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Commons Chamber

Volume 808: debated on Monday 7 December 1970

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House Of Commons

Monday, 7th December, 1970

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Foreign And Commonwealth Affairs

United Nations Special Committee On Peace-Keeping

1.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the progress of the work of the United Nations Special Committee on Peace-Keeping.

The Special Committee on Peace-keeping Operations has for the past two years been working on a comprehensive report to be submitted to the General Assembly on United Nations military observer operations. Little progress has so far been made.

As a further step towards extending United Nations influence in areas where peace may be fragile, will the Government do everything possible inside and outside the United Nations to ensure that any Middle East settlement is reinforced by a restored United Nations presence, diplomatic and, if necessary, military?

It would be our wish that we as a member of the United Nations should help in any way possible with regard to the Middle East settlement. It is too early to say what the outcome will be, but we are in close touch with other parties concerned.

In view of the breach of the peace in Guinea recently, can the right hon. Gentleman say what is the mind and attitude of the Government towards this situation and what they propose to do in the United Nations?

This is a little wide of the Question. There has been a fact-finding Mission and the Security Council will be debating its report later today I think.

Libya

2.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will now make a further statement on current negotiations with Libya.

I would refer to the Answer I gave the hon. Member on 16th November. The Libyan delegation to the current talks returned to Libya for the Muslim festivities at the end of Ramadan. We expect the talks to resume at a mutually convenient date, either here or in Tripoli.—[Vol. 806, c. 301–2.]

In view of the Foreign Secretary's recent statements on Resolution 242, which appear to place a different emphasis on this resolution, and in view of the close ties between Libya and Egypt, would the right hon. Gentleman give a firm undertaking that there can be no question of supplying Chieftain tanks to Libya?

I do not think I need comment on Resolution 242. My right hon. Friend the Secretary of State made our position perfectly clear about that. As for the question of the supply of tanks to Libya, Israel or any other country, we do not normally comment on particular deliveries.

Bearing in mind that Libya has entered into an alliance with the United Arab Republic, can the right hon. Gentleman give an undertaking that any supplies of arms to Libya will be controlled so that they cannot be used against a neighbouring State, namely, Israel?

This is exactly the sort of consideration which we shall have in mind when dealing with any proposals about the supply of tanks.

European Economic Community

3.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will now publish a White Paper on the effect on the constitutional position of the British Parliament of Great Britain's accession to the Treaty of Rome.

No, Sir. Consideration was given to this in the White Paper "Legal and Constitutional Implications of United Kingdom Membership of the European Communities" (Cmnd. 3301) published in May 1967.

That White Paper is now out of date and incomplete. Will my right hon. and learned Friend reconsider this and publish a list of all the Acts that require amendment and Statutes which must be introduced in the unlikely event of Britain entering the Common Market? What would be the alterations in parliamentary machinery for this purpose?

At this stage of our negotiations the information given in the White Paper is adequate. No doubt at a later stage it may be necessary to provide more.

Is the Minister aware that two minutes ago I was refused a Question by the Table on the ground that it referred to what the previous Administration had done and that I cannot ask the present Government to be responsible for what the previous Administration did? [HON. MEMBERS: "Hear, hear."] How can the Government try to fall back on the decision taken in 1967, as the House of Commons has never had an opportunity of passing any opinion on the matter?

As far as I can recall, there were debates in the last Parliament which were very helpful.

Since my right hon. and learned Friend referred specifically, in his Answer to my right hon. Friend's Question, to the White Paper of 1967, can he say why he gave instructions for the transfer of my Question on that White Paper to the Attorney-General? Is it because this is such a hot potato that every Minister wants to pass it on to another?

I do not quite know in which circumstances my right hon. and learned Friend's Question was transferred. As he will appreciate, the Attorney-General is responsible to this House for questions relating to constitutional matters.

4.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the progress of negotiations to join the European Economic Community.

18.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied with the progress to date of negotiations to join the European Economic Community; and if he will make a statement.

23.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement about the progress of negotiations for Great Britain to join the European Economic Community.

29.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the present state of the negotiations for Great Britain to join the European Economic Community.

39.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the latest position in the Common Market negotiations.

At present I have nothing to add to what I told the House on 25th November. I would hope, with your permission, Mr. Speaker, and with that of the House, to make a further statement on the progress of the negotiations after the next Ministerial meetings which take place tomorrow. I am satisfied that all parties are making efforts to see that the negotiations are concluded as soon as possible.—[Vol. 807, c. 431.]

Can my right hon. and learned Friend make any statement on progress which may have been made on the time factors for Britain's entry into the Common Market, if that is to take place? We have heard mention of five and seven years.

Will my right hon. and learned Friend accept that there is absolutely no connection between the decision taken in the House last week on the question of British Summer Time and Greenwich Mean Time and the question of applying to join the Common Market?

Yes. I assure my hon. Friend that I was entirely in favour of the Motion which was carried by such a large majority last week.

While wishing my right hon. and learned Friend well in tomorrow's meeting, may I ask him whether he agrees that if we were already in the Common Market it would be a good deal easier for Europe to exert influence on the United States against restrictive trade measures?

I am sure that that would be so. The Community has made representations to the United States on this subject. I have no doubt that an enlarged Community would adopt outward-looking and liberal policies.

May I remind my right hon. and learned Friend of the statement made by my right hon. Friend the Prime Minister on 5th May that enlargement of the Community should not take place without the wholehearted consent of the British people? In view of the latest opinion poll, which shows that only 16 per cent. of the people are in favour of Britain applying to join the Common Market, how do the Government propose to obtain the wholehearted consent of the British people to this country joining the Common Market?

If the outcome of the negotiations is, in the Government's view, successful, they will have to put the position to Parliament.

Will the right hon. and learned Gentleman, when making statements, take every appropriate opportunity to remind the public that besides the civil servants in Brussels there are the Council of Ministers and a potentially important democratic institution in the European Parliament in Strasbourg?

As the right hon. and learned Gentleman is conducting the negotiations, can he say whether the Government support the proposals for currency union and rigidly fixed exchange rates which the Community has taken as its objective?

There are later Questions on the Order Paper on that subject. I take exactly the same view as that taken by the previous Administration.

5.

asked the Secretary of State for Foreign and Commonwealth Affairs what dates have been fixed for the Ministerial meetings between Great Britain and the European Economic Community between now and the end of 1970.

There will be one further ministerial meeting this year, on 8th December, and a meeting at the level of Deputies on 18th December.

9.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a Ministerial broadcast on television about the progress of the negotiations for Great Britain to enter the European Economic Community.

I have no plans to do so at present.

As I have said, my first objective is to keep the House, and through it the Press and public informed of the progress of the negotiations.

In view of the apparent state of public opinion on this matter, does not the right hon. and learned Gentleman think that the time has come for the Government to give more of a lead? Is it not very odd that, on the one hand, the negotiations should be going very well, but, on the other hand—[Laughter.] Hon. Members may laugh, but some of us returned at the end of last week from Brussels where we spoke to people in the Commission. This is the impression which we got.

I did not make the first interruption, Mr. Speaker.

Does not the right hon. and learned Gentleman accept that it is unsatisfactory that he apparently should be doing very well in Brussels but that the rest of his colleagues should be making so little attempt in this country to carry public opinion with them?

I do not accept that criticism of my colleagues. A great deal of information is being presented on all aspects of the negotiations. One difficulty is that there are people who do not care what may be the result of the negotiations, but those of us who are concerned that they should be successful must, to some extent, await their outcome and deal with matters as they arise.

As the level of the financial contribution to be made by Her Majesty's Government in the event of our joining the Common Market is probably the most critical single issue, does the right hon. and learned Gentleman propose to explain the Government's view on this matter to the Ministerial meeting this week?

I do not think that I can anticipate what I shall say tomorrow or what will be the outcome of the discussions. I shall certainly make a statement to the House thereafter.

Does my right hon. and learned Friend recall from his own forensic experience that some cases are so weak that even the most persuasive and skilled advocacy cannot make them appear other than they are? Is that perhaps the very proper and prudent reason underlying my right hon. and learned Friend's refusal to go on television, as suggested in the Question?

Although I have frequently heard my right hon. and learned Friend do exactly that, I can assure him that that is not so in this case.

Has the right hon. and learned Gentleman seen the report by Peterborough in the Daily Telegraph this morning that he will be warmly welcomed in Brussels tomorrow because of the Government's introduction of their wretched Industrial Relations Bill? If he makes a Ministerial broadcast, will he tell our associates in Western Europe that they must not interfere in British affairs?

I am quite sure that there will be no interference by the Community in the passage of the Government's Industrial Relations Bill.

14.

asked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with Commonwealth countries on the effect on their trade with Great Britain of the Common External Tariff should Great Britain join the Common Market; and whether he will make a statement.

I have had discussions with a large number of Commonwealth countries on the effect on their trade if Britain joins the European Communities.

Surely the Chancellor of the Duchy can confirm that the trade of Commonwealth countries to Britain is still greater than it is with the whole of the Six put together? In view of the fact that they would suffer a double blow through the loss of Commonwealth preferences on top of the imposition of common external tariff, surely he has proposals himself to put to the European countries in order to safeguard vital Commonwealth interests?

Of course we have put proposals to the Community to safeguard vital Commonwealth interests. Of course Commonwealth trade is of great importance to this country. What we believe is that if negotiations can be concluded on satisfactory terms, a strong Britain within the enlarged Community will bring great trading benefits to the Commonwealth.

Would the Chancellor not agree that the acceptance of the common external tariff and its implications will mean that we shall lose customers outside this country, so that we should have a smaller market after entry than we have now?

Experience has not shown that to be necessarily the case. Commonwealth trade with the Community has increased very considerably in recent years.

15.

asked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the Six on their proposals for an Economic and Monetary Union; and whether he will make a statement.

Economic and monetary union is not one of the subjects being discussed in the negotiations for Britain's entry into the European Communities. They are, of course, matters of general interest being discussed by the Six in the light of the Werner Report. Like the last Government, we have welcomed the moves which the Community has already made towards closer economic and monetary integration.

Surely the Chancellor of the Duchy must accept that that is an extraordinary and very unsatisfactory reply? It is no good at all saying, "We are doing the same as the last Government", when the last Government had no possibility of considering the Werner Report which was not even completed or published until October this year. Will he please make it plain to the House why he does not include this in the substance of the negotiations and why he will not make it clear how Britain stands on this crucial question of fixed exchange rates?

These are not matters for discussion in the negotiations. We may have a part to play in general discussions beforehand about monetary co-operation, and if the negotiations are successful and we are members, then certainly we shall have a great deal to say. But nothing will prejudice our decision. I would remind the right hon. Gentleman that the Leader of the Opposition, when he was Prime Minister, on 10th February, 1970, had a great deal to say about this matter, and said, I think, that he thought that nothing but good could come from closer cooperation within an enlarged Community on financial matters; and that is all that is being proposed at this stage. I remind the right hon. Gentleman that he was a member of the Cabinet at that time. We are conducting negotiations on the very basis that his own Government put forward.

Having read the Werner Report, may I ask whether my right hon. and learned Friend agrees with the logic of it, and, in particular, does he accept the consequences of the economic and monetary reform of the union clearly set out in the Werner Report?

All I accept is that there is nothing to cause us concern in the first stage of the Werner Report calling for a measure of co-operation in these matters. The second stage would not arise as far as we are concerned till we were members of the Community. We would then express our views. The third stage is fairly far in the future and would require amendments of the Treaty of Rome. Certainly nothing could happen in regard to these matters which could be decided without our point of view being expressed.

Would the right hon. and learned Gentleman give a clear answer? Do the Government favour or disfavour the proposed Federal decision centre which would rob Britain entirely of her national independence?

Is it not becoming clear that progress on the lines foreshadowed in the Werner Report is likely to be pretty cautious?

All the experience of the Community throughout its history is that it adopts a cautious and pragmatic approach on these matters. There is a good deal of monetary and economic cooperation at the present time, and it must be in our interest to see that it continues.

19.

asked the Secretary of State for Foreign and Commonwealth Affairs what plans he has to visit Bonn for discussions with Herr Scheel about the British application for membership of the European Economic Community.

Neither I nor my right hon. Friend have any immediate plan to visit Bonn for discussions with Herr Scheel. I will, however, be meeting Herr Scheel at tomorrow's Ministerial meeting in Brussels.

Is my right hon. and learned Friend aware that, whatever differences may exist between the major German political parties on the question of ostpolitik, there is a very wide measure of unanimity across all political opinion in Germany on the advantages of our application succeeding?

I am sure that that is so, I am sure that if the negotiations can succeed there will be mutual benefit to both countries and to the whole Community.

The Chancellor of the Duchy will have heard the Foreign Secretary express disapproval of our interference with other countries' policies. When he meets the German Foreign Minister will he apologise for the episode last Friday when members of his party, including a member of the Cabinet, indulged in criticism of the German Government's ostpolitik?

Is the Chancellor of the Duchy aware that these negotiations are based on a false prospectus and that the British public is being deceived, in that the terms for which we are negotiating are not the terms and conditions which we shall have to accept within the E.E.C. in view of the Werner Report and the political union discussions now taking place?

The public would only be deceived if it accepted the sort of statement which the hon. Gentleman has just made.

20.

asked the Secretary of State for Foreign and Commonwealth Affairs what further steps he will now take to keep the public informed of the progress of the Common Market negotiations.

My first duty is to keep the House and through it the Press and public informed on the negotiations. I also try to avail myself of as many opportunities as possible in making public speeches, and I accept a high proportion of the invitations I receive from radio and television channels in this country and abroad.

In his public speeches and television appearances will my right hon. and learned Friend continue to direct people's attention to the substantial and growing benefits to this country from membership of the Community, not only economic but political?

Is the Minister aware that the latest official estimate we have had of the increase in the cost of living consequent on joining the Community is now out of date and pessimistic? Is he aware that this is one of the many objections to joining the Common Market which is being tactfully dropped by those who oppose our joining, and will he therefore publish a White Paper setting out the new facts?

Certainly this is a developing process. There has been a great deal of exaggeration of the effect on the cost of living of our joining the Community, and not enough has been said about the increase in the standard of living that should result.

22.

asked the Secretary of State for Foreign and Commonwealth Affairs what plans he has to visit the French Foreign Minister to discuss the enlargement of the European communities.

Neither I nor my right hon. Friend has any specific plans for further bilateral meetings with M. Schumann at this stage. I look forward to seeing him at tomorrow's Ministerial negotiating meeting in Brussels.

Is my right hon. and learned Friend aware that the French Government have found that their effective sovereignty has been in no way diminished by membership of E.E.C. and that, on the contrary, they have been able to exert an increasing influence in the world? Is this not the answer to the claim that to join the Common Market will reduce our influence?

This is certainly a fact. It is worth pointing out that, on the whole, the French, like other members of the Community, have exerted a greater influence acting in concert than they could have hoped to exert acting alone.

In any discussions which the Minister has with the French Foreign Secretary, will he make it clear that in his view the creation of a Europe-based reserve currency, which might be the ultimate outcome of the proposals in the Werner Report, would be greatly to the advantage of this country and of the world?

These are matters not directly arising in the negotiations, and the question is one which would be better put to my right hon. Friend the Chancellor of the Exchequer. I agree with the hon. Gentleman in all these matters. We have a great interest in co-operating and finding appropriate solutions.

38.

asked the Secretary of State for Foreign and Commonwealth Affairs how many members of his Department are engaged whole-time and at what estimated annual cost on the Common Market negotiations.

There are 11 members of the Diplomatic Service engaged full-time in the negotiations. A further 11 officers in the Foreign and Commonwealth Office and in Brussels provide supporting services for the Delegation which are almost full time. The best estimate I can give of the cost of this staff is approximately £145,000.

Can my right hon. and learned Friend say whether these people work in the Department called the European Integration Department? As the present Government are following on the previous Government's negotiations, and are therefore committed to no centralism and no supranationalism, as stated by the previous Prime Minister on 9th February, 1969, why are we trying to integrate Britain into Europe?

There is no particular significance in the title of this section of the Department, as I explained to my hon. Friend the Member for Holland with Boston (Mr. Body) the other day—none at all.

Can the right hon. and learned Gentleman say, in addition, what is now the annual cost to public funds of giving financial help to organisations working for British membership of the Common Market? Has the amount increased or is it the same?

A number of Questions have been asked on the subject, but it does not arise out of this Question.

41.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will report to the House of Commons on the submissions made by Her Majesty's Government in the course of the negotiations for entry into the European Economic Community, before they are divulged to the Press.

The full texts of submissions made by Her Majesty's Government in the course of the negotiations with the European Communities are confidential. I hope, however, with your permission, Mr. Speaker, and with that of the House, to continue my practice of making statements to the House as soon as possible after each Ministerial negotiating meeting.

But is not my right hon. and learned Friend aware that the Press seem to be getting the information while the House is getting no details at all? Will he adopt the suggestion made by the right hon. Member for Woolwich, East (Mr. Mayhew) that he should publish a White Paper whenever he changes the economic assessment of his predecessors?

There must, I suppose, be some limit to the number of White Papers one can publish. I appreciate that a certain difficulty arises out of fairly detailed reports in the Press of what is going on in the course of negotiations. I can promise my right hon. Friend that I will do my best to ensure that the House is kept fully informed, and that the information given to the House will be the authoritative statement. I cannot negotiate on the basis of leaks of documents that have not been handed over to me.

While thanking the right hon. and learned Gentleman for the information he has already given to the House about a common fisheries policy, may I ask whether he can say in what form his statements will be made at a later date, and what prospects he may see about coming to some agreement on a separate protocol?

We have made our position clear about the fisheries agreement. We regretted the circumstances in which it was brought forward whilst negotiations were going on, but we have accepted that it was coincidental and that it applies only to the fishery policies of the Six, and we have reserved our position. I do not think that I can say any more at this stage.

43.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will reconstitute the consultative committee between Government and representative bodies on entry into the Common Market; and if, in addition to reappointing the Cooperative Union, he will invite representation from other bodies serving consumers' interests like the Consumer's Association.

No, Sir. I consider that present channels of consultation with outside representative bodies are adequate.

Did it just fade away or was it wound up? Were its members ever thanked for their services? Has it disappeared without trace? As the right hon. and learned Gentleman is not prepared to consult the rest of the country in any other way, will he reestablish this body so that at least he can receive advice from quarters other than those from which he is receiving it at the moment?

It is true that this body disappeared almost without trace. It was set up and first met in December, 1966. It had four meetings between December, 1966, and May, 1967. It was set up under the auspices of the Department of Economic Affairs. Perhaps the right hon. Member for Stepney (Mr. Shore), who was then responsible for these negotiations, can help the hon. Gentleman.

South Africa (Arms Supply)

7.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the supply of maritime arms to South Africa.

The Secretary of State for Foreign and Commonwealth Affairs
(Sir Alec Douglas-Home)

The Government will make a statement at the appropriate time when a decision has been reached.

As the matter has been under consideration for six months, can my right hon. Friend say whether the decision will be announced at the Commonwealth Prime Ministers' Conference?

No. We shall announce the decision in our own time. I should not like at this moment to forecast when that will be.

Is the Foreign Secretary aware that we hope that the Government's "own time" never arrives and that we shall hear no more of this foolishness?

What were the effects of the representations made to the Government by British commercial interests, particularly the oil companies, about the consequences for our investments in black Africa in respect of this proposed decision?

We have a very large trade with black Africa and with South Africa, and we have very large investments in the latter. I should need notice of the hon. Gentleman's question to quantify the matter.

Gibraltar

8.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the future status of Gibraltar.

Her Majesty's Government have no plans to alter the status of Gibraltar which is defined in the preamble to the Gibraltar Constitution Order in Council of May, 1969.

Can my right hon. Friend say what will happen to Gibraltar should Britain join the European Economic Community? Can he assure us that the right of entry which Gibraltarians enjoy today will be safeguarded in the pending immigration legislation?

