words of the Motion, "a dangerous precedent", I regard it as an absolute requisite.

The Opposition's attitude seems to stem from another and more basically doctrinaire view, which again is in two parts—first, that all good mergers will come from the operation of market forces, and secondly, that public activity and finance, if used at all, should be used only outside that area. This adds up to the view that what is profitable in the eyes of the finance market must be good and should be left to the market, and what is not profitable in the eyes of the market probably should not be carried out, but if it is, should be done only at public expense.

I cannot accept that in these days everything in respect of which somebody cannot make enough profit shall be unloaded on to the taxpayer. Nor can I accept that the Board should not deal with matters in respect of which somebody sees a good profit. There is no clear black and white distinction between what is profitable and what is not in this respect, even in money terms.

Many other factors must be taken into account. They affect the degree of immediate profitability and the longer-term considerations. The real argument today does not concern the minutiae of the merits of the case, on which the bulk of opinion comes down on the side of the I.R.C. The real argument which the Opposititon are advancing is that we should maximise immediate or short-term profit which will accrue to a few on a particular market operation, rather than, as my hon. Friends and I would do, subordinate that consideration to other wider and longer-term interests.

That is the issue on which the I.R.C. was bold enough to make a judgment and take a stand. That is the difference between us. The I.R.C. makes it abundantly clear in its statement that it has acted on the second basis—that is to say, it has subordinated the short-term, immediately profitable argument to other considerations. I have heard it argued that it should have put out the statement earlier. I do not regard that as a very relevant argument. It is naive to think that anybody operating in this field could put out a statement in the course of an operation. The statement makes it clear why the Board acted, and on what basis it did so—and I accept it.

The right hon. Gentleman is trying to wrench the argument to suit his party purposes. My hon. Friends and I believe that the national interest cannot be judged in the way that the I.R.C. presumes to judge it.

I have said clearly that that is the difference between us. The right hon. Gentleman, with his background and City experience, and the stockbroker who spoke just before me take a view that is different from mine. I have pointed what the difference is, but so long as we are clear that the I.R.C. acted on the second basis I can argue that in my opinion it acted correctly.

I applaud its acting in the way it did, and I shall be willing to defend it anywhere. Nobody except the right hon. Gentleman, in one slight intervention in his speech, has gone so far as to say, as I do, that one cannot doubt that the collective experience, expertise and background of those who make up the I.R.C. justify its claim to be able to exercise such a judgment. I think that it will be generally agreed that both on the Board and on the staff of the I.R.C. there is at least as much experience, expertise and background in private enterprise as hon. Members opposite can muster at any time. I see no reason to doubt the ability of the I.R.C. to make a judgment. That is why it was appointed, and that is why its individual members are so highly regarded in respect of their mostly-private enterprise activities.

I agree that any exercise of judgment involves a degree of risk, but believe no case has been made out anywhere and practically all informed comment suggests the opposite. But this is so here. If we are to refuse the Board any degree of judgment, there is no point in having it. If we say that it must never take a risk nothing will be done, although we know that somebody must get busy. I therefore congratulate the I.R.C. on its decision and upon its work to date. I hope that it will not be put off by any criticisms that might be made of it—much less by what I regard as self-evidently ill-considered Motions such as this.

As I said when we began the whole idea and brought in the original White Paper, I hope that industrial and financial interests outside—despite what may be said here this afternoon—will continue to recognise the value of the work that such a body can do. France and Japan are now embarking on the very same exercise, for the very same purpose. Sweden and Germany have not only been trying to do it but have been asking the I.R.C. to tell them how it is doing it. This is an area in which Britain was behind but in which she is now catching up and even going ahead. Nobody who knows the urgency of the need to restructure British industry can doubt the usefulness of the I.R.C., taken alongside other efforts to modernise our industry.

Let us not, because of prejudice that we find it difficult to get rid of—and this applies to all of us—halt this process now for reasons that will really be miserably prejudiced. This is a necessary part of our armoury for winning through, and I hope that the House will reject the Motion with contumely.

5.48 p.m.

The right hon. Member for Belper (Mr. George Brown) has a sound reason for congratulating the Government and himself—if that is the right term—for the establishment of the I.R.C. We on the Liberal benches supported its inception, and nothing that has happened—not even the present emergency—has caused me, for one, to regret the advice that I then gave my colleagues, and which I believe the events of the last year have proved to be basically correct.

This is to be a short debate and I shall therefore confine myself to asking the right hon. Gentleman only two questions. I hope that I may have answers at the end of the debate. It was a serious decision on the part of the I.R.C. to use public money to prevent one merger from taking place and to enable another to occur.

Therefore the facts, however, confidential they may have been at the time of the discussions between the I.R.C. and the companies involved, should be the subject of a very full disclosure. I would like to hear from the right hon. Gentleman that, because of the nature of this action, and because it is virtually unprecedented for public money to be used in this way, we shall have such a disclosure. I hope that he will not refer me to the statement which appeared in the Daily Telegraph on Saturday because, although I have the utmost respect for the City Editor of that newspaper, whose words I often follow with great interest, and whose judgment I respect in all ways, I do not believe that the I.R.C. has given the kind of disclosure necessary to enable any of us to arrive at a sound judgment.

The second point which I wish to raise is one raised briefly by the right hon. Member for Leeds, North-East (Sir K. Joseph), when he rightly said that none of us could assess entirely the consequence of any merger or the creation of any monopoly in consequence of such a merger. We may not know what is the final outcome, and we do not know whether it will prove to be in the public interest. However good our judgment may be in one matter, it may be faulty in another, and the I.R.C. has no superhuman powers. I am sure that the right hon. Gentleman the Minister would not wish to ascribe such powers to it.

Therefore, I ask this second question, which I will divide into two parts. Would he not agree that there might be a case for extending the powers of the I.R.C, even though no merger created by it can create a monopoly, so that it is obliged, year by year, to discover and report in its annual report on the effects of the mergers for which it has been responsible? Secondly, in those mergers which virtually create a monopoly, might it not be wise for the Government to look at an extension of the powers of the Monopolies Commission, to see whether there should not be a continuous watch maintained upon any monopoly position which may be created, because of the possible dangers which might result to the public and private sector and the nation as a whole?

There is much more that I would have liked to have said, but we are forced by our time-table to a very limited discussion. I will confine myself to these questions and I hope give an opportunity to other hon. and right hon. Gentlemen who have not yet spoken.

5.52 p.m.

Like the hon. Member for Bodmin (Mr. Bessell), I shall try to be as brief as possible, much briefer than I would otherwise have been, so that other hon. Members may have the chance to speak. This is, unfortunately, a very short debate. My interest in it arises from the general interest that we all have in the I.R.C., but particularly from the fact that George Kent is one of the more prominent firms in my constituency. My constituents stand to benefit from this merger and will be interested to note that the Opposition finds the action of the I.R.C. deplorable.

I am a little surprised at the way in which the Opposition has acted. I would have thought it sufficient for it to take the opportunity of this so far unique action on the part of the I.R.C. to seek information. To go out on a limb and to deplore it seems to go rather far. My right hon. Friend the Member for Belper (Mr. George Brown) drew attention to the fact that the Motion was in somewhat general terms. It is worth paying some attention to the specific matter and drawing some general conclusions from it. George Kent is an old-established firm with a high reputation in the industrial measurement and control sphere. It is the largest independent British-owned company manufacturing industrial and process control instruments and, as such, a fairly obvious base for a national industry.

It is worth paying some attention to the instrument industry for a moment. An important factor is the changes which have been taking place over the years in the industry. More and more industrial instruments are taking on the characteristics of scientific instruments, of laboratory equipment. They are becoming more sophisticated than in the past. This is a market in which George Kent has made minor invasions only over the years. It is predominant in industrial measurement. Although it operates in the scientific area it is a lesser concern there. It is a market in which Cambridge Instruments has been pre-eminent, with a strong reputation and good connections with the university world, and other institutions.

The two firms complement one another. The area in which one firm is strong is that in which the other is weak. Taken together they cover a broad range of the instrument world. If, as is sometimes said, the laboratory instrument of today is the industrial instrument of tomorrow—and this is true—the Kent-Cambridge merger is a natural and the newly-merged firm will be able to accel- erate this continuing process. If the merger is industrially desirable, and this is what the I.R.C. meant when it said that it was thought to be in the national interest, then the new company will form the basis for further development in industry.

This is where I revert to the "potted history" mentioned by the right hon. Member for Leeds, North-East (Sir K. Joseph). What he omitted to say was that the I.R.C. became interested in the Kent-Cambridge merger when it began to look beyond the immediate merger. When the I.R.C. began to look towards the future development of the industry, after the merger, it saw that the complementary functions of the two firms gave a basis for development stronger than that of their rivals.

Having reached that conclusion the I.R.C. first of all gave moral support to Kent, and then backed up its actions with public money. Should it have done so? There is no doubt that the intervention of the I.R.C. was crucial. It won the day. I think that it was right to do so, if only because the I.R.C. was set up to do exactly this kind of thing. It was established to intervene, and this was intervention. In this respect I was a little depressed by the speech of the right hon. Member for Leeds, North-East, because when I first entered the House he seemed to be a very forward-looking Minister of Housing and Local Government, with all the elements of the planner about him.

He has reverted to being a fairly ruthless kind of marketeer, and I am depressed and sorry to see that he is leaning so heavily on market forces. Incidentally, the hon. Member for Eastleigh (Mr. David Price), whom I much admire, and who hopes to speak later, went so far as to suggest during the Second Reading of the I.R.C. Bill, that the Government were pursuing the wrong means—means which he thought then were corruptive of the sort of market economy we wished to see in Britain. He will remember saying that I am sure. The whole point is that the operation of free market forces would in this case have produced the wrong answer, as it very often does. It would not have produced that merged company, a springboard, providing a basis for a developed industry, making it strong enough to face American competition.

A Rank-Cambridge merger would have had two major defects. First, it would not have had a wide enough range over the instrument sphere; it would have covered a narrower range compared with the Kent-Cambridge merger which has taken place. Secondly, the manufacture of instruments is not central to Ranks. That firm regards it as a peripheral operation. It is an important and profitable part of its operations, no doubt, but it is only one operation among many and is, therefore, peripheral. This is not true of Kent. The centre and core of Kent's operation is the instrument sphere, and the centre and core of the new merged firm is exactly that.

Some people have objected to the element of public ownership involved in the I.R.C. shareholding. I do not object, but welcome it. It seems that this is the best sort of public ownership; namely, the kind which is likely to be profitable and bring revenue to the public purse. Thus, the Opposition Motion is wrong and the I.R.C. action is right. By its intervention, the I.R.C. has obtained the right sort of merger for the future of the industry.

Nobody has criticised the type of intervention employed. Indeed, this intervention conforms to the take-over code and the new group is likely to be capable of fighting off American penetration of our market. For this reason I trust that hon. Members will support the I.R.C. and that the Motion will either be withdrawn or defeated.

6.2 p.m.

If anything could have persuaded me to vote for the Motion, it would have been some of the intemperate remarks of the right hon. Member for Belper (Mr. George Brown). In contrast, my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) opened the debate in a temperate speech and, as one would have expected, he was exceedingly fair.

My right hon. Friend said that the Motion implied no criticism of the I.R.C. Later, he said that not for a moment were we questioning the motives and good intentions of its members, whom he described as vigorous, intelligent and honourable. I endorse those sentiments, but the Motion does not. It is critical of the I.R.C. and for that reason I do not feel, much as I dislike disagreeing with my right hon. and hon. Friends, able to support the Motion. I do not sympathise with it because, by implication, it asks the Government to interfere with the activities of the I.R.C. This is my main criticism of the Motion. It is a clear case of kicking the frying pan instead of sacking the cook, and I need not go much further in the process of identifying the cook who I wish to see sacked.

There are four prime reasons why I cannot support the Motion. The first is because I do not believe that the record of the Corporation merits censure. I was one of those who regarded its initial establishment with some suspicion, but my views have been influenced not only by the stature of the men appointed to the Corporation but also by the Corporation's record of achievement. I endorse the remarks made by the Daily Telegraph on 6th July, when it said that the Corporation had already proved an effective catalyst in the normal, slow processes of change in many industries. I believe that such a desirable development as the B.M.C.-Leyland merger would not have taken place except for the good offices of the Corporation.

The second reason why I cannot support the Motion is that while, in regard to Kent, it may be that the I.R.C. is open to some criticism for not having been sufficiently open, and while I regret that taxpayers' money should be invested on such vague terms from the return point of view, I see no reason for challenging the judgment of the Corporation that the outcome achieved is the best one for British industry.

My third reason for dissenting from the Motion is that if we are—as we surely are under this Government—to have official intervention in industrial affairs, then the more remote it is from Government the better. I would rather have men whose records and achievements in industry are beyond challenge controlling such powers than Ministers controlling them. I do not wish to lambast Ministers in this debate, except to say that they are too inclined to act from a background of unblemished ignorance and considerable prejudice. One battle honour which the Corporation can claim to its credit is the delicate compliment paid to it by the Government in connection with the Industrial Expansion Bill. The Government said, in effect, "We cannot trust our own creature, which is acting in an alien way"—in that it was acting with common sense and wisdom—"We must, therefore, have power to act on our own."

The fourth reason for withholding my support from the Motion is that I regard the choice of such a subject by the Opposition at such a time as something worse than whimsical. There are so many subjects on which this grotesque and awful Administration should be censured that it seems that the Opposition are themselves guilty of lowering the level of the argument in seeking to debate the frying pan rather than the cook. The Opposition are, therefore, losing opportunities of challenging on vital matters an Administration who have shown themselves responsible for many of the ills which now disturb the nation.

6.7 p.m.

The speech of the hon. Member for Yeovil (Mr. Peyton) showed the seriousness with which some hon. Gentlemen opposite feel about the whole question of the rôle and function of the I.R.C. Apart from the hon. Gentleman's final observations, he appeared to be saying, in effect, that there is a serious purpose behind the I.R.C, that it is doing a good job and that we should suspend judgment for some time.

The hon. Gentleman's speech was in contrast to the theme adopted by previous speakers from the benches opposite. I was reminded by some of their remarks of a passage which appeared in the Final Report of the Committee on Industry and Trade, in 1929. It said:

"… 'the adequate equipment of British industrial works with adequate plant and machinery may be obstructed by the conservative habits of mind which prevent many employers from pursuing an energetic renewal of plant'"

While the I.R.C. is not specifically concerned with the renewal of plant, it is concerned with changing motivation and people's minds and with the restructuring of industry. It is a pity that in debates of this kind, which follow the pattern of the debate we had on the Industrial Expansion Bill, there is still no recognition by hon. Gentlemen opposite of the importance of trying to under- stand the problems of contemporary industry.

Two main objections have been raised by hon. Gentlemen opposite, both inside and outside the House, to I.R.C. intervention in industry. The first is the fact that the Corporation uses public money for its activities. This argument is a non-starter, because public money is used by all nationalised industries, in various ways and for various reasons, but Parliament and the Government control neither. As the Economist recently pointed out:

"This freedom has widespread consequences—including some of the structure of British industry."

If we are to bring some competitiveness and a thorough restructure to our industry we shall need a variety of ways of doing it. The concept of Government involvement in industry has not just happened in the last 10 or 15 years. It may be that because we now have a more articulate Government and industrial force the problem is seen more acutely, but the whole emphasis of Government involvement in industry goes back 70 or 80 years.

The logical consequence is for Governments to back up their ideas, which they have not always been prepared to do, and show sincerity in their beliefs by making money available; and one would expect support of that idea rather than criticism of it. While I had some reservations about the Industrial Expansion Act and the use of money in that connection, I hope that the Opposition can distinguish, as I have, between the two approaches. The hon. Member for Yeovil (Mr. Peyton) was able to show that there is an important difference in the way Governments can act.

The second objection runs rather on the lines that the shareholders in firms have had their interests overriden. That argument will not wash in the case of Kent-Cambridge Instruments, which has been the theme of this debate. The latter company was strongly influenced to accept the lower of two bids, but the fact is that without I.R.C. intervention the bidding would not have got as high as it did in any case. The George Kent shareholders might say that

"… their earnings have been diluted by the high price paid for Cambridge …"

but they should blame their own board for that. If the Corporation was twisting their arm they certainly have not said so.

There is an impressive list of mergers, and of work done by the Corporation in the last 12 months; of co-operation with firms and advice given. These are not even mentioned in the report. That is how we would expect the Corporation to work—without mentioning everything it does. Nevertheless, the report is there, and it has been referred to. It is an impressive list of work done whether one takes the telecommunications industry survey, Rootes Motors, A.E.C.—Elliott-Automation, G.E.C.—A.E.I., Dun-ford and Elliott (Sheffield)—Hadfields, the paper and board industry survey, Coats Paton—West Riding Worsted and Woollen Mills, or the British Oxygen Company—Edwards High Vacuum International.

In the case of Coats Paton it hardly looks as though the shareholders had their interests overridden because, as the report says:

"Both companies … wish to acknowledge the interest of the Industrial Reorganisation Corporation in securing an increased measure of rationalisation in the industry and of that organisation's separate approach to both companies on the subject."

This action is a fairly serious indication of the way in which a number of companies have been able to approach the Corporation or be approached by it, and have acted on the advice given.

Let us look more closely at the Motion, and at the rôle of the Corporation. It has been referred to more than once, and particularly in what I suggest was a very fine speech by the right hon. Gentleman the Member for Belper (Mr. George Brown). The Motion states:

"That this House, while upholding the independence of the Industrial Reorganisation Corporation, deplores its action in intervening with public money on behalf of one bidder in a merger operation …"

It is an interesting and revealing form of words. On the one hand, we have the judicious use of the word "independence". On the other, the attack is towards one activity of I.R.C.—the Kent-Cambridge bid.

I shall give the Opposition the benefit of the doubt—and I hope that I am not being foolhardy in doing so—when I say that they are not wholly politically motivated in giving up some time on one of their Supply days for a debate on this subject. But if they are not politically motived, they are something else. It means that they simply do not know the facts of industrial management and industrial reorganisation.

In short, on this subject the Tory Party is schizo. The I.R.C. type of organisation meets the Tories' long accepted criteria—it is a commercially aggressive and efficient organisation, but that it is associated with and has been set up by Government is very difficult for them to accept. That it was set up by Socialists is even worse, and it is far too traumatic for them ever to understand.

What we have a right to expect from the hon. Member for Eastleigh (Mr. David Price) is that he will give us a little more insight into the Conservative Party conscience on this subject. We had some indication, and then a denial, of what the Conservative Party would do with the I.R.C. if returned to office. Frankly, I think that many of my hon. Friends and many hon. Members opposite were not clear about what a Conservative Government would do. That point wants clarification, not only for hon. Members but for many people outside the House who have shown interest in the subject.

An intelligent Opposition who lean so heavily on their business relationships and connections would have tackled the subject of I.R.C. rather differently. Here I disagree with the hon. Member for Yeovil, who said that there were other subjects of greater import. The I.R.C. is very important. The great pity is that we have taken only one very small part of its activities, and with this rather absurd wording of the Motion we have moved from what we should have been debating. I suggest that the issue should have been about the Corporation's long-term objectives. Its strategy, its rôle in the restructuring of industry are relevant and pertinent questions.

There are three areas of debate. The first is: should the I.R.C. hold on to the shares is acquires? When it was set up, the Government said that the Corporation would not act as a "holding" company. It has a modest share stake in Rootes, but, generally, it has avoided building up equity holdings in industrial companies. In the case of Kent-Cambridge, the profits of rationalisation will take a while to emerge. Will one of the I.R.C. directors act as a watchdog? This needs clarification. The "holding company "has an appeal which the I.R.I. structure in Italy has shown to be possible and successful.

Secondly, the Corporation is still hamstrung from going into industry and reorganising it. A very keen and enthusiastic executive who went to the Corporation with ideas about a particular industry would not be able to get a list of companies that would be willing to be taken over and merged into a substantial unit.

Thirdly, can the Corporation assist in the development of mergers across national boundaries in Europe? I realise that our own Government policy is evolved in European technological matters, but the Government should not be too humble tonight. They should say whether they believe that the Corporation has a rôle to play there. My right hon. Friend the Member for Belper referred to the fact that in a number of countries there is interest in the work of the I.R.C, and I believe that the way in which we look at the question of scientific and technological collaboration will not only depend on Government good will and desire, but also on the setting up of organisations and institutions like the I.R.C. so that they can move in quickly to the important work that needs to be done in industry in Europe.

I would urge both Front Benches, in their concluding speeches, to show that they have thought about these matters and understand what the I.R.C. is doing now—and is likely to do in the future.

6.19 p.m.

I listened to the hon. Member for Billericay (Mr. Moonman) with care, and I agree with him in one respect. I believe that this debate, which is far too short, is important. It is concerned with questions of power and accountability which lie near to the heart of the free society and how it evolves, and relate closely to questions of freedom, competitiveness, enterprise and the strength and effectiveness of this country and the world. I believe that, far from being the peripheral issue that my hon. Friend the Member for Yeovil (Mr. Peyton) implied, it is absolutely central to the difficulties facing the country and the Government.

I go back to the analysis which the Secretary of State for Economic Affairs gave the rôle of I.R.C. as he saw it. I believe that analysis to be superficial and that this superficiality created the conditions in which the present difficulties and the present case have arisen. The I.R.C. is a new kind of public agency which lives on the horns of a dilemma. Those within the I.R.C. for various reasons have often argued vigorously that they are commercial and act commercially. They see nothing wrong in going to the market place and participating where some win and some lose.

That is the kind of background in which the Kent-Cambridge affair evolved. The I.R.C. went in and behaved like capitalists. It argued that it was doing so commercially on profitability criteria and behaving as a good commercial firm. This was understandable from its point of view in the absence of clear directives to the contrary. But the facts are that it is not so. The I.R.C. is not a commercial organisation but an instrument of Government. Whether it is a good or a bad instrument I shall argue shortly. The point is that I.R.C. exists because it is an instrument of government to bring about the rationalisation of industry, not to make money.

I listened with great care to the Secretary of State when he touched on the criteria by which the I.R.C. should intervene and talked about international competition. I believe some of my hon. Friends do not go along with this. But when there is foreign competition which is Government subsidised and backed by Government procurement policies based on national prestige reasons, there is little choice for this country if it wishes to retain certain industries but to intervene to obtain equally competitive conditions. To that extent, I personally go along with the view that the Government, through the I.R.C. or some other instrument, are entitled to adopt policies towards certain industries and to have particular objectives for certain industries. On the broader question of intervention allowed on the rather vague criterion of national efficiency this is more difficult and delicate. When we examine a particular case, such as the one we are discussing today the precise arguments sound very weak.

I now say a word on the question of the I.R.C. as an instrument to secure Government objectives towards certain industries, on its record, and the way in which it has evolved as an instrument. Its difficulties have been not so much in trying to achieve objectives as to persuade Government officials and other agencies inside the Government—many of whom have activities overlapping the objectives of the I.R.C.—to see sense.

It is on the question of co-ordination between the I.R.C. and other officials carrying out procurement policies—the D.E.A. and the D.E.P. and the Ministry of Technology—and the vast proliferation of instruments under this Government, that the real battle has had to be fought. It takes place behind closed doors with other officials and Ministers where efforts are made to persuade them not to pursue policies contrary to the overall rationalisation of a particular industry. I believe that the I.R.C, if properly brought into and co-ordinated within overall sensible Government policies to create industries which will be internationally competitive and will not be overwhelmed by foreign Government-supported competition, has a rôle to play, but it is a political, not a commercial, instrument. It should be seen honestly and straightforwardly as such. Because it is a political and not a commercial instrument it is naïve to claim that it should go into every situation on the argument that it should behave in a commercial way.

As my right hon. Friend the Member for Leeds, South (Sir K. Joseph) said, such an institution has to walk delicately, and in this case delicacy was certainly needed and it was lacking. That is why I go along with the Motion and argue that, while I.R.C. and its management have done well and could do well in future, yet with this background of lazy thinking by this Government about its proper rôle, and the Government's failure to grasp the real implications of this kind of new agency, in this case it has made a mistake.

6.25 p.m.

I am very conscious that this debate has been all too brief and the outcome will be immensely frustrating to hon. Members on both sides of the House who came with the intention of making a contribution and have not been able to do so. I would willingly give up my winding-up speech but that such a break with tradition I should find difficult to make, and I should like to clarify some of the points which have been made. Nevertheless, I, too, feel frustrated because I shall have to make my speech very much shorter. I should like to follow the interventions made by the hon. Member for Luton (Mr. Howie) and the hon. Member for Billericay (Mr. Moonman).

We can take comfort in the fact that this can be regarded as a continuing debate, for we debated the White Paper, we debated the Industrial Reorganisation Corporation Bill on Second Reading, in Committee and on Third Reading before the Corporation was set up. We had a debate on 1st February, 1967, on the Consolidated Fund Bill and now we have this short debate today. I have no doubt that we shall have others in the future on the key issue of the structure of British industry and how it should be changed. I hope that I shall be able to summarise certain of the facts in this case and that we shall agree on them across the House. I wish to make known some opinions on which I do not expect to get the same unanimity.

We are today talking mainly about the recent events of the Kent-Cambridge merger. The first fact is that this was a contested take-over. For the first time the I.R.C. has openly taken sides. In Mr. Charles Villier's happy phrase,

"we have put our money where our mouth is."

I wonder what action the I.R.C. would have taken if there had been two suitors for the hand of A.E.I. instead of one. Would it have intervened? This is one of the major issues in the debate. The I.R.C. decided that it knew better than the market mechanism and it used its large resources of public money to ensure that its view was successful. The right hon. Member for Belper (Mr. George Brown) thought this a good thing and I think it a bad thing.

The second fact is that Ranks, not the I.R.C. or for that matter Kents, was the catalyst for this restructuring of the industry. Ranks made its first public offer for Cambridge Instruments on 9th April, On 15th May, Kent announced the terms of its proposed offer, but the Rank offer on 9th April certainly triggered proceedings off. Would anything have happened if Ranks had not acted? From the days when the I.R.C. was in a state of gestation under the midwifery of the right hon. Gentleman, the I.R.C. had been looking at restructuring and possible mergers in the British scientific and industrial instruments fields, but nothing came out of that period of gestation until Ranks made its offer.

The third fact is, if the I.R.C. had not supported Kents, Ranks would have succeeded in its bid. It cost the I.R.C. nearly £6½ million of public money to support Kents against Ranks. The question I ask hon. Members opposite who believe that it was right for the I.R.C. to support its judgment in this manner, is whether, in terms of priorities at this moment, so certain are they that the I.R.C. was correct in its judgment—remember some structuring would have taken place if Ranks had gone through with its offer—this is a top priority for £6½ million of public money to be used to support this particular method of regrouping the scientific instruments industry against all the other calls on public expenditure at this time.

I apologise for interrupting, but the hon. Member used the emotive phrase, "It cost the I.R.C.". The I.R.C. has invested £6½million—I take the hon. Member's word for the sum—which shows that the managing director expects it to sell at a thumping great profit in the 1970s. No other merchant bank or city institution would regard its investment as a cost. Why does the hon. Member use that term in relation to the I.R.C?

I can give the right hon. Member two answers. I will go on to say whether this is a good investment, but he will agree with me that even if it is ultimately a profitable investment it is a current call on public money. In terms of the current cash flow it is competing for the use of that £6,500,000 in this first post-devaluation year of 1968 with other current calls on public money and he cannot gainsay that.

The fourth fact is that no adequate reasons were given by the I.R.C. to either Ranks or the public for favouring Kents. Ranks played fair with the I.R.C, but the I.R.C. never played fair with Ranks. It did not tell Ranks why it preferred Kents to Ranks and nor did it make efforts to discover from Ranks what their corporate strategy would have been if the Taylor Hobson and Cambridge Instrument merger had gone through, and remember the Hilger Watts offer from Ranks was also pending.

On 16th June, the Observer, to which the right hon. Member for Belper paid some attention, said:

"Imagine how John Davies must feel. He was absolutely open with the I.R.C. in all the dealings prior to the bid for Cambridge, but now finds that the I.R.C. is using taxes he pays to help out a rival he has outpaced in the market place."

Only last Wednesday was the first time the public were given the I.R.C.'s justification for preferring Kents to Ranks, and it was a thin justification. What it amounted to was that the I.R.C. said, "We are the I.R.C. and we know best."

As my hon. Friend the Member for Horsham (Mr. Hordern) pointed out, the whole position of Taylor Hobson has been dismissed very lightly. Taylor Hobson is not an incompetent company, as has been acknowledged by the Government, because in each of the last three years Taylor Hobson has been awarded the Queen's Award for Industry-, which does not suggest that it is precisely the slouch which the defenders of the I.R.C. have been suggesting.

The industrial logic which was the basis of the Secretary of State's speech is not at all clear to me. The I.R.C. claims that the Kent-Cambridge merger will provide a broad-based company covering industrial and scientific instruments and therefore capable of competing with American giants. On the other hand, Ranks takes the view that the best merger was that of the scientific instrument companies—Taylor Hobson, Cambridge and Hilger and Watts—without the added diversification into industrial products.

I understand the argument of the hon. Member for Luton, but the plain fact is that, on the information available, one can argue the case both ways. I put it to the hon. Member for Luton and to the Parliamentary Secretary that there are some questions which anyone would be asking if he were one of the parties to this sort of merger and were considering it. He would ask, "Am I buying products or market? Am I eliminating competition? Am I safeguarding a source of supply? Am I safeguarding a market for my existing or future range of products? Am I buying management? Am I buying technology? Am I buying as a defensive strategy to stop my competitor from increasing his strength? Am I buying into a different market or technology as a specific and well-thought-out policy of diversification?" I hope that the right hon. Gentleman has observed that the questions begin "Am I buying", not, "Am I forming a judgment about what other people ought to do?".

Having answered those questions, there are two other rules for mergers to bear in mind. The first is that one ought not to go into a merger without knowing one's maximum price exactly and one ought not to be lured beyond it, which is what happened to Kents. Secondly, one ought to have an outline integration plan prepared in advance, because if one's merger is to succeed, integration must be total. Nothing fails like the merger of two equal partners one, or both, of whom still wants to remain a separate business, but with a bit more security added. Those are the sorts of questions which ought to be asked. Nothing that the I.R.C. has published has convinced me one way or the other and I shall not be convinced today in the absence of answers to those questions.

I hope that the House recognises that four companies have been under discussion—Cambridge Instruments, Taylor Hobson, Kents and Hilger and Watts. I hope that the House appreciates that there are at least 14 combinations of merger and restructuring. There could be a merger of all four; there could be a merger of any three leaving out the fourth; there could be two mergers of any two and one merger of any group of two leaving out the other two companies on their own. That makes a possibility of 14 combinations. Why do the Government think that the I.R.C. is so competent to judge among those 14 alternatives so as to know what is best for British industry better than the market does?

The right hon. Gentleman quoted prolifically from the weekend Press. I quote from the Sunday Telegraph of yesterday, which said:

"How does one know who to back? The Restrictive Practices Court, with its staff and its judges, the Monopolies Commission with its Q.C.s and experts, both make very heavy weather of industrial judgments.

The idea of the Board of the I.R.C, largely busy business men acting part-time, being able to sit as a tribunal of judgment makes me laugh."

Those who hold that the I.R.C. is competent to judge must remember that this judgment involves the use of £6,500,000 of public money. What we challenge—and I know that the right hon. Gentleman accepts this, because this is what the argument is about—is the whole theory of the I.R.C. as an active interventionist body and we challenge that theory—

rose—

I have given way once to the right hon. Gentleman. The Parliamentary Secretary must have time to reply and I do not have time to give way again. We challenge the theory that the Board of the I.R.C. knows what is best for British industry.

rose—

The next fact is the question of the legality of the I.R.C.'s action. Let us make it clear that that is not in question, because of the very wide powers which the Government gave the I.R.C. in the Act and which we bitterly opposed in Standing Committee.

The sixth fact is that the I.R.C. has said that it follows its mouth with its money. This has involved the I.R.C. in open market operations in support of Kents against Ranks and it has involved the use of public money in support of one contender against another.

rose—

I know that the right hon. Gentleman knows little about patience, but I hope that he will wait patiently for a little longer.

As Mr. Villiers has said, the I.R.C. is a new organisation; "there is nothing like it elsewhere and new organisations do new things". What has it done? It has used the taxpayers' money to favour one bidder against another, and, in an economic sense, the I.R.C. is an irresponsible organisation.

Nonsense.

Of course, it is legally—

rose—

Order. We are working against time.

Of course—

rose—

Order. The hon. Gentleman has not given way, so the right hon. Gentleman must resume his seat.

Of course, the I.R.C. is legally responsible for not misusing the money entrusted to it and nobody suggests that it would be otherwise, but when it puts its money where its mouth is, its action is not comparable to that of a merchant banker or industrial firm following the same injunction, and I will tell the right hon. Member for Belper precisely why not. It is because its money is at risk—

rose—

It is for an hon. Member to decide whether to give way.

I have undertaken to give the Parliamentary Secretary time to reply. If the Parliamentary Secretary will give up his time, I will willingly give way to the right hon. Gentleman.

The money of an industrial firm or merchant bank is at risk in two ways—loss of investment and failure to earn. Failure to earn is of no relevance to the I.R.C, because it has no statutory duty to make a profit. Loss of capital might be mildly embarrassing, but it would not have the same significance as for a merchant bank or an industrial company. Therefore the I.R.C. is in a position to back its judgment against a. competitor without the financial disciplines to which its competitor is subject.

I have three points to make about the future. The I.R.C. has now made its position clear—it knows best what is best for British industry. Right hon. and hon. Members opposite agree with that view. We on this side do not, and increasingly the country will come to agree with us about it. Second, no company can now trust the I.R.C. implicitly. It can no longer trust it because the I.R.C. has ceased to be a catalyst and become a judge, and trust, I remind the House, was one of the original ground rules for its existence. Third, no company can now proceed with a bid without fear that a counter-bid will be supported by the I.R.C, with the knowledge that the I.R.C. has virtually unlimited resources behind it and is bound to win.

The action of the I.R.C. over Cambridge Instruments has given a particular meaning to the penultimate paragraph of its first annual Report:

"The hope is that nationalisation can be by agreement, but if this provies impossible, the I.R.C. will not flinch from exercising its collective business judgment in supporting positive action."

As we have seen in the Kent-Cambridge case, supporting positive action means, "Heads I win, tails you lose". No doubt, such an attitude is entirely in tune with the Prime Minister's philosophy of politics, but it is in a very different key from the dulcet tones of the Financial Secretary to the Treasury when he replied to the last debate which we had on the I.R.C.

On 1st February, 1967, the hon. Gentleman said, about the I.R.C.:

"The Corporation competes with nobody. It threatens nobody. It compels nobody. It offers its connections, knowledge, advice and access to information to serve the purposes which I have outlined. There is no compulsion in its working. All this talk of threats or anything of that kind is quite beside the point."—[OFFICIAL REPORT, 1st February 1967; Vol. 740, c. 659.]

The Financial Secretary's speech stands in absolute contrast to the new behaviour of the I.R.C, and our Motion today stands on his evidence.

6.41 p.m.

We shall have to read HANSARD carefully tomorrow to find out exactly what the Opposition think about the I.R.C. We had one view from the right hon. Member for Leeds, North-East (Sir K. Joseph), another from the hon. Member for Yeovil (Mr. Peyton), and yet a third from the hon. Member for Eastleigh (Mr. David Price), the second Opposition Front Bench speaker.

In considering the Motion, the first question is whether the I.R.C. was right to intervene in the way it did in the Kent -Cambridge merger. The I.R.C. had a strong technical argument for supporting the Kent-Cambridge merger in preference to the Rank-Cambridge merger.

The instrument industry in the United Kingdom has suffered from excessive fragmentation, with firms unable to maintain the research and development, marketing or technical service effort needed to make a sufficiently powerful impact in the home and export markets. At the same time, it is an industry which depends pre-eminently on the skill and professionalism of its staff. Questions of structure and control, therefore, are necessarily delicate matters. They have to be handled carefully. It is not unknown for a company to acquire the shell of a company and to find that it has lost all its staff.

We see in the nucleonic instrument sector a good example of how, I am sure, hon. Members on both sides would like to be able to proceed, if possible, in every case. Here, by agreement, Nuclear Enterprises, a small progressive Scottish firm founded by a nuclear physicist, was able to acquire the activities of E.M.I. and Elliott in the nucleonic instrument field with the help of an I.R.C. loan, thus setting up an independent and powerful nucleonic instrument company with the resources needed for growth and competition in world markets.

Elsewhere in the instrument field, however, progress has been disappointing. Efforts to bring about a grouping of several of the major scientific instrument companies, including Cambridge, did not produce results. So the reaction of both Mintech and the I.R.C. to the initial Rank bid for Cambridge Instruments was far from hostile. Any company has to be taken seriously if it is able to show the technical and commercial success of Rank Xerox and Rank/Taylor Hobson in their different fields. However, the board of Cambridge Instruments strongly opposed the bid from Rank and held discussions with Kent which resulted in the agreed bid from Kent. The I.R.C., with Mintech knowledge and agreement, then attempted to arrange a compromise by bringing together Kent, Cambridge and Rank/ Taylor Hobson, and eventually other instrument companies, too, into one group wholly concerned with instruments. But this was not acceptable to Rank.

At this stage, it was open to the I.R.C. to support Kent and disappoint Rank, to support Rank and disappoint Kent and Cambridge, or to drop out altogether, which would amount to leaving the field to Rank with its greater financial resources. Obviously, the matter needed very careful consideration against the background of the state of the industry as a whole.

The instrument industry covers a diverse range of activities. At one end, the products include industrial control instruments which have to be rugged enough to work continuously, with very high reliability, in industrial conditions of vibration, corrosion, dust and extremes of ambient temperature in the general rough and tumble of a factory. At the other end of the scale, it includes scientific instruments which may be switched on for only a few minutes a day, instruments working in laboratory conditions and involving a totally different kind of technology in their creation. The techniques used in both industrial instruments and scientific instruments span optics, precision engineering, electronics and physical chemistry.

The state of the instrument industry reflects Britain's past emphasis on pure research rather than industrial application, a bias which we are now trying to correct by many different policies of this Government. Britain's scientific instrument effort has been a good deal stronger than its industrial instrument effort. It is absolute bunk, if I may so put it, to suggest that the industrial instrument sector is declining, contracting or in any way likely to be a failing industry in the future.

Will the hon. Gentleman refer to the George Kent report, which itself refers to the slow growth of the industrial instrument industry as compared with the scientific instrument industry?

Yes, and I shall refer to figures in a moment, if the hon. Gentleman will be patient.

Perhaps the most significant indicator is not just domestic production but the trade figures. With all the difficulties of the classifications—I freely acknowledge that we often do not know exactly what the Overseas Trade Accounts mean—one can say that for instruments in Class 861.97, that is, the more conventional measurement and control instruments, imports rose between 1964 and 1967 by 89 per cent. and exports, though rising, rose by only 21 per cent., a story which is all too common in a wide range of engineering products. But this does not mean that we can contract out of the whole field of engineering in which this sort of thing happens.

On the other hand, for the far more complex analytical and other instruments—Class 861.98—imports fell between those same years by 8 per cent., but exports rose by 78 per cent. That is a splendid trade performance by any standards. It is almost unique among engineering products., and paralleled only by other advanced products, as in the recent trend in computers.

Our industrial strategy as a nation, therefore, not only on instruments but generally must be to bring advanced products and techniques more closely to the support of our basic and still much larger engineering activities.

Cambridge offers in the range of techniques which it employs precision engineering and electronic capabilities in the medical and scientific instrument and the industrial control fields. Kent offers precision engineering and electronics and total systems capabilities mainly in the industrial process control field.

There are clearly mutual advantages to Kent and Cambridge in having outlets in the industrial instruments field for new developments coming from the scientific instrument industry. Rank had no such use for Cambridge. Rank Taylor Hobson are not in the industrial control sector to any significant extent, but they offer optics and the highest precision engineering capabilities in lens manufacture and design and dimensional measuring equipment, in which they are pre-eminent. However, it is a completely different area from industrial process control, in which both Kent and Cambridge are active.