That is a matter of which my right hon. and learned Friend the Chancellor of the Duchy of Lancaster will take note. But at present Gibraltar would come under Article 227(4) of the Treaty, which would, I think, be in accordance with the wishes of the people of Gibraltar.

What consideration has been given to the idea put forward by the Gibraltarians that Gibraltar should be represented in this House?

I do not think that that matter has been taken any further. The previous Administration gave their views on it. We have nothing to add to what was said.

Will the right hon. Gentleman confirm that if Gibraltar is covered by Article 227(4), which deals with full membership of the European Economic Community, it will involve obligations of free passage for their workers between that country and other countries in association with the E.E.C.?

There are various aspects of this matter. I cannot anticipate the discussions. This is one aspect which will have to be borne in mind.

Terrorist Activities (Compensation)

10.

asked the Secretary of State for Foreign and Commonwealth Affairs what are the terms of compensation payable to dependent relatives of officials of his Department who lose their lives as a result of terrorist activities; and if he will make a statement.

Widows of members of the Diplomatic Service who lose their lives in these circumstances would receive, in addition to the normal death gratuity and widow's pension, a special allowance under the Injury Warrant, 1965.

May I exceptionally take this opportunity to say how delighted 1 am, as I am sure is the whole House, at the safe return of Mr. James Cross.

I am sure that we all agree with what the right hon. Gentleman says about the safe deliverance of Mr. Cross. Will he bear in mind that Government representatives of this country in foreign parts are entitled not only to decent terms of compensation but to adequate security? Will he agree that the policy on Africa being pursued by the Government is more likely to put our representatives at risk than to keep them in safety?

No. I do not think that I would agree with that but would devote myself to the first part of the hon. Gentleman's supplementary question. We are very concerned about the security of our diplomatic representatives in all circumstances in any country, and we will do all we can about it and study with great care the compensation which they would get in cases of accident or injury.

Would the Foreign Secretary convey to the Government of Canada the thanks and admiration of this House for the way they have behaved?

We have conveyed to them the thanks of Her Majesty's Government here and I think the House would wish the House's thanks to be conveyed, too.

Fiji

11.

asked the Secretary of State for Foreign and Commonwealth Affairs when he intends to pay an official visit to Fiji.

Would the Foreign Secretary start considering plans to visit Fiji? Is he not aware that the people of that newly independent State are anxious to have a clear statement from the Government here about the future of the Commonwealth Sugar Agreement?

I was in Fiji in March, but I am always willing to go back again—very happy to do so; it is a lovely place to be. Of course we bear very strongly in mind the dependence of the Fijian economy on sugar.

Rhodesia

12.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the latest developments in contacts between Her Majesty's Government and the illegal Rhodesian régime.

I would refer the hon. Member to the Answer I gave to a Question from my hon. Friend the Member for Chigwell (Mr. Biggs-Davison) on 16th November.—[Vol. 806, c. 302.]

Will the right hon. Gentleman not agree, in view of the latest news from Rhodesia of still further entrenchment of racialism in the policy of the Government there, that we can have no confidence that conditions contained in the five principles would be observed once independence had been recognised? Would he not, therefore, reconsider the ill-timed decision of the Government here to reopen negotiations with the régime?

No. I would have thought that, in a way, it made it more urgent that we should see whether there is a satisfactory settlement which can be reached within the five principles.

Would not my right hon. Friend accept the fact that most people on this side of the House welcome what he is doing and wish him every success?

Would not the right hon. Gentleman accept that if there is to be any chance whatever of success in this doubtful exercise it will depend on the Government's making it quite clear that, failing a settlement, sanctions will continue, and that the decision of the Rhodesian Government to introduce new apartheid-type legislation after the House of Commons debate casts grave doubt on the wisdom of the Government's policy in this respect?

We debated this policy a very short time ago and during that debate we discussed the sanctions question. I have nothing to add to what I said then.

South And Central America (Official Visit)

13.

asked the Secretary of State for Foreign and Commonwealth Affairs what proposals he has for an official visit to South and Central America.

Whilst I would naturally hope to visit Latin America, I have no plans to do so at present.

Will not the Foreign Secretary see whether he can arrange for one of his senior colleagues to pay a visit in view of the great commercial and political success of previous visits?

Yes, I hope that many visits can be arranged. The Chancellor of the Duchy has just come back from Mexico, the Secretary of State for Trade and Industry visited the Argentine last month and Princess Alexandra opened the British Industrial Exhibition. I hope that this pattern of visits can continue.

If the right hon. Gentleman does visit South America, will he regard the observance of international obligations relating to minority rights and freedom of expression as legitimate subjects for discussion with Governments there, particularly when he visits Brazil?

As long as the hon. Gentleman does not ask me to interfere in the internal affairs of other countries.

Grain Imports, United States (Levies)

21.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he has received representations from the United States of America on the question of the imposition of levies by the United Kingdom on grain imports; and whether he will make a statement.

Yes, Sir. As large grain producers, the United States are naturally concerned about the possible effect that our cereals proposals could have on them. We are engaged in consultations with the United States Government and with other Governments who are parties to the Five Power Agreement relating to cereals.

Will the right hon. Gentleman assure the House that a sympathetic attitude will be taken towards these representations, since the imposition of levies, combined with trade protection and the predatory dumping of the Common Market, is creating an international climate of protection which is against this country's interests?

No, I could not give the undertaking for which the hon. Gentleman asks. All we are doing here is changing over the cost of support to this country from the taxpayer to the consumer. The effect on American or other suppliers can easily be exaggerated.

Does not the Minister agree that the Government will take the steps which are in the best interests of this country and British farmers?

Will the Minister bear in mind that there is a case for imposing levies on feed grains, which we can grow ourselves, but not such a good case for imposing levies on hard wheat, which would cause bread prices to rise considerably? Will he see that there is a differential?

I am interested in the point which my hon. Friend has put forward. I think that the commercial difference in price is sufficient to distinguish between the two.

Foreign And Commonwealth Office (Staff Working Conditions)

24.

asked the Secretary of State for Foreign and Comonwealth Affairs if he is satisfied with the working conditions of the staff of the Foreign and Commonwealth Office in London; and if he will make a statement.

No, Sir. I am not satisfied. My right hon. Friend the Minister of Housing and Construc- tion is at present considering what steps can be taken, pending the construction of a new Foreign and Commonwealth Office, to improve conditions in the old building.

I welcome what my right hon. Friend said, but will he confirm that his Department is accommodated in no fewer than 13 separate buildings and urge his right hon. Friend to remedy that situation?

Yes, these will be matters for discussion between my right hon. Friend and myself.

German Democratic Republic (Recognition)

25.

asked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the West German Foreign Minister about the question of recognising, the German Democratic Republic.

I have discussed with Herr Scheel his Government's eastern policies, including their efforts to achieve a modus vivendi with East Germany. Details of these discussions are confidential.

Is it not high time that the right hon. Gentleman came off the fence and accepted that the normalisation of relations between West and East Germany would benefit us as much as West Germany? As was said by my hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), a party of the right hon. Gentleman's parliamentary colleagues in Bonn was recently subjected to what The Times called a vitriolic outburst against Herr Brandt's ostpolitik. In view of that and the deplorable attack of the right hon. Member for Streatham (Mr. Duncan Sandys) in opposing the recognition of the Oder-Neisse line and the treaty which Herr Brandt is signing in Moscow today, will the right hon. Gentleman take this opportunity to repudiate what his right hon. Friend said and make it clear that the Government do not support the C.D.U?

I am quite clear that the Government have supported Herr Brandt in his ostpolitik policy. We think that he has handled the matter with very considerable skill. When the hon. Lady speaks about normalisation between East and West Germany, that is exactly what Willy Brandt is trying to do, but the East German Government have not so far responded.

Will my right hon. Friend make it clear to the hon. Member for Wolverhampton, North-East (Mrs. Renee Short) that there can be no normalisation of relations with East Germany as long as the Berlin Wall is in position?

There are many matters that should be discussed between the West German and East German Governments, and the West German Government are trying to do just this. At the North Atlantic Council meeting last week everyone was agreed that there must be visible progress on Berlin before we could begin to talk about normalisation.

In general I welcome the Answers which the Foreign Secretary has given, but does he not agree that that still leaves Friday's incident unresolved? Will he take this opportunity of making clear that what his colleagues, including a Cabinet Minister, said or were a party to in Germany on Friday does not represent the views of Her Majesty's Government?

I must make myself more aware of what my right hon. Friend said. On the other hand, I can only answer for Her Majesty's Government, and Her Majesty's Government's view is as I have described it.

European Security Conference

26.

asked the Secretary of State for Foreign and Commonwealth Affairs what proposals he has made since his appointment to enable a European Security Conference to take place.

46.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied that the necessary conditions have now been met for the convening of a European Security Conference; and if he will make a statement.

As I told the House on 20th July, I would welcome a well-prepared and businesslike meeting to deal with matters of real substance. This and related questions were fully discussed at the meeting of the North Atlantic Council which I attended in Brussels on 3rd and 4th December. With permission, I will circulate the Communiqué of this meeting in the OFFICIAL REPORT.

Will the right hon. Gentleman make it clear that the Foreign Office is not up to its old tricks and trying to raise obstacles when progress in East-West relations appears to be good? Will he also bear in mind that it is many years since the Warsaw Powers made proposals for a security conference? At a time when N.A.T.O. is putting pressure on us to spend more on defence in Europe, does not the Foreign Secretary think that it is high time we made an agreement with the Warsaw Pact countries so that we could reduce our defence expenditure?

We do not see any point at this moment in creating new machinery to try to normalise conditions when the present machinery could be used by the Soviet Union if it had the will.

Does not my right hon. Friend agree that until the Soviet Union has shown some willingness for peaceful co-existence, both over Berlin and over the Strategic Arms Limitation Talks with the West, we must be chary of making any one-sided concessions?

Yes, that is what I tried to say but my hon. Friend has said it better.

Does the Foreign Secretary remember that a month ago he told the House that this conference needed to be carefully prepared? Last week, however, he changed his ground and said at Brussels that the time was not ripe. Does not this suggest that the Foreign Secretary is continually finding excuses for not holding such a conference?

No, Sir. I have been totally consistent. If we are to have a conference it must be properly prepared. It is no use beginning the preparation unless the Soviet Union shows itself willing to achieve some easing of tension in Berlin.

Can the right hon. Gentleman say whether the necessary climate for such talks is adversely affected by reports of increased espionage, especially by Russia? In view of the report this morning in the Daily Mail that three Russian diplomats, or members of a trade delegation, have been expelled from this country, can he say whether that is affecting the situation, and also whether the report is correct?

That would not affect the calling of any preparations for a security conference. We are constantly having to deal with this aspect of Soviet policy, which I deeply deplore, but it is a separate matter.

Following is the communiqué.

Final Communiqué

The North Atlantic Council met in Ministerial Session at Brussels on 3rd and 4th December, 1970. Foreign, Defence and Finance Ministers were present.

2. Ministers again stated that the political purpose of the Alliance is the common search for peace through initiatives aiming at the relaxation of tension and the establishment of a just and lasting peaceful order in Europe, accompanied by appropriate security guarantees.

3. The Council received a statement from President Nixon which pledged that, given a similar approach by the other Allies, the United States would maintain and improve its own forces in Europe and would not reduce them except in the context of reciprocal East-West action. Ministers expressed their profound satisfaction at the reaffirmation of Alliance solidarity expressed in this statement.

4. Ministers reviewed the international situation as it had developed since their last meeting in May in Rome. They noted that 1970 had been a year of extensive diplomatic activity by member governments of the Alliance to initiate or intensify contacts, discussions and negotiations with the members of the Warsaw Pact and with other European countries. Ministers paid particular attention to the Strategic Arms Limitations Talks, the Treaties negotiated by the Federal Republic of Germany with the Soviet Union and Poland, intra-German relations, Berlin and the situation in the Mediterranean.

5. Ministers welcomed the resumption at Helsinki in November of the negotiations between the United States and the U.S.S.R. on Strategic Arms Limitations. They expressed the hope that the talks would lead, at an early date, to an agreement strengthening peace and security in Europe and in the world.

6. Ministers noted with satisfaction the signing of the Treaty between the Federal Republic of Germany and the U.S.S.R. on 12th August, 1970, and the initialling of the Treaty between the Federal Republic of Germany and the Polish People's Republic on 18th November,

1970. They welcomed these Treaties as contributions toward reduction of tensions in Europe and as important elements of the modus vivendi which the Federal Republic of Germany wishes to establish with its Eastern neighbours. Ministers noted the clarifications made in the context of the Treaties, and reflected in the exchanges of notes between the Federal Republic of Germany and the Three Powers, to the effect that quadripartite rights and responsibilities for Berlin and Germany as a whole remain unaffected pending a peace settlement which would be based on the free decision of the German people and on the interests of European security. Ministers welcomed the beginning of an exchange of views between the Federal Republic of Germany and the G.D.R. and expressed the hope that this exchange will prepare the ground for genuine negotiations between the two. Ministers reviewed the development of the quadripartite talks in Berlin.

7. In considering the situation with regard to Berlin and Germany, Ministers recalled their statement in the Brussels Declaration of 5th December, 1969 (paragraph 10) to the effect that concrete progress in both these fields would constitute an important contribution to peace and would have great weight in their evaluation of the prospects for improving East-West relations in Europe. Indeed, these prospects would be put in question failing a satisfactory outcome to the current Berlin negotiations. With this in mind, Ministers stressed the importance of securing unhindered access to Berlin, improved circulation within Berlin and respect by all for the existing ties between the Western sectors of Berlin and the Federal Republic of Germany which have been established with the approval of the Three Powers. They underlined the need for an understanding between the Federal Republic of Germany and the G.D.R. on a negotiated settlement of their mutual relations which would take account of the special features of the situation in Germany.

8. Ministers took note of a report on the situation in the Mediterranean prepared on their instructions by the Council in Permanent Session. They noted that the evolution of events in the area gives cause for concern and justifies careful vigilance on the part of the Allies. They recommended that consultations on this question should continue, and they invited the Council in Permanent Session to keep the situation under review and to report fully thereon at their next meeting.

9. As a result of their review of the international situation and its positive and negative aspects, Ministers emphasised that these developments in Europe and the Mediterranean all affect the Alliance directly or indirectly, and have a bearing on the possibilities of reducing tensions and promoting peace.

10. Ministers noted that the initiatives which had been taken by Allied Governments had already achieved certain results which constituted some progress in important fields of East-West relations. Nevertheless their hope had been that more substantial progress would have been recorded in bilateral exploratory contacts and in the on-going negotiations, so that active consideration could have been given to the institution of broad multilateral contacts which would deal with the substantial problems of security and co-operation in Europe. They affirmed the readiness of their governments, as soon as the talks on Berlin have reached a satisfactory conclusion and in so far as the other on-going talks are proceeding favourably, to enter into multilateral contacts with all interested governments to explore when it would be possible to convene a conference, or a series of conferences, on security and co-operation in Europe. In this event, the Council would give immediate attention to this question.

11. In the meantime, the Council in Permanent Session will continue its study of the results which might be achieved at any such conference or series of conferences, and of the appropriate exploratory and preparatory procedures, including the proposals that have already been advanced. The Allied Governments will also pursue energetically their bilateral exploratory conversations with all interested states on questions affecting security and co-operation.

12. Ministers recalled that any genuine and lasting improvement in East-West relations in Europe must be based on the respect of the following principles which should govern relations between states and which would be included among the points to be explored: sovereign equality, political independence and territorial integrity of each European state; non-interference and non-intervention in the internal affairs of any state, regardless of its political or social system; and the right of the people of each European state to shape their own destinies free of external constraint. A common understanding and application of these principles, without condition or reservation, would give full meaning to any agreement on mutual renunciation of the use or threat of force.

13. In the field of international co-operation, the contacts mentioned in paragraph 10 might provide an opportunity to consider ways and means of ensuring closer co-operation between interested countries on the cultural, economic, technical and scientific levels, and on the question of human environment. Ministers reaffirmed that the freerer movement of people, ideas and information is an essential element for the development of such co-operation.

14. Ministers noted that Alliance studies on the various aspects of the mutual and balanced force reductions question have further progressed since the Rome Meeting and instructed the Council in Permanent Session to pursue studies in this field.

15. Ministers representing countries participating in N.A.T.O.'s integrated Defence Programme re-emphasised the importance they attach to mutual and balanced force reductions as a means of reducing tensions and lessening the military confrontation in Europe and recalled the Declarations on this question issued at Reykjavik in 1968 and at Rome earlier this year. They noted that the Warsaw Pact countries have not directly responded to these Declarations but have mentioned the possibility of a discussion at some future time of the question of reducing foreign armed forces on the territory of European states.

16. These Ministers renewed their invitation to interested states to hold exploratory talks on the basis of their Rome Declaration, and also indicated their readiness within this framework to examine different possibilities in the field of force reductions in the Central Region of Europe, including the possible mutual and balanced reduction of stationed forces, as part of an integral programme for the reduction of both stationed and indigenous forces.

17. Ministers reaffirmed their profound interest in genuine disarmament and arms control measures. In this connection, they expressed their satisfaction with progress towards a ban on the emplacement of weapons of mass destruction on the sea bed. They further considered the pursuit of Allied efforts and studies in all fields related to disarmament to be essential, including those concerning biological and chemical weapons. They invited the Council in Permanent Session to continue to examine these matters.

18. Ministers endorsed the recent Council recommendation to Allied Governments to start work at once in order to achieve, by 1975 if possible but not later than the end of the decade, the elimination of intentional discharges of oil and oily wastes into the sea. This and the other accomplishments of the Committee on the Challenges of Modern Society during the past year were welcomed by Ministers as evidence that the Allies are effectively combining their resources to stimulate national and international action on environmental problems.

19. Ministers examined a report on the achievements of the Conference of National Armaments Directors and its subordinate bodies in the promotion of co-operation in research, development and production of military equipment during the four years of its existence. They noted that, in spite of the excellent progress that had been made in the exchange of information on defence equipment, it had proved possible to establish relatively few firm N.A.T.O. projects for cooperative development and production of equipment. They recognised that more political support would be necessary to overcome the obstacles to greater co-operation. They agreed to the need for a more positive approach in order to achieve the financial and operational benefits of more widespread adoption of jointly developed and produced equipment.

20. Ministers of the countries participating in N.A.T.O.'s integrated defence programme met as the Defence Planning Committee on 2nd December, 1970.

21. Ministers concentrated their discussion on a comprehensive study, which has been in progress since last May, of the defence problems which the Alliance will face in the 1970s. They approved for public release the text at Annex.

22. Ministers confirmed that N.A.T.O.'s approach to security in the 1970s will continue to be based on the twin concepts of defence and détente. They reaffirmed the principle 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. They agreed that East-West negotiations can be expected to succeed only if N.A.T.O. maintains an effective deterrent and defensive posture. Ministers confirmed the continued validity of the N.A.T.O. strategy of flexibility in response, which includes forward defence, reinforcement of the flanks and capabilities for rapid mobilisation, and calls for the maintenance of military capabilities which are able to provide an appropriate counter to any aggression. They noted the continuous rise in Soviet defence and defence-related expenditure and the evidence that the U.S.S.R. is continuing to strengthen still further its military establishment including that in the maritime field where Soviet power and the range of its activity have markedly increased. They, therefore, emphasised the need for improvements in N.A.T.O.'s conventional deterrent, as well as the maintenance of a sufficient and modern tactical and strategic nuclear deterrent.

23. The security of N.A.T.O. being indivisible, Ministers underlined the special military and political rôle of North American forces present in Europe as an irreplaceable contribution to the common defence. In parallel they welcomed the important decision of European member nations participating in N.A.T.O.'s integrated defence programme to make an increased common European effort to strengthen the defence capability of the Alliance. The establishment of a special European Defence Improvement Programme of substantial additional measures will significantly strengthen N.A.T.O.'s capacity for defence and for crisis management in fields, including communications, which have been identified in the "AD 70s" Study as having particular importance.

24. In respect of the above Study, Ministers invited the Defence Planning Committee in Permanent Session to draw up a suitable programme and to ensure that all possible progress is made.

25. Ministers noted the force commitments undertaken by member nations for the year 1971 and adopted the five-year N.A.T.O. force plan covering the period 1971–75. They gave directions for the development of a force plan for the next N.A.T.O. planning period.

26. Ministers viewed with concern the evidence of continuing growth in Soviet military strength in the Mediterranean. Such developments, they felt, could constitute an increasingly significant threat to the security of the Alliance. Ministers commented with approval on steps which have been taken to improve the Alliance's defence posture in the Mediterranean. Referring to their Communiqué issued in Brussels on 11th June of this year, Ministers directed that urgent attention be given to the development and implementation of further appropriate measures.

27. Within the field of crisis management, Ministers reviewed communications facilities for high level political consultation and for command and control; they agreed to a number of important measures designed to improve and expand these vital facilities. They encouraged further efforts in the field of civil preparedness and civil emergency planning. They noted progress made on various defence studies. They also noted that the trend towards more sophisticated equipment at increasing cost may well continue, and they stressed that forthcoming modernisation programmes would offer an opportunity for increased co-operation.

28. The Ministerial Meeting also provided the Defence Ministers comprising the Nuclear Defence Affairs Committee (Belgium, Canada, Denmark, Germany, Greece, Italy, Netherlands, Norway, Portugal, Turkey, United Kingdom and United States) with the occasion to review work recently in progress in the Nuclear Planning Group and plans for the future. Acting on the recommendation of the Nuclear Defence Affairs Committee, the Defence Planning Committee adopted the policy documents elaborated by the Nuclear Planning Group at their meeting in Venice last Spring and finalised at Ottawa in October this year. These documents are in consonance with N.A.T.O.'s strategy of flexibility in response.

29. The next Ministerial Meeting of the Defence Planning Committee will take place in the Spring of 1971.

30. The Spring Ministerial Meeting of the Council will be held in Lisbon on 3rd and 4th June, 1971.

31. Ministers requested the Foreign Minister of Belgium to transmit this Communiqué on their behalf through diplomatic channels to all other interested parties including neutral and non-aligned governments.

ANNEX to M2(70)2/19

Alliance Defence For The Seventies

The Allied countries participating in the integrated defence efforts decided at a meeting of the Defence Planning Committee in Permanent Session in May of this year to examine in depth N.A.T.O. defence problems for the next decade.

2. The North Atlantic Alliance has made a practice over the years of periodically conducting major reviews and adapting its policies to accord with the changing circumstances of the times. A notable recent example was the study undertaken in 1967 which resulted in the Report on the Future Tasks of the Alliance establishing defence and détente as complementary pillars of its activities. That Report stated that "collective defence is a stabilising factor in world politics. It is the necessary condition for effective policies directed towards a greater relaxation of tensions". Against this background, governments earlier this year recognised the particular timeliness of a full and candid exchange of views among the Allies on their common defence over the next ten years. This examination of N.A.T.O.'s defence capability in the light of current and prospective military and political developments has now been completed.

3. N.A.T.O.'s approach to security in the 1970s will continue to be based on the twin concepts of defence and détente. Defence problems cannot be seen in isolation but must be viewed in the broader context of the Alliance's basic purpose of ensuring the security of its members. There is a close inter-relationship between the maintenance of adequate defensive strength and the negotiation of settlements affecting the security of the member states.

4. The 1970s could develop into an era of successful negotiations between members of the North Atlantic Alliance and those of the Warsaw Pact. On Western initiative, there are now negotiations under way between East and West which could lead to a real relaxation of tensions. It is hoped that there will be satisfactory progress in on-going talks on a limitation of strategic nuclear weapons and on an improvement of the situation in and around Berlin, and in other current negotiations between individual members of N.A.T.O. and the Warsaw Pact. The Alliance will continue to seek improved East-West relations, and in the framework of this effort, one of its principal aims will be to engage the Soviet Union and its allies in meaningful talks on mutual and balanced force reductions and other disarmament measures. Progress in this field would facilitate dealing with the defence problems of the next decade. This period might also see convened one or more conferences on European security and co-operation.

5. On the other hand, the Allies cannot ignore certain disturbing features in the international situation. The evidence thus far suggests that the U.S.S.R., intent on extending and strengthening its political power, conducts its international relations on the basis of concepts some of which are not conducive to détente. In particular, its concept of sovereignty is clearly inconsistent with United Nations' principles. At the same time, Soviet military capabilities, besides guaranteeing the U.S.S.R.'s security, continue to increase and provide formidable backing for the wide-ranging assertion of Soviet influence and presence, persistently raising questions regarding their intentions. In real terms, there has been a continuous rise in Soviet defence and defence-related expenditures between 1965 and 1969 of about 5% to 6% per year on average and the evidence is that the U.S.S.R. is continuing to strengthen its military establishments still further. The contrast between these figures and the corresponding information relating to the Alliance may be seen from paragraph 10 below. Whether East-West relations can in these circumstances be significantly improved will depend mainly on the actions of the U.S.S.R. and its Warsaw Pact allies, and on the attitudes they bring to negotiations now in progress or in prospect.

6.The position of the Alliance and its member countries during this period of exploration and negotiation, with special reference to European security and mutual force reductions, would he weakened if N.A.T.O. were to reduce its forces unilaterally, especially those in the European area, and in particular at a time when it is confronted with a steady growth in Soviet military power, which manifests itself above all in the strategic nuclear and maritime fields. N.A.T.O. member states must, therefore, maintain a sufficient level of conventional and nuclear strength for defence as well as for deterrence, thus furnishing a sound basis from which to negotiate and underlining that nego- tiation is the only sensible road open. Progress towards a meaningful detent in an era of negotiation will, therefore, require the maintenance of a strong collective defence posture.

7. The present N.A.T.O. defence strategy of deterrence and defence, with its constituent concepts of flexibility in response and forward defence, will remain valid. It will continue to require an appropriate mix of nuclear and conventional forces.

8. It is to be hoped that success in strategic arms limitation talks will be achieved. Allied strategic nuclear capability will in any event remain a key element in the security of the West during the 1970s. At the present time, adequate nuclear forces exist and it will be essential to ensure that this capability, which includes the continued commitment of theatre nuclear forces, is maintained.

9. The situation in the field of conventional forces is less satisfactory in view of certain imbalances between N.A.T.O. and Warsaw Pact capabilities. Careful attention needs to be paid to priorities in improving N.A.T.O.'s conventional strength in the 1970s. In the allocation of resources, priority will be given to measures most critical to a balanced Alliance defence posture in terms of deterrent effect, ability to resist external political pressure, and the prompt availability or rapid enhancement of the forward defensive capability in a developing crisis. In addition to a capability to deter and counter major deliberate aggression, Allied forces should be so structured and organised as to be capable of dealing also with aggressions and incursions with more limited objectives associated with intimidation or the creation of faits accomplis, or with those aggressions which might be the result of accident or miscalculation. In short, Allied forces should be so structured and organised as to deter and counter any kind of aggression Important areas in N.A.T.O.'s conventional defence posture to which attention should be paid in the next decade include: armour/ anti-armour potential; the air situation including aircraft protection; overall maritime capabilities, with special reference to antisubmarine forces; the situation on N.A.T.O.'s flanks; the peacetime deployment of ground forces; further improvements in Allied mobilisation and reinforcement capabilities as well as in N.A.T.O. communications, for crisis management purposes.

10. The Alliance possesses the basic resources for adequate conventional strength. However, member countries are confronted with diverging trends in the pattern of expenditures and costs. On the other hand the cost of personnel and equipment continues to mount and most N.A.T.O. countries are faced with major re-equipment programmes; on the other, in many member countries the share of G.N.P. devoted to defence has declined and, even if outlays in money terms have risen, outlays in real terms have diminished owing to inflation. In marked contrast with the trend in Warsaw Pact countries' military expenditure, defence expenditures of the N.A.T.O. European countries taken as a whole and calculated in real terms went down by 4 per cent. from 1964 to 1969.

11. It is of paramount importance that there be close collaboration among all member states to ensure the most effective collective defence posture. It is equally important that the burden of maintaining the necessary military strength should be borne co-operatively with each member making an appropriate contribution.

12. The commitment of substantial North American forces deployed in Europe is essential both politically and militarily for effective deterrence and defence and to demonstrate the solidarity of N.A T.O. Their replacement by European forces would be no substitute. At the same time their significance is closely related to an effective and improved European defence effort. Ten of the European countries have therefore consulted among themselves to determine how it would be possible for them individually and collectively to make a more substantial contribution to the overall defence of the Treaty area.

13. As a result the ten countries have decided to adopt a special European Defence Improvement Programme going well beyond previously existing plans and designed to improve Alliance capability in specific fields identified as of particular importance in the current study. This Programme will comprise:

  • (a) an additional collective contribution, in the order of $420 million over five years, to N.A.T.O. common infrastructure to accelerate work on the N.A.T.O. integrated communications system and on aircraft survival measures;
  • (b) numerous important additions and improvements to national forces, costing at least $450–500 million over the next five years plus very substantial further amounts thereafter; the forces concerned will all be committed to N.A.T.O.;
  • (c) other significant financial measures to improve collective defence capability, costing $79 million over the next two years.
  • The United States and Canada have welcomed this Programme, and have reaffirmed their intention to maintain their forces in Europe at substantially their current levels.

    14. After careful review of the proposals emerging from the examination of defence problems in the Seventies, the Defence Planning Committee in Ministerial Session on 2nd December, 1970, adopted concrete proposals aimed at improving N.A.T.O.'s defence capabilities.

    Central Europe

    27.

    asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the relations in Central Europe between the North Atlantic Treaty Organisation and the Warsaw Pact, following the Federal German Government's talks with Poland.

    We welcome the initialling of the Polish-German Treaty. N.A.T.O. Ministers' position on questions affecting relations between East and West in Europe is set out in the communiqué issued after the meeting of the North Atlantic Council which I attended in Brussels last week. I am circulating the text in the OFFICIAL REPORT in reply to Question No. 26.

    Will my right hon. Friend let the Federal German Government know that we welcome this improvement in relations between the Federal Government and our Polish friends, on whose behalf we entered the war in 1939?

    Yes, and we are glad to see the matter of the OderNeisse line settled between the Poles and the Germans.

    Is the right hon. Gentleman aware that most thoughtful people in this country welcome the peaceful settlement of the problem of the frontier between Germany and Poland, and that since most thoughtful people in this country are friendly to Poland, we realise that this affects us and also European peace?

    Will the right hon. Gentleman take this opportunity to make it clear that he does not support the views of his colleagues, expressed in the Western European Union Assembly, which sought to water down the resolution welcoming the ostpolitik of Herr Brandt?

    No, Sir. I do not think that that is necessary. Again, I can only repeat—and I think that the House feels this, too—that so far the ostpolitik has been successful as far as it has been conducted by the West German Government. We now want a response from the other side.

    40.

    asked the Secretary of State for Foreign and Commonwealth Affairs what response the Union of Soviet Social Republics has made to the North Atlantic Treaty Organisation proposals for mutual and balanced force reductions in Central Europe.

    The Warsaw Pact countries have not responded directly to N.A.T.O.'s proposals; but at the meeting of the North Atlantic Council in Brussels last week N.A.T.O. Ministers renewed their invitation to interested States to hold exploratory talks on the subject.

    Can my right hon. Friend say whether there has been any indication that the U.S.S.R. are willing to get down to discussing the substantive problems, which is necessary before this conference can be a success?

    But is it not the case that the Warsaw Powers indicated in June for the very first time that they were prepared to discuss mutual force reductions either at or after a possible European security conference, and should not the House at least welcome this progress, limited though it is, in the position of the Soviet Union?

    Yes, Sir. I am not sure how far they have gone back on what they originally said. They now seem to be limiting any discussion to the reduction of foreign forces on the territory of European States, and are not willing now that this should be discussed in a security conference. But this has further to be explored. I think that the Russians feel that this is not the right forum.

    Middle East

    28.

    asked the Secretary of State for Foreign and Commonwealth Affairs what proposals he will submit to the United Nations concerning guarantees for any settlement in the Middle East.

    We have no immediate plans to put forward proposals on the subject. This is one of the matters which has been the subject of discussion in the Four-Power talks in New York.

    I thank the right hon. Gentleman for that reply, but does not he agree that effective guarantees are an essential key to any settlement in the Middle East and that on this occasion we must not repeat the mistake made in 1956 by denying teeth to any military presence, as it was previously denied as a result of the British and French veto in 1956, and that it is therefore necessary for the Security Council to support any military presence with its authority; if one or two super-Powers are hesitant about becoming involved directly in guaranteeing a settlement, has the right hon. Gentleman considered the possibility of a European initiative?

    This is one of the most sensitive issues in the whole problem of the Middle East. There are others, but this is one of tremendous importance. We have obviously had discussions with our colleagues and others to see whether we can find ways and means of providing satisfactory guarantees. We certainly have thoughts in relation to this, but I do not think that it would help if I were to set them out this afternoon.

    Will the Minister exercise his influence in trying to bring about the maximum degree of European participation in any settlement in the Middle East?

    Yes, Sir. It would obviously be necessary to have European participation. That will be one aspect that we shall bear in mind.

    The Minister's replies have been encouraging, but can he say specifically that there is no objection in principle to a French or British contribution to a United Nations force on Israel's old frontiers, if and when she withdraws to them?

    We should not be opposed to providing a contingent to such a force. The main thing is to obtain agreement among the parties concerned on the sort of force that would give them an adequate feeling of security.

    Will my right hon. Friend try to make the point that if such a force is established it will not succeed if, as in the case of the last one, it is at the behest of a dictator?

    Without commenting on what happened before, I would say that the best thing, if this were to be done under United Nations auspices, would be to make it subject to a Security Council resolution, which would mean that any of the major parties concerned could veto any suggestion of a withdrawal.

    Union Jack

    42.

    asked the Secretary of State for Foreign and Commonwealth Affairs what criteria govern the lowering to half-mast of the Union Jack over United Kingdom diplomatic missions in the capitals of foreign countries on the occasion of the funeral of a foreign head of state or head of government.

    The flying of flags at half-mast is a matter for The Queen's Pleasure, and appropriate instructions to do so are given under Command of Her Majesty in each case as it arises.

    Can the right hon. Gentleman explain, therefore, why it was decided that the Union Jack should be lowered to half-mast in Jerusalem on the day of President Nasser's funeral? Would he not agree that although President Nasser's death was greeted with widespread regret in this country, it inevitably aroused more mixed feelings in Israel; and that this action was an act of insensitivity on a par with the Foreign Secretary's speech at Harrogate?

    No, Sir. I would not accept it as insensitivity. Her Majesty's local representative must have discretion in regard to local usage, and in this case the Consul-General flew the flag at half-mast because he judged that not to do so would give offence to a large proportion of the population, if not to all.

    On a point of order, Mr. Speaker. If this is a question of the Prerogative, should the Question have been asked?

    Order. I understood that the Minister accepted responsibility by answering.

    Overseas Development

    Inter-Departmental Committees

    30.

    asked the Minister for Overseas Development if he will state the inter-Departmental committees on which the Overseas Development administration of the Foreign Office is separately represented.

    No, Sir. It has for a long time been the practice not to disclose details of this kind.

    Noting that the practice of secrecy in Cabinet Committees has no logical justification, and in any case has been breached in the past on some security-associated committees, may I ask the right hon. Gentleman to confirm that in those committees on which he and his sub-department are represented he will be able to express a view different from that expressed by the main stream of the Foreign Office, and that he will not be under any compulsion?

    I told the hon. Gentleman last month that the Overseas Development administration would be represented on inter-Departmental committees. That is the position; and I cannot go further than that.

    Commonwealth Development Corporation

    31.

    asked the Minister for Overseas Development if he will change the financing of the Commonwealth Development Corporation to a revolving fund basis.

    Does the right hon. Gentleman recognise that the present system means that we book as public expenditure in respect of the C.D.C. positive sums when for many years the C.D.D. represents a net gain on public expenditure? Will he look into this matter to see whether an improvement can be made?

    It would represent a fundamental change in the structure of the Commonwealth Development Corporation. I have not been convinced by any arguments that this would bring real gains in its train.

    Under-Developed Countries

    32.

    asked the Minister for Overseas Development if he will specify the steps he is taking to encourage more private investment in developing countries; and, in view of the unpredictable nature of the amount of private investment, how he proposes to maintain the overall target figure of one per cent. for overseas aid.

    In answer to a Question on 16th November, I said I had set up a working party to examine means of encouraging British private investment in developing countries. The Government has undertaken to do its best to reach the U.N.C.T.A.D. 1 per cent. target by 1975. A number of different elements count towards this target and I shall keep a close watch on each of them. The Government have already announced substantial increases in official aid flows over the next few years.—[Vol. 806; c. 310.]

    Despite that, does not the right hon. Gentleman recognise that there is an alarming credibility gap between the promise, reiterated by the Prime Minister, to try to reach 1 per cent. by 1975 and the aid figures announced by the Chancellor, which would take us only to half of 1 per cent. by 1975?

    There is no credibility gap. We have announced that we are looking into the possibility of stimulating private investment. The right hon. Gentleman is jumping ahead too far in assuming that this examination and consequent action will fail. I believe that it will be successful, and will make a contribution towards the 1 per cent. target.

    Does my right hon. Friend agree that the best way of encouraging private investment in developing countries is to find some way of persuading developing countries that what possible private investors fear most is nationalisation without adequate compensation?

    Technical Personnel (Accommodation)

    33.

    asked the Minister of Overseas Development what steps are taken when his Department recruits technical personnel for work overseas to ensure that adequate accommodation for themselves and their families will be available.

    The receiving Government are responsible for providing accommodation as part of the terms and conditions of service offered. If there is undue difficulty or delay, my Department sees that the matter is brought to the attention of the Government concerned.

    Is my right hon. Friend aware that some technical officers recruited for Zambia by the Crown Agents have complained that they were misled about accommodation conditions in that country, and that some families have now been waiting for many months for proper accommodation? Will he ensure that before any more of our people are sent out suitable accommodation is available for them?

    I have communicated with my hon. Friend about the case that he drew to my attention. We are making representations through the British High Commission in Lusaka. It is obviously important to try to ensure that new agreements, as far as the O.S.A.S. is concerned, include some clause to prevent this happening, as far as possible.

    Will the right hon. Gentleman examine the big gap that sometimes exists between the housing conditions of the expert and technical people that we are sending overseas and the people that they are serving? Will he try to do something about the training programme so that the difference between the people of the locality and those coming from overseas is not so wide? It makes their work difficult.

    We must obviously see, as part of the inducement to people from this country to serve abroad, that their housing and other living conditions are adequate.

    Second Country Training Schemes

    34.

    asked the Minister for Overseas Development what support he intends to give to plans for second country training schemes within the Commonwealth.

    The Government have undertaken to support arrangements for training people from one developing Commonwealth country in another as part of the expanded Commonwealth Programme for Technical Co-operation.

    Can the right hon. Gentleman tell me whether this matter is likely to be considered at the Commonwealth Prime Minister's Conference?

    I have no doubt that it may be discussed there. As the right hon. Lady knows, this matter has been discussed with the Commonwealth Secretariat, and with other Commonwealth countries, and I am anxious that we should make progress.

    Development Aid Target

    35.

    asked the Minister for Overseas Development if he will now state Her Majesty's Government's full reasons for their refusal to accept a separate target for flows of official development assistance.