There is no substantial industrial process instrument activity within Rank. Rank has been investing its very substantial earnings from Xerox—for which it is licensed wholly from the United States as far as technology goes—with varying success in a very wide range of activities, including bingo halls, bowling alleys and motor ports, as well as industrial equipment; and there is nothing wrong with that. In industrial process control it would be virtually starting from scratch. By contrast, Kent has concentrated all along on instruments and stands or falls by operating profitably and maintaining technical superiority over their competitors in the instrument industry.

Against this background it is difficult to fault the argument of I.R.C. as to where the industrial logic and the national interest lay. As I understand Opposition speakers, they have not denied the force of the industrial argument. The right hon. Member for Leeds, North-East spoke of a possible Rank-Cambridge merger as if it might have been a second best, and he questioned whether it might not be better to accept a second best in this respect. In other words, the Opposition have questioned the industrial case but they have not denied it, and they freely accept that it could well be sound.

They question it for two reasons. First, because Rank disagreed, and it was for Rank to consider whether Cambridge would have been a profitable investment for them at the price which they offered. I would not dispute that the judgment that Rank made could well have resulted in a better use of our national assets than had previously been the case, and I readily concede this to the hon. Member for Horsham (Mr. Hordern), but that still need not make it as good a solution as the Kent-Cambridge merger. The Opposition are perhaps being a trifle idealistic if they expect the voice of reason instantly to command universal assent where it conflicts with the short-term interests of some of the parties involved.

The second argument of the Opposition is that the market would have shown who was right in its own good time—in the long run, when as Keynes said, we are all dead. Such masochistic pursuit of the purest Tory doctrine speaks well for the consistency of hon. Gentlemen opposite, but not well for their good sense and sense of priorities for the country in the position it faces and the needs of industry today.

The next opposition argument is that even if the right solution has been arrived at this time, it constitutes a dangerous precedent for the future. That is the hoary old argument that if right is done this time right may have to be done next time too. But, they argue, even with all the advice in the world from a wide range of people to whom they talk in private industry as well as in Government and research establishments, the I.R.C. is still not infallible. It will certainly make mistakes sometimes if it bids against other bidders.

We are all human, even the I.R.C., and I would be very sorry if, after a number of years, I could feel that it had never made a mistake, because it would mean that those at the top had gone to sleep. It must be that I.R.C. could err, and it is inherently more likely that it will make a mistake in the quiet of an uncontested takeover than under the arc lights of a contested one. If hon. Gentlemen opposite are anxious to see the I.R.C. maintaining penetrating standards of assessment, then they should welcome the entrance of I.R.C. into contested takeover bids, when it would have to argue its case and convince shareholders as well as the management of companies.

Opposition hon. Members have made the point, as have some sections of the Press, that if I.R.C. enters into a contested takeover bid it will forfeit the confidence of firms which have previously been prepared to confide in I.R.C. and open their books to the Corporation. There is no evidence whatsoever of this happening, either with firms who are already engaged in discussions with I.R.C., or with firms who are making fresh contacts with I.R.C. The House has heard this afternoon of the fishing industry. Only last week a firm which was anxious to talk was passed on to the I.R.C. from Mintech. There is no evidence, I repeat, that there is any failing or diminution of confidence. Indeed, in so far as there is any reaction, the effect of the Kent-Cambridge deal seems to have been to consolidate the view that I.R.C. is to be taken seriously as pursuing a constructive rôle in British industry.

I believe it was the hon. Member for Horsham who asked about the terms on which the I.R.C. can borrow. If he will read the I.R.C. Report and accounts he will find the terms fully set out there; it is broadly at the Government borrowing rate.

Other hon. Members, and particularly the hon. Member for Bodmin (Mr. Bessell), argued that the I.R.C. should justify its interventions, giving a reasoned case for its view, before backing it with public money. The I.R.C. has already gone a great deal beyond the usual practice in the City in this respect. It has not been exactly reticent, but I am sure that it will note the point that hon. Members have made and do its best to conform.

When it comes to public agencies handing out funds to private industry, the Opposition struggle valiantly to overcome their scruples about Government intervention. So long as they could regard I.R.C. as a placid milch cow they were ready, though somewhat surprised, to smile on its ruminations; but it never was a milch cow; it has a serious task to do and it is doing it energetically.

Perhaps the strongest reason for rejecting the Opposition Motion is not that it is doctrinaire, not that it is less than scrupulous in failing to seek value for public money, but in that the Motion is complacent. The Opposition when, in power, left this country in a state—and I quote from the recent report by the Brookings Institution—in which, by 1962, productivity in United Kingdom industry was already 14 per cent., below that of France, 12 per cent. below that of Germany, and 5 per cent. below that of the Netherlands and even below Italy. I hope that hon. Gentlemen opposite will read that report.

There is a need for action, and for urgent action. The instrument industry cannot wait while the Opposition overcomes another lot of scruples. We have heard from the speeches of hon. Gentlemen this afternoon the great diversity of view that exists on the Opposition benches about the activities of I.R.C. Meanwhile, the House cannot accept an inhibition on the long overdue and energetic work of the Industrial Reorganisation Corporation and, therefore, I invite the House to reject the Motion.

Question put:—

That this House, while upholding the independence of the Industrial Reorganisation Corporation, deplores its action in intervening with public money on behalf of one bidder in a merger operation, and regards such action as a dangerous precedent for the future.

The house divided: Ayes 233, Noes 307.

Division No. 269]	AYES	[7.0 p.m.
Alison, Michael (Barkston Ash)	Gower, Raymond	Nicholls, Sir Harmar
Allason, James (Hemel Hempstead)	Grant, Anthony	Noble, Rt. Hn. Michael
Astor, John	Grant-Ferris, R.	Nott, John
Atkins, Humphrey (M't'n & M'd'n)	Gresham Cooke, R.	Onslow, Cranley
Awdry, Daniel	Grieve, Percy	Orr, Capt. L. P. S.
Baker, Kenneth (Acton)	Griffiths, Eldon (Bury St. Edmunds)	Orr-Ewing, Sir Ian
Baker, W. H. K. (Banff)	Gurden, Harold	Osborn, John (Hallam)
Balniel, Lord	Hall, John (Wycombe)	Osborne, Sir Cyril (Louth)
Barber, Rt. Hn. Anthony	Hall-Davis, A. G. F.	Page, Graham (Crosby)
Batsford, Brian	Hamilton, Lord (Fermanagh)	Pearson, Sir Frank (Clitheroe)
Beamish, Col. Sir Tufton	Hamilton, Michael (Salisbury)	Peel, John
Bell, Ronald	Harris, Frederic (Croydon, N.W.)	Percival, Ian
Bennett, Sir Frederic (Torquay)	Harrison, Brian (Maldon)	Pike, Miss Mervyn
Berry, Hn. Anthony	Harrison, Col. Sir Harwood (Eye)	Pink, R. Bonner
Biffen, John	Harvey, Sir Arthur Vere	Pounder, Rafton
Biggs-Davison, John	Hastings, Stephen	Powell, Rt. Hn. J. Enoch
Birch, Rt. Hn. Nigel	Heald, Rt. Hn. Sir Lionel	Price, David (Eastleigh)
Black, Sir Cyril	Heath, Rt. Hn. Edward	Prior J. M. L
Blaker, Peter	Heseltine, Michael	Pym, Francis
Boardman, Tom (Leicester, S.W.)	Higgins, Terence L.	Quennell, Miss J. M.
Body, Richard	Hiley, Joseph	Ramsden, Rt. Hn. James
Bossom, Sir Clive	Hill, J. E. B.	Rawlinson, Rt. Hn. Sir Peter
Boyle, Rt. Hn. Sir Edward	Hirst, Geoffrey	Rees-Davies, W. R.
Braine, Bernard	Hogg, Rt. Hn. Quintin	Renton, Rt. Hn. Sir David
Brewis, John	Holland, Philip	Rhys Williams, Sir Brandon
Brinton, Sir Tatton	Hordern, Peter	Ridley, Hn. Nicholas
Bromley-Davenport, Lt.-Col. Sir Walter	Hornby, Richard	Rippon, Rt. Hn. Geoffrey
Brown, Sir Edward (Bath)	Howell, David (Guildford)	Robson Brown, Sir William
Bruce-Gardyne, J.	Hunt, John	Rodgers, Sir John (Sevenoaks)
Bryan, Paul	Hutchison, Michael Clark	Rossi, Hugh (Hornsey)
Buchanan-Smith, Alick (Angus,N&M)	Iremonger, T.L	Royle, Anthony
Buck, Anthony (Colchester)	Irvine, Brynant Godman (Rye)	Russell, Sir Ronald
Bullus, Sir Eric	Jenkin, Patrick (Woodford)	St. John-Steavas, Norman
Campbell, B. (Oldham, W)	Jennings, J. C. (Burton)	Sandys, Rt. Hn. D.
Campbell, Gordon (Moray & Nairn)	Jopling, Michael	Scott, Nicholas
Carlisle, Mark	Joseph, Rt. Hn. Sir Keith	Scott-Hopkins, James
Carr, Rt. Hn. Robert	Kaberry, Sir Donald	Sharples, Richard
Channon, H.P.G.	Kerby, Capt. Henry	Shaw, Michael (Sc'b'gh & Whitby)
Chichester-Clark, R.	Kershaw, Anthony	Silvester, Frederick
Clark, Henry	Kimball, Marcus	Sinclair, Sir George
Clegg, Walter	King, Evelyn (Dorset, S.)	Smith, Dudley (W'wick & L'mington)
Cooke, Robert	Kirk, Peter	Smith, John (London & W'minster)
Cooper-Key, Sir Neil	Kitson, Timothy	Speed, Keith
Cordle, John	Knight, Mrs. Jill	Stainton, Keith
Corfield, F.V.	Lambton, Viscount	Stoddart-Scott, Col. Sir M. (Ripon)
Costain, A.P.	Lancaster, Col. C.G.	Summers, Sir Spencer
Craddock, Sir Beresaford (Spelthorne)	Lane, David	Tapsell, Peter
Crosthwaite-Eyre, Sir Oliver	Langford-Holt, Sir John	Taylor, Sir Charles (Eastbourne)
Crouch, David	Lewis, Kenneth (Ruthland)	Taylor, Edward M. (G'gow, Catheart)
Crowder, F. P.	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Taylor, Frank (Moss side)
Cunningham, Sir Knox	Lloyd, Ian (P'tsm-th, Langstone)	Teeling, Sir William
Currie, G. B. H.	Lloyd, Rt. Hn. Selwyn (Wirral)	Temple, John M.
Dance, James	Longden, Gilbert	Thatcher, Mrs. Margaret
d-Avigdor-Goldsmid, Sir Henry	Loveys, W.H.	Tilney, John
Dean, Paul (Somerset, N.)	McAdden, Sir Stephen	Turton, Rt. Hn. R. H.
Deedes, Rt. Hn. W. F. (Ashford)	MacArthru, Ian	van Straubenzee, W. R.
Digby, Simon Wingfield	Maclean, Sir Fitzory	Vaughan-Morgan, Rt. Hn. Sir John
Dodds-Parker, Douglas	Macleod, Rt. Hn. Iain	Vickers, Dame Joan
Donnelly, Desmond	McMaster, Stanley	Waddington. David
Coughty, Charles	Macmillan, Maurice (Farnham)	Walker,Peter (Worcester)
Doughty, G.B.	Maddan, Martin	Walker-Smith, Rt. Hn. Sir Derek
du Cann, Rt. Hn. Edward	Maginnis, John E.	Wall, Patrick
Elliot, Capt. Walter (Carshatton)	Marples, Rt. Hn. Ernest	Waters, Dennis
Emery, Peter	Marten, Neil	Ward, Dame Irene
Errington, Sir Eric	Maude, Angus	Weatherill, Bernard
Farr, John	Maulding, Rt. Hn. Reginald	Wells, John (Maidstone)
Fisher, Nigel	Mawby, Ray	Whitelaw Rt Hn William
Fletcher-Cooke, Charles	Mills, Stratton (Belfast, N.)	Williams, donald (Dudley)
Fortescue, Tim	Miscampbell, Norman	Wills, Sir Gerald (Bridgwater)
Fraser, Rt. Hn. Hugh (St'fford & Stone)	Mitchell, David (Basingstoke)	Wilsaon, Geoffrey (Truro)
Galbraith, Hn. T.G.	Monro, Hector	Wolrige-Gordon, Patrick
Gibson-Watt, David	Montgomery, Fergus	Wood, Rt. Hn. Richard
Giles, Rear-Adm. Morgan	More, Jasper	Woodnutt, Mark
Gilmour, Ian (Norfolk, C.)	Morrison, Charles (Devizes)	Worsley, Marcus
Glover, Sir Douglas	Mott-Radclyffe, Sir Charles	Younger, Hn. George
Glyn, Sir Richard	Munro-Lucas-Tooth, sir Hugh
Godber, Rt. Hn. J. B.	Murton, Oscar	TELLERS FOR THE AYES:
Goodhart, Philip	Nabarro, Sir Gerald	Mr. R.W. Elliott and
Goodhew, Victor	Neave, Airey	Mr. Reginald Eyre.

NOES
Abse, Leo	Fernyhough, E.	Luard, Evan
Albu, Austen	Fitch, Alan (Wigan)	Lyon, Alexander W. (York)
Allan, Frank (Salford, E.)	Flectcher, Raymond (Ilkeston)	Lyons, Edward (Bradford, E.)
Alldritt, Walter	Flectcher, Ted (Darlington)	McBridge, Neil
Anderson, Donald	Fooley, Maurics	McCann, John
Archer, Peter	Foot, Rt. Hn. Sir Dingle (Ipswich)	MacColl, James
Atkinson, Ronald (Preston, N.)	Foot, Micheal (Ebbw Vale)	MacDermot, Naill
Atkinson, Norman (Tottenham)	Ford, Ben	Macdonald, A. H.
Bacon, Rt. Hn. Alice	Forrester, John	McKay, Mrs. Margaret
Bagier, Gordon A. T.	Fowler, Gerry	Mackenzie, Gregor (Rutherglen)
Barnes, Michael	Fraser, John (Norwood)	Mackie, John
Barnett, Joel	Freeson, Reginald	Mackintosh, John P.
Baxter, William	Galpern, Sir Myer	Maclennan, Robert
Beaney, Alan	Gardner, Tony	McMillan, Tom (Glasgow, C.)
Bence, Cyril	Garrett, W. E.	McNamara, J. Kevin
Benn, Rt. Hn. Anthony Wedgwood	Ginsburg, David	Mahon, Peter (Preston, S.)
Bennett, James (G'gow, Bridgeton)	Gordon Walker, Rt. Hn. P. C.	Mahon, Simon (Bootle)
Bessell, Peter	Gourlay, Harry	Mallalieu, E. L. (Brigg)
Bidwell, Sydney	Gray, Dr. Hugh (Yarmouth)	Mallalieu, J. P. W. (Huddersfield, E.)
Binns, John	Greenwood, Rt. Hn. Anthony	Manuel, Archie
Bishop, E. S.	Gregory, Arnold	Marks, Kenneth
Blackburn, F.	Grey, Charles (Durham)	Marquand, David
Boardman, H. (Leigh)	Griffiths, David (Rother valley)	Marsh, Rt. Hn. Richard
Booth, Albert	Griffiths, Eddie (Brightside)	Mason, Rt. Hn. Roy
Boston, Terence	Griffiths, Rt. Hn. James (Llanelly)	Maxwell, Robert
Bottomley, Rt. Hn. Arthur	Griffiths, Will (Exchange)	Mayhew, Christopher
Boyden, James	Hamilton, James (Bothwell)	Mendelson, J. J.
Braddock, Mrs. E. M.	Hamling, William	Mikardo, Ian
Bradley, Tom	Hannan, William	Millan, Bruce
Bray, Dr. Jeremy	Harper, Joseph	Miller, Dr. M. S.
Broughton, Dr. A. D. D.	Harrison, Walter (Wakefield)	Milne, Edward (Blyth)
Brown, Rt. Hn. George (Belper)	Hart, Rt. Hn. Judith	Mitchell, R. C. (S'th'pton, Test)
Brown, Hugh D. (G'gow, Provan)	Haseldine, Norman	Molloy, William
Brown, Bob (N'c'He-upon-Tyne,W.)	Hattersley, Roy	Moonman, Eric
Brown, R. W. (Shoreditch & F'bury)	Hazell, Bert	Morgan, Elystan (Cardiganshire)
Buchan, Norman	Healey, Rt. Hn. Denis	Morris, Alfred (Wythenshawe)
Buchanan, Richard (G'gow, Sp'burn)	Heffer, Eric S.	Morris, Charles R. (Openshaw)
Butler, Herbert (Hackney, C.)	Henig, Stanley	Morris, John (Aberavon)
Butler, Mrs. Joyce (Wood Green)	Hilton, W. S.	Moyle, Roland
Callaghan, Rt. Hn. James	Hobden, Dennis (Brighton, K'town)	Mulley, Rt. Hn. Frederick
Cant, R. B.	Hooley, Frank	Murray, Albert
Carmichael, Neil	Horner, John	Neal, Harold
Carter-Jones, Lewis	Houghton, Rt. Hn. Douglas	Newens, Stan
Castle, Rt. Hn. Barbara	Howarth, Harry (Wellingborougn)	Noel-Baker, Rt. Hn. Philip (Derby,S.)
Chapman, Donald	Howarth, Robert (Bolton, E.)	Oakes, Gordon
Coe, Denis	Howell, Denis (Small Heath)	Ogden, Eric
Coleman, Donald	Howie, W.	O'Malley, Brian
Conlan, Bernard	Huckfield, Leslie	Oram, Albert E.
Corbet, Mrs. Freda	Hughes, Rt. Hn. Cledwyn (Anglesey)	Orme, Stanley
Crawshaw, Richard	Hughes, Emrys (Ayrshire, S.)	Oswald, Thomas
Cronin, John	Hughes, Hector (Aberdeen, N.)	Owen, Dr. David (Plymouth, S'tn)
Crosland, Rt. Hn. Anthony	Hughes, Roy (Newport)	Owen, Will (Morpeth)
Crossman, Rt. Hn. Richard	Hunter, Adam	Page, Derek (King's Lynn)
Cullen, Mrs. Alice	Hynd, John	Paget, R. T.
Dalyell, Tarn	Irvine, Sir Arthur (Edge Hill)	Palmer, Arthur
Darling, Rt. Hn. George	Jackson, Colin (B'h'se & Spenb gn)	Pannell, Rt. Hn. Charles
Davidson, Arthur (Accrington)	Janner, Sir Barnett	Park, Trevor
Davies, Ednyfed Hudson (Conway)	Jay, Rt. Hn. Douglas	Parkin, Ben (Paddington, N.)
Davies, Dr. Ernest (Stretford)	Jeger, George (Goole)	Parkyn, Brian (Bedford)
Davies, Harold (Leek)	Jeger, Mrs. Lena (H'b'n&St.P cras, s.)	Pavitt, Laurence
Davies, S. O. (Merthyr)	Jenkins, Hugh (Putney)	Pearson, Arthur (Pontypridd)
Delargy, Hugh	Jenkins, Rt. Hn. Roy (Strechford)	Peart, Rt. Hn. Fred
Dell, Edmund	Johnson, James (K'ston-on-Hull, w)	Pentland, Norman
Dempsey, James	Jones, Dan (Burnley)	Perry, Ernest G. (Battersea, S.)
Dewar, Donald	Jones, Rt. Hn. SirElwyn (W. Ham, S.)	Perry, George H. (Nottingham, S.)
Diamond, Rt. Hn. John	Jones, J. Idwal (Wrexham)	prcntice, Rt. Hn. R. E.
Dickens, James	Judd, Frank	pric,chriStopher (Perry Barr)
Dobson, Ray	Kelley, Richard	price, Thomas (Westhoughton)
Doig, Peter	Kenyon, Clifford	Prjce, William (Rugby)
Dunn, James A.	Kerr, Mrs. Anne (R'ter & Chatham)	Pursey, Cmdr. Harry
Dunnett, Jack	Kerr, Dr. David (W'worth., Central)	Randall, Harry
Dunwoody, Mrs. Gwyneth (Exeter)	Kerr, Russell (Feltham)	Rankin, John
Dunwoody, Dr. John (F'th & C'b'e)	Lawson, George	Rees, Mertyn
Eadie, Alex	Lee, Rt. Hn. Frederick (Newton)	Reynolds, Rt. Hn. G. W.
Edelman, Maurice	Lee, Rt. Hn. Jennie (Cannock)	Rhodes, Geoffrey
Edwards, William (Merioneth)	Lee, John (Reading)	Richard Ivor
Ellis, John	Lestor, Miss Joan	Roberts, Albert (Normanton)
English, Michael	Lever, Harold (Cheetham)	Roberts, Rt. Hn. Goronwy (C'narr'n)
Emals, David	Lever L. M. (Ardwick)	Roberts, Rt. Hn. Gwilym (Bedfordshire, S.)
Ensor, David	Lewer, Arthur (W. Ham, N.)	Robertson, John (Paisley)
Evans Albert (Islington, S.W.)	Lewis, Ron (Carlisle)	Robinson, Rt. Hn. Kenneth (St.P'c'a.)
Evan, loan L. (Birm'h'm, Yardley)	Lipton, Marcus	Robinson, W. O. J. (Walth'stow, E.)
Faulds, Andrew	Loams, Kenneth	Rodgers, William (Stockton)