    I gave the right hon. Lady the reasons on 16th November.—[Vol. 806, c. 303.]

    If the right hon. Gentleman will forgive me, what he said then was completely tautologous. He said that we were refusing to accept an official aid target because we were refusing to accept one. I cannot accept that as in any way an adequate answer for the complete failure to understand the importance of a special aid target.

    Perhaps I can help the right hon. Lady. The Government see no advantage in fixing any target, either private investment or official flows, because we regard both as equally important.

    Then can the right hon. Gentleman tell me whether that means that he therefore rejects the Pearson Committee's recommendations on this matter?

    Does not my right hon. Friend agree that this Government's more flexible approach to aid offers the best hope of reaching the overall 1 per cent. target at the earliest possible date?

    South Vietnam (United Kingdom Aid)

    36.

    asked the Minister for Overseas Development what plans he has to increase United Kingdom aid to South Vietnam now that the period of reconstruction is beginning.

    My hon. Friend, the Under-Secretary of State, has just returned from Vietnam. I hope that his discussions with Ministers and officials in Saigon will have indicated new areas in which our aid may contribute to the economic development of the country.

    I congratulate my right hon. Friend on his enterprise in sending his hon. Friend the Under-Secretary of State to Saigon to see for himself, but will he remember that the total British aid to South Vietnam now amounts to less than 2d. per head per year? In view of the great war damage done in that country, and of the widespread concern expressed by both sides of the House, will my right hon. Friend now consider a substantial increase in aid?

    Perhaps I can assure my hon. Friend by saying that the present Prime Minister when Leader of the Opposition told the House two-and-a-half years ago that we would certainly want to play an important part when the time for reconstruction came. This I hope we shall be able to do, and I look forward to hearing the ways in which we can do it from my hon. Friend.

    Does the right hon. Gentleman agree that until there is a satisfactory peace settlement in Vietnam it might be wiser for us to restrict our aid to the medical help we have so far been giving?

    The right hon. Lady perhaps knows that we are going further than that now. We are already financing the construction of two primary schools in Saigon, and are looking into the possibility of setting up an English language centre. I think that both things are important.

    37.

    asked the Minister for Overseas Development how long the British medical team will remain in Saigon.

    Will my right hon. Friend remember that the British medical team has built up a great reputation for service, and that it would be a great pity if the team were to be withdrawn?

    This is entirely true: the medical team has a very fine reputation indeed. The first leader of the team, Dr. Philip Evans, has been asked to go to Saigon late in January to see the best way in which we can possibly continue to provide technical assistance in the paediatric field.

    Will the Minister make it very clear that this aid is given purely on a humanitarian basis, and in no way implies any acceptance of the political or military position in South Vietnam?

    The medical team went out to do a job and I think that it has done it very well.

    Electricity Supply Industry (Dispute)

    I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration namely,

    "the dispute currently in the electrical supply industry, which is already causing considerable disruption to communications, transport and industrial production, and causing considerable hardship and inconvenience to the public, particularly in the East Midlands area".
    Any further deterioration will without doubt produce a situation not far short of a national state of emergency. I therefore respectfully request that the House be adjourned in order that this matter may be discussed.

    The hon. Member must bring his submission to me in writing.

    The hon. Member for Derbyshire, South-East (Mr. Rost) was courteous enough to inform me earlier in the day that he might seek to make an application under Standing Order No. 9 this afternoon.

    The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter which he thinks should have urgent consideration, namely,
    "the dispute currently in the electrical supply industry, which is already causing considerable disruption to communications, transport and industrial production, and causing considerable hardship and inconvenience to the public, particularly in the East Midlands area".
    As the hon. Gentleman and the House know, under Standing Order No. 9 I am directed to take account of the several factors set out in the Order but to give no reasons for my decision.

    I have listened carefully to the submission which the hon. Member has made, but I have to rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order; and therefore I cannot submit his application to the House.

    Business Of The House

    Ordered,

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

    Orders Of The Day

    Supply

    [7TH ALLOTTED DAY],— considered.

    Inland Revenue Department (Report Of Estimates Committee)

    Motion made, and Question proposed,

    That this House takes note of the Fifth Report from the Estimates Committee in session 1968–69 and of the related Departmental Observations. (Command Paper No. 4314.)—[Mr. Eyre.]

    3.33 p.m.

    In the absence of the consideration of this Report being moved by the Chairman of the appropriate Committee, it is perhaps for me to launch the debate on an important Report which came from the Estimates Committee concerning the Inland Revenue Department.

    The whole House must be grateful to the Committee for all its labours and for its final Report. The individual taxpayer knows well enough of the delays which affect him. The staff are all too well aware of the burden which they have to face, but it is right that the House and the country as a whole should direct their minds to the problems which are posed on the present workload of the Inland Revenue.

    I want first to place it firmly on the record that we get in general from the Inland Revenue a very high standard of work. Although it may not always be apparent to Members of the Committee on the Finance Bill—

    On a point of order. We seem to be having some difficulty with the acoustics. Is it possible for you, Mr. Speaker, to suggest that the hon. and learned Gentleman should speak up?

    I suspect that it is not a matter of my voice but is a matter of the engineering of the House. I think that I can manage to proceed without the assistance of artificial means, and I shall certainly speak up for the benefit of the hon. Gentleman.

    I was paying a tribute to the work of the Inland Revenue and saying that, although it might not be immediately apparent to every member of the Committee which considers the Finance Bill, it is a fact which most Treasury Ministers have recognised, that the quality of the briefs and the information with which they are serviced is of a very high standard indeed.

    It is true that Ministers who advocate reforms find from time to time that they are perhaps somewhat frustrated by the expertise in the Revenue in explaining the obstacles in the way of what they propose; but this is not necessarily to criticise. It would indeed be deplorable if one was not aware of the obstacles to suggested courses of action. I certainly found that whenever a reform was decided upon, whatever the initial enthusiasm of the Revenue had been, it spared no effort in promoting the reform in the best possible manner.

    It is not just the intellectual quality of those at Somerset House which is impressive. I was glad to see from the evidence quoted in the Report that the Staff Federation had a high regard for the management which came from the top. In its written evidence the Staff Federation stated that, although it had some reservations at the lower levels, it commended the top management at the Board and head of division levels. I believe that this feeling of high regard is reciprocated by the top management in relation to the members of the Staff Federation.

    On this occasion the Board has demonstrated its reasonableness in its reply to the Committee's recommendation, and it has been encouraging to find that a large number of the recommendations which were made have been accepted by the Inland Revenue.

    Nevertheless, the main position revealed by the Report is undoubtedly a disturbing one. The workload is heavy. The strain on the staff is very considerable. There are difficulties of recruitment. What is perhaps even more serious, there are difficulties of retention of highly trained and skilled staff. This position clearly has the most serious implications for the reform of taxation.

    When we have discussed the Finance Bill hon. Members on both sides have shown themselves to be extremely impatient of arguments which are concerned with administrative convenience or administrative difficulties. In present circumstances it would clearly be quite wrong for hon. Members to disregard the administrative effects of what they propose and what they discuss. However, it is also intolerable if tax reforms of great economic and social importance cannot be effected because the administrative machine of the Revenue cannot cope. I know of no other Government Department where there are such severe limits placed on a Government's room for manoeuvre in considering reforms. These are restrictions placed on the administrative framework by the load which at the moment the Revenue must bear.

    I believe that several conclusions flow from this. First, in considering particular modifications of the law I have no doubt that we must look perhaps rather more than we have done in the past to simplicity, if necessary at the expense of some equity. There is a universal demand that our tax laws should be simpler and fairer. People do not realise that in most cases we cannot have both. Every modification to meet a particular case, to create a further exemption, to give special treatment to a specially deserving category of citizens, complicates the tax structure and more often than not in itself gives rise to further anomalies which call in due course for further modifications.

    One of the examples given in the Report are some Clauses which were added to the 1969 Finance Bill, I believe at the Committee stage, relating to the disallowance of tax relief for interest payments. This is a perfectly good example of how equity complicates the law. I am not suggesting that we were wrong to add those clauses. Clearly one cannot always disregard equity. But this is a good illustration of how the two can conflict. Inevitably the pressures from overseas come mainly on the side of equity. In general, we should give more thought to preserving or promoting simplicity in the light of the administrative congestion which prevails.

    Next, I have no doubt that the Inland Revenue is one of the foremost areas in which it would be wrong for the Government to take too restrictive an attitude to the expansion of staff. This is not, in fact, one of the recommendations of the Committee.

    If there is one point on which, perhaps, I would like to have seen the Committee go further in its recommendations than it did, it is in looking at the clerical and executive staff and in seeing how far the position of recruitment and retention there could yet be further improved. Certainly the question of the expansion of staff is essential if we are to eliminate the formidable barriers to future reform. This will apply just as much to any reforms which the Government may have in mind as it applies to what the Opposition will have in mind when they return to power.

    The Revenue works in practice, I find, rather surprisingly, by always estimating the amount of work involved in blocks of hundreds of thousands of hours' overtime. But even reforms which simplify the law and which may save time in the end may still often initially require a large amount of overtime, and it is wrong that putting too great a burden of overtime on the staff should prevent necessary change.

    I understand that a group of consultants has been appointed to look at the causes of wastage. Not only expansion but retention is, of course, a vital question. Clearly, the problems of the Revenue would be eased to a considerable extent if the phenomenal rate of wastage could be reduced. I understand that the wastage rate of the tax officers (higher grade) alone has more than doubled in the last five years. Can the Financial Secretary say when he expects to see the report from those consultants? Certainly when that report is made I hope the House will have an early opportunity to discuss it. Naturally he or the Government will discuss it with all the staff involved, but I hope that this House, too, will have an opportunity to consider it.

    Thirdly, there is, in my view, an urgent need for new premises for certain tax offices. The conditions in some of the central London offices that I visited were quite intolerable and could only have a bad effect on the recruitment and retention of staff. So whatever the restraint on Government spending in other directions, it seems to me that the improvement of the position of the Revenue does have a very high priority. I hope that the Financial Secretary himself has also visited and, if he has done so, will continue to visit the premises and see for himself the conditions under which some of the staff have to work.

    The main recommendation made by the Committee to ease the general position was the suggestion that there should be an independent inquiry to simplify and remodel the national tax structure and to review the organisation of the Inland Revenue. Before I come to that, however, I should like to take up two particular recommendations.

    The Committee recommended that surtax should be decentralised and transferred in due course to the Chief Inspector of Taxes branch. The Revenue reply to this was that this would cost between £500,000 and £2·3 million over 20 years. The Revenue does not accept the recommendation, but says that it will keep it under continuous review.

    It may be difficult to press this suggestion at this time, because it obviously depends to a large extent on what attitude to surtax and the amalgamation between income tax and surtax the Government are taking. When I was in the Treasury there was a Working Party which looked at the reform of income tax and surtax structure, and which would clearly consider, amongst other things, the amalgamation of the two. This review is obviously still proceeding and, indeed, the Financial Secretary said in answer to a Question recently that this was being considered.

    It seems to me likely, or desirable at any rate, that at the end of this review we should abolish surtax under that name and proceed to have a more logical system of income tax rising in a series of steps without any special surtax structure. Whatever happens to the rate of surtax, clearly this is a logical and sensible arrangement. If the two are unified, clearly the Committee's recommendation would automatically take effect.

    The other particular recommendation to which I refer concerns the promotion structure for tax officers (higher grade).

    I have already referred to the wastage rate. I was disturbed when I looked into this myself to find how slow the promotion rate was. At present, as the Committee explained in paragraph 39 of its Report, these executive officers who cannot join before 18 must wait six years for modified training and must then have been basic grade inspectors for four years before they can be selected for final training. The Committee recommends that the six-year and four-year periods should be reduced. I think this is a vitally important recommendation, and I am not entirely clear what the Revenue's answer to this is.

    The Revenue says that there is a practical obstacle to reducing the six-year period because of the limited competition which requires four years' service in the grade before it can be attempted. I am not sure how many people can he promoted through this limited, competition. Nor am I quite sure what the new proposals of the Board are. But of one thing I am convinced; whatever the practical obstacles, they must be swept away. This 10-year period is far too long for any bright youngster entering as a tax officer (higher grade). It means a loss of potential inspectors and of executive officers. Many with gumption and intelligence will simply not wait that long. Why should they? Once they have acquired a reasonable degree of knowledge, they are worth their weight in gold to accountants' offices. In one of the tax offices I visited, the district inspector viewed with the greatest of regret the number of good men and women he had lost to accountants' firms. It may well be that one cannot avoid accountants offering a higher salary—at present they can do, and they do so. But the long delay, in any event, has a dispiriting effect and is bound to lose a good number of men and women who are badly needed. Unless we make a change, we shall continue to subsidise the accountants' profession, or at any rate, accountants' offices, with recruits trained at the Revenue's expense.

    I do not wish to show any disrespect to the Committee by not referring to all the other recommendations at the end of its Report. Many of them, as I said, have been accepted in any case.

    I want to end by turning to the call for a new national inquiry. I am not entirely surprised by this recommendation, because in effect what the Committee said was, "All our recommendations may marginally improve the position in the Revenue, but what is basically wrong is the complication of our tax system. We cannot solve our main problems until we have a better system." This recommendation was, in a sense, a cry of despair.

    Our tax system was last examined in detail by the Radcliffe Commission, and I do not, with respect to the Committee, feel that a further Royal Commission at the moment is the answer to the Committee's prayers. Nor do I expect, for that matter, any dramatic results to come from the group of the Inland Revenue professional and business experts who are consulting on the reforms of our present tax structure. The official answer certainly refers to this group as if it were some sort of alternative to the national inquiry. But while I welcome the existence of this group, I cannot see, and I am sure they themselves cannot see, any splendid non-controversial, simple, all-embracing recommendations for refrom emerging at the end.

    There are certainly ways in which considerable simplification and improvement can be achieved. As I have said, complexity inevitably arises from pressure for exemptions in favour of deserving categories or causes which in due course have to be further modified and remodified. For example, we have the exemptions in favour of house buyers. We wish to encourage house ownership, a worthy cause. Immediately, anomaly arises in that those who are in any event buying a valuable capital asset have relief in respect of what they pay in the process of acquisition, while those who do not have the benefit of the asset but who are paying the equivalent of mortgage payments through rent have no relief. A new system is introduced, or promised, for rent relief, which is to extend to private tenants as well as to council house tenants, but this will be means-tested, and there will be no help for those higher up the income scale, whereas the mortgage relief goes to all, irrespective of income. Clearly, there is here an element of anomaly and injustice.

    Further to encourage saving, we have over the years built up a most elaborate and complicated structure of reliefs in respect of various kinds of insurance policies. I need not go into detail, but one could point here again to several anomalies which have arisen over the years in connection with savings.

    It would be better, simpler, and, I suspect, in the long run more just, to sweep away all this structure of exemptions, saving about £800 million or whatever it is, and reduce income tax by the equivalent of 2s. in the £. This would bring about an enormous saving in administration time, simplify the tax system, and broaden the base of the tax structure—lowering the height of the building, so to speak, without having a regressive effect. If one started with a tabula rasa, this would, I believe, be a much more sensible and simpler way to proceed. However, since millions of people have undertaken commitments which would be adversely affected, and since a whole business has been built up on the present base of tax concessions in insurance, it would be such a drastic reform that most would shy away from it. Indeed, I doubt that we can look for this kind of drastic solution.

    The only alternative is the most painstaking careful analysis of various aspects of our tax system. The real trouble, it seems to me, is that there is not sufficient discussion and study of taxation outside Somerset House. There are a few studies scattered throughout the universities, with one or two professors taking an interest in a special branch of tax, and in some areas, for instance, at York University, there is perhaps a more concentrated investigation than one finds anywhere else. But by and large we do not have the number or quality of students or the systematic research into different fiscal systems which there are, say, in Canada or the United States.

    Neither do we have any means whereby experts in different disciplines—expert sociologists, for example, as well as economists—are brought together with expert administrators and professional men to ensure that the suggestions for tax reform can work in practice. I fully endorse the evidence on this point given by Professor Wheatcroft to the Select Committee on Procedure when it was looking into the question of a Select Committee on Taxation. At another time, I shall return to that subject.

    I have no doubt that, to some extent, the widespread dissatisfaction with our tax system and part of the root cause of the administrative problem facing the Revenue should be attributed to the lack of sufficient expertise outside Somerset House on which tax reformers can draw. Without it, whatever the long-term plans of the Revenue itself, Governments are bound to press a series of ad hoc measures which prevent the evolution of our tax system as a more logical and coherent whole.

    Although I am in no way responsible for it, I hope that the Report of the Estimates Committee will commend itself to the House, and I know that all right hon. and hon. Members will be duly grateful to the Committee for its labours.

    3.55 p.m.

    As one of the members of the Committee which carried out this investigation, I wish to say at the outset how much I agree with many of the observations falling from the hon. and learned Member for Lincoln (Mr. Taverne). All of us on the Committee were very impressed by the standards maintained throughout by the Inland Revenue and by the sense of dedication shown by everyone working in the Department. I agree with what the hon. and learned Gentleman said about the state of some of the premises in which these people are expected to work, and I echo his plea. There ought to be proper attention paid to this side of the matter in order to ensure that the premises are in a good state so that those working in the Revenue are able to enjoy the same sort of working conditions as are enjoyed by anyone doing a similar job in commerce or industry.

    We felt that there were many reasons for the wastage of staff, but one of the main reasons—again, this echoes what was said by the hon. and learned Gentleman—is the long period which a bright young man may have to wait for promotion, a period which he may well regard as a little too long so that he is attracted away to accountancy, to banking, and so forth. We felt that this problem was so serious that we should make a recommendation about it.

    We felt that the system of surtax was based on conditions applying many years ago, and, for my part—I cannot speak for the rest of the Committee—I thought that the reasons given for not bringing surtax into the general tax pattern were very weak. In my view, it is now time that we created a situation in which we had a general tax system, with surtax no longer treated as a separate body of tax.

    The hon. Gentleman will recall that when we discussed this matter at some length, it was emphasised that the same recommendation had been made in the Report of the Estimates Committee on the Inland Revenue in 1961. Some years had passed since there had been that call for a review, and at this point we began to feel a little impatient with the excuses made for keeping the system as it is.

    The hon. Gentleman is right. We were concerned that, apparently, the Inland Revenue had ignored the recommendations in an earlier Report and seemed to be concentrating, I thought, over much on the fact that it was committed to purchase a very expensive computer for the surtax centre, the life of which would be ten years, I think. We did not feel that this was a particularly good reason for again putting off a recommendation made as long ago as 1961, and I very much hope that the matter will be taken up afresh.

    The hon. and learned Member for Lincoln suggested that there ought to be a closer review of the whole question of the tax structure, administration, and so on. In this respect, we are as an Estimates Committee in an extremely difficult position in that we cannot put in our recommendations anything which would conflict with the will of the House. While we may have felt—I certainly did—that the impact of many sudden changes in taxation had been a major cause of problems in the Inland Revenue, we could not as a Committee make a recommendation along those lines, for we should he going completely wrong if we commented in that way upon a decision which had been taken by the Government and subsequently passed by the House in a Finance Act. We had to be careful, therefore, in spelling out the ways in which we felt that some changes could be made.

    I was impressed by the tremendous reaction there is upon the whole staff of the Inland Revenue if Parliament suddenly decides in a Finance Bill on two or three major changes in taxation. This is something which we could not say in our Report, but we now have the opportunity of saying it in the House. We should learn the lesson and not seek to make a number of violent changes in the tax structure in one go because if we do, as surely as night follows day, we throw great difficulties on the staff of the Inland Revenue in trying to deal with the tremendous increase in work it inevitably causes.

    I merely wanted to make these few points and to say that I am glad that the Opposition chose the Report for debate. I hope that the general recommendations of the Report commend themselves to the House.

    4.0 p.m.

    I too, served on the Sub-Committee and I must say that when my colleagues and I were given this subject for investigation we were a little perturbed and did not look forward to it. But when we came to investigate we found the subject of tremendous fascination and it was well worth going around the country meeting the staff, listening to the evidence and seeing the conditions under which the staff work.

    There is not the slightest doubt by the Sub-Committee that the Inland Revenue is under-strength and overworked and that the great majority of the staff work in grimy and depressing surroundings. That situation affects even the taxpayers. For instance, there are complaints of delay in the repayment of tax refunds—some of them lasting many months—which must cause a great deal of hardship to quite a number of people. But it is not the fault of the Inland Revenue officials. They have too much to do and, as a result, the taxpayers suffer. It is also no fault of the staff that investigations into tax evasions are held up or are interfered with because there are simply not enough investigating staff to get on with the job. In that aspect alone, if the situation were adjusted so that there were more staff and better flexibility of promotion, the Treasury and the country as a whole would benefit, because a great deal of the tax being avoided at the moment would be recovered.

    I agree with the hon. Member for Totnes (Mr. Mawby) that the wastage of staff to commercial undertakings is very serious. Why do they go? The answer is simple. These are highly trained and specialised people and they are attracted to private concerns because those concerns can pay a far higher salary than they can get in the Inland Revenue. The answer is that there must be some revision of salaries.

    As we all are, I am for simplification of taxation. But we must face the fact, as the hon. Gentleman pointed out, that the very operation of simplifying taxation will, for a period, throw a greater burden of work on the Inland Revenue. I do not know whether the Chancellor of the Exchequer did any service to the Opposition in doing so, but he certainly gave some degree of service to the Inland Revenue by issuing notice of a reduction of 6d. in the standard rate of income tax next year. That may assist the Inland Revenue. But even if the Government ease off, at least for a period of time, coping with that easing off takes up more time of the Inland Revenue. It sounds ridiculous, but it is so.

    The Sub-Committee visited East Kilbride and saw the computer centre there. After what we had seen in other income tax offices we thought that the staff conditions at East Kilbride showed a fantastic improvement. The staff there may not agree that their restaurant serves particularly good meals, but I thought that the food was marvellous compared with what hon. Members get in this House. They work in light, airy offices, almost hygienic to a fault. It was a revelation to us. That centre is coping with practically all the P.A.Y.E. in Scotland.

    In the computer room we saw the machinery in operation—machinery which can be used for other public services and Government Departments. We were told that the extension of computer centres in the Inland Revenue would probably save about 6,000 staff. That does not mean any reduction or sacking of staff. It means that the staff will be able to begin to cope with the work involved because the computer system does not need so many people to operate it.

    But I want to offer a word of warning about computers. We had a rather terrible incident during the investigation. The Chairman of our Sub-Committee was that well-known figure Sir Eric Errington, the former hon. Member for Aldershot. Sir Eric never gave the impression of having an eagle eye, but his appearance was deceptive. We were going through the various stages of the computer's work and at the final stage Sir Eric pounced. He spotted a single tax P.A.Y.E. form beautifully made out but with no name and address at the top. He asked why this form was in the computer and it had to go all the way back. The incident showed that while one must have computers one still needs the human element to feed in such simple things as names and addresses. I believe that the computer centres will ease staff shortage and give better conditions.

    I gladly endorse what has been said about the overcrowded, dusty, dirty and depressing conditions under which a great many of these highly skilled and trained staff have to work. I went to the Norwich office, which was near the Cathedral, not in the course of the Sub-Committee's investigations, but as part of my constituency work. The Deputy Chief Inspector had to be at the door to meet me because, he said—quite seriously, for it was not a joke—"I am afraid that you will get lost on the way to find my office." It was a terribly crowded, Dickensian place, and I am glad to say that within the last few weeks the Inland Revenue in Norwich has moved to ideal modern offices.

    There is another aspect to which both the public and the House must pay attention. One of the obstacles, though perhaps minor, to recruitment is the social standing of a tax inspector. For many years the tax inspector has been a music-hall joke, and even when he moves around in his social activities outside his work there is a degree of taint in his being a tax inspector. This must be tackled. We must raise the prestige of the Inland Revenue staff. This is not a joke. It is a very serious matter and it is affecting recruitment.

    Again, it is all very well to talk about getting more staff and improving premises, but salaries and conditions must be re-adjusted. They must be improved considerably in order to attract recruits and prevent wastage. Promotion must be more rapid and flexible. During our investigations, we saw many bright young men and women worthy of pro- motion but held back by the fact that a certain period of time has to elapse.

    In conclusion, I should like to pay tribute to the staff. Wherever we went, they were doing their best under difficult circumstances. They deserve more than they are getting at present, from the public and from this House. This serious situation has to be tackled and tackled from the human as well as the mechanical angle.

    4.11 p.m.

    Listening to the hon. Member for Norwich, North (Mr. Wallace) and to his hon. and learned Friend the Member for Lincoln (Mr. Taverne), I could not help feeling some doubt about the direct co-relation which they seemed to be making between the condition of premises in which the Inland Revenue is required to work and the service which it offers to the public. I shall be principally concerned this afternoon with East Kilbride, which, as the hon. Gentleman said, is indeed a model of premises for the Inland Revenue to operate in. But alas, the service which it provides to the public in Scotland leaves a good deal to be desired, as I hope to show.

    Before coming to that aspect of the matter, I shall just comment briefly on the remarks of the Financial Secretary. I join my hon. Friend the Member for Totnes (Mr. Mawby) in congratulating the Opposition for choosing this subject this afternoon. I do not know whether one is to attribute this to courage, cheek or a sense of contrition. Having listened to the Financial Secretary, I am afraid it is clearly not the last mentioned.

    I must protest to my hon. Friend. I have not yet said a word in the debate. I hope he will excuse me.

    I was not aware that I referred to my hon. Friend. If I did, it was entirely a slip of the tongue, and I apologise to my hon. Friend.

    The report is one long condemnation of the conduct of our tax affairs by the last Government. My hon. Friend the Member for Totnes said that it was not for the Committee to pass comment on legislation which had been approved by Parliament. That is true, but I am glad to see in paragraph 74 the Committee made not a bad bash at it. It said:
    "Your Committee … are obliged to recognise that the fundamental cause of the Inland Revenue's present plight is the growth in tax legislation over the last few years. This is the fruit of Government policy which is not for Your Committee to criticise."
    Fortunately we do not have to be so inhibited in the House. Indeed, if we look at paragraphs 24, 27, 29 and 36—I do not intend to read them; hon. Members obviously have them—time after time we come down to the fact that the present serious problems and conditions of the Inland Revenue are the direct consequence of the vacuous, ill-prepared, ill-considered and ill-digested tax legislation and tax changes introduced by the previous Government.

    As the burden of taxation has been enormously increased and has gummed up the works of the Inland Revenue system, so the need for that system by the individual taxpayer has inevitably increased. In other words, the demand for the service has grown as the tax burden has grown, and the growth in the tax burden has ensured that the service provided will suffer accordingly.

    Would the hon. Gentleman not also concede that the demand by the public for greater services from the public sector as a whole has resulted in the need to increase tax revenue overall? Both go together, and there is no point in the hon. Gentleman speaking about one without taking the other into consideration.

    I would not concede that. But I should be going rather wide of the subject if I followed that line.

    As a result of the ill-considered tax changes of the last Government, a very serious situation has been produced in the Inland Revenue. The hon. and learned Member for Lincoln trotted out the old favourite that one cannot have simplicity and equity in the tax system. I do not entirely disagree with that, but what is clear to me is that the higher the levels of taxation the more complexity is needed to provide equity, and as we reduce the levels of taxation so simplicity is more easily reconciled with equity. That is the direction in which, I trust, we will move.

    In general, the problems which have afflicted the Inland Revenue have been particularly acute in so far as the service offered to the taxpayer in Scotland is concerned. I intend to devote my remarks mainly to the position of the Inland Revenue centre No. 1 at East Kilbride. I make no apology for doing this, because the Estimates Committee points out that the Inland Revenue Centre at East Kilbride is, in a sense, the prototype, the first one. Therefore, what has happened in East Kilbride, and what, alas, is still happening is of general and broader relevance, because our experiences with East Kilbride are experiences which hon. Members on both sides of the House representing English constituencies may, if we are not careful, have to face when their local "East Kilbride" is established.

    In the four or five years during which I represented my constituency before East Kilbride, as one might say, came on stream, I cannot recall one single case where a constituent of mine was unable to obtain redress of errors and adequate service from the taxation office, which at that time was the local P.A.Y.E. office in Dundee. I can recall numerous cases when constituents of mine—

    We will come on to the question of conditions in a moment. I can recall numerous occasions when constituents of mine came to me to complain that they were being taxed out of existence. That was a direct consequence of the tax legislation passed by hon. and right hon. Gentlemen opposite. I had to explain to constituents that, alas, there was no redress to that, except by returning a Conservative Government. We are beginning now to see that redress.

    The background is that in my part of Scotland we had an excellent service from the Inland Revenue prior to East Kilbride. Since then, I regret to say that there has been a fairly horrific change in the situation. So far as I can judge from what I have heard from my hon Friends representing Scottish constituencies, and hon. Gentlemen opposite, my experience with my constituency has been pretty well typical of what has been happening in most constituencies in Scotland.

    Would the hon. Gentleman kindly desist from associating his remarks about East Kilbride with hon. Members on this side of the House. I for one have had a very different experience, and one of helpfulness. Let him speak for himself and not us.

    If the hon. Gentleman has the opportunity to catch Mr. Speaker's eye, he will explain what his experience has been. I know, from conversations with other hon. Members and hon. Gentlemen on the opposite side of the House, that my experience in my constituency has been by no means unique, but in fact typical.

    I can best describe what has been happening by mentioning one or two of the many cases drawn to my attention in the past eighteen months.

    The first case concerns a lady who retired in October, 1968, In January, 1969, she forwarded her P.45 to East Kilbride so that her coding could be adjusted and she could receive a rebate. She heard nothing. She wrote to inquire what was happening and received neither reply nor acknowledgment. Over the next 10 months, she wrote four times, again receiving no acknowledgment. Finally, she saw me, and I managed to get an explanation and an apology for her, together with her rebate.

    Another case concerns a gentleman who became redundant in March of this year and started to draw unemployment benefit. He was also in receipt of a pension from the Forestry Commission. From the beginning of April, he suddenly found that the tax deducted from his pension had increased since he became redundant. He wrote to the Cardiff tax office which handles Forestry Commission tax and got no reply. He went to the office in Dundee on three occasions without making any progress. On his fourth visit, the Dundee office telephoned Cardiff and East Kilbride on his behalf and assured him that matters would be put right. All that happened was that in August, the next month, his deductions were further increased. Again matters were put right only when I intervened.

    The third case concerned a man drawing a retirement pension and a local authority pension since his retirement in 1968. Until April of this year, tax was deducted at about £6 a month. Suddenly, without warning, his deductions jumped to £20. He wrote to East Kilbride and, after a couple of months, received an assurance that his coding was wrong and that it would be readjusted. Nothing was done. In August, he saw me. Once again, only at that stage was the matter put right.

    The pièce de résistance concerns a constituent of mine who suddenly found his marriage annulled and his three children reduced to bastardy overnight. Suddenly, without reason and without explanation, he was recoded as a bachelor. Once again he received neither explanation nor answer when he wrote to East Kilbride.

    It is no good the hon. Member for West Lothian (Mr. Dalyell) saying "Cheap". These are facts. They are examples drawn at random from a file which I have, and even that is only part of my long correspondence over these continuous cases.

    If the hon. Gentleman will be patient, in a few moments I will describe my visit to East Kilbride.

    In almost every case to come to my attention, there have been certain features in common. First, in no case, with one possible exception, was it a matter of computer error. When the hon. and learned Member for Lincoln was Financial Secretary—my hon. Friend will note that I have it right this time—he told us that this was a matter of teething troubles with the computer. But it is not. With one possible exception, in no case brought to my attention has the computer been at fault. In every instance it has been a matter of human error.

    Secondly, even when investigations have been instituted as a result of taxpayers writing in to the centre, because the taxpayers' letters have not been acknowledged, they have been totally unaware of what was happening and naturally were convinced that nothing was happening.

    Thirdly, where complaints were attended to and sorted out, the time lag between the first representations and the settlement of complaints was quite excessive in my view.

    At this point, I must express one word of thanks to my hon. Friend the present Financial Secretary. He inherited the chaos and confusion of our tax laws from the party opposite. Since my hon. Friend took up his present appointment. I have found that he has been able to deal with every case that I have had to refer to him, and has settled the grievances of taxpayers with much greater expedition than was shown by right hon. and hon. Gentlemen opposite.

    My hon. Friend has also taken a great interest in the workings of the centre and the problems that have arisen there. He has visited the East Kilbridge Centre, and he was good enough to arrange for me to visit it a month ago. I found my visit extremely interesting. What struck me above all was that in the so-called "allocation unit", where taxpayers' P.A.Y.E. affairs are handled at what might be called desk level, there was hardly any evidence of a tax officer beyond his or her teens. One supervisor in charge of a group of those tax officers to whom I spoke was, I imagine, in about his 21st year. This reflects what is undoubtedly the biggest problem that the centre faces, and hon. Members will note that the Report of the Estimates Committee has a considerable bearing upon it. It is the problem of wastage among young men and women still barely out of the initial training period.

    My hon. Friend has assured me that there is evidence of a reduction in the number of complaints about East Kilbride. Certainly when I was there, I was shown evidence on which that assessment is based. However, in my experience there is little sign yet of any improvement. The rate of complaints seems to be running more or less on a plateau: it has not increased in recent months but certainly it has not reduced.

    My hon. Friend also pointed out to me that the number of complaints which I and other hon. Members refer to the Treasury is infinitesimal compared with the total number of cases handled by East Kilbride. But, against that, I think that it is fair to point out that the number of complaints which an hon. Member receives is likely to be a small proportion of the number which exist and which are not referred to a Member of Parliament.

    When I visited East Kilbride, the centre was obviously feeling to some extent that it was the victim of a bad Press. I would not dispute that, although the majority of people who complain to me seem unaware that others faced similar difficulties. That suggests that their cases have not been brought up as a result of what has been said in the Press.

    It was suggested to me at East Kilbride that, while the service offered to an area such as mine is by no means as satisfactory at present as the service that we received previously from the tax office in Dundee, in other areas such as Glasgow where there was an acute shortage of tax officers before the change to East Kilbride the service offered to taxpayers may be better. In other words, my area is the victim of averaging, from which people in other parts of Scotland are benefiting. There may be something in that, but it is small consolation to my constituents.

    What is to be done about the situation? When I was at East Kilbride I discussed two possibilities which I thought might help. One was that we should improve the arrangements for taxpayers to find out about their P.A.Y.E. affairs at "local access" points. I get the impression that there is too much of a tendency for the so called "access points" at local offices to greet a taxpayer with the comment, "I am afraid that it is all handled at East Kilbride. You had better write to them, or we will. We can do nothing for you." A more personal approach to the individual taxpayer could help. However, I gathered at East Kilbride that the Inland Revenue is looking into this possibility at present. It may be that my hon. Friend will be able to comment on it when he replies to the debate.

    It seemed to me that there would be something to be said for some form of "fail safe" device whereby, for instance, all individual complaints from taxpayers would be trapped to one side as they came in and followed through by an individual officer with, perhaps, a special section to see that they were dealt with expeditiously and the taxpayer informed accordingly. I have received a letter from my hon. Friend in which he says that this is an idea which:
    "The Revenue will certainly consider.… But they do see serious practical difficulties in its implementation.… The difficult task of examining a half ton of mail every day to isolate individual complaints would, I think, only contribute to further delay in getting the correspondence to the appropriate staff to take effective action."
    I can see the dangers of this, but bearing in mind that, unlike other communications to the centre, the complaint from the individual taxpayer is nearly always handwritten, this should not present insurmountable problems. I am sure that something like that is needed, because we have to ensure that taxpayers receice acknowledgments of letters they have sent.

    Beyond that, some of the recommendations of the Estimates Committee's Report should assist the staffing situation, which is crucial. I agree that we have to increase the competitive attractions of the Inland Revenue as against accountancy and other forms of employment which tempt the semi-trained or trained man away.

    The final conclusion, and there cannot be any dispute about it, is that if we want to eliminate the problems which have arisen at East Kilbride, if we want to ensure that they do not occur when establishments such as East Kilbride are set up in other parts of the country, the vital necessity is to reduce the burden of taxation overall and I am delighted that my hon. and right hon. Friends have made a start on this.

    4.33 p.m.

    The hon. Member for South Angus (Mr. Bruce-Gardyne) talked about the report as being one long condemnation of the taxation Statutes of the last Parliament. He produced singularly little evidence for this. Large reforms which have been carried through and which may be carried through will always produce that kind of reaction from the Inland Revenue Department.

    I am sorry to interrupt the hon. Gentleman so soon, but he says that I have produced singularly little evidence. This was because I chose not to read out the relevant paragraphs from the Report. If he looks at paragraphs 24, 27, 29 and 36, he will find that time and again these comments are made.

    I do not accept that that is evidence which should be adduced. This is what I question. In 1969, four years after the introduction of those reforms, one would not expect that, however indigestible the original Bills might have been, there had been insufficient time for the Inland Revenue to have made decisions as to how they should be treated. If there is any reform which requires more than four or five years to be fully digested, then future Chancellors will be very hard put to it to introduce the massive reforms to which they at present dedicated.

    My only reason for speaking is to counter some of the views put forward so far which suggest that reform is virtually impossible because the Inland Revenue cannot undertake it. I must oppose this view vigorously. The Estimates Committees, composed of admirable men looking at the problem in the best way they could, failed to grasp some important matters and failed to put some of the direct questions that should have been put before it was prepared to accept at face value a person who, when asked: "Are you overworked?" replied: "Yes." This is too easy

    Before we accept that any Department of State is overworked and therefore cannot undertake the kind of reforms that any Parliament or any Administration might wish to pursue, we have to ensure that they come up with much stronger evidence than that, because the implications are enormous. If this goes uncorrected, this debate and this Report will always be quoted against any kind of reform of any size which might be suggested. I accept that the Estimates Committee has done some splendid work. It is under-staffed. The way in which it carries out its duties means that it tends to bring up the main issues rather than to dispose of them. I think, for example, of the one dealing with Far Eastern expenditure, where the issues of the expense of carrying out a Far Eastern commitment by the defence forces of the Government were inadequately examined but at least provided the starting point for the argument.

    This Report in the same way does not end the argument, it provides a starting point. It provides the starting point for more inquiry and more examination. Per-haps its most important effect is that it is able to stimulate others to find some way of producing a situation in the Inland Revenue Department whereby further tax reforms can be introduced from time to time. If the argument is that by 1971, the date of the next Budget, no reforms are possible because of the reforms of six years ago, what is our hope for any kind of taxation reform of the kind we must demand?

    I accept that the reforms of 1965 produced some heavy burdens upon the Department, but I fail to be impressed by the seriousness of this. Of course from time to time every Department of State finds itself with major issues of reform which produce a strain which has to work its way through. To go from there and say that because of that we must never introduce that kind of legislation, whether it is good or bad is immaterial, would be wrong. This time should be more than enough for any legislation to work its way through. If it was bad they have had five years to make it good. We know the crying need for the tax reforms. We know the need to integrate surtax and income tax to get the shape of the tax curve correct, not this botched-up business we have at present, so that when a Chancellor wants to reduce taxation or even on occasions to increase it, he has to do it in this ham-fisted way of so many pence on the standard rate rather than adjusting the curve to allow for certain exemptions for certain people and producing revenue from those best able to afford it.