Roebuck, Roy	Storehouse, Rt. Hn. John	Wells, William (Walsall, N.)
Rogers, George (Kensington, N.)	Strauss, Rt. Hn. G. R.	Whitaker, Ben
Rose, Paul	Summerskill, Hn. Or. Shirley	White, Mrs. Eirene
Ross, Rt. Hn. William	Swain, Thomas	Whitlock, William
Rowlands, E. (Cardiff, N.)	Swingler, Stephen	Wilkins, W. A.
Ryan, John	Taverne, Dick	Williams, Alan (Swansea, W.)
Shaw, Arnold (Ilford, S.)	Thomas, Rt. Hn. George	Williams, Alan Lee (Hornchurch)
Sheldon, Robert	Thomson, Rt. Hn. George	Williams, Clifford (Abertillery)
Shinwell, Rt. Hn. E.	Thornton, Ernest	Williams, W. T. (Warrington)
Shore, Rt. Hn. Peter (Stepney)	Tinn, James	Willis, Rt. Hn. George
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Tuck, Raphael	Wilson, William (Coventry, S.)
Short, Mrs. Renée (W'hampton, N.E.)	Urwin, T. W.	Winnick, David
Silkin, Rt. Hn. John (Deptford)	Varley, Eric G.	Winstanley, Dr. M. P.
Silverman, Julius	Wainwright, Edwin (Dearne Valley)	Woof, Robert
Skeffington, Arthur	Wainwright, Richard (Colne Valley)	Wyatt, Woodrow
Slater, Joseph	Walden, Brian (All Saints)	Yates, Victor
Small, William	Walker, Harold (Doncaster)
Snow, Julian	Wallace, George	TELLERS FOR THE NOES:
Spriggs, Leslie	Watkins, David (Consett)	Mr. J. D. Concannon and
Steal, David (Roxburgh)	Weitzman, David	Mr. Ernest Armstrong.
Steele, Thomas (Dunbartonshire, W.)	Wellbeloved, James

Bristol Corporation Bill Lords (By Order)

Order for Second Reading read.

7.10 p.m.

I beg to move, That the Bill be now read a Second time.

Perhaps I should say at the outset that I believe that hon. Members will have received copies of a statement in favour of the Bill from the promoters and that I have in my possession further copies. I also have copies of the report of the debate in Committee in another place, which contains much detailed discussion. This, too, is available to hon. Members. At the end of the discussion I should be prepared, if the House were to give me leave—I hope that no hon. Gentleman present would object—to reply on points of detail on behalf of the promoters, should occasion arise.

The Bill carries out the Minister of Transport's instructions to the Port of Bristol Authority given to the Authority at the time of the rejection by this Government of the Portbury scheme, which would have made Bristol the finest port in Europe. The Port of Bristol Authority was told to consult the National Ports Council and to bring forward proposals for the future modernisation and expansion of the Port of Bristol.

The Bill embodies the agreed proposals and has the support of the South West Economic Wanning Council, which endorsed Portbury and whose Chairman, incidentally, has only this weekend deplored the Government's continued obstruction of Bristol's legitimate aspirations to take its place in the region. The Bill carries out the Minister's instructions. It is also born out of the continued frustration of the citizens of Bristol since 1964 at the hands of this Government, who have seemed to be reluctant to make up their minds and, when they do, only slowly.

The Bill has passed all its stages in the House of Lords. In offering it to the Commons I am authorised on behalf of the promoters to say that they will have included in the Bill a Clause to meet the only Government objection made in the Lords—incidentally, the House of Lords did not see fit to instruct the promoters to include a provision to this effect—and make the West Dock scheme subject to the control of the Minister of Transport under sections 9 and 10 of the Harbours Act, 1964. That, I believe, fully meets the objections of the Minister, other than that he saw fit last Friday to turn down the entire scheme.

Although the Minister has turned down the scheme now, if we were to get a Bill on to the Statute Book it could easily be amended to meet the needs of future years. One of the points which I am asked to make is that a Bill on the Statute Book would mean that, when the need arises for future development and expansion of the Port of Bristol, it can be proceeded with much more easily by amendment of the existing Statute than by beginning the whole process again.

Therefore, for that very reason, despite the Minister's request, we cannot agree to withdraw the Bill. In any case, we must press the Minister for a much more definite indication of what the future of the Port of Bristol is to be. If the Government must interfere, they have an obligation to help us plan our future.

The West Dock authorised by the Bill would provide Bristol with the necessary works of renewal—I stress that word—and expansion which she must have or die. The Minister's letter received by many hon. Members this morning, and in any case published in the newspapers, envisages the rundown over 15 or 20 years of the Port of Bristol and the loss of jobs at the level of 6,500. This amounts to the virtual closure of the Port of Bristol at the end of that time.

Bristol has held a proud place as one of our major ports for 1,000 years. If that high-flown sentiment does not commend itself to hon. Members with rival claims, I would like them at least to consider that this is nothing to the fact that one in four of the citizens of Bristol now depend directly or indirectly on the prosperity of our port. It is difficult to see how during the course of the next 15 to 20 years the running down of the port would not have a very serious effect on the livelihood of all the citizens of the city which I am proud to represent.

The principal ground for the present rejection is that there would be an uneconomic return on the capital involved. This is debatable. The Minister says that it does not come up to the 8 per cent. test rate of return for such projects. One of my principal questions to the Minister—I will read it slowly so that he can write it down—is whether he can give us an example or other examples which come up to this standard. It would be very helpful if he could tell us that, because obviously, whatever happens today, we shall not be deterred from coming forward in the future with proposals and we would like to know just what our competition is and what the rules of play are.

The Minister has said that public money on the scale for which we are asking—we are not asking for public money; we are asking to spend £14¾ million—should not be committed on this project. We shall go to the market, not to the Treasury. I think that is worth the Minister's consideration. We shall not come bleating to the Treasury. We shall go and chance our arm in the market where projects are judged.

The hon. Gentleman is saying that the Corporation would be pre- pared to do without the Government's 20 per cent. grant?

I was just coming on to that. I am so grateful to the Minister for leading me on to my next point. Will the Minister give his consent for our project without the grant? Will he authorise us to go ahead without the 20 per cent. grant? If he would care to answer that by an intervention now, I would be happy to give way to him. If he cannot do it now, perhaps he will answer it in his speech, as he specifically raised the question of the grant. I am asked to ask him on behalf of the promoters whether he would give us consent to go ahead with the project without the 20 per cent. grant for which we would be eligible.

It seems odd to us that the Brighton Marina for yachts, costing £11¾ million raised on the market and a £3½ million Government loan, should get the go-ahead and yet the lifeblood of the second city of the Kingdom is at risk because we cannot have our dock.

I know that many hon. Members wish to speak, but I must now deal with the Minister's letter of last Friday, which is public knowledge, and endeavour to answer some of his main points to which I have not already referred. He attempts to prove that there would be great additional costs over and above £14¾ million, that there would be additional costs to users of the new dock and that these should somehow be included in the cost of the project.

What about the income which we shall derive from those users? We have the 2,000 acres of land which the citizens of Bristol own. If users want to construct specialist facilities, that will produce income to us and it will not cost us anything. We will be providing them with the site. That point, therefore, is disposed of.

Then we come to the old bogy of the alleged insufficiency of committed traffic from the industrial areas. We have unrivalled communications for our proposed extension. The motorway network of the United Kingdom might almost have been designed to lead to the Port of Bristol, and our rail communication also is good. They are the cross-country routes which are to remain open in the rationalisation of the railways. We are within easy reach of London, South Wales, the great industrial Midlands and the far South-West, too, if the Government would only get on with their road programme there.

In any event, the idea that industry has to be within a few miles of the port and that the port must not be built before one has obtained the industry is an old bogy. A businessman does not wait for a queue of people to form in the street before he decides to build and open a shop. He goes into the pros and cons and decides that it is worth opening a shop, and his customers appear if he has made the right decision.

The trouble about the present situation is that the Port of Bristol has too many customers and is unable to cope with the existing trade. The Minister seeks to make their position yet more difficult.

The question of the proximity of industry is contradicted in the Minister's recent letter. In any event, there has been a substantial change of ground from the reasons given for turning down the Portbury scheme. On the question of communications, one might point out that it is probably quicker to get from Slough to Avonmouth than it is to get from Slough to the London Docks. It certainly will be when the motorway is completed, and the Bristol-London route looks like being a reality before too long. There are no worth while plans for dealing with the hopeless congestion in the City of London.

The cost of berths is another query raised by the Minister. It is false to make a comparison with other schemes. We must have the entrance lock—which is to be 1,400 ft. long and to take ships of 140 ft. beam—in any case. It is unrealistic to transfer or apportion this to the cost of the berths. The more berths that are constructed, the less the cost would be as trade continued to grow.

The next question is that of importance to the south-western region. There are three principal planks in the policy outlined in the Tress Report: the Port of Bristol, improved regional communications and the key position of the Plymouth area and the dock there. I have the wholehearted support of all my hon. Friends from the South-West of England in urging on the Government those three chief planks in the policy outlined by the Tress Report.

We are told that the rate of growth of the Port of Bristol is less than in other places, but when one is working near to 100 per cent. capacity it is very difficult to grow. When one is in a run-down or stopped position, any activity counts for a big percentage increase. We have been fighting with one hand tied behind our backs, and now our right arm is to be cut off by the arbitrary action of the Minister.

We are told that our exports are small compared with imports. History is one of the reasons for this, but, also, we cannot do more exporting without the berths, and it is the berths for exporting which are provided for within the Bill.

In his letter, the Minister makes a big point of the future of the City Docks. The City Docks are the port from which John and Sebastian Cabot sailed to discover the New World. In this respect there is greater confusion of thought in the Minister's mind than in almost anything else. He must be pressed today to give us an indication of how we may get out of our difficulties. The City Docks are run at a loss, supported by Avon-mouth, the more modern port which the citizens constructed with their own moneys at the end of the last century and more recently.

We have this valuable site in the centre of the city, but we cannot close the City Docks. We cannot redevelop them to the advantage of all the citizens, because without the new West Dock we cannot fulfil our long-term contracts and obligations to the present users. One cannot simply close a dock when one has contracts which continue for many years. It is not possible to go into the existing docks of Avonmouth because there simply is not room. That is why we need our Bill and what is contained in it.

We are hamstrung in making progress in the matter by the Minister's decision of last Friday. The penultimate paragraph of his letter is somewhat sickening to us in Bristol in our present disillusion, but perhaps he can do something to extend some hope to us. While he hears his words again, I hope that he is thinking up some helpful suggestions.

The Minister says:

"The people of Bristol are proud of their port, and rightly so"—

we knew that already—

"and I hope that the changing pattern of traffic and advances in technology may in due time make it possible to undertake further development of the port on an economic basis."

That is a long sentence without any punctuation, but the message is clear: the Minister hopes that we have a future. By his opposition to the Bill, however, by saying flatly last week that he had no intention of letting it pass and no intention of authorising our scheme, he has put the whole of our future in doubt.

The Minister hints that we must await the Severnside Study. But we waited for Tress, for the National Ports Council—twice—and we waited for a reply on the current matter which is under discussion. When the Prime Minister was last in Bristol, he said that we would know in three weeks. The three weeks expired on the Friday before Whitsun, but nothing has happened. Now, we have forced the issue by coming to the House and asking for a Second Reading of the Bill. On the last sitting day before today, the date for Second Reading, we were told in answer to a Written Question on Friday morning that the Minister was out to stop us.

We are entitled to an answer to my specific questions which I have raised and to others which will be put by my hon. Friends. We have a Government who believe in planning, but so far there has been no helpful action as a result of that planning or the lack of it. The Minister says that the Port of Bristol cannot stand still but must either develop or decline.

Hear, hear.

I am glad to have that "Hear, hear" from the hon. Member, to whom I might refer tonight as my hon. Friend. Friends, I hope, we always will be in the interests of the future of the city and the dock that we all care about.

All the Bristol Members—indeed, the whole of the West Country—cannot accept the present state of affairs, and certainly cannot accept the decline of the Port of Bristol. So we must know more from the Minister this evening. If the Government must interfere, the Government have a duty to tell us how we can progress. We cannot play our full part in the nation's economic life or in that of the region without a secure future for our port. If this debate does nothing more, it will give an opportunity to the Minister to tell us what he can do to help our future, and I hope to heaven he can help us this evening.

7.30 p.m.

I should like, in making my own speech, to follow many of the points which the hon. Member for Bristol, West (Mr. Robert Cooke) made, but I would like to answer a question which he raised right at the beginning, although it is a little presumptuous of me because, the question was addressed to the Minister. He asked what other approved schemes had shown a return of 8 per cent. or more on investment. If he had looked at the evidence given to the Select Committee in another place he would not have to look far for his answer. The north side at Newport showed a d.c.f. return of 9 per cent. and a roll-on-roll-off at Swansea of 10 per cent. As the dock manager pointed out, approval would not have been given if the investment had not been capable of showing a return of 10 per cent. I think that that answers the specific point which the hon. Member raised at the very beginning.

It is very sad that when we debate these issues we find ourselves fighting against one another. They put colleague against colleague and city against city and region against region. We find ourselves engaged in a cut-throat competition and a slanging match between one side of the Bristol Channel and the other. What we all want is co-operation and what we all want is rationalisation of all the resources to secure a maximum return for both sides of the Channel and both regions. We want co-operation and rationalisation on a basis which will stand up to the test of hard economic and financial assessments as opposed to emotion.

What are the financial and economic facts of the scheme put before us this evening? The Bill we are asked to endorse is for a £15 million scheme and the most optimistic assessment of the return on this investment is 6 per cent. It is much more likely, the National Ports Council assessment shows, to be a return of between 2¾ per cent. and 4½ per cent. The Government have already laid down the minimum financial criterion by which to judge these schemes and it is 8 per cent. Every recent investment in such schemes has had to conform to that criterion and has done so.

The promoters of the Bill have done something which is fast becoming what might be called financial assessment Bristol fashion. If an assessment does not suit them and they do not accept the criterion being used—it is what happened over Portbury—they make an optimistic assessment and, when faced with the hard economic facts of their proposals, they prefer to take a local hunch and tell us that they know that it will be a good scheme.

Is my hon. Friend not aware that on at least one occasion during discussion of the scheme the Port of Bristol Authority figures were found to be correct and the Ministry's figures, upon being checked at the Ministry, were found to be incorrect?

Is my hon. Friend saying that the present scheme of £15 million will achieve the 8 per cent. criterion which is necessary and which is at the moment used to judge such an investment? If he is, perhaps he can argue that in his own speech. On the National Ports Council evidence—I agree it was not very good evidence—the figure is 2¾ per cent. to 4½ per cent., at the most optimistic, as the return on the investment.

Even so, even if we overlook this factor, how can we endorse a scheme which not only gives such a low return on such a large investment, but will have a disastrous effect on neighbouring ports? What we say that is, if we find that the nearby ports are capable of handling this trade, and if we find as we do, that in South Wales there is an enormous capacity to take up, why should those resources compete rather than complement the services of the ports in the Bristol region? That is, in fact, what would happen if this scheme went ahead. No doubt there might be quoted to us—I am pleased that the hon. Member for Bristol, West did not—the National Ports Council letter in which Sir Arthur Kirby set out the way in which the Bristol and South Wales ports were complementary rather than competitive.

That statement was rather simply put in the letter to the Minister and is one of the inaccuracies in the information provided by the Ports Council, because an astonishing piece of evidence emerged in the evidence given to the Select Committee. It turned out that the National Ports Council did not even bother to give detailed figures or make any inquiry from the South Wales Dock Board about the different figures of different cargoes.

Had it done so it would have found that on the most cautious assessments which have been made the South Wales ports would lose about £1 million worth of trade per annum. It turned out that the National Ports Council conclusions could only be arrived at by evidence produced by Bristol.

Does the hon. Member mean in pounds or tonnage?

In receipts, I gather.

The fact which emerged from the evidence, and I am sure that the hon. Member knows it, was that the evidence given of the pattern of trade in the South Wales ports showed that we are not as narrowly confined in the way we trade as we used to be but have diversified and have enormous excess capacity to develop. The hon. Member will find that some of our ports are working at only half capacity. It is the sort of trade for which Bristol would be competing with South Wales.

Is the hon. Member really seriously attempting to argue that Cardiff will provide the necessary trading for the South-West? Because this is what so many of us want Bristol developed for. Surely there cannot be any argument that Cardiff will satisfy that?

To make this Bristol scheme justifiable will mean taking away from the South Wales ports on the other side of the Channel the type of trading which could equally well be developed there.

If the Bristol scheme is to have any chance of success it will compete with the South Wales ports. The regional argument is handled in the Minister's letter. I think that my right hon. Friend will deal with this matter himself, but if we look at the evidence given to the Select Committee we find that the type of trade to be expanded under the one dock scheme is the type of trade being expanded in the South Wales ports. The South Wales ports have enormous spare capacity.

Therefore, not only do we find that the financial return expected on such an investment is so low, but also Bristol's losses can be reduced only by putting the South Wales ports into the red. This scheme reveals a plan which could bring real gain to the ports on both sides of the Channel and reveals the confusion which results from spasmodic reaction to piecemeal proposals.

The National Ports Council sometimes suffers from having to react to individual port applications. One has only to read Sir Arthur Kirby's letter to the Minister to realise how confused one can get in certain respects. He said initially:

"The Bristol scheme cannot be justified by any financial criteria."

Then we get something of an apologia on behalf of the Bristol Corporation. He ends with the understatement of the year when he says:

"I am sorry, but I cannot give you a clear-cut case. I realise only too well the difficulties which this recommendation leaves you with before you can arrive at a decision."

That is some sort of advice. I am sure that the Minister would say "Hear, hear" to that sort of advice. Having tendered that advice, he tries to discount it by saying that one cannot take this advice as really concrete or worth while.

I think that these occasions, when we debate the Bristol and the South Wales ports, are very sad indeed, because they tend to concentrate on the negative side on both sides. On the one hand, we get over-gloomy prognostications. We are told that this great and ancient port of Bristol will die if it has less than a £15 million scheme. We were told this about the Portbury scheme when we were asked for £27 million. I think that there is a slight element of blackmail and exaggeration in the remarks made by the hon. Member for Bristol, West.

I realise that the evidence given in Committee by Bristol people was to the same effect. But if one reads the evidence of the South Wales Docks Board manager about what happened in South Wales, we, too, thought that our ports were written off. We thought that there would never be a chance of a profit. But by selective investment where it was necessary and by rationalisation, every individual dock in South Wales has achieved a profit this year.