    So we have the monstrosity of a situation when the Chancellor came and cut the standard rate by 6d. and said that there was no other way of producing these tax changes, reducing these taxes, than by giving very large reliefs to those best off and the greatest reliefs of all to those who had unearned income. If we are serious about wanting to produce a taxation system which can be flexible and meet the requirements of various Chancellors we will need to produce the kind of reform which, if we accept this Fifth Report, will be impossible because of the strains put upon the Department. I want to quote from one or two parts of the Report to illustrate what I have been saying.

    Paragraph 51 says:
    "In the words of the Chief Inspector they"—
    that is the Department—
    " 'take every [graduate] who is qualified and who will come' ".
    I do not find this so appalling. I do not believe that it is an illustration of the serious shortage of tax inspectors that the Department will take everybody who is qualified. I know plenty of organisations which will take everybody, so long as he is qualified. It depends on the qualification. We have had no evidence of any dilution of expertise among inspectors of taxes, and I will always pay tribute to the standard and ability of those who come forward to these posts. This is not evidence of an extreme shortage.

    Question 94 was:
    "Having had difficulty in recruitment do you have a high turnover? Is a tax inspector an attractive person to industry?"
    The answer was:
    "Yes, but we do not have as yet, fortunately, a high turnover."
    There is no high turnover—troubles in recruitment and difficulties in wastage on recruitment—but no high turnover once people have become inspectors. That is not by any means to say that the situation is perfect, but it is not as disastrous as has been stated, nor as disastrous as might be the impression obtained from a casual reading of the Report.

    Paragraph 28 refers to the shortage of trained staff at tax officer level. There is a reference to Question 91 which says:
    "… we are slightly short in the number of tax officers".
    That is very different from saying that there is a shortage of trained staff at tax officer level.

    I accept that these extracts do not give all the nuances, but my reading of the Report shows that there is insufficient evidence of any overload on the Inland Revenue, and I find no detailed questioning to establish evidence of an overload, for instance, about the amount of overtime worked, or reductions in standards of personnel, and so on. Those were the questions which should have been asked before it was accepted that there was an overload so great that tax reform in the future would not be possible. These are serious matters, because any Government wanting to undertake tax reform will always be met by the practical obstacles and the Report is a bible of practical obstacles to the kind of reform in which we expect the Government to be engaged.

    Of course there is room for better recruitment, better pay scales and better opportunities and of course we need more of these people, but we should not have been given a picture of the tax system breaking down, or anything of that sort. We are dealing with a long-term problem which must be fitted in. We must insist that the Report is not regarded as a major barrier to tax reform and in this debate we must ensure that it is not so considered.

    4.43 p.m.

    I join with those hon. Members who have already paid tribute to those who gave evidence to the Select Committee, of which I was a member. However, I am bound to say that I was not a very happy member of the Committee, because I felt that it failed almost completely to see the wood for the trees. It took a great deal of detailed evidence, but it produced a Report of 313 pages without any reference to what I regard as the main problem of the Inland Revenue, and one of the main problems of the country, the fantastic complication of our tax system.

    The predicament of the Inland Revenue—the tremendous number of hours which people have to work, the difficulties in recruiting, fully ventilated in the Report—is due more than anything else to this fantastic complication. The system bears hard not only on those in the Inland Revenue, but on businesses as a whole, particularly on small businesses and on farmers like so many of my constituents who are practical men with hands wet from milking the cow and who are then faced with endless paper work involved in the present tax system.

    At the other end of the scale, tycoons, who should be increasing the prosperity and profitability of the country, spend a great deal of their time in their mahogany-panelled boardrooms planning schemes of tax avoidance—not tax evasion, I am not accusing them of that—weaving spells which other tax people later will try to unravel.

    Who really understands his own tax returns? Who can put his hand on his heart and say that he understands everything about them? Probably only the people employed by the Inland Revenue can do so, and their complaint is that they do not get anough money and therefore they probably do not have very large tax returns.

    This complication from which we suffer is a self-inflicted wound. Perhaps as a civilian I should no longer regard a self-inflicted wound as a military offence, but even for a civilian it is still extreme folly, and the country has inflicted upon itself massive damage by the complications which we have allowed to crop up through the years. The Treasury and the House in unholy matrimony are the only people who can drastically improve matters, and my hon. Friend the Financial Secretary now has a tremendous opportunity to go about this task and to recognise that the complications of our tax system are Gilbertian and must be drastically streamlined.

    4.48 p.m.

    It is easy to talk about Gilbertian complications, but when I made a similar remark to the former Prime Minister, Mr. Macmillan, he sent me to see the Chief Parliamentary Draftsman, who, in an hour and a half, was able to take this attitude to pieces simply by explaining that the tax authorities have to deal not only with the bulk of us, who are fairly honest in our tax returns, but with those who set about getting round the Revenue and who employ income tax evasion lawyers, a much over-paid profession.

    The hon. Gentleman will understand the difference which I made between tax avoidance and tax evasion, the one legal and the other illegal.

    I should like first to say something about the general issues, and then continue a subject raised by the hon. Member for South Angus (Mr. Bruce-Gardyne), with whom I was in total disagreement in much of what he said about East Kilbride. As the Financial Secretary will remember, in a previous debate I paid tribute to East Kilbride, and in doing so again I should like to discuss some of the difficulties in some detail, because I agree at least with the hon. Member for South Angus that this is a pioneering project and East Kilbride has a certain relevance outside Scotland.

    Since biblical times, the tax gatherer has been unpopular. In spite of the powerful remarks of my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), I should have thought that in the offices in Scotland—and I speak with no knowledge of the North or the South of England—many tax offices were indeed understaffed and overworked, as the Committee said.

    However, I am bound to say, without being rude to any of my colleagues, that I would go some way with my hon. Friend the Member for Ashton-under-Lyne, who was brave enough to start this line of argument. If he had not spoken, perhaps I would not have remarked that I, too, thought that there was a good deal of sloppy and superfluous questioning by our colleagues who served on the Estimates Committee. I wondered why some questions were asked, at inordinate length, and what the questioner hoped to get out of the witnesses. My hon. Friend the Member for Ashton-under-Lyne has given us some thought for reflecting on our own questioning in Select Committees.

    I echo much of what has been said by my hon. and learned Friend the Member for Lincoln about the argument of simplicity versus equity and merely reflect that his former chief, my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), sent me to see Sir Arnold France when I raised certain issues of equity and simplicity. In any tax reforms more attention should be paid to simplicity and slightly less to equity. However, that is much easier said than done. As my hon. and learned Friend the Member for Lincoln said, and as the Report points out, the intellectual and personal qualities needed of those at the top of the Inland Revenue are very considerable. I echo the plea for substantially more pay to be given to those who do this extremely rigorous job.

    I now wish to get down to detail. The subject of recruitment is raised in paragraph 7 of the observations of the Chancellor of the Exchequer, where it is pointed out that the aim is to recruit at the rate of 100 graduates a year. The issue is not only to recruit them but how to keep them. I refer to the example on which the Treasury has not yet written to me concerning the Scottish Estates Duty Office. The striking fact emerges that, over a ten-year period, of 32 graduates, 13 went to lawyers and insurance offices, seven went to banks, four were declared unsuitable, four went away to get married and only four remained. If this is the sort of picture which obtains throughout Great Britain—and I have no reason to suppose that Scotland is a typical—it is quite serious.

    I can assure the hon. Gentleman that the Scottish Estate Duty Office faces particular and special problems because of the source of its recruits and the attractiveness of other occupations once they have been trained by the office. I am sorry that the hon. Gentleman has not had a reply. I have a fairly full note of the matter on the basis of which a reply is due to be sent to him. I shall ensure that it reaches him as soon as possible.

    I am not complaining that I have not had a reply. Of course, such highly trained men are lured away by other attractive occupations.

    My next point arises out of question No. 1489 dealing with the changes which we might expect as a result of the Report of the Fulton Committee, on which my hon. Friend the Member for Ashton-under-Lyne served. The witness said:
    "I think it would be very difficult, if I may say so, for you in your Report to produce the right answer out of a hat, as it were. This will come with time. It will depend I think very largely on decisions taken arising out of the Fulton Report."
    It would I think be for the benefit of the House if the Financial Secretary could say how far thinking on the Fulton Report has gone in this respect.

    Paragraph 35 of the Report refers to a wastage rate of as much as 50 per cent. I should like to pose a question which may be somewhat esoteric, but some of us wonder whether this profession is intrinsically, by its nature, a young man's job. I can well understand the argument that tax collecting is a job which appeals far more to those who perhaps have passed their thirty-fifth or fourtieth birthday than to young men. I am not sure that it is not deeply true that at one level young men perhaps find that the job is not what it has been made out to be and that they are not intrinsically suited to it, at an early stage in their career.

    Thus I wish to refer to paragraph 52 of the Report which deals with the issue of ex-Service recruits. As one who, whatever his other views on defence, has been consistently concerned with Service careers and legitimate career expectations in the Services—and the hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) will grant me this—I should like the Treasury to tell us how far its discussions with the Services have gone on how a Service career can be geared to a career in the Inland Revenue.

    I am aware of questions Nos. 781 to 784 and the doubts expressed by the witnesses about whether Service personnel were as suitable as one might suppose at first sight for work in the Revenue. But, even accepting these doubts, I should like the Treasury to tell us what further thought it has given to this matter, and to make a suggestion. As one who has visited the Service College at Shrivenham, may I ask whether it would not be sensible for those entering the Services whose career expectations in the modern world might be much shorter than formerly, at an early stage in an officer's career to talk in terms of the career sliding over, so to speak, at the end of his Service time to a fairly senior promotion ladder in the Revenue.

    If the Financial Secretary is doubtful about that line of thought, there is the example of France and what the École Polytechnique does for its alumnii. I do not say that Shrivenham should be turned overnight into an École Polytechnique. All I am pointing out is that, as the Estimates Committee said, there are grounds for further investigation into marrying the lines of a Service N.C.O. or Service officer with a proper career in the Revenue. That would be worth following up.

    I draw attention to paragraph 17 in the Chancellor's observations:
    "The Board are discussing with the Ministry of Defence arrangements for ensuring that opportunities for a career in the Inspectorate of Taxes are brought to the attention of servicemen who are about to retire".
    Precisely what is being done about that?

    I am glad that the hon. Member for South Angus has returned to the Chamber. Frankly, I think that he has been taking a popular and easy line, in the Scottish Press and today. It is easy to produce a few cases and to say how scandalous they are. But how many of all the cases with which East Kilbride deals are unsatisfactory? Of course, we have our difficulties from time to time, but, since the hon. Member has made the speech which he has made today, I wish to repeat what I said in the debate on the Report of the Public Accounts Committee, namely, that whenever approaches have been made by Members we have received prompt and satisfactory service. Whenever there has been error, I have found East Kilbride remarkably willing to confess it.

    What a Member of Parliament asks of a tax department or of a department of the Ministry of Health and Social Security is that if they are wrong they should admit it without too much haggling and not put up tremendous defences to try to prove that they are right. Many of my dealings with East Kilbride have been thoroughly satisfactory. It is tough on the people who work there to go to the Press with the "juicy" cases which receive a great deal of publicity—because the Press, by its nature, always records what looks like the scandalous or awkward case, for which I do not blame it—and does not pay tribute—why should it, because they are not news—to the many cases which have been dealt with promptly and satisfactorily.

    I found during my visit to East Kilbride that those responsible could produce considerable evidence that what they wanted to do was not to obtain the maximum amount of tax but to ensure that people were paying the right amount of tax. That was their object, and the top echelon seemed serious about attaining it. It was certainly our impression that at East Kilbride they were working seriously towards this end.

    Having said this, and having praised the centre, I have certain specific questions which concern my constituents, and the constituents, I suspect, of my hon. Friend the Member for East Stirlingshire (Mr. Douglas) and others. One is, what the Treasury will do about the whole issue of telephone communications. This arises out of paragraph 29 of the Report. I think a great deal of trouble would be saved if telephoning were somehow made easier. It may be that a free telephone service should be further expanded on the reverse charge system. On the other hand, it could be abused, and I would wish to know from the Department whether there are great signs of abuse, where this has been done, because pioneering schemes really could be improved. Certainly in the "surgeries" which all of us hold one finds that the most bitter criticism made about East Kilbride is that they have to spend a great deal of money in telephoning before they get on to the right person at the centre. Young married couples find difficulty in getting time off if both are working. So on the whole issue of free telephone calls at East Kilbride or anywhere else I should like a statement from the Government this afternoon.

    I would like to come on to another question. Certainly I have had uncommonly often at my Saturday "surgeries"—and I gather this is also the experience of some of my hon. Friends—a problem which concerns the unfortunately growing number of separated or divorced wives. The problem, as I see it, is, often, a problem where alimony has been awarded by the court, but although alimony may have been awarded by the court, that alimony is not being paid to the unfortunate lady, and yet she is taxed on the basis of that alimony, which is not in fact paid to her. When I was Parliamentary Private Secretary to my right hon. Friend the Member for Coventry, East (Mr. Crossman), when he was Secretary of State for Social Services, on a number of Ministerial visits to Glasgow and that area I discovered from social security offices the greatly increased rate of separation and of divorce in our country—even in the last three years. Therefore, I think that this issue of alimony and its complications has numerically grown and is becoming almost a national issue. So the question I ask is, what can the Department do to help the woman whom it is charging a tax based on alimony which is not coming through? This may be partly a question for the Home Office and the courts, because there are legal complications, of which I am aware, but with which it would be wrong to take up the time of the House now to discuss at too great length.

    Again on a constituency basis, I think all of us have learned that there are problems when changes of employment take place and tax matters are passed from one office to another. I make no complaint, but it does seem that in present cases it has been rather more difficult than it should have been to work out some final assessment—for instance, between East Kilbride and Southampton or between East Kilbride and some of the tax offices in Lancashire. Some people have to spend too long on emergency code numbers. I am wondering whether the Financial Secretary has any reflections on how he could improve interoffice communication. Indeed, this was raised expressly at Question No. 560 about the employers' unit, which, it was stated in evidence,
    "deals with all employer matters including their reports of changes of employment; the employers' unit also includes the tracing group, which is basically an alphabetical index of every taxpayer for whom we have a record."
    There should be improvements in this.

    Another issue is the whole question of privacy. At Questions Nos. 582–586 the Chairman of the Committee put a question which I think should be read out since one cannot otherwise have this recorded in HANSARD. He said:
    "While we are talking about security, there are certain people who take the view that there is a danger in computerisation, that the individual's privacy might be interfered with by people who are able to get information from the computer. We have had a memorandum about this, but I just want to confirm with you that there is no possibility of what I would describe as random access to the computer to obtain information of individuals?"
    To which the answer from the witness from East Kilbride Centre was, "None whatsoever." I would just like to interject, Are we quite sure about this? Because I should like to be convinced that computer records and computers run by the Revenue are used for tax purposes only and for no other kind of information giving. This is a subject which may well come up in private Members' time if my hon. Friend the Member for Birmingham, All Saints (Mr. Brian Walden) or any other hon. Member is enabled to go ahead with a privacy Bill.

    I also am a bit concerned about Question No. 584:
    "How is communication arrived at between here and elsewhere?"
    The answer was:
    "The only present communication between the two computer systems is in verifying the taxpayer's national insurance number. This is achieved by an exchange of punched cards."

    I think the hon. Member has moved on to communication between the Department of Health and Social Security and the Inland Revenue, not that between two Inland Revenue offices.

    Yes. I am taking this point and it is an inter-related matter and this is precisely the point I am asking about. I am not at all happy about certain information which is gathered by the Revenue being used, for example, by the Department of Health and Social Security—but I say that without any implied criticism of either Department. I should like to ask, as other hon. Members have, about other uses to which the computer can be put, because clearly to quite an extent the computers such as we have seen at East Kilbride could be used for other purposes—for industrial purposes, or for the purpose of private enterprise or public enterprise, or whatever. It is important from the point of view of the taxpayer, and I should like to hear a statement of the Treasury's philosophy on this issue.

    I should like very simply to ask about an issue which came to the fore when my right hon. Friend the Member for Sowerby (Mr. Houghton), who is sitting in front of me, was asked by my hon. Friend the Member for Eccles (Mr. Carter-Jones) about how the Treasury organised its dating. My right hon. Friend said, in answer to Question No. 1199:
    "I think claims have been made from time to time that the Chancellor should open his Budget so far as the Inland Revenue Department is concerned in November and not leave it until April. That would be most convenient."
    It is quite true that the Government have given forewarning to the Revenue of certain tax changes, and equally, as my right hon. Friend the Member for Sowerby, who has unrivalled experience in these matters, pointed out, it would also be helpful if changes in allowances could be announced fairly early, because it means that if changes in allowances are not announced early much work has to be done, time and time again—at least double work has to be done. Talking to those who work in the Inland Revenue, one learns that there is considerable agreement on the importance of the point raised by my right hon. Friend the Member for Sowerby on the issue of allowances in addition to tax changes.

    Finally, I would just like to add to the point which has already been made by my hon. and learned Friend the Member for Lincoln (Mr. Taverne) and by my hon. Friend the Member for Ashton-under-Lyne. All of us who would like seriously to think about tax changes feel very inhibited by the present set up. I do not really expect the Conservative Government would go out of their way to facilitate the Opposition when it comes to introducing a wealth tax, but those of us who think a wealth tax ought to be introduced know perfectly well that in a number of areas in our country it would be almost physically impossible because of the situation of the Inland Revenue at the present time. Apart from the party politics of the matter, there is a really serious issue involved, and that is to what extent should social measures in the field of taxation be inhibited, or, indeed, thrown out, by the fact that there is not the machinery to put them through.

    So I would sit down simply by adding my voice to the voices of my hon. and learned Friend the Member for Lincoln and my hon. Friend the Member for Ashton-under-Lyne upon the point of principle—leave party politics out of it—they raised.

    5.10 p.m.

    I, too, am surprised that the Opposition have chosen this report as a matter for a debate on a Supply Day. The report was published a year ago. The Treasury commented upon it in March of this year, and in the early spring of this year, in the last Parliament, I constantly pressed the then Leader of the House to have a debate on it, to no avail. I am therefore surprised that the Opposition, in opposition time, have decided to debate this subject. I am grateful that they have, but I am surprised.

    I understand that there is a Standing Order that certain Supply Days are given up by the Opposition expressly for the discussion of reports of the Estimates Committee. This is one of those days.

    If that is the procedure, I am very glad. None the less, it does not abate my surprise in the least. By being obliged to debate this report the Opposition are laying themselves open to a completely valid charge that the current state of the Inland Revenue is in large part due to the complexity of the tax changes that the Labour Government introduced. Shortly I shall answer directly the point raised by the hon. Member for Ashton-under-Lyne (Mr. Sheldon). The Inland Revenue is in a state bordering upon administrative chaos. It is understaffed, and such staff as there are are over-worked. As the hon. Member for Ashton-under-Lyne said, the depressing conclusion is that no serious measure of tax reform can be considered for two or three years at the earliest.

    Just to get it right—what I said was that if the report were accepted it would be an argument against tax reforms. I did not accept that extreme view.

    I shall deal with that point in a moment. I do not agree that it is acceptable to the House, or that it should be acceptable to the Government. But a great deal of the complexity arises from the introduction of capital gains tax and corporation tax in 1965—now five years ago. We should not blame the present shadow Home Secretary too much, because many of the changes introduced by his successor have added immeasurably to the work of the Inland Revenue Department. The report showed that the major reason for working overtime in 1968—and I remind the House that overtime is mentioned in the report—was the introduction of the clawback principle in that year. I happen to agree with the clawback principle. Nevertheless, it involved a massive amount of admini- strative work and was a relatively small change. On top of that, in the 1968 Finance Act there was the aggregation of children's income, which involved much detailed work. The party opposite introduced it for political reasons. I do not object to its having done that, but in Committee I objected strongly, as a Conservative, to the proposal, and voted against it. It has involved an immense amount of administrative work.