I do not want to appear partisan, but our side of the Channel is reacting to such developments as are contained in the Bill which has been presented today. We find ourselves equally on the defensive and protective of our own ports. As a result, one would not have thought that there was tremendous potentiality for all the ports on the Severn Estuary. The debate comes at a time when the most exciting prospects are being opened up on the Severn. Investigations have found that from Newport to Cardiff there are large areas capable of development adjacent to deep water ports. This was one of the top choice Maritime Industrial Development Area Sites—M.I.D.A.S. Another choice site was the area of land surrounding Bristol. Surely exploitation of these areas over a long period will provide tremendous prosperity in future for both regions.

The hon. Gentleman has talked about geography. Is he aware on which side of the Severn Estuary the deep water channel lies?

Yes. I am aware that the South Wales ports are deep water ports, too. In the consultants' report on M.I.D.A.S. the top choice site was Newport and Cardiff. The point is that we do not do the cause of Bristol or of South Wales any good by disagreeing among ourselves. Surely the essence of the problem was put succinctly by Lord Rochdale when he said:

"It is clear indeed that at present there is a danger that capital might be invested in Bristol in a duplication of facilities which already exist which are under-employed at Newport. We feel, in order to guard against any such wasteful investment and in order to make possible the rational development of port facilities in the upper Bristol Channel, a much closer association between Bristol and Newport than has existed hitherto is essential."

It is six years since those remarks were made, and they are as true now as then. We need a properly co-ordinated plan. I hope—and this is where I join with the hon. Member for Bristol, West—that before the year is out the Minister will produce a comprehensive plan for the whole of the ports in the Severn Estuary, if only to save us from yet another application for another mini-Portbury plan and further undignified squabbles.

7.45 p.m.

The hon. Member for Cardiff, North (Mr. E. Rowlands), understandably and properly, has put the case for the South Wales ports. I rise to support my hon. Friend the Member for Bristol, West (Mr. Robert Cooke) and the Bill. Most of the land area concerned in the Bill is in my constituency. When this project—I say "when" rather than "if"—is completed, many of my constituents will be concerned with it, particularly those in the parishes of Portbury and Easton-in-Gordano. I am naturally anxious that their interests should be fully safeguarded. It is partly for this reason that I am happy to support the Bill.

The consultations which have taken place between the Bristol Corporation, the Somerset County Council and the Long Ashton Rural District Council have been amicable. The Corporation has agreed to introduce certain safeguards in the Bill, particularly concerning planning permission for any development in the area, other than maritime works. It is significart, and certainly satisfying from my point of view, that there has been this amicable agreement between the Bristol authorities and the Somerset authorities in this matter.

We are today in a most extraordinary and unusual position. We have had Bristol, through its foresight and its vision, planning and saving for this project for a number of years. It was prepared to back its judgment and to raise the money to provide the development which we believe is necessary for the Port of Bristol. We have had the National Ports Council, the body of experts set up by the Government to advise on port matters, reporting in favour, first, of the Portbury scheme and now of the Bristol West Dock scheme.

We have had the Economic Development Council for the South-West putting this as one of its three main priorities for the economy of the region as a whole. We have had the regional C.B.I, and the trade unions coming out strongly in favour of it. We have had, too, the Port of Bristol Authority with its long experience in these matters. Therefore, the vision, the money and the expert approval all say "Yes", but the Government, and only the Government, say "No". I hope, trust and believe that no Bristol Members, on whichever side of the House they may sit, will vote with the Government on this issue tonight.

We have had a variety of arguments from the Government since this controversy first started. We are told that the country does not need this additional capacity, that it is best to concentrate it in a limited number of ports, and anyway the South-West will not suffer. I do not want to deal with the detailed arguments because I think that they will come more appropriately from hon. Members on both sides who represent the City of Bristol, but I find it disturbing, and indeed one is bound to be suspicious, when one finds differing arguments being used.

Perhaps I might give the House an example of what I mean. When the Government turned down the original Portbury scheme, one of the arguments used then was that port hinterlands were comparatively small areas not more than 25 miles from the ports concerned. That was one of the main arguments, that there was not sufficient industrial development within 25 miles of the area concerned. But in the letter which the Minister wrote the other day to the Chairman of the Port of Bristol Authority he said that:

"the minimisation of overall transport costs may well be achieved by the concentration of traffics on more distant ports."

It is very disturbing when one finds entirely different arguments used, in the one case against Portbury, and in the other against a somewhat similar but more modest scheme on this occasion.

The Government appear to be disregarding the experts and shifting their ground from month to month. It is no wonder that the overwhelming feeling in the area is that the Government are being shortsighted, and are not really addressing themselves to the merits of the case.

I wish to put forward two other broad arguments which have not been fully dealt with, certainly not in the letter which the Minister wrote the other day to Sir Kenneth Brown. I think we all accept that the Bristol area is a natural growth area. The prospects for the future are bright. No one on either side of the Bristol Channel wants to preach gloom. The Severn Bridge is of great significance. We have natural advantages, and one of these which will soon be fully in operation is a first-class motorway system intersecting just north of Bristol. No other port in the country will have such excellent road communications with the main industrial centres of the country.

Does the hon. Gentleman appreciate that the argument he is using about the intersection of the motorways is equally relevant to the case put forward on behalf of the South Wales ports with their link with London with the M4, and the Midlands with the new Newport-Worcester Trunk Road?

I shall come to that in a moment. I do not agree with the hon. Gentleman, although there is an element of truth in what he says.

This is one of the main arguments, particularly when one considers the intersection of these two motorways from London and the Midlands. When one considers the container revolution with the new development which this demands, one realises that here there is a golden opportunity to build a new port on a green field site, with first-class road communications free from congestion. One cannot say this of any other port in the country, however much money one may put into it.

My hon. Friend the Member for Honiton (Mr. Emery) said, and we in the South West endorse it, as does, I think, the Secretary of State for Economic Affairs, that prosperity can and must radiate into the peninsula from the Bristol area. This is of significance for the whole region.

Having stated the advantages, what are the weaknesses? There are two which make this project of considerable importance. One is the natural pull eastwards to Europe. The development of natural gas in the North Sea is almost bound to mean a pull for development away from the western half of the country towards the eastern half. I am not complaining about that. All I am saying is that it is necessary for regional plans to take into account these natural pulls which are likely to develop, and which will not help the South-West.

I am delighted, as I am sure everyone is, to see my hon. Friend the Member for Worcester (Mr. Peter Walker) on the Opposition Front Bench. I appeal to him to repeat the pledges which have been given by the party to which he belongs with regard to development in the Port of Bristol so that those concerned will know exactly where they stand, and what conclusions they can draw as a consequence.

My final point—and this was referred to by my hon. Friend the Member for Bristol, West—is that the promoters of the Bill have agreed to introduce into it a Clause which will ensure that the procedures under the Harbours Act have to be gone through before the Bill can be put into operation. There is nothing to be lost, and everything to be gained, by allowing the Bill to go to Committee where it can be considered on its merits. If the Measure gets on to the Statute Book, the arguments will have to be gone through again because the promoters have agreed that the Harbours Act procedure should be put into operation. If anyone on either side of the House has any doubts, he can come down in favour of the Bill knowing full well that the Minister has his safeguards through the Harbours Act.

I hope, therefore, that my hon. Friend will be supported in the Lobby by both sides of the House.

7.57 p.m.

I am pleased to have the opportunity to support the case made by the hon. Member for Bristol, West (Mr. Robert Cooke), but I confess that it is with some regret that I have to challenge the Minister's decision. I have a certain amount of sympathy with my right hon. Friend, because he has been in the Ministry for only three months, or slightly less—

It seems longer.

—and there have been two previous Ministers of Transport while the Labour Government have been in power.

I am, therefore, sorry for my right hon. Friend, because he has been saddled with the responsibility of advising my city authority that he cannot agree to the scheme for the West Dock. In other words, he is the chap with the ring in his nose, and there is someone at the end of the pole about whom we should like to know.

I think that all the facts bear that out. All the evidence that we have suggests that that must be the case, because the Bill has been brought in owing to the dilatoriness of the Ministry of Transport in dealing with a matter which has been before it for nearly five years. I agree with the Minister that one cannot always make judgments based on sentiment or emotion, but sentiment and emotion do play a part in the life of the people.

I am proud to be able to state a case for my city, which is acknowledged to be the most progressive city in the country in all aspects of civic administration. I am not exaggerating. If I had the time I could quote cases over and over again concerning our health services, our education services and, not least, our dock services. We have had a dock in Bristol since 1200.

The Minister may say, "Yes, but as time progresses the situation changes, and there may now be justification for not encouraging the further development of this port." If he says that he must reckon with the feelings of the people of the city, who have an enormous pride in this great dock undertaking. It is because Bristol is a progressive city that it had the foresight in 1958, to begin negotiations for the purchase of land, in respect of the proposal which then came forward for the Portbury Dock scheme. The land was purchased in 1960. That is why I am sorry that the Ministry has been so lax in making a decision on the matter. It should have done so long ago. In the meantime, the ports in South Wales—I do not complain about this—who were sleeping in their beds while we were talking about progress, have been stimulated to come to the House to state their case against Bristol.

Someone—we do not know whether he is a consultant or an accountant at the Ministry of Transport—has been creating a picture which the Ministry is prepared to accept in order to controvert the case which Bristol has submitted. I bow to the Minister; I acknowledge that his intellectual capacities are greater than mine. I have not had the same opportunities that he has had for making judgments on theoretical figures, but I can tell him that there are schools in which one may learn far more than one does from an academic education—the school of adversity and the school of experience.

I hasten to intervene to assure my hon. Friend that my grass roots are as clear as his are.

That does not alter my right hon. Friend's capacity for thinking along intellectual lines. My party now has too many intellectual Socialists and not enough grass roots. I was a member of the Bristol local authority for 10 years, from 1936. I was vice-chairman and then chairman of its electricity undertaking for a long time. It was second-to-none in the country. My experience of my colleagues on that local authority makes me far more prepared to accept their judgment of what is necessary for the development of the port in Bristol than the judgment of someone who has made an academic assessment of the present situation.

The Minister must not be surprised if hon. Members representing this great city feel hot and bothered about this, because in 1965 it was all but agreed that Bristol should have Portbury. Then the Minister disappeared. Then, I suppose, the scheme was put into a pigeon-hole, and opposition was stimulated. Allegations are freely made—I do not know on what grounds—that it has now become a political decision. It is strongly felt in Bristol that there have been certain interferences—whether from the South Wales ports or some other agency we do not know.

I am sorry that the Minister issued his statement only last Friday. It is significant that it was issued three days before the House was to have an opportunity to debate the merits of the Bill and decide whether it should go on to Committee. It is strange that the document should have been sent out on Friday to the Chairman of the Bristol Dock Authority, because the effect is bound to be to make this debate a little more than a charade.

I take full responsibility for this action. My reason for sending out this statement beforehand was that I thought it would be intolerable for hon. Members to come here to debate a Bill of this type without knowing the Government's attitude. What I did was done for the benefit of hon. Members, and most of them have taken advantage of it to criticise quite fairly parts of the scheme.

If that was my right hon. Friend's object he is more at fault than I thought. If he thinks that a statement that came into my hands today provides me with an adequate opportunity for coming to a decision on the proposals that he is putting forward against the West Dock extension, he is wrong. I have not been able to absorb the alleged arguments of the Ministry against the West Dock scheme. This makes the position worse. I should like to know whether he is suggesting that the statement was sent to Members of Parliament representing the city. I have not received a copy. I do not know whether other hon. Members have. I had to obtain my copy from another source. But that is beside the point. It was unfair not to have made the statement available until only three days before the matter was to be debated in the House.

I confess that I do not know much about the economics of the matter, but I gather that the Minister's case is that his figures are right and the figures provided by the consultant to the authority are wrong together with their assessments. I gather that the judgment of the Bristol Chamber of Commerce and Shipping is wrong, and also the judgment of the South West Regional Planning Council. I gather, in fact, that everybody but the Ministry of Transport is wrong.

Yet my hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) was quoting to us some observations made by Sir Arthur Kirby, who was at one time, I believe, Chairman of the South Wales Transport Docks Board. Now he is Chairman of the Ports Council. I ought also to point out that the Ports Council on two occasions agreed that Portbury was a viable proposition, as was the West Dock. I take it that the Ministry's case is that this proposal cannot be sustained because not sufficient exports will be going through the new dock to make it a viable proposition. The Minister must know that trade follows facilities.

I cannot grasp this at all. Two continental ports—Amsterdam and Antwerp—have more deep-water berths than we have in the whole of the British Isles. In that case, what are we thinking about in agreeing to a marina at Brighton, which will cost £13½ million and will merely be a sailing paradise, contributing nothing to our economy, and then saying that a great port like Bristol cannot, over five, six or seven years, spend a few million pounds a year?

The whole thinking on this matter is entirely illogical. It is utterly ridiculous to say that Bristol cannot develop a deep-water berth at its own expense, if necessary. Will the Minister tell me who it is advising him that these figures are not acceptable? This person is a phantom as far as I am concerned. He does not exist. I would be quite willing to sit down if anyone can tell me who he is.

I am quite certain that the judgment of my colleagues on the Bristol City Council, some of whom are listening to me now, and who have had 32 years' experience on this Docks Committee, and 40 years on the local authority, is more acceptable than anything else. I do not accept this alleged evidence as to why we should not have this scheme. I suppose that it is almost impossible to appeal to the Minister's sense of justice and ask him to withdraw his opposition and let this Bill go forward to a Committee for examination. I cannot understand why the Government will not let a Committee examine it. Let us have a good look at it and encourage the development of the Gateway to the West.

There is already a deep-water channel at this port. No dredging is necessary. Once the lock gate is built at a cost of £8 million—perhaps that is one of the reasons why the Government will not accept it—and when the country prospers, as all hope it will, the need to have more and more deep-water berths will grow and these can be installed here at an infinitesimal cost. All the necessary facilities for every aspect of dock development are there. There are 1,200 acres, bought with great foresight, in the belief that it would be in the national interest, awaiting development.

I ask the Minister not to be hidebound, to perhaps look at what a predecessor of his thought about this. I want him to have second thoughts. We do not need convincing on this, we are convinced that this is in the interests, not only of Bristol, but of the country. When shippers are offered the opportunity of turning their ships round in 48 hours less than can be done at any other port, they will use such facilities. I ask the Minister not to be too dogmatic, not to accept the advice of theoreticians in preference to practical people, who have been operating this port for up to 40 years.

8.14 p.m.

May I ask your indulgence before I begin my speech, Mr. Deputy Speaker. You will have noticed that I tabled an Amendment to the Motion, in the traditional form, to reject the Bill.

I have informed the hon. Member that his Amendment is not selected.

Yes, Mr. Deputy Speaker.

Like other hon. Members who have taken part in the debate, I am chiefly concerned with the main purpose of the Bill, put by my hon. Friend the Member for Bristol, West (Mr. Robert Cooke), namely, to authorise the construction of this new dock, the West Dock, at a cost of approximately £14,750 million. Hon. Members will have seen the letter from the Minister to the Chairman of the Port of Bristol Authority. In it the Minister pays tribute to the Port of Bristol. We all recognise the excellent quality and the great service the port has rendered. Nothing we say is designed to deprecate that service.

My hon. Friend is right in saying that we are all very proud of the past. But what of the future? Does he not realise that the Minister is frustrating the future of the Port of Bristol?

In spite of this tribute, which we all willingly pay, I, like the hon. Member for Cardiff, North (Mr. E. Rowlands), feel compelled to oppose the Bill for a number of reasons. During the proceedings in another place it was emphasised that Bristol was the largest municipal docks in the country, with a distinguished commercial history. The promoters tell us that the steady increase in trade since the war has caused pressure on accommodation to increase.

I notice that the hon. Members representing Bristol have not adduced the slightest evidence to this effect.

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I appreciate that this is not a Committee stage. But they have not given any kind of guidance about this pressure on accommodation. It is said that existing facilities are insufficient to handle the increased traffic and deal with congestion and delays.

My hon. Friend is making quite outrageous statements. Those of us in favour of the Bill have not wanted to produce this argument, but if he wants to take it chapter and verse it is in the Tress Report.

I will come to that later.

Another contemtion is that the increased size of modern ships, and the limitations imposed upon accommodation as a result of this, is causing serious concern. I can understand that. The House has to consider this serious problem and the expenditure, which involves a substantial investment of resources. I understand that the dock site would cover about 250 acres, with an additional area for the deposition of spoil. The scheme would take five years.

The House may get the impression from a scrutiny of these statements that the existing facilities of the Bristol Docks are being used to capacity. Yet I understand that at Bristol vessels are worked on a one-shift per day basis. That is in marked contrast to the South Wales ports where, subject to availability of labour, Barry and Swansea, for example, operate three shifts, and Cardiff and Newport operate two.

Is the hon. Gentleman aware that arrangements are being made to work a three-shift system in Newport?

That strengthens my remarks.

Despite the persuasive arguments advanced, the Bill should be rejected on a number of grounds. As the Minister pointed out in his letter to the promoters, the national need for this kind of additional port capacity has not been established.

Secondly, such a scale of investment might not be justifiable today, under present economic conditions. As the Minister said in his letter, there is a good deal of evidence to show that the project would not be likely to attract a satisfactory return. My hon. Friend the Member for Bristol, West suggested that the requirement of a return of 8 per cent. was unreasonable. However, the hon. Member for Cardiff, North pointed out that the manager of the Docks Board in South Wales was working on that basis, and even the higher one of 10 per cent. for new developments. This, too, is at variance with the case put forward by my hon. Friend the Member for Bristol, West.

Supporters of the project have emphasised that of the total cost of £14¾ million, about four-fifths would be provided by Bristol under the original proposition, so that only 20 per cent. by way of grant would be required from the Government. Today, my hon. Friend the Member for Bristol, West put forward another proposal and said that Bristol would find all the money.

Is the hon. Gentleman aware that this is not a new proposal, but has always been the basis of the Bristol application?

I will show why that intervention is irrelevant. It may sound attractive for the Minister to be told that the promoters of such a project will find all the money, but that is not the final argument. Money is important, but it is not all-important in this respect, because a project of this kind would mean the diversion of enormous resources of materials and manpower. In present economic conditions such a diversion should not be undertaken.

My third argument is somewhat parochial. Hon. Members will be aware that for many years we in the South Wales ports have been trying to build up general and alternative traffic to replace the declining coal shipments. These long and laudable efforts have met with considerable success. Most of the hinterland is in the Welsh development area, which is quite different from the hinterland to which supporters of the project have referred. It would be a much more serious blow to South Wales if we should lose some of the trade from our docks.

Why?

Such a closure in our case is more important in the setting of the area. My hon. Friend cannot conceive of the difference of impact caused by the closure of docks in South Wales compared merely with, for example, the failure of Bristol to obtain more facilities.

The owners of the docks in South Wales, together with other interests, have succeeded to a large degree in variegating the traffic and our industry in the hinterland is also now more variegated. The Docks Board has played a notable part in modernising the docks, in closing down some of the less suitable docks and in enabling the docks to serve our newer industries. The result is that today instead of merely having coal ports, South Wales has ports which cater for many commodities, many of them of a specialised nature.

In my constituency we have built up the banana industry to such a point that Barry is now the largest banana port in the United Kingdom, a position which, I believe, was held by Bristol some years ago. Many food imports come to Cardiff and Cardiff Docks now cater for a great deal of the steel coil trade. We in South Wales now deal with Irish meat, timber, motor cars, oils of different kinds and many other commodities. This new trade is being developed by much sweat, anxiety and hard work. In my respectful submission, Bristol may obtain such a degree of increased trade, which may only partially justify the sort of investment about which we are speaking, but only if some of that trade is attracted from the South Wales ports.

In recent years the ports of South Wales have become modestly profitable. For example, in 1967 Cardiff had a net surplus of £43,000—not a great deal of money, but something. Newport had a surplus of £237,000; Barry, £127,000; Port Talbot, £123,000; and Swansea, £35,000. I need only mention these figures to show how delicate a margin exists and how easy a surplus of, for example, £35,000 for Swansea could be turned into a loss.

It was pointed out in another place that despite the efforts of the South Wales docks, much of its trade is marginal and vulnerable to slight changes in circumstances. The British Transport Docks Board has said that the implementation of this Measure would seriousty threaten the South Wales docks. I should add that the Board is not a South Wales organisation. It owns docks throughout the United Kingdom. It has pointed that the implementation of the Bill would be a serious threat to the work which it has done to try to salvage our docks in South Wales.