    The 1969 Finance Act introduced the disallowance of interest. I cannot object to the fact that it was introduced for political purposes. Nevertheless, the resultant increase of work this year and next year will be astronomical for the Inland Revenue. Early this year, in the socialist budget, the former Chancellor reduced surtax. It should be remembered that it was the Socialist Party in 1970 that reduced surtax. The way that the then Chancellor chose to do it was, again, immensely complicated and it created several anomalies. For example, a married man with two children, earning £6,000 a year, suddenly moves—for a short period—into a very high marginal tax bracket, where he pays 72 per cent., or 14s 5d. in the £ on every extra £ until suddenly, when he receives £6,400 a year. magically and mysteriously his marginal tax rate falls to 52 per cent., or just over 10s. These are serious anomalies, created by the fiddling and small measures to which we have been subjected in the last three budgets.

    Over the centuries it has been the custom for Parliament to report upon the workings of its tax gatherers. One of the most renowned reports was in the 18th century, investigating the scandal that arose in Coventry in 1798 and which became known as the Coventry scandal. The parliamentary report found that the Land Tax Commissioners—the people responsible for gathering taxes—included "journeymen, weavers, scavengers, dealers in dead horseflesh, dealers in cats-meat, paupers on parish relief, two fiddlers and two idiots."

    In spite of the staffing difficulties in the Inland Revenue, the quality of staff has steadily improved over the years and is probably as high today as it ever has been. But is is inadequate for the amount of work that we impose upon it, and it is to the credit of the people working in the Inland Revenue that they have been able to cope with the change inflicted upon them.

    There is little wonder that in 1968–69 several hundred thousands of hours of overtime had to be worked. Page 259 of the report states that the cost to the country was about £873,000. It is little wonder that there is a 50 per cent, wastage of graduate entries into the service. It is little wonder that every advertisement for a graduate to take on the career of a tax inspector brings in fewer than two applicants. The reason is that those who are contemplating a career in the Inland Revenue feel that they may have to spend their lives dealing with relatively unimportant mental chores, chasing fairly trivial amounts of tax.

    I am glad to see that the right hon. Member for Sowerby (Mr. Houghton) agrees because that is the nub of the problem. When an inspector of taxes leaves the Inland Revenue he never appears on the unemployment register. He is snapped up. Unemployed income tax inspectors do not exist. In this respect they are rather like rich young widows. The complexity of our system is such that it is having grave implications upon our national morality. If a rich taxpayer receives £1,000 as a gift he pays no tax on it. If he receives £1,000 by way of capital gains, there is a 30 per cent, tax, and if he receives £1,000 as part of his earned income, the tax rate is 88¾ per cent. It is consequently of great interest to such a person to try to insure that that £1,000 falls into the correct grade.

    That is what the taxation system is all about—because it was William Pitt who devised the Schedules on which we still operate. The last Government added Schedule F, but Pitt devised the schedules and the system of grading sources of income from the point of view of the rate of tax they would bear. What happens in a situation of moral laxity? Deep down in the tax jungle individuals suspect the trees; they suspect the undergrowth; they suspect the shadows—and because they cannot see any path they cease to become particular whether they are treading on it. They become hesitant about paying their share of tax because it seems so big, so arbitrary, and so difficult to determine fairly and accurately. That is the present position.

    Moral laxity in tax matters is growing, and the permissiveness that has seeped through our society is also seeping into the area of fiscal honesty. It is admitted in the report by the Chief Inspector that because there are fewer inspectors they have to make a much more highly selective choice of issues to pursue and fight. This means that inspectors of tax in the Inland Revenue cannot police all the boundaries between what is right and what is wrong in tax law. If these boundaries cannot be effectively, regularly and consistently policed, it is not fair on the Inland Revenue Department or on the individual tax payers.

    What is the answer? I do not believe that the proposals put forward by the Select Committee add up to a coherent answer. There is a proposal to improve recruitment, but recruitment cannot be improved to a service which cannot offer a satisfying career. The proposals say, "Improve the job advertisement, improve the rates of pay and suddenly it will get better." It will not, and we in our heart of hearts appreciate this. Efficiency can only be restored, equity can only be improved and the costs of collection can only be reduced in two ways: first, by reducing the upper rates of taxation and, secondly, by drastically simplifying our tax system. The Government have started on the first. Much of our tax law would become of peripheral interest if, for example, estate duty started on estates of £25,000. Hon. Members opposite may disagree on political grounds—obviously they will—but if the great bulk of estate duty cases are taken out, the administration of estate duty becomes a relatively simple matter.

    It would be sensible to exempt from capital gains tax all cumulative transactions up to the value of £1,000 a year. Some people may say that this should be higher. This would do away with a great deal of the detailed dog work in the Inland Revenue Department. I do not want to plead the case for those changes today—the opportunity for doing so is on the Finance Bill—but I do want to plead the case for simplification. Simplification basically depends upon computers. In the next two or three years virtually every area in the country will be computerised—

    It may be delayed a little longer, but I hope when the whole country is computerised for P.A.Y.E. purposes it will be possible to look at other changes in our tax system.

    The hon. Member for Totnes (Mr. Mawby) and several hon. Members opposite mentioned the possibility of combining income tax and surtax into one graduated form of tax on incomes. I know the difficulties of unearned income and income from differing sources but, with a will, I am sure this can be done. This rather mild recommendation of the Select Committee had a dusty brush-off from the Treasury, but I feel sure that steps can be taken here.

    The jackpot here would be to combine income tax receipts with a great many, though possibly not all, social security payments: to merge welfare benefits into a form of reverse P.A.Y.E., negative income tax or reverse income tax. An interesting article appeared in The Guardian this year written by an ex-tax inspector, Joe Horner, who is turning his hand to free-lance journalism. He called such a system a social dividend scheme, but in essence it is the same sort of arrangement which seeks to resolve the position of, for example, a married man with three children earning £1,500 to £2,000 a year paying to the State through various taxes and contributions about £500 and receiving back from the State in many different ways about £400. We must try to move towards a system which reconciles these two cash transactions between the individual and the State, the money being taken away from him and being given back to him. A P.A.Y.E./social benefit system would be an ideal way of dealing with the detailed proposals which are to be announced for rent allowances.

    I do not want to discourage the hon. Member from pursuing this important matter, but I hope he does not for a moment think that this will be a short-term simplification.

    I agree entirely with the hon. and learned Gentleman that to get to this stage will be a major dislocation and this reverts to the point made by the hon. Member for Ashton-under-Lyne. Our system is so complicated that we have not enough people to simplify it. That is almost the admission of the Report, and it is a sad and unacceptable admission. We must simplify it. My feeling is that it will have to be by a merging together of the social security side and the tax side. I am glad to see that the Government have decided to have a study of this. I hope that the Financial Secretary will be able to say how the study is progressing. When it is completed we might perhaps all be able to read it if it is published.

    The Inland Revenue Department is coping remarkably well with an impossible task, but it is we as legislators who have imposed that impossible task upon them. We are to blame and we must seek the remedy.

    5.26 p.m.

    I was very interested in the comments of the hon. Member for St. Marylebone (Mr. Kenneth Baker). His closing remarks touched upon an aspect which is dear to my heart, perhaps for different reasons from the one he mentioned on the basis of the Report. He stressed the need to simplify the tax system by trying to get a net payment between the Inland Revenue and the social security system. This is an important theoretical matter which should not fall to the ground on the basis of the strictures contained in the Report.

    The great merit of this system is that it does not identify the poor in the way that some of the Bills emanating from the Government identify the poor. It avoids a system whereby only the relatively poor sections of the community are known to go to the Post Office to receive certain benefits and only the very poor children are known to receive free school meals and other benefits.

    The hon. Member for South Angus (Mr. Bruce-Gardyne) referred to Centre 1 which has become an area of contention in the Scottish Press and among Scottish Members. I have received many representations from my constituents about the efficiency of the centre, and I have written to the Financial Secretary asking for an examination to be made. When one tries to bring into a centralised system the tax affairs of 2 million tax payers some difficulties are bound to arise, and I should be surprised if the tax payers were not concerned. The hon. Member for South Angus has done Scotland a great service.

    Paragraph 53 of the Report reads:
    "The Inland Revenue Department are undergoing a revolution in regard to their clerical procedures caused by a major programme of automatic data processing. They realised as long ago as 1957 that substantial savings would result from the use of computers. A further reason for changing to computers was the problem of obtaining clerical staff in London."
    The Inland Revenue has managed to bring to Scotland and to Centre 1 no fewer than 1,350 jobs, but the type of publicity which some hon. Members have given to the Inland Revenue in East Kilbride will make it much more difficult for it to get the type of labour that is required and to maintain the numbers. What has been said will exacerbate the problem of labour turnover, and it will not help constituents to get their queries dealt with to their satisfaction. Such remarks do no service to the Inland Revenue, and are made more for the sake of shallow publicity in newspapers that look for deficiencies in the public service while ignoring the large number of "satisfied customers" whom the Department has served.

    Part of the difficulty in any system of taxation lies in simplifying it to the point where equity is not unduly affected. Judging from some of the remarks made from the benches opposite, hon. Members seem to fear that the moral fibre of the community will be undermined by our present system of taxation, but I do not accept that we can judge moral fibre by cases of tax avoidance and evasion. In general, ours is a very good system. Many improvements are needed in it, but it does not do the present system any good to seek to draw from what tax evasion and avoidance there is the conclusion that our moral fibre is diminished. If, for reasons into which we cannot now enter, we have to adopt some other form of taxation, such as a value added tax, it will be partly because other countries do not have the same problems, and have therefore had to devise a system which does not directly sustain Government revenues.

    The Report mentioned certain difficulties in training staff and getting staff, and I suggest that the Inland Revenue should look to the universities. It should cast its net a little wider in Scotland and England, and set up some liaison with our polytechnics, central institutions and colleges of further education. Some of those institutions are offering degree courses which might with a little discussion and co-operation be made more suitable for providing much needed recruits.

    Can the Financial Secretary give some information about the harmonisation at Centre 1 of Schedule E administration with the collection of the tax? And how far have we gone in centralising not only the administration of Schedule E but the collection of taxes under several of the other Schedules? Some hon. Members opposite appear to view the trend towards centralisation with some awe.

    The hon. Member for South Angus gave picturesque details of the service obtained from the Department's local offices in Dundee. I have visited those offices many times and the conditions provided for staff and visitors alike are deplorable. It is difficult for tax payers seeking answers to their queries to get the necessary privacy although I know that we had the Younger Committee inquiring into the subject of privacy.

    I do not fear the computer so much, because with it I can see possibilities of introducing some degree of flexibility into our tax system. People want simplicity, but I think that they will put up with a little of the present complexity if they can much more closely relate what they have to pay in tax with the benefits that they receive.

    Perhaps the most simple tax of all is the rates that householders pay. The rating system is simple to administer and not hard for people to understand, but it is still difficult to use it as a basis for necessary local expenditure. I know that the Government are producing a Green Paper on local taxation and revenue, but I plead with the Financial Secretary to consider using a computer, particularly in Scotland, in order to find out whether we can devise an effective local income tax as a buoyant source of local revenue. Without something of that nature we shall not be able effectively to reform local government or to give a reformed local government its necessary source of finance. My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) clearly pointed out the difficulties of getting reform on the basis of this Report.

    I suggest that while taking note of the Report, we should tell the Inland Revenue: "You have this massive computer. You are capable of using it for other purposes"—the East Kilbride computer has been used by the National Research and Engineering Laboratory—"can you think of a means of programming the computer and of using these new devices not only for centralising taxation now but decentralising the revenue-gathering decision so that people can more closely relate what they pay in taxes with what they receive in benefit?"

    Broadly speaking, we have a very good and efficient tax system, perhaps the best tax gathering mechanism in the world, and before we make radical changes in it we should have much more discussion on the Floor of the House. As I say, the Report has many deficiencies but it has provided an opportunity for discussion. I should be grateful if the Financial Secretary could deal with some of the points I have made.

    5.38 p.m.

    This is a most fascinating debate and I congratulate the Opposition on their choice of subject. I have for very many years admired the work of the Estimates Committee. I have always thought it a great pity that all the evidence that has been collected over a very wide range of subjects has not more frequently seen the light of day in the House. If more attention were paid to committees which examine governmental matters in great detail, we should have better government.

    One thing that worries me is that nobody who has spoken has commented on two Committees which are almost contemporary with the work which has been done by the Estimates Committee. For instance, the Select Committee on Procedure, on which I serve, is examining a very wide subject. If it presents an affirmative report to the House for action, it will add to the work of the Inland Revenue. It is a pity that there has not been associated with this debate the other work which is going on and which affects the Inland Revenue. The Chief Secretary is to give evidence to the Select Committee on Procedure on Wednesday. In matters such as these, in taking an overall view of improvement it is a pity that the whole case cannot be deployed.

    Nobody has mentioned today that if the Inland Revenue causes hardship in its assessment of an individual's income tax, the case can be sent to the Parliamentary Commissioner. The case is examined in detail with a view to discovering why the mistake has occurred and what hardships have arisen. The Parliamentary Commissioner has been able to make up to the complainant for some of the hardships he has suffered as a result of mistakes which are bound to arise in the workings of the Revenue.

    In support of what my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) said, it is important, in the interests of maintaining a proper conception of Parliament, that letters written to the Inland Revenue should be acknowledged. People tell me that they have written three or four times to the Inland Revenue, without acknowledgement. This is not the proper way for the Revenue to treat the people.

    I fully accept the problem of obtaining well-trained staff, but I do not think that it should be difficult to obtain staff to acknowledge letters. I hope that the Financial Secretary will ensure that an instruction goes out to the effect that letters written to the Inland Revenue by people who are experiencing difficulty with their tax return and payments should at least be acknowledged.

    We must do all that we can to ensure that the staff of the Revenue is properly housed, has proper conditions and is properly remunerated. I hope that the Chancellor of the Exchequer, in the difficult situation he is facing with regard to salary increases, will not be inhibited in discussing the position of his own staff. The Report causes me deeply to regret that for a long time under all Governments the conditions of the Inland Revenue staff do not seem to have received the attention they have deserved. I hope that we can look forward to the day when those who serve the Revenue so loyally and in such a hard-working way will be adequately remunerated and housed. I have seen the conditions of some of them and I fully agree with what the Report says.

    It is not often that I mention in the House details of my personal problems, but I was furious the other day when I received from the Inland Revenue a little piece of brown paper relating to Schedule E, or whatever it is that I pay taxes under. This form referred to my "employer". Whoever thought up the wording for that form does not understand the democratic position of Parliament. Parliament is not an employer. Neither I nor any other Member of the House has an employer.

    I ask my hon. Friend not to worry. I am going to put it quite nicely for you in a minute.

    Hon. Members who receive forms such as this must be surprised to learn that they are the servants of Parliament. I took great exception to this form. I sent it immediately to the Chancellor of the Exchequer, who receives masses of letters from me, as does my hon. Friend the Financial Secretary. They must find this irritating and embarrassing. I said in my letter, "I cannot accept this form". I received in reply a charming letter from the Chancellor, as always. I have a great admiration for the present Chancellor, particularly in the difficult job he is doing. He said to me, "I sympathise and agree with you, but please do not press me to print any more forms". His idea apparently is to reduce the number of forms.

    I agree with my right hon. Friend up to a point. I shall not press him, but I hope that one day supplies of this form will be exhausted, that there will have to be a reprinting and that the intensely objectionable word "employer" will be removed.

    If my hon. Friend the Financial Secretary wants to add anything, I should be delighted to give way so that he may do it now. Both he and my right hon. Friend the Chancellor will accept that I will not press the matter, but it should be made clear on the record that hon. Members should not be addressed as if they are under some employer—heaven knows who or what. Does my hon. Friend the Financial Secretary wish to intervene?

    I think that if I were to say one sentence by way of intervention it might save a little time later. As the letter which was sent to my hon. Friend explained—I know all about the letter, because I drafted it—the word "employer" in the P.A.Y.E. scheme is given an extended meaning—that is, anyone who pays remuneration to a Schedule E employee. "Employee" is given an extended meaning to mean anyone who holds an office. So it does not need to be under a contract of employment. Members of Parliament hold an office; and under the old legislation it was a public office. I hope that my hon. Friend will accept that no discourtesy is intended to her or to any other Member of the House from the fact that on these forms Parliament is described as an employer.

    I am very grateful to my hon. Friend. I do not agree with one word that he has said. I know we have had an explanation about "office". I do not hold an office. I would not be here if I had not been voted in by my constituents. "Office" is a ridiculously old-fashioned word. The Treasury is old-fashioned. It goes back into history, and history has altered. We are not living in the nineteenth, eighteenth or seventeenth century. It was a very polite letter that I had from my hon. Friend the Financial Secretary, but I still think "office" is a ridiculously objectionable word. As the years have rolled on there have been all sorts of alterations to offices and that sort of thing. I just do not like the word, and, so long as I can find ways of expressing my views, I shall continue to do so until those wretched papers run out.

    I have also listened with great interest to what has been said by quite a number of hon. Members on both sides of the House, saying that they would prefer simplicity to equity. I hope to goodness that we shall not adopt that approach in this House of Commons. I shall not accept it. I know only too well that equity always appears to go to the bottom of Cabinet agendas, and this applies to all Governments.

    We should aim at both simplicity and equity. I know nothing about devising financial provisions in connection with the collection of taxes. I only know that it is a great nuisance. I cannot offer any comments on how taxation could be simplified. I complete my own tax forms, and then I get into difficulties anyhow. The Inland Revenue is always extremely helpful, and one has just got to pay up. But I mind tremendously about equity, and much taxation today does not provide for equity. I do not think the Financial Secretary will agree with me. He writes me the most delightful letters, but I do not seem to make any headway. I really regret that.

    Reference has been made to the payment of maintenance allowances and alimony, to deserted wives and divorced wives, and I fully agree with what was said on that subject. But, taking a slightly different point, when a court—a summary court of jurisdiction or a higher court—awards a sum of money for the purpose of looking after a child—I am not talking about married women or spinsters or anything like that, because there are always arguments on both sides when a marriage is dissolved—for the Treasury to claw back money in the form of taxation is far from equitable. Of course, we want to see that children are adequately provided for. When a court takes from a husband a certain amount of money, based on what he can afford—sometimes he cannot afford very much, particularly if he has two households to maintain—and the court makes an award to the child, for the Treasury to claw back money which never was the Treasury's money anyhow—it was the husband's money and it has been awarded to the child—this is not based on equity.

    In the long run, the Treasury has got to make a choice. All the Inland Revenue people have got to make a choice. They will come down on the side of simplicity, and equity once more will fly out of the window. As I say, my hon. Friend the Financial Secretary has written some nice letters to me. I do not know whether we have really got together on the subject, but perhaps the gap is narrowing. What worries me is that apparently he does not see any chance of this idea of mine becoming accepted. But why not? It is bad enough claiming taxes from people who have got to pay them. But when a court says to a man, "You must pay so much per week for your children"—the wife is working trying to keep the children in the same sort of conditions which applied when the wife and husband were living together—and then when the Treasury claws back money which never belonged to the Treasury, this is not equity.

    Before the last election I had intended to introduce a Ten-Minute Rule Bill to get rid of this ridiculous idea, but I gave way to my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) who wanted to introduce a police Bill. I simply cannot understand how the Treasury dare do this. I have written in detail to the Chancellor of the Exchequer and he will get my letter tomorrow morning. Every now and again I raise various cases. I have raised with the Parliamentary Commissioner a case in which a mistake was made by the Inland Revenue. The wife was working very hard, far harder than she ought to have done, to help maintain her six children. The Inland Revenue made a mistake and, as a result, the wife had to go to the Social Security office to obtain money to enable her to keep going. This was a charge on the taxpayer.