Is that the phantom about which I was speaking?

I really cannot answer the hon. Gentleman's question.

I will give some concrete examples of what I mean. The loss of the present vehicle traffic to the South Wales ports would mean the loss of about £130,000 a year gross. The loss of the steel coil traffic to Newport would involve a gross loss of £600,000 a year. That sort of margin would probably remove the present small surplus and make these docks unprofitable again.

I have shown that we in the South Wales ports offer a wide range of facilities. These are by no means fully employed. On the other side of the picture, Bristol wants to design new docks for a very different sort of volume of traffic than Bristol has been employing in the past.

The hon. Gentleman will agree that South Wales could not accommodate this type of traffic because its docks do not have the deep water which is available in Bristol for huge modern ships.

Nor does Bristol have these facilities at present.

It will.

Only if this Measure goes through. The port facilities in South Wales could be designed to accommodate some of the larger ships more cheaply than the expense involved in this Bill. What we have, therefore, is a contrast: on the north side of the Bristol Channel—partly used, very useful and varied facilities; on the south side of the Bristol Channel—a port that is working at a certain level, but wants to increase that level irrespective of the consequences to other ports on the South Wales side.

As far as I can ascertain from the previous proceedings, the total of trade in Bristol in 1967 was 8·3 million tons, and I understand that it is hoped to increase that in due course by 2,300,000 tons. Even if the estimated displaced traffic of the old city dock is deducted, there will be a net increase of 2 million tons—a formidable proportional increase over the present 8 million tons. If this is not done, the figures on which the promoters have been working as to the project's viability fall to the ground. The promoters must get this sort of trade to make the thing viable even by their own estimates. This is a formidable increase, and it could only be obtained with some really serious consequences to the South Wales ports.

I therefore respectfully ask the House to reject the Bill for the several reasons I have given: the costing, the need, and the consequences to other ports that have unused capacity. I cannot accept the argument that without this extension Bristol would sink to the status of a backwater. It would still be a very flourishing city and port. Bristol is in the centre of what has been described as one of the fastest developing areas of its kind in the United Kingdom as regards both population and employment. It will, including Avonmouth, have very large and important docks even without this extension. Those docks are capable of considerable improvement and technical innovation.

My hon. Friend the Member for Bristol, West has said we must get the Bill on to the Statute Book. That, on the face of it, seems to be a very reasonable argument, but in the circumstances it would be improper to accept it. If this kind of proposal is brought forward, Parliament should have an opportunity to reconsider it at an appropriate date. The Bill should be considered one way or the other today, and, if it is rejected, the promoters should come forward again.

8.31 p.m.

As far as I can gather, this is an occasion when, whether or not the Government decide to support the West Dock scheme, they will offend a large number of hon. Members on both sides. This is probably a good thing in one way, because it is not a party political issue. There is no party line on whether one has a dock extension or not. It is an issue that the whole House is properly debating.

If I may say so, one of the reasons why I decided to issue a very full and long letter last weekend was that it seemed to make a mockery of our proceedings if the Government's arguments were to be given three-quarters of the way through a debate. If the issue of that long letter offended some hon. Members, I am sorry: the intention was to ensure that everyone was as fully aware of the facts as possible. There is no reason for the Government or any particular hon. Members to have a view which is against Bristol, nor, for that matter, is there any reason why the Government or any block of hon. Members should have a view which is against South Wales. What we as a House are considering is a major piece of national investment. That is why I think it right and proper to have this debate and for hon. Members to express their views. It is interesting to see how the divergence of views cuts across both parties.

One thing that I regret is that, so far, the debate has been very much an argument between South Wales and Bristol—

But is the Minister aware that there are a number of us not from Bristol or South Wales who are waiting to speak? It is he who has turned the debate into a South Wales and Bristol argument at this moment.

It seems that I cannot win. If I try to reply to some points raised, hon. Members are still critical. The discussion has centred very much between Bristol and the South Wales ports—

rose—

It would be helpful if I could complete a sentence of my speech.

I think my right hon. Friend has risen much too early. He has not heard many arguments yet to be put. It is most unfortunate that he should intervene so soon.

It is perfectly normal practice on a Private Bill for the Minister to express the Government's view—[Interruption.] My hon. Friend is entitled to his point of view, but from his long experience in this House he will be aware that it is normal for the Minister to intervene in the middle of a debate. If he allows me to make my remarks, the debate will continue after that.

This is not a debate on South Wales ports versus Bristol ports but one concerning a very small country with very limited resources about the way in which it uses those resources to the best advantage. This is something on which people can have many differing points of view.

The hon. Member for Bristol, West (Mr. Robert Cooke) raised a number of questions. The first specific question was: would I give an example of port investment which had reached 8 per cent. and above? The sorts of rates of return we are talking about are very limited; we have very limited resources available for public expenditure of any type and very limited resources for public expenditure on docks. On Tilbury stages 2 and 3, the return on gross cost is 10·5 per cent. to 13 per cent. On the Tilbury grain terminal, on the gross cost it is 10·3 per cent. and on the net cost 12·5 per cent. At Seaforth, on the gross cost it is 9·6 per cent. At Greenock, on the gross cost the return is 16 per cent. to 22 per cent.; at Newport timber and cargo terminal it is 11·8 per cent. to 12·4 per cent.; at the Swansea roll-on and roll-off berth, on the gross cost it is 11 per cent. and on Bristol ore berth port improvements the return on gross cost is 13 per cent.

Against that I have figures to deal with the investment in the West Dock, where the return on gross cost would be between 1 and 3 per cent. I am not making the point on questions of d.c.f. return, but this is one of the few measures we have of public expenditure. I am not saying that it is always right, but it is one of the few guidelines we have. On any basis of port investment the return on d.c.f. investment is very low indeed.

The hon. Member also asked, if the Government would agree that if the Bristol Port Authority decided to dispense with the 20 per cent. grant, would the Government then agree to the proposal? Much as I am sorry to have to say it, the Government would not, because the problem we face is: whether the money is raised by Bristol Corporation, using the rates as security, or direct out of Government funds, it is public expenditure. I cannot understand particularly hon. Members opposite, whose case so often is a complaint against existing levels of public expenditure, criticising the Government because they will not embark on major expenditure.

The whole point is that this is a valuable asset in the form of city docks which are obsolete. We cannot use the resources of those lands and docks to pay for future expansion because the right hon. Gentleman will not allow us to expand.

The hon. Member has missed the whole point. This is public expenditure however it is raised, and it counts against any other form of public expenditure. This is not confined to hon. Members opposite. Everyone is in favour of reducing public expenditure, yet immediately produces a long list of highly desirable objects which on their merits involve increased public expenditure.

The question of Brighton Marina has gained great prominence in this discussion. First, the Government have not approved the Brighton Marina project. Secondly, of the total cost of Brighton Marina, the harbour works and yacht basin are about £3½ million as opposed to the £15 million we are talking about. Thirdly, no public money is involved in the Brighton Marina project. This is private capital raised on the open market. The main point about this is that no decision has been taken about Brighton Marina by the Government and there is no public money involved.

As I said before, I do not want to take sides in this Wales/Bristol argument, because I do not think that this is the issue. I join my hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) in his complaint about the extent to which the effect of this decision on Bristol is being exaggerated. Over the past ten years the average rate of growth of traffic through the major United Kingdom ports has been nearly 3 per cent. per annum. The comparable figure for Bristol is less than 2 per cent. Yet, although the comparable trade for Bristol has been considerably less than that for the country as a whole, the northern sub-region of the south-western region has been developing at a faster rate than any other in the country.

Between 1961 and 1966, the total population of the sub-region rose by 6·7 per cent., whereas that for Great Britain as a whole rose only by 3·8 per cent. Even allowing for the additional number of people in the region, during the same period the number of jobs in the sub-region rose by 7·1 per cent., against a national average of only 4·1 per cent.

Therefore, in this area the amount of port traffic is considerably less than the average for the country as a whole. Despite that, the growth in the sub-region, in terms of population and of jobs, is higher than that in any other part of the country. In the light of that, how can it be argued that this is an area which is dependent upon the ports? If this were so, we would not expect the rate of jobs to be growing so much faster than the rest of the country when the rate of port activity is rising much more slowly than that of the rest of the country.

Surely the whole argument which we are making is that, because these new jobs have been created in comparatively recent times, it is essential that there should be port facilities available so that this new prosperity which will create new requirements for imports and exports can be properly dealt with.

The hon. Gentleman is confusing the country with some small island. The people who live in Bristol will be getting their imports and making their exports through all sorts of ports—Bristol and others. The argument can be made for Bristol West Dock, but the argument that a town which is expanding must have its own port to maintain its prosperity is a little thin.

The point which I was making, and which is an important one, is that it is argued that the port development is a crucial factor in the development of the area. The facts show that with a substantially lower rate of growth in port traffic there is a very much higher rate of growth in terms of employment.

This is a national problem of very real interest to the whole country, wherever one lives. There are two essential issues here. One is the control of public expenditure. The second is: given the need for considerable investment in the port system of the United Kingdom as a whole and very limited funds with which to do it, is it right for the Government to use the powers given to them by Parliament to ensure that that investment is placed in the areas where the maximum return lies?

It may well be asked: if Bristol, which has devoted much thought to this—I do not for one moment overlook the enormous civic pride which Bristol has—wants to have this port development, why should Parliament intervene? If Parliament does not want to control either public expenditure of this level or port investment of this level, it is taking a decision which will have very serious repercussions. No one is arguing, certainly not I, that the Bristol proposal is some sort of airy-fairy thing which does not hold water. It is a very substantial document and is very well worked through, if it is regarded as a Bristol proposition. No Minister of Transport can look at it in that way, either in terms of expenditure or in terms of the effects on the port.

Yet I must confess, if I were a Bristolian, I would have some doubt about a project which would be such a charge on public funds as this one. We have done calculations on the effect on Bristol, and it is a very complex issue. The direct impact on the rates would vary with the method of funding the debt and the ability of the rest of the port to make a profit to absorb the deficit. Taking Bristol's own lower traffic forecast, it works out in this way. In the second year there would be a deficit of £97,000 which would be just over 1d. on the rate. In the third year there would be a deficit of £258,000, equivalent to a 3d. rate. In the fourth year there would be a deficit of £507,000, equivalent to 5·7d. on the rate. In the fifth year there would be a net deficit of £748,000 with a rate equivalent of 8·4d.

Is the right hon. Gentleman giving figures for the highest estimate?

No, I made the point that I had taken Bristol's lower traffic forecast. Although the National Ports Council supports the scheme, it does not accept the Bristol calculations, not even these. The Bristol local authority calculation is very complicated and upon it depends the effect on the rates. Nobody is in any doubt that this is not expected to be a profitable investment for a very long time, if ever. That is not a matter for me; that is a matter for Bristolians. The burden of my case is that a major port investment must be viewed in a national context in terms of port policy and the call on national resources.

What then are the powers of the Minister? The Harbours Act, 1964, which was passed by hon. Gentlemen opposite gives us the powers that we are using on this. With a view to securing the proper control in the national interest of schemes of harbour development, the Minister was given power to authorise or refuse projects costing over £½ million. This provision enables the Minister to exercise a purely negative control over individual projects so as to prevent duplication and take into account regional planning.

There are two issues on the question of national port planning. On the one hand, in the general cargo trades the development of modern techniques has led and is leading to increasing concentration of traffic on the routes and services which can take full advantage of the economies that they make possible. Traffic to Europe is increasingly tending to concentrate on ports on the South and East coasts where the individual container services and vehicle ferry services provide rapid door-to-door transport.

On the deep sea routes the tendency is to concentrate the trade for each of the major overseas trading areas on a limited number of services and ports, so that there is sufficient cargo to maintain reasonable frequency of high volume services. Except possibly for one North Atlantic service, it does not seem in the least likely that Bristol will be selected as the terminal for deep sea container services.

My predecessor and I have had the advantage on this point of the views of the Chamber of Shipping and the major container consortia. On some routes it is possible that both the United Kingdom and the Continent may come to be served by vessels calling at one of our ports en route to, for instance, Rotterdam. Again, Bristol does not seem to be well placed even for such calling services. Moreover—and this is the important point—there is a surplus of capacity for general cargo traffic in the Severn Estuary as a whole. Several hon. Members have made this point. It is not a question of it being of interest to South Wales, though it clearly is; it must be of interest to the nation. Moreover, additional provision can be made elsewhere more cheaply than at Bristol.

In the second place, we are concerned with the development of bulk imports. The size of vessels used has been increasing and is likely to continue to increase. Coupled with that is the growing and desirable tendency to locate bulk processing industries adjacent to the deep water berths handling their raw materials. The West Dock would not have been able to handle modern crude oil tankers or the iron ore ships of the future. These are or will be catered for at Milford Haven and in the new Port Talbot harbour.

But the real question is whether there is any prospect of investment in the dock paying off either in real return on the investment or in terms of its desirable contribution to general regional development, and doing so at least on the same scale as possible alternative investments. I do not want to go into all the detailed argument about the precise financial return likely to be obtained from the investment in the new dock. These calculations can be no more than a rough guide to a decision. The calculations depend on traffic forecasts which in turn must involve a large element of judgment.

On some aspects, we, the Port of Bristol Authority and the National Ports Council, all agree. On others we disagree. But the returns estimated range from 1 per cent. to 9½ per cent. on a d.c.f. basis. Bristol's own calculations show a range from 6 to 9½ per cent., as against the Government's normal minimum standard which, as I said, is applied to all other major port investment projects, of 8 per cent. on low risk.

Comment was made about advice I received from the National Ports Council. It recognised how difficult the question was, and paragraph 4 of the annexure to the letter from the National Ports Council, this independent body, shows d.c.f. returns varying from 2¾ per cent to 4½ per cent. But one must look further into it. I recognise the difficulty facing the National Ports Council.

Sir Arthur Kirby, who has given a great deal of attention to this matter, says at the end of his letter:

"I am aware that in passing this recommendation to you I am advocating a project on the speculative basis of, so far as we are able to show, little more than long-term prospects."

He goes on:

"Though giving full weight to the possibility of over provision of capacity in national terms, with consequent financial problems, I think that this state of affairs would not persist for a prolonged period."

Finally, he says:

"It is not to my liking to have to recommend a project on this negative line of reasoning. Nevertheless, it is this, coupled with a belief that we cannot eliminate Bristol from the national ports pattern, that weighed decisively"—

and so on.

The National Ports Council came down solidly in favour of the Bristol scheme, as did Bristol itself. If things were different and we could have a speculative investment yielding a very low return, there would be a case for it. But in present circumstances no Government, of any party, would be able to accept an investment on this level, of this speculative nature and with this level of return.

The d.c.f. return is not the overriding criterion. The simple point is that, if we are to prevent misuse of the limited resources which we have for public investment, we have to ensure that projects which will give a return below that obtainable elsewhere are undertaken only if there are substantial additional arguments for them. For unavoidable geographical reasons, construction of the West Dock will involve heavy costs—£3 million per berth simply for the enclosed dock—before any actual berth structures or equipment are provided. That is to be set against costs ranging from £1·2 million to £3 million for fully equipped deep water berths in other ports. These costs would have to be met by the users, the ratepayers or some other sector of public funds. As I have said, it is no argument to say that the problem is solved if Bristol itself raises the money. The effect on local expenditure could be very heavy over a long period.

The Government have considered whether, in spite of the high costs, the project might be so important to the development of the Bristol area and the region as a whole to justify them in letting it go ahead. Obviously, one had to give serious thought to the powerful arguments and the case made by the South West Economic Planning Council. We have given the matter the fullest examination. Ministers have to take decisions at some stage, and they are never happy about it. I have never yet taken a decision which pleased anybody. I have tried four Ministries now, and it has been the same in them all. However, after the fullest examination, the Government have come to the conclusion that they could not justify this unremunerative project as a promotional investment.

The development of the South-West as a whole is very little dependent on the Port of Bristol. As I said earlier, the Bristol sub-region has been growing faster than any other in the country. The hon. Member for Bristol, West raised the question of jobs. This decision will not involve the sacking of anybody as a result. There has been a great deal of misunderstanding about it. What we say is that, if one takes all the existing industries which might conceivably be affected in the very long term, a period of 15 to 20 years, the effect in reduction of job opportunities would be equal to about one-quarter of the average annual increase in the number of jobs in the Bristol area over recent years. This decision has no employment connotation about it at all.

It is a prosperous area, an area which will go on being prosperous and expanding in both jobs and population. In view of the high rate of development in the sub-region and the urgent need to attract new projects to development areas, there seems to be no strong case for providing additional incentives to basic industries to establish themselves in the area by providing bulk import facilities for which the users would not be paying the full economic price.

That is the only way in which traffic on the scale envisaged could be attracted to the dock. But not building the West Dock does not mean the end of Bristol as a port. It does not mean the end of Bristol as a major port. As frequently happens in these disputes, some of the statements become more and more exaggerated as time goes on. This is understandable, because people are worried and nervous. There has been a great deal of exaggeration.

Avonmouth can be expected to handle for the foreseeable future substantial quantities of general cargoes of types or for destinations not covered by specialist container services, of foodstuffs, of raw materials for the paper and tobacco industries, of ores for the local works, including the new smelter which Rio Tinto Zinc decided to build there without waiting for the decision on the West Dock, of petroleum products for distribution, or as feedstocks for gas and chemical works and so on. Certainly the space available in the Avonmouth Docks is limited, but the sort of modernisation works which the port authority has already undertaken or has in mind will provide high throughput facilities enabling the docks to handle large volumes of traffic efficiently.

We do not have any sort of mysterious phantom at the Ministry of Transport which has a grudge against Bristol.

There is pressure somewhere.

I hope that my hon. Friend will let me finish my sentence. I do not think that any Minister, whatever his political complexion, would take a decision on this basis. I am in no doubt about the political popularity of the decision, but the decision is taken on the basis of the investment and use of limited public funds. I am very well aware of the controversial nature of the decision and I am not unaware of the genuine pride of the people of Bristol. But a Minister must take a national view of its expenditure on this scale. Whatever phantoms we may have in the Ministry, I have seldom been more sure—I may be wrong—about a decision than about this.

I do not think that a case can be made out or supported. I hope that the Bill will be withdrawn. It would clearly be foolish in the light of the decision to go on ploughing the Bill through in the knowledge that the exercise would prove abortive in the end. But if the Bill is not withdrawn, with great regret I shall have to ask hon. Members on both sides of the House to reject the Second Reading in the knowledge that the limited resources which we have avaliable have to be planned, and nowhere more importantly than in the dock industry, and that this plan cannot be justified on that basis.

9.1 p.m.

When the Minister intervened, I hoped that we were to hear some positive proposals for the development of the Severn Estuary as a whole. I hope that all those who have spoken in the interests of South Wales will note that there is not one crumb of positive comfort to them in the Minister's remarks. Those in South Wales who object to the development of the Port of Bristol in this way are making a fundamental mistake in their own interests, irrespective of the interests of Bristol. If the alternatives were major development of the South Wales ports and development of Bristol, it would be natural for them to represent their own interests. Once or twice in the debate I recalled the occasion when the Prime Minister spoke at Chatham in 1964 saying, "Why do I say that we should have a bigger Navy?" and a heckler cried, "Because you are speaking in Chatham." There was a ring of that from South Wales tonight.

The danger to the ports of South Wales is not the development of the port of Bristol. It is the development of London and Liverpool at the expense of other ports throughout the country. I believe that a cardinal error of investment judgment is being made by the Government in that they are to concentrate everything on two major ports which happen to be the two major ports which suffer more than any other two ports in the country from congestion. South Wales is making a great mistake in not suggesting that there should be greater concentration, spreading the investment to the north-east and the south-west, as opposed to concentrating it in the south-east and northwest. It is a tragedy for the whole development of the area.

I was very surprised when the Minister concluded by saying that he could not imagine any Minister giving the go-ahead to this project. What he was saying was that he could not imagine any Minister agreeing with a recommendation of the National Ports Council and a recommendation of the Economic Development Council for the South-West. When he said that seldom had he been more sure of a decision than the decision to stop the development of this port, he was going against the views of the National Ports Council and against the advice of the Economic Development Council for the South-West and saying that never had he been more sure of the correctness of a decision which went completely against the recommendation of the two Government-appointed bodies primarily concerned with the project.

I must confess my own considerable disappointment at the manner in which the project has been dealt with. First, there has been this constant delay. There was a recommendation of the National Ports Council which was turned down. Then there came the publication of the White Paper which contained many questionable assertions and arguments. Following that, it was decided to institute a new scheme. That was operated and worked upon.

The Minister tried to defend himself by giving his detailed reply only three days before the debate, but it was the Prime Minister who said eight weeks ago that the decision would be known in three weeks. There was, therefore, a further five weeks' delay with publication of the Minister's reply only a few days before the debate.

I would like to examine some of the Minister's main arguments against the scheme. The first is the rate of return. A rate of return on the investment is only one factor when considering the rate of economic return in terms of Government expenditure. One of the important rates of return would be if the development of the Bristol port resulted in a diminution of congestion in other very congested areas. I am confident that this would happen, because a great deal of Midlands traffic goes either to Liverpool or to London and causes a great deal of congestion as a result.

Secondly, when considering a rate of return from the Government's viewpoint one must consider the reduction in costs of certain forms of motor transport delivering the goods to the docks. This would be an important factor with a port linked to motorways in the way that this one will be linked. Therefore, the rate of return is only part of the argument.

When the rate of return is suggested as being a positive return by everybody who has examined the proposal, and the people of Bristol are confident that it will be a good return, I must confess to having a great deal of sympathy with the sentiment expressed by the hon. Member for Bristol, South (Mr. Wilkins). The hon. Member said that in this sort of exercise one can look at figures and statistics, but the figures and statistics that are available are all historic figures. What is not available is always a commercial judgment: that is, the likely effect of a new port with new facilities on a new, previously green-field site linked with two major motorways.

For example, when the White Paper was published giving the reasons why the Government refused Portbury, the facts given for the motor transport costs and the volume of traffic likely to be attracted from the Midlands were all based on the existing road system and existing transport costs, whereas with the completion of the motorway very different transport costs would be involved.

What the Minister or, at least, his advisers have failed to recognise in all their calculations on Bristol is that it is not purely the distance factor which attracts goods. The time factor in delivering them is much more important than the distance. If a lorry has to go 20 miles through congested traffic and takes three hours to reach its destination, people prefer to send their goods on an 80 mile journey which takes only two hours. This calculation has been omitted.

I would much prefer to accept the judgment of the people of Bristol, who are willing to take this risk. The Minister was, I think, endeavouring to panic them to put them against the project by his remarks about the rates. It is the first time that the Government have used that argument. Never before have they tried to illustrate it.

There are several reasons why the rate argument is a particularly bad one. First, the Minister quoted figures based on the lowest estimate, which, therefore, gives the worst possible interpretation of what might take place. Secondly, he failed to take into consideration an increase in the rateable value for Bristol which may well result due to the development of these ports and docks by attracting other industries and economic expansion to the area.

Thirdly, although he must have been aware of this, the Minister failed to tell the House that the Port of Bristol had £2 million worth of reserves and that it was out of these reserves that Bristol would meet the initial deficit.

I think that I made it clear when using that as an analogy that it was a complex matter and it depended entirely on the way that the debt was funded.

I am grateful for that half apology, but the only object of quoting the figure of 5d. in the £ on the rates was to frighten the people of Bristol into thinking that they were on to a bad bet, whereas the Port of Bristol and all the political parties in the council, who are united on this matter, know the figures, know that they have the reserves and know that it will be in the interests of the ratepayers and the people of Bristol to go ahead with this project. That is their calculation knowing all the figures and statistics that the Minister knows.

The scheme would have the further advantage of a release of land within the middle of the city.

Yes. The hon. Member has made that further point. Therefore, on the grounds of the interests of the ratepayers, I do not accept the Minister's argument.

The right hon. Gentleman went on to industrial development, again saying that no case had been made because the rate of industrial development had been faster than that of the rate of traffic into the port and, therefore, there was no argument on this basis. We know, however, that the development of the port will affect the whole of the South-West. This is one of the main proposals of the Economic Development Council for the South-West.

If the Government are going to set up these Councils in these regions, appoint people to them to give them their advice, and they say that there are three major things which can be done for the economic development of a region—in this case, the South-West—at least the Government might heed their advice. If they do not, what is the point of having an Economic Development Council for the South-West at all?

The hon. Member asks why we should bother to appoint these good people if we are not going to accept their recommendations, but surely even he would not expect the Government to accept every recommendation made? Secondly, does he not think it unfortunate that, within its remit, the South-West Economic Planning Council was not able to look also at the effect of these proposals on the region and on the South Wales ports as well, and not simply at Bristol?

As to the second point, the Minister has not given any positive hope to the region at all, either South Wales or the South-West. Unlike some hon. Members, I have visited the South Wales ports and I know exactly what is going on there. As to the first point, of course I do not expect the Government to accept every proposal, but when the Planning Council comes out with its report on economic development for the South-West and makes three major proposals, and many minor ones, it ill becomes the Minister to say that he does not think this is of any importance in the economic development of the South-West, and to say that without giving any detailed argument.

I believe it is absolutely right to go ahead with this project, and certainly if I were in the Minister's position I would give the go ahead to this project.

First, I think the Minister's answer is based on an outdated concept of looking at the previous pattern of development of ports. I cannot do better than quote the right hon. Gentleman's predecessor when she turned down Portbury. She said:

"Recently completed analyses of port traffic flows and their relationship to port hinterlands show that the great majority of our imports and exports are generated close to the ports through which the traffics flow."

I believe that concept has dogged the Ministry of Transport ever since. The Ministry has failed to realise that the motorways, and possibly the freightliner trains, will transform the pattern of ports.

Secondly, Bristol is prepared and ready with its plans. It has an ideal site and a port well managed by a port authority which can boast of a really remarkable record of achievement over the years, an authority of no political complexion. I have visited the port authority a number of times, and the thing which has impressed me is that the port authority is not party political, but that everybody in Bristol is rightly proud of it and its achievements. In those circumstances, I believe Bristol should be given the go ahead.

If the go ahead had been given originally, to the first project, that scheme would be well on its way by now, well under construction, and ready for the completion of the motorways. On the argument of the hinterland, the Government have failed to recognise the importance of the M5 and the M4, one motorway bringing from the Midlands a great deal of traffic which would otherwise congest other parts of the country, and the other, the M4, bringing traffic from the industrial areas west of London. Thirdly, the Government have failed to recognise the importance of time, not distance, in travel to ports. Fourthly, they have failed to recognise the importance of such a port in the development of the South-West.

They have failed, too, to recognise the potential of such a port on the main, long sea routes. Let it be remembered that this port is 250 miles nearer to the United States than is the Port of London, and 232 miles nearer South America. On these factors alone there would be an advantage in using the Port of Bristol.

I believe the Government are wrong, and I certainly hope that the next Government will take the opportunity of going ahead with such a project to enable this port to expand, on no other grounds than that Bristol is a city of people who are determined that their historic port shall be modernised so that they may show that spirit of merchant venturing for which they and their city are renowned. I think it is right for the Government to turn down such a proposal if, quite clearly, it is an absurd, ridiculous project.

If Bristol had come forward with a scheme which sounded splendid for the City of Bristol, but all the figures showed that it was an absurd and ridiculous scheme, I would have opposed it. Indeed, when I first went to look into the Portbury Scheme, when I was appointed "shadow Minister of Transport", I must confess that I went there with some scepticism that that was a place which was clinging to an idea which was not warranted. Having examined the facts and details of the reports since then, I think investment on the historical figures is marginal. But with the spirit of Bristol and the various developments which are taking place, I believe it has every likelihood of being a successful investment. I hope that at the earliest opportunity it will be given the chance of proving that the City's confidence is fully justified.

9.16 p.m.

I intervened when my right hon. Friend the Minister of Transport was speaking to protest against what I thought was his too early intervention. My right hon. Friend reminded me that I should know the practice of the House. I do know the practice of the House. However, I thought that my right hon. Friend should have waited because I hoped that he would listen to further arguments. However, he has obviously made up his mind in advance of the debate and nothing for the moment will change it. Therefore, as a Bristol Member representing that historic part of the city in which is situated the old docks, as distinct from the new docks we are discussing tonight, I propose to answer some of the points which have been raised.

I want to assure my right hon. Friend that this is a continuing fight; it is not one which Bristol will give up lightly even if we lose the vote tonight, which I still hope we will not.

My right hon. Friend has made his decision. I will say a few words about the timing of it in a moment. I think that it is most unfortunate that my right hon. Friend has not, as yet, been to Bristol to see the Avonmouth site for himself. At least his predecessors went to Bristol. My right hon. Friend has made this decision, which is of great consequence to the city, without seeing the issue, if you like, on the ground. At least, that should have been done in fairness to Bristol and its work.

My right hon. Friend says that the country cannot afford the West Dock; that in different circumstances it would be a different matter. If that is the case, why could not Bristol have been told this by the Ministry a long time ago? Surely, in these circumstances the protracted delay is indefensible—1964 to 1968. The first Bristol scheme came forward in 1964 and since then we have had four years of delay. This has not been for lack of activity on the part of Bristol Members on both sides. We have pressed the present Minister, as we did his predecessors, for a decision but no decision was given until now.

I helped my right hon. Friend by putting down a Question, because he said that he would make a decision on Friday last. But it was only at the last minute of the 11th hour that the decision was made. My right hon. Friend says that it was to help the debate; that it would have been unfortunate if there had been no statement before the debate. The fact is this debate on the Bill has precipitated my right hon. Friend into making the decision.

Great bitterness is felt about the decision in Bristol, on both sides of the political fence. This was a scheme which was put forward by the Port of Bristol Authority, unanimously backed by the city council when the Labour Party was in the majority, and it has been supported since the Conservatives, or Citizens, as they call themselves in our city, have taken over—I hope temporarily. I assure my right hon. Friend that there will be great bitterness about the way in which the city has been treated.

The leader of the opposition Labour Party on the city council has given me the text of a motion which is to be put down for a meeting of the council tomorrow. I am sure that the motion will receive unanimous support. It protests against the way in which Bristol has been treated, and assures the people of Bristol that the council will continue its fight, as I said earlier.

I think that the hon. Member for Worcester (Mr. Peter Walker) was right when he said it was rather sad that at this stage the Minister should try to scare Bristol ratepayers by talking about the effect of this scheme on the rates. This is a flourishing enterprise. It happens to be the largest remaining single municipal trading undertaking in the country. In an earlier age it would have been a source of Socialist delight. Here we have a public undertaking directly responsible to the people of the city, and controlled by them through their votes.

I did not intend to scare the people of Bristol. I used that as an argument to demonstrate that on the calculations which had been made this dock would lose vast sums of money for at least the first nine years.

I have heard many arguments against Bristol, but that is the most novel. It must have been necessary to dip to the bottom of the rag bag of arguments to bring that one up. I am sorry if I offend my right hon. Friend, but we must speak plainly on this matter, because we feel strongly about it. My right hon. Friend told us, and it is no novel economic discovery, that it is not just a matter of cash, but of economic resources.

No.

Then what did my right hon. Friend say?

I am sorry if my hon. Friend wants me to keep intervening. I was talking about the fact that public expenditure amounted to so much. I did not make the point about economic resources.

I thought that my hon. Friend was saying that one could not argue that because Bristol had money the city ought to be allowed to go ahead, or because it could raise the money it should be allowed to proceed. I thought that he was saying that it was a matter of the proper disposal of national economic resources. That is my recollection of my right hon. Friend's argument, and it sounds a good one, but there is public expenditure and public expenditure. The case for Bristol is that this is not merely in the interests of Bristol, but in the interests of the general prosperity of the country. In short, it is a fit and proper use of economic resources, scarce as they may be.

It seems curious for my right hon. Friend to argue that all docks development must be co-ordinated in a national plan. He was previously the Minister of Power, and as such sanctioned the expenditure of public money on the electricity, gas, and coal industries, which compete with each other. Some of my hon. Friends do not particularly like that system, but it is one which my right hon. Friend supported, and which, incidentally, I support.

It is compatible with the planning of national resources to have reasonable competition between ports. Socialists differ always on what is a Socialist argument. I am simply pointing out that if we invest in electricity it does not mean that we must not therefore invest in gas, because they are both sources of energy. In fact, there is now reasonable competition, and that is very much in the interests of national efficiency.

I was glad that my right hon. Friend did not this time overstress the question of discounted cash flow. In fact, he seemed almost as doubtful about its value as was Professor Tress, in the South-West Survey. As an engineer I am, by nature, always suspicious of accountants. They generally stand in the way of getting things done. The first thing about discounted cash flow is that it is possible to make the figure almost anything. It depends on the assumptions that are made. It is possible to conjure with the figures and throw anything into the equation.

In my view, that is what the Ministry has been attempting to do. The Ministry says that it is 6 per cent., and that if it is 6 per cent. we cannot have it. The Authority has argued that it is 9½ per cent. at the maximum. The question is not objective; it is subjective. Almost everything has been dragged in to produce figures which blacken the Bristol case.

I should have thought that the proper view to take was that Bristol has given great thought and a vast amount of time to working out this scheme; that it is already a prosperous port; that its judgment has proved sound in the light of past experience; that it has excellent management and good local judgment by the man on the spot; and that in all the circumstances the Government were not taking a great risk in allowing Bristol to trust its own judgment and go ahead. I was delighted that my right hon. Friend did not seem to think very much of discounted cash flow, because I do not think much of it myself. It is, therefore, largely a question of personal judgment and local initiative.

The real reason why this scheme has been turned down has not been frankly stated. The reason is political. The scheme has been turned down because of pressure from South Wales—and especially from the Transport Docks Board, which hopes to be the germ of the new nationalised organisation. I am not against such nationalisation, but I hope that there will still be a considerable measure of local control. The view has also been put forward—and it is perhaps even more dangerous—that since Bristol is already prosperous its further development can easily be sacrificed. I must point out that the prosperity of Bristol is the prosperity of Severnside and that the prosperity of South Wales is equally the prosperity of Severnside.

As to the idea that Bristol can be run down so that other areas can be lifted up, I would have thought that a sound judgment would be that the future should be built on the best and not on the average.

Much was said, in great detail, in the other place. My hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) quoted extensively from the report of the hearings before the Select Committee in the other place. It is a weighty document, which I have here. My hon. Friend did not say that the Select Committee reported to the other place that the Bill should proceed. I hope that the excellent example set there will be followed here tonight.

My right hon. Friend said that this was not a party question. If it is not a party question I hope that it will not be decided by a party vote, and that the Whips will not use their influence at the doors of the Lobbies. We shall see.

The Bill should go into Committee. The Government have nothing to fear from that. Let the case of the Bristol and the South-West objectors be heard. I do not think that there is any procedural difficulty in having the Minister before the Committee. If, on Friday, we had received the answer "Yes" for Bristol, the Bill would still have been needed to implement the decision. There must be a Private Bill. If it is referred to a Committee the Minister's position is fully safeguarded, because if it became an Act, it could not be activated unless his powers were invoked. This has been agreed to by the sponsors already.

Whatever influence may be exerted by the Whips in this matter, I am sure that the Bristol Members present will vote for the Bill. I certainly shall. It would be a bad day in parliamentary representa- tion if Members who had the privilege of speaking in this place for a great and ancient city did not go into the Lobby on behalf of that city. I hope also that the majority of hon. Members on both sides will follow the example which will be set by Bristol Members.

Order. I would remind the House that there are 28 minutes left and quite a number of Bristolians and anti-Bristolians want to speak.

9.32 p.m.

Anyone who has listened to the debate so far, with the exception of the speeches by the two Front Bench spokesmen, might have concluded that this was purely a battle between Bristol and South Wales. This is not the case, and it was for that reason that I so quickly interrupted the Minister. I use as the basis of my case the first of the recommendations on investment requirements for a strategy for the South-West, in the Tress Report. This is Recommendation 561, on page 123. It says:

"The Council"—

that is, the Economic Council—

"will continue to urge on the Government the importance of port investment in the upper Bristol Channel, particularly at the Port of Bristol."

There were also other significant paragraphs in the Report, particularly paragraphs 234 and 236. Throughout, one sees the South-West Regional Economic Planning Council urging the Government to accept the recommendation of approval of the Bill. The real tragedy of the Minister's statement is that this is the first of the three major recommendations made in the Tress Report. The Minister said that the Council has

"… made it clear that they regard the proposed West Dock as one of the three principal planks in their regional strategy."

The right hon. Gentleman goes on:

"After very careful consideration, therefore, the Government have concluded that the refusal of my authorisation to build the West Dock will not affect the overall growth prospects of the Region."

What we have here is the Minister, quite openly and frankly, saying, "I know better than the Regional Council."

Why should he not?

If the hon. Gentleman takes that view, perhaps he believes that the Minister should say, "To hell with the Economic Planning Council. Let its recommendations go to blazes and its 30 members go home."

I have initiated debates in the House on the Tress Report, when the Government have said that they were considering its recommendations. At no time have they said that they had no intention of accepting them. This is why I condemn the Government. I admit that it was a different Ministry answering at that time, but it was the same Minister and I give him credit for being frank and honest, which is more than we have had from other Ministers. At least he said, "No. We in Whitehall know better than the people on the spot who have made these recommendations after studying the matter for 2½ years."

It should be made clear that this matter does not affect only Bristol. It concerns the other conurbations throughout the link to North Devon into Exeter. Certain industrialists have been considering the provision of employment in this part of Devon in the belief that this scheme would go forward.

I find the Minister's argument for using the discount cash flow technique rather strange. One must consider not only the rate of return which would benefit Bristol, but the return for the south-west region as a whole. I find it strange to learn from hon. Members who represent Bristol that they are willing to go forward with this £15 million project on an entire private stock issue, so that the money will be provided by industry. We should remember, therefore, that industry which wants this stock can come forward with the money. That being so, this does not fall into the normal category of public expenditure with which, in any event, the Government has been too generous. In this case a local authority is asking the Minister to allow industry to find the money to finance a project that industry wants. For this reason the Minister should not be allowed to reject the proposal.

I am perturbed at the squabbling with Wales that has gone on. It seems a non sequitur. If the trade at Bristol docks increased by 8 million to 12 million tons in the next three or four years, that would represent an increase of l½ per cent. in the total volume of traffic throughout the country. Thus, this is not of such major importance merely to Wales. It affects the south-west region as a whole.

People want to use the smaller ports away from London and Liverpool. I speak from experience because in one of my businesses I use Felixstowe, a port of which many people have not even heard. It has easy access and the good labour relations that exist there enable one to operate more quickly and easily than is normally the case in London or Liverpool. For this reason Bristol has much to recommend it.

I do not want the Bill merely to be sent into Committee. It should be placed on the Statute Book immediately. There has already been too much delay and the South-West condemns the Government for constantly fobbing off and postponing good proposals of this type. Let us have an affirmative decision tonight and pass the Bill, rather than merely send it into Committee.

rose—

Order. Before I call the next speaker, I remind the House that only 20 minutes remain for the debate. If hon. Members would be brief, both they and the Chair would be grateful.

9.40 p.m.

I am pleased to follow the hon. Member for Honiton (Mr. Emery), who has reiterated the case for the South-West. I am sure that he will not mind if I am as adamant in putting the argument in favour of South Wales.

This is an issue over which much heat has been generated, and Bristol has certainly put up a tremendous fight. Let us be quite clear that it has been completely ruthless in the promotion of its schemes. I compliment my hon. Friends on their efforts to bring the Bristol schemes to fruition—in these arguments no holds have been barred—but they may possibly have tended to underestimate the opposition. After all, Welshmen love a fight. I think that I have played some modest part in harnessing the opposition to this scheme.

In the event, the Government have made a sober decision based on economic facts and financial accountability. That is how any fair-minded person would judge an issue like this. I believe the Government's decision to be in line with their declared policy of creating an integrated transport system with the ports organised on the basis of public ownership. Unified control of policy is essential to prevent the continuation of haphazard development, and decisions relating to the ports will affect the wellbeing of the whole colony and can be taken only on the basis of positive central planning.

This manner of thinking is also in line with the whole Severnside project and, as the Minister pointed out in his letter of 5th July to Sir Kenneth Brown, Chairman of the Port of Bristol Authority, the report on that project may not be available before the end of 1969. I feel sure that the Minister will also take into consideration the fact that the coastal strip known as the Wentlooge and Llanwern Flats, east and west of Newport, is one of the three sites in the country at present being considered for major maritime industrial development.

We in Wales have opposed this West Dock scheme as, earlier, we opposed the Portbury scheme. We have throughout maintained that similar facilities could be provided in South Wales more quickly and more efficiently, and at a fraction of the cost. Our opposition goes even beyond that. Our ports suffered with the decline of the coal industry in South Wales, and it is fair to say that we have picked ourselves up by our bootlaces as it were. Great things are at present under way in the South Wales ports. Much credit is due to the British Transport Docks Board for its enterprise and its success in introducing new traffic. New equipment has been introduced to cater for modern needs and requirements.

The Bristol scheme, if it were allowed to proceed, could upset all our efforts. In South Wales we are proud of our ports for they are the arteries of our nation. There are five ports which come under the British Transport Docks Board. Mil-ford Haven is excluded. Those five ports tend to be complementary to each other. In South Wales we have a sort of ports complex on similar lines to London and Merseyside. I am privileged to represent the Port of Newport, a very prosperous and go-ahead town. Its enterprise is shown to no better advantage than in the present development of its docks. A few years ago there was the removal of the coal hoists in Newport. This was symbolic of change and the effort to look to the future which is taking place in Newport.

A few months ago I was privileged to be at our docks in Newport when the Prime Minister came to open our new timber terminal. That terminal is the most modern in the United Kingdom, and possibly in Europe. A container terminal is being developed in Newport. I wish many more West Country hon. Members were present to hear this. Both these major schemes in Newport are sound financial propositions. In Port Talbot we have a new terminal going ahead at a cost of £17 million capable of taking vessels of 100,000 tons.

Order. We are discussing the Bristol Bill. The hon. Member must come to it.

I was trying to develop the alternative facilities and better facilities that exist in South Wales. An hon. Member opposite spoke of motorways which link with the Port of Bristol. In South Wales we have not been lagging behind in this matter. Newport is in closer reach of Britain's major centres of population, industry and commerce. For example, nearing completion is the Ross Spur, which will give direct access to the M5 and Birmingham. The M4—

Order. The hon. Member must take note of what I said. This is not the Newport Corporation Bill; it is the Bristol Corporation Bill. He must link his remarks to the Bill.

I am sorry, Mr. Speaker, but I felt that we have to put the counter-arguments to the Bristol scheme. It is worth pointing out that Bristol already has a lower percentage of unemployment than the South Wales ports. If this West Dock scheme were to go ahead it could have the effect of intensifying unemployment in South Wales.

The fact has to be faced that this additional traffic is required if Bristol is to make a viable proposition of the new West Dock scheme. This traffic would be obtained at the expense of the South Wales ports. It would create a difficult situation for the British Transport Docks Board for the under-utilisation already of the South Wales ports cannot be too greatly exaggerated. Cardiff's timber trade might well be diverted to Bristol. South Wales exports about 30,000 vehicles a year to the United States from the Midlands and from London. This trade would be equally vulnerable if the Bristol scheme went through. Already there is speculation about Bristol being interested in the steel coil trade. Newport's gross revenue loss as a result would be about £600,000 per annum.

All these developments have involved considerable amounts of capital. It has been said that the Portbury scheme and other Bristol schemes were being thought out when people in South Wales were asleep in their beds. Since the South Wales ports were nationalised in 1948, £23 million has been invested in them and a further £11 million is in the process of being spent. That excludes the Uskmouth scheme at a cost of £8 million, which is the subject of review at present.

Does my hon. Friend want to stop this scheme?

I would like the House to bear in mind, too, that—

Other hon. Members want to speak.

—when the Rochdale investigations were carried out, the South Wales ports were inclined to be dead or in the doldrums and certainly were financial losers. This is not so today. Bristol has tried to imply that it is not in direct competition with South Wales. We believe that this is not so. Bristol has indicated that South Wales is concerned only with primary products. Again this is not so. I cite the timber trade, motor cars and steel coils. This is the trade which the Port of Bristol must attract if the West Dock scheme is to be made a viable proposition.

If the Government had given Bristol the go-ahead and if the scheme had succeeded, all that Wales would have got out of it would have been the crumbs from the rich man's table. Alternatively, if the scheme goes ahead and if it fails, this will be disastrous to the nation and, perhaps even more so, to the ratepayers and citizens of Bristol. [HON. MEMBERS: "Nonsense."] Above all, it would throw into jeopardy all the patient efforts of South Wales to build a modern ports system. Bristol already has a good and efficiently run docks. There is a tendency to under-estimate this. It has been said that Bristol is at present working to capacity. I understand that this is the subject of dispute, because the shift system at Bristol is not being fully utilised. Bristol is the centre of a vast and growing sub-region. The same cannot be said of Wales at present, though our prospects are bright.

In conclusion, we are glad that the Minister has based his decision on ordinary financial and economic criteria. We in Wales are united in our opposition to the scheme.

9.54 p.m.

I very much regret, as many other Members, including those from Bristol, do, the fact that South Wales Members of Parliament are against the Bill for their own reasons. My hon. Friend the Member for Newport (Mr. Roy Hughes) took the main accolade of pleasure to himself. His attitude will be bitterly resented by many Labour supporters and others in Bristol.

My complaint about the Government's opposition to the Bill is relatively simple. First, I complain very much that we have not been given the facts which we are entitled to have before making a decision on the matter. This is disgraceful. For many months the Government have said that their figures are right, the Port of Bristol has said that its figures are right, and two or three other bodies, including the National Ports Council, have claimed that their figures are right.

Why is the White Paper which we discussed with Ministers and others before the Easter Recess not available? I am sorry to say to my right hon. Friend the Minister that I did not like his statement on Friday, and I did not like the fact that those of us who had been intimately involved were not given a copy. It would have helped us to give some thought to the matter over the weekend. I was abroad on Parliamentary business and those of us who were not in London had no knowledge of this. I did not know until I returned to the United Kingdom.

I apologise to my hon. Friend. All hon. Members concerned were written to, and if the hon. Member was not available for reasons which are perfectly legitimate—

My hon. Friends tell me that they have not received it. I hope that the Minister will take this as a criticism. I am sorry to have to speak in such blunt terms, but it is a very fair point.

The matter will not be closed entirely unless the Bill is voted out. If the Bill goes to Committee we would at least have a chance to consider further information. My right hon. Friend must realise that his decision is being looked at very unfavourably, to put it at its mildest, by the people of Bristol. They are not convinced by the facts and figures which he has presented. They are proud of their port; they are proud of it as a municipal undertaking and proud of the public control they have over it. They feel strongly about the loss of the opportunity to develop.

My right hon. Friend cannot have it both ways. He cannot, as he did in the Adjournment debate of my hon. Friend the Member for Bristol, Central (Mr. Palmer) say that if there is no development the port will stultify, and then today say that this is not the end of Bristol docks. Of course, it is not the end of Bristol docks, but it is the end of the logical development in Bristol docks

Division No. 270.]	AYES	[10.0 p.m.
Allason, James (Hemel Hempstead)	Hunt, John	Sharples, Richard
Awdry, Daniel	Irvine, Bryant Godman (Rye)	Shaw, Michael (Sc'b'gh & Whitby)
Bennett, Sir Frederic (Torquay)	Jopling, Michael	Sinclair, Sir George
Biggs-Davison, John	Kimball, Marcus	Smith, Dudley (W'wick & L'mington)
Brewis, John	Longden, Gilbert	Stainton, Keith
Cooper-Key, Sir Neill	Loveys, W. H.	Teeling, Sir William
Deedes, Rt. Hn. W. F. (Ashford)	MacArthur, Ian	Turton, Rt. Hn. R. H.
Dobson, Ray	Macmillan, Maurice (Farnham)	Vickers, Dame Joan
Doughty, Charles	Maddan, Martin	Walker, Peter (Worcester)
Dunwoody, Dr. John (F'th & C'b'e)	Maginnis, John E.	Walters, Dennis
Eden, Sir John	Maude, Angus	Ward, Dame Irene
Elliott, R.W. (N'c'tle-upon-Tyne, N.)	Monro, Hector	Weatherill, Bernard
Ellis, John	More, Jasper	Wells, John (Maidstone)
Emery, Peter	Morrison, Charles (Devizes)	Whitelaw, Rt. Hn. William
Eyre, Reginald	Munro-Lucas-Tooth, Sir Hugh	Wilkins, W. A.
Fraser, John (Norwood)	Osborn, John (Hallam)	Wills, Sir Gerald (Bridgwater)
Gresham Cooke, R.	Palmer, Arthur	Wilson, Geoffrey (Truro)
Halt-Davis, A. G. F.	Pearson, Sir Frank (Clitheroe)	Younger, Hn. George
Hamilton, Michael (Salisbury)	Peel, John
Harrison, Col. Sir Harwood (Eye)	Percival, Ian	TELLERS FOR THE AYES:
Heseltine, Michael	Rodgers, Sir John (Sevenoaks)	Mr. Robert Cooke and
Hiley, Joseph	Royle, Anthony	Mr. Paul Dean.
Hornby, Richard

NOES
Allaun, Frank (Salford, E.)	Atkinson, Norman (Tottenham)	Blackburn, F.
Anderson, Donald	Bagier, Gordon A. T.	Blenkinsop, Arthur
Armstrong, Ernest	Barnett, Joel	Booth, Albert
Atkins, Ronald (Preston, N.)	Bessell, Peter	Boyden, James

which the local people can see. I hope that the Minister will think again and not oppose the Bill.

9.57 p.m.

It is sad that the debate has shown a rivalry between the two sides of the Bristol Channel when they should be working in co-operation. On the whole, the Government are right in turning down this piecemeal approach, but I appeal to them to press forward as soon as they can with a comprehensive ports development for the whole of the Bristol Channel. If we do not work together, the alternative is that we shall lose together.

The Bristol Channel has very much to offer in terms of national ports development because of the congestion of the English Channel and our proximity to the major American market. I appeal to my colleagues on both sides of the Channel and to the Minister to push this as far as they can. We must try to see that the things that we have in common work together for our mutual benefit, and prevent the piecemeal schemes which I believe the Minister was right to shoot down both on ports grounds and on national economic grounds.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 63, Noes 166.

Braddock, Mrs. E. M.	Howie, W.	O'Malley, Brian
Bray, Dr. Jeremy	Huckfield, Leslie	Orme, Stanley
Brown, Bob (N'c'tle-upon-Tyne,W.)	Hughes, Roy (Newport)	Oswald, Thomas
Brown, Hugh D. (G'gow, Provan)	Hunter, Adam	Page, Derek (King's Lynn)
Brown, R. W. (Shoreditch & F'bury)	Hynd, John	Pannell, Bt. Hn. Charles
Buchan, Norman	Jackson, Colin (B'h'se & Spenb'gh)	Park, Trevor
Buchanan, Richard (G'gow, Sp'burn)	Janner, Sir Barnett	Parkyn, Brian (Bedord)
Butler, Herbert (Hackney, C.)	Johnson, James (K'ston-on-Huil W.)	Pearson, Arthur (Pontypridd)
Callaghan, Rt. Hn. James	Jones, Dan (Burnley)	Peart, Rt. Hn. Fred
Cant, R. B.	Jones, J. Idwal (Wrexham)	Pentland, Norman
Carmichael, Neil	Judd, Frank	Perry, George H. (Nottingham, S.)
Carter-Jones, Lewis	Kenyon, Clifford	Rees, Merlyn
Coe, Denis	Lawson, George	Reynolds, Rt. Hn. G. W.
Coleman, Donald	Leadbitter, Ted	Rhodes, Geoffrey
Concannon, J. D.	Lee, Rt. Hn. Frederick (Newton)	Roberts, Gwilym (Bedfordshire, S.)
Crawshaw, Richard	Lestor, Miss Joan	Robertson, John (Paisley)
Crossman, Rt. Hn. Richard	Lewis, Ron (Carlisle)	Robinson, Rt. Hn. Kenneth (St.P'c'as)
Cullen, Mrs. Alice	Lomas, Kenneth	Robinson, W. O. J. (Walth'stow, E.)
Dalyell, Tam	Luard, Evan	Roebuck, Roy
Davies, Ednyfed Hudson (Conway)	Lyons, Edward (Bradford, E.)	Rose, Paul
Davies, s. O. (Merthyr)	McCann, John	Ross. Rt. Hn. William
Dempsey, James	MacColl, James	Rowlands, E. (Cardiff, N.)
Dewar, Donald	MacDermot, Niall	Sheldon, Robert
Doig, Peter	Macdonald, A. H.	Shore, Rt. Hn. Peter (Stepney)
Dunn, James A.	McGuire, Michael	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Eadie, Alex	Mackenzie, Gregor (Rutherglen)	Silkin, Rt. Hn. John (Deptford)
Ennals, David	Mackie, John	Silverman, Julius
Ensor, David	Maclennan, Robert	Slater, Joseph
Evans, loan L. (Birm'h'm, Vardley)	McMillan, Tom (Glasgow, C.)	Snow, Julian
Faulds, Andrew	McNamara, J. Kevin	Spriggs, Leslie
Fernyhough, E.	Mahon, Peter (Preston, S.)	Steel, David (Roxburgh)
Fitch, Alan (Wigan)	Mahon, Simon (Bootle)	Steele, Thomas (Dunbartonshire, W.)
Fletcher, Ted (Darlington)	Mallalieu, E. L. (Brigg)	Summerskiil, Hn. Dr. Shirley
Forrester, John	Manuel, Archie	Thomas, Rt. Hn. George
Fowler, Gerry	Marks, Kenneth	Thornton, Ernest
Freeson, Reginald	Marsh, Rt. Hn. Richard	Tinn, James
Galpern, Sir Myer	Mason, Rt. Hn. Roy	Urwin, T. W.
Gower, Raymond	Mendelson, J. J.	Varley, Eric G.
Gray, Dr. Hugh (Yarmouth)	Millan, Bruce	Wainwright, Edwin (Dearne Valley)
Grey, Charles (Durham)	Miller, Dr. M. S.	Wallace, George
Griffiths, Eddie (Brightside)	Milne, Edward (Blyth)	Wells, William (Walsall, N.)
Griffiths, Rt. Hn. James (Llanelly)	Moonman, Eric	Whitaker, Ben
Hamilton, James (Bothwell)	Morgan, Elystan (Cardiganshire)	White, Mrs. Eirene
Hamling, William	Morgan, Geraint (Denbigh)	Williams, Clifford (Abertillery)
Hannan, William	Morris, Alfred (Wythenehawe)	Wilson, William (Coventry, S.)
Harper, Joseph	Morris, Charles R. (Openshaw)	Winnick, David
Harrison, Walter (Wakefield)	Morris, John (Aberavon)	Winstanley, Dr. M. P.
Hattersley, Roy	Moyle, Roland	Yates Victor
Hazell, Bert	Murray, Albert
Hobden, Dennis (Brighton, K'town)	Neal, Harold	TELLERS FOR THE NOES:
Hooley, Frank	Noel-Baker, Rt. Hn. Philip (Derby, S.)	Mr. Ernest G. Perry and
Houghton, Rt. Hn. Douglas	Oakes, Gordon	Mr. Neil McBride.
Howarth, Robert (Bolton, E.)	Ogden, Eric

Selective Employment Payments

10.8 p.m.

I beg to move,

That the Selective Employment Payments Variation Order 1968, a draft of which was laid before this House on 30th May, be approved.

This is a comparatively simple Order. The Government promised to keep the working of the Selective Employment Tax under review when the tax was introduced in the House two years ago. A number of major modifications in its incidence have already been introduced. This draft Order deals with the activities on which the tax falls as initially defined by the Standard Industrial Classification.

Under the Standard Industrial Classification, all slaughterhouses are classified under a distributive heading. Most private slaughterhouses have, therefore, borne Selective Employment Tax without refund. Local authority slaughterhouses, however, have been treated like most other local authority services; they always receive payments equivalent to refund of the tax.

My hon. Friend the Member for Willesden, West (Mr. Pavitt), reminding us, as he so often does, of important Co-operative interests, and the hon. Member for Bromsgrove (Mr. Dance) have drawn the attention of the House on many occasions to the anomaly created by this situation. Put simply, it has meant that municipal slaughterhouses have been treated more favourably than those run privately or by Co-operative Societies.

The Order provides that licensed private sector slaughterhouses and knackers' yards shall, subject to the usual conditions, be eligible for registration under Section 1 of the Selective Employment Payments Act. As a result, outside the development areas all slaughterhouses, public and private alike, will receive refund of the tax. In development areas, private slaughterhouses will receive the regional employment premium.

The second change made by the Order is intended to remedy another anomaly. Under a decision taken in another place, the testing of goods for manufacturers is eligible, as part of the manufacturing process, for refund of the tax under Section 1 of the Act. However, an earlier decision affecting Lloyd's Testing House ruled that in another context testing designed to ensure that materials conformed with statute laid down by Act of Parliament was not itself manufacture. An industrial tribunal subsequently applied this ruling to Selective Employment Tax. It is clearly right that the two forms of testing should be on the same basis and the Order achieves that result. Both types of testing will be treated as part of the manufacturing process.

The cost of these two changes will be about £650,000 in a full year at the proposed new rate of tax, which comes into effect on 2nd September. The Order is not and cannot be retrospective. My right hon. Friend proposes that these changes should take place at the earliest possible opportunity and, subject to the approval of the House, they will be effective on 5th August.

Article 3 of the Order is designed to simplify the arrangements by which refunds on the tax are made to certain charities and local authorities. Section 2 of the Act makes the Minister of Agriculture responsible for making payments to agricultural charities. From 2nd September, that responsibility will be taken over by my right hon. Friend. Charities will then receive all their refunds from a single source. At the same time, the Department of Employment and Productivity will relinquish its powers to make certain payments relating to activities falling under the Standard Industrial Classification headings listed in Section 2 of the Act to local authorities in Scotland and in England and Wales, and that duty will be taken over by the Minister of Housing and Local Government in England and by the appropriate Secretary of State in Scotland and in Wales. The net effect of this part of the Order is that charities and local authorities will then receive refund from one Government Department rather than two.

Some changes in the Selective Employment Tax classification have, of course, already been made as a result of decisions by industrial tribunals or higher courts. My Department has frequently advised that classification should be tested in this way and there have been numerous occasions on which, the first test having shown the equity of reclassification, the Government have accepted that judgment without mounting the appeal which is open to us. The general question of classification of particular activities for S.E.T. purposes will be kept under review.

The Minister must not widen the debate on his own Order.

Tonight, I simply ask the House for approval to a specific but important reclassification embodied in the Order.

Question put and agreed to.

Adjournment

Resolved, That this House do now adjourn.—[ Mr. Ernest G. Perry.]

Adjourned accordingly at fourteen minutes past Ten o'clock.

Volume 768: debated on Monday 8 July 1968

House Of Commons

Prayers

Oral Answers To Questions

Suez Canal

United Nations

Abolition Of Slavery (Convention)

Nuclear Weapons (Non-Proliferation Treaty)

Sea Bed (Maltese Proposals)

European Convention On Human Rights

Council Of Europe (Greece)

Ussr (Mr Gerald Brooke)

South Yemen

Rhodesia

Middle East

International Organisations (British Delegations)

South Africa (Supply Of Arms)

Malaysia

Nato

United States (Baltimore Consular Facilities)

Persian Gulf

Spain (Gibraltar)

Greece

Cyprus (United Nations Force)

Vietnam

Holy See (Her Majesty's Mission)

Trucial States

North Atlantic Treaty Organisation (Ministerial Meeting)

Nato (Non-Proliferation Treaty)

Nigeria

Railways Dispute (Settlement)

Sterling (Bis Discussions)

Deep Sea Fishing Industry

Business Of The House (Supply)

Business Of The House

Orders Of The Day

Supply

Industrial Reorganisation Corporation

Bristol Corporation Bill Lords (By Order)

Selective Employment Payments

Adjournment