    The question has been raised of social security payments in relation to tax relief, and I fully agree with what has been said. I am very sorry that I have been unable to persuade the Financial Secretary to try to alter this situation. I know that he cannot carry as much weight as all that, but he could argue. We have elected so many magnificent young men into the House so that they will become arguers. I recognise that arguing with the Treasury—I am talking about the Civil Service side of the Treasury—is very difficult indeed. I sometimes wish that the Treasury civil servants would come up to my part of the world. I could show them a lot of things which might soften their hearts so that they would try to deal in equity and let simplicity fly out of the window.

    Grapevines are chancy things in the House of Commons. We are always rushing along grapevines, and sometimes they are proved right and sometimes they are proved wrong. I want to make my position perfectly plain on a nasty rumour which I have heard. I do not support, and would not support, a move to take any important matters in the Finance Bill, apart from technical questions, in Standing Committee. We must argue all the questions of equity and simplicity on the Floor of the House. The collection of taxes affects all sorts of businesses, industries, development areas, professional bodies, industrial workers—in short, human beings generally—in different ways.

    I was once suspended from the House of Commons for a protest which I made on this sort of subject. I do not want to have to do it again; once in a lifetime is enough for anyone. My party was extraordinarily nice about it, but in parliamentary life compliments do not necessarily go with action. I should like compliments and action to run together. It would be much better for the country sometimes if they did.

    I hope, therefore, that the rumour which I have heard, that the Chancellor of the Exchequer is thinking of sending too much of the Finance Bill to a Standing Committee, will be blown out of the window. It would not be a good idea at all. I do not expect the Financial Secretary to be able to answer me on that point today, but I always believe in giving warning in advance. One should not suddenly spring something on Ministers. They need time to reflect. I ask my hon. Friend the Financial Secretary, therefore, to make certain that the Chancellor of the Exchequer knows my views. It is a question on which I feel strongly. Although I do not mind technical details being considered in Standing Committee, I should be extremely annoyed if any new Clauses or matters such as those to which I have referred—maintenance allowances, and so on—were taken in Standing Committee. I doubt that I should be a member of the Standing Committee, and I regard it as most important that these matters should be raised on the Floor of the House so that—

    Order. I am sorry to interrupt the hon. Lady, but, in her enthusiasm, she is straying a little wide of the subject before the House. I hope that she will keep strictly to the matters covered by the Motion.

    But these are important questions, Mr. Deputy Speaker. I doubt that even you have read the whole of the Report. It takes a lot of reading. This debate gives us a wonderful opportunity, for once in a while, to have a Treasury Minister on the Front Bench listening to the views of back benchers. We want to influence the Treasury's thinking on how the requirements of simplicity and equity in taxation can be brought together for the common good.

    6.3 p.m.

    I hope that I shall be forgiven if I do not attempt to comment on the speech of the hon. Lady the Member for Tyne-mouth (Dame Irene Ward). The hon. Lady's constituency is not far from mine, so I could anticipate a good deal of what she had to say. However, she did intrigue the House at one stage when she spoke of the interesting and nice letters which had passed between herself and the Financial Secretary, and she struck a new note, I thought, when, with reference to certain women of whom she was speaking, she said that they were getting together on the subject and the gap was beginning to narrow between them. I became a little concerned at that point and wondered whether the hon. Lady, as she put it, would spring something on the Minister. However, perhaps I had better leave that now.

    The interesting feature of the debate so far has been the way in which few hon. Members have stuck really closely to the scope of the Report. As a member of the Estimates Committee, which spent many months on this investigation, I know that we realised in the early stages that we could not deal with all the complexities of the tax structure, concerning ourselves with notions of tax reform and all the social consequences which would flow from such thinking. Inevitably the Committee had to deal with the Inland Revenue Department.

    As a Committee, we decided that there were three forms of thinking which we could apply to our investigation and to the evidence which we took. We had to consider, first, the shortage of certain important members of the Inland Revenue staff, the inspectorate, in particular, second, the question of automation, and third, the question of the structure of the Department itself.

    I wish at the outset to express gratitude to all the witnesses who gave evidence to the Committee, and, in particular, special gratitude to Mr. N. C. Price, the Deputy Chairman of the Board of Inland Revenue, who came before us on no fewer than 11 occasions. This was a remarkable attention to duty, and Mr. Price's service to the Committee as a witness was invaluable. Second, I express our gratitude to Sir Leonard Barford, the Chief Inspector of Taxes, who came before us on five occasions.

    Finally, in speaking of those who helped to make the work of the Committee worth while, I feel that it would be improper not to accord a special place to Sir Eric Errington, until recently the hon. Member for Aldershot. He is a remarkable man. On one's first acquaintance with him, one could easily become irritated by his eye for detail. Sometimes, one could, perhaps, feel a little annoyed that he asked so many questions that other members of the Committee did not seem able to put questions or put their points over. In the course of time, however, I began to see how Sir Eric Errington's diligence, industry and experience worked towards the production of the sort of Report which he, as Chairman, had in mind.

    We had a very successful year under Sir Eric Errington's chairmanship, and, as I now read the Report as an ordinary Member of the House, recognising its framework and the manner in which it was put together, with the assistance of those who helped us so admirably, the Committee Clerks, I realise that Sir Eric achieved what he had set out to do. He directed to the complex subject before us three simple modes of approach and thinking so that, in addressing ourselves to the three questions to which I have referred, we might produce a Report which would give rise to a debate such as the one we are having today, then a further debate upon the wider considerations of tax law and tax reform and all that flows from automation.

    I come now to the question of staff shortage. Inevitably, there is a conflict here arising from the natural desire of the Inland Revenue itself to maintain the highest possible professional standards and, on the other hand, the desire of the general public to have a quicker response to their needs. The hon. Lady the Member for Tynemouth rightly referred to the question of equity and simplicity, and I took this point in her speech as being the most interesting of all within the context of the conflict to which I have just referred, namely, the conflict between the desire for professionalism, on the one hand, and the needs of the public, on the other. How can one achieve equity and, at the same time, a good measure of simplicity? There is no one final answer in a highly complex industrial society such as ours.

    I will pluck one figure from the Report as an example. There are 11 million employment changes per year in the United Kingdom. But that is only a microscopic part of the business of the Inland Revenue. The Chief Inspectorate branch has under it about 50,000 employees throughout 750 district branch offices. How does one organise, even with that small amount of labour force, the ability to deal with 11 million employment changes? Plucking such figures out of the whole complex of the work, one not only has an interesting arithmetical exercise but a first glimpse of the magnitude of the business.

    This is why I was so upset by the hon. Member for South Angus (Mr. Bruce-Gardyne). I apologise in that I am referring to him when he is not here, but he has been flowing in and out in a kind of unsettled way and I cannot anticipate his appearances. The hon. Gentleman misinterpreted the feeling of the House in a debate of this nature by taking upon himself the sole job of trying to make some petty party political points out of his attitude towards East Kilbride.

    The Sub-Committee had a Conservative Chairman in Sir Eric Errington and both Conservative and Labour members. We were not concerned with party political points but with the objective examination of the Inland Revenue Board. Through the whole process of discussion, question and answer, and the participation of this unique instrument, a House of Commons Committee, with witnesses, we were seeking to evolve answers which might be useful in helping us to make some contribution to the improvement of the Inland Revenue service. The hon. Member made a grave misjudgment of the temper of the House, because that is the job we are also seeking to do today. We are concerned in this debate to examine what best can be done in order that the general public can receive a better service.

    It is important to stop here for a moment and examine that phrase, "better service". The hon. Gentleman plucked from his file several cases of members of the public who had suffered some inconvenience in not having responses, either in the nature of the question they wanted or in the time they wanted, from the Inland Revenue. He took these isolated cases and tried to pluck out an allegation of discontent and inefficiency at and about Kilbride which I now seek to challenge.

    I have spoken about seeking a better service. I am bound, therefore, to say that, from my experience on the Sub-Committee and both before and since as an ordinary Member of this House dealing with ordinary casework, the courtesy and efficiency of the Inland Revenue personnel are an example not only to this country but to the world. I say that with profound conviction. Anyone who has travelled abroad and seen the conditions in other countries will not accuse me of exaggeration when I say that, in our Inland Revenue service, we have professionalism of the best type.

    The courtesy of the Inland Revenue staff is the more remarkable when one considers the magnitude of the job they have to do. At no time can I fault them in this. However, by the very nature of the complexity of the problems they face and by the nature of the workload they have to shoulder, there are bound to be people in a high-density population such as ours who will from time to time encounter difficulties and will inevitably have to go to their Members of Parliament to "gee along", as it were, their problems for more immediate attention.

    Having said that, however, we must bear in mind that we are talking about a service which is excellently staffed. By the same token, and within my own knowledge, the service itself is anxiously from day to day reviewing not only its work but how best to carry it out. It is reviewing its recruitment, its standards, its efficiency and its structure, having regard to the progress in the computerisation of the nine regions.

    I want to turn now to some of the recommendations and the answers we have received to them from the Inland Revenue Department. One of our main concerns was with the recruitment of graduates for the Inspectorate. We felt that this should be brought about by sufficiently trained personnel officers. I am glad that the Department has not only accepted the need for this but has done something about it. How effective this action is will be for others to judge later on, since only a few months have passed since the recommendation was made and answered.

    But I have one criticial note on the question of recruitment. The Department said that its university liaison officers were already working on the lines proposed by the Committee. I must say that I was not impressed by the results of the work of the liaison officers. I was most certainly impressed by their enthusiasm but not by their results, because it seemed to me they were having to do too much. They come from the Inspectorate, and in their district offices they have a lot of work to do quite apart from visiting the universities in their areas in order to try to make some personal contact, all within about three weeks during a year's work.

    Worse than that, with the best will in the world an inspector having the interests of his Department at heart and seeking to achieve the standards set by his superiors is hardly able to produce results if he has to take a graduate to his district tax office to see the functional state of his work in the field. In many cases a graduate would be very much put off if he saw some of the conditions in tax offices.

    Sometimes tax offices look dismal, often they are not painted enough, or they are painted in the style of the Ministry of Public Building and Works and lack the woman's touch. A few pastel colours would make them more attractive. Sometimes the furniture is dismal and uninspiring. A qualified person who might be thinking in terms of a career in a tax office would be put off by the unfortunate environmental conditions. Perhaps the Inland Revenue should think about changing its approach to recruiting through liaison officers.

    One of the best ways to seek an improvement in recruitment is to look at the examination conditions. We are living in a new age. Once upon a time academic success appeared to stem from the roots of the 11-plus. Everybody believed that biologically there was growth in the human frame but that the capacity of the brain stood still. That fallacy has now been exposed. Education is changing. Similarly, there has been a presumption for far too long in the Civil Service that high qualifications for entry are synonymous with professional standards. That is not necessarily so. There are men who can make a high professional contribution on the basis of academic qualifications; there are others who can make a similarly fitting professional contribution with a combination of academic qualifications, experience, personality, attitude and aptitude. A wide range of qualities goes into a man's ability to carry out his duties efficiently.

    Therefore, the answers of the Department on the subject of examinations are hardly supportable. We suggested to the Inland Revenue that it should reduce the six years which higher-grade tax officers must serve before being considered for modified training and the four years which modified inspectors must serve before selection for full training.

    It was thought once that a plumber could be trained only if he served a five-year apprenticeship. That idea has gone. What are we talking about in the 70s when we say to an inspector, higher grade, "You have to wait six years"—

    I accept the correction. What is the idea of saying six years in that case and four years for the other grade of officer that I have mentioned? We have men of great ability in the higher echelons of industry who have been a dynamic force when their initiative has been tapped and they have been given the opportunity. Therefore, the Inland Revenue might look again at qualifications and the time members of staff have to serve before promotion is possible.

    Automation is more pertinent to the movement of personnel than the promotion of them. The hon. Member for South Angus, with his fleeting visit to East Kilbride, missed an important point about the function of the centre. When I went there I found it exceptionally intriguing. For those who are not acquainted with the capacity of the I.C.L. 1900 equipment at East Kilbride, the Report will perhaps give an indication of its capacity and of one or two of the reasons why the hon. Gentleman was able to pick on a couple of mistakes. The Report says:
    "The computer can read and amend about 250 taxpayers' records per second and print 160 notices of coding or 50 notices of assessment per minute. In a typical day it will calculate 20,000 tax liabilities, 3,000 code numbers and record 8,000 changes of employment."
    To manage that, an awful lot of people would have been required on the ground in district offices. The change taking place can be seen in that brief comment.

    The hon. Member for South Angus referred critically to East Kilbride, but he has overlooked what is happening there. First, when the decision was made to construct the building, we were talking in terms of a five- to six-year programme to get it from the planning board to the end product. While it was approaching completion, administrative steps had to be taken to call in from Scottish officers the case papers of all those liable to be assessed for tax. In addition, a housing programme had to be laid down for the incoming staff. Then the new tax papers had to be programmed on to magnetic tape to evolve the first steps of computerisation.

    It is understandable that the Inland Revenue has made one or two mistakes. Although mistakes have been made, it is that the errors have been minimal compared to the units of production. As an example, last week a constituent of mine working for an employer whose registration is with East Kilbride wrote to me complaining that he had not received a rebate to which he was entitled. I wrote to his district tax office, and that office immediately got in touch with East Kilbride. Within 48 hours of sending my letter, I had a call saying that the matter was being attended to. I cannot imagine anything more rapid than that. Even to those who criticise our postal system, 48 hours is fairly speedy for a matter to be dealt with by a unit such as the Computer Centre at East Kilbride.

    In the next 10 years, nine other centres are to be opened. I think that one should add a word of caution in this connection. We must be careful about the types of equipment selected for the computer centres. I have the privilege of serving on the Computer Sub-Committee of the Select Committee on Science and Technology and, although it would be wrong to repeat any of the information supplied to that Committee, it is right to say that great changes are taking place in computers. New equipment is coming along all the time. It is important that the equipment in our regional offices is such that the offices are compatible with each other. We have also to bear in mind the development of a huge grid across the country involving banks and many Government Departments, including the Department of Health and Social Security. The computer complex should be studied with the greatest care so that compatibility can be achieved and sustained, and that can be done only by a day-to-day examination of the computer business. Another point concerning the computerisation of our Inland Revenue services is that, although we have received assurances, an exceptionally vigilant eye must be kept on confidentiality.

    I think that hon. Members who served on the Committee can rightly feel proud. we have done a useful job. A great many educational spin-off benefits are gained by those who take part in such an exercise. The new acquaintanceships and associations made are part of the intriguing life of this House and never to be forgotten. But, at the end of the day, we must ask ourselves where we go from here. I intervened earlier in the debate to remind the House that the Estimates Committee examined the Inland Revenue in 1961 and made a recommendation, repeated in this present Report, on the future organisation of the surtax department. I will not develop the point because it has been dealt with adequately. However, it raises the interesting question: what now?

    I hope that the House will not take the view that, once this debate is concluded, this important Report should go into a pigeonhole and be forgotten. Many hon. Members have a contribution to make. The corollary of the efforts of the officers of the Inland Revenue is that questions are asked on the basis of this Report. It is only by a continuing interest in the Committee's recommendations that we can harmonise the activities of this House and the Board on matters which are essential if this service is to protect the country's institutions in a constructive and positive way.

    It is misleading to say that the Inland Revenue service or the tax col- lector is unpopular, and then to go on and on about it. I do not believe that that view is widely held. The British character is quite different from that. However, it is a presumption which certain hon. Members make from time to time.

    Among the officers and staff of the Board and the professional bodies associated with it there is a determination to meet the needs of a modern society and have the kind of automation to enable them to deal with income tax matters efficiently. It is also necessary for them to have that personal contact, often minimised for reasons which I do not understand, so that they may be involved personally with the affairs of the Board. In order that these propensities may be kept alive, it is important for Members of Parliament to make the largest contribution possible by not allowing this Report to be forgotten. In the months ahead we ought to base questions on it and ask what progress is being made. If that is done, I am certain that the Inland Revenue will anticipate our requirements and get on with the job.

    6.36 p.m.

    I will not detain the House very long with my comments on the Report. Perhaps I might begin by adding my congratulations to my right hon. and hon. Friends who are responsible for its being debated today. However, there is one unfortunate element of timing of which they may not have been aware in choosing today for a discussion of this Report, and it highlights one general defect in the Report itself.

    The admirable people who gave evidence to the Committee were almost exclusively exceedingly senior gentlemen, and none the worse for that. But it is noticeable that there is no evidence from the rank and file members of the staff of the Board of Inland Revenue in the provinces. It is true that they were represented by their general secretary and that the trade union submitted some evidence. But the evidence of the Staff Federation suggested that more field work should be done in the Department's branch offices.

    To my mind, this is a fairly general defect in any investigation of this kind. All too often we seek the views of the generals about what is going on among the infantry in the firing line. The unfortunate feature is that the Board of Inland Revenue, as I understand it, sought the advice of the Staff Federation and began to conduct an investigation into the views of the staff at the grass roots level. Not very long ago, a constituent of mine completed a questionnaire sent out by the Board consisting of no fewer than 60 pages. It is unfortunate that the resulting information has not yet been assembled in report form. When it is, I hope that it will be published and that we shall have a chance to consider it. It was my understanding that the report was due by the end of December.

    Without accepting the sense of crisis which so many hon. Members have attempted to introduce into the debate, I for one am prepared to accept that morale in the Department is not as high as it might be. But that is not just a matter of overwork. There are far more subtle problems involved in it.

    I draw attention to a sentence in paragraph 4 of the Observations by the Chancellor of the Exchequer and the Board of Inland Revenue. It says:
    "Candidates for the open competition for Inspectors of Taxes are required to have a university honours degree or its equivalent, since the nature of the work the fully trained Inspector has to perform calls for evidence of intellectual attainment of this order."
    I am told that one of the more serious causes of poor morale amongst staff is that a great many highly trained people have to deal with work which represents no intellectual challenge to them. To an extent, that may be an indication of the excessive volume of work, and I would like to suggest that it is high time that we introduced some systematic form of sampling into the work done by the Department.

    I am well aware that inspectors have discretionary powers as to the amount of inspection which they give to the returns of individual taxpayers. I have some figures and I should welcome the comments of the Financial Secretary as to whether they are of roughly the appropriate order of magnitude. I understand that an inspector may expect to examine about 1,000 traders' accounts in a year and that an officer may be responsible for 3,000 to 4,000 taxpayers' accounts a year.

    If the latter figure is accurate, it represents a work load of about 80 accounts a day. The most that can be given to an individual account on average on that basis would be about six minutes. Clearly, it is not practicable for a single officer to go through accounts at that sort of rate, to deal with counter inquiries, correspondence and internal memoranda, and to produce anything like the calibre of work which the officer himself would like to be able to produce in order to get proper satisfaction from his job.

    There is no reason why we cannot have a proper sampling system. We have this sort of thing already. It is operated by the Customs and Excise. At Heathrow Airport, for example, the Customs examines only a small proportion of the total number of passengers who go through the green-marked door. There is the same sort of sampling system in the Social Security Department. There is no reason why the principle should not be extended in a systematic and public way to the Board of Inland Revenue.

    However, I am in favour of an even more fundamental change in the nature of the Department's kork. The only duty of the individual taxpayer at the moment is to let the Board know what his income has been for the previous year and then sit back and wait. If he is agile enough, he may wait for a very long time, but finally he will have to pay the tax that the Department says is due from him.

    I see no reason why we cannot move over to a system by which, in addition to telling the Inland Revenue what his income was in the previous year, the individual taxpayer also carries out his own individual assessment to tax. In addition, he would pay that tax by a fixed date in each calendar year. If he failed to report his tax by a fixed date, there would be penalties, including a fine. If, having reported his tax by the due date, he did not pay enough, interest charges would run from the legal date for the amount by which he had fallen short. Conversely, if he had overpaid tax in an access of generosity, the Revenue would pay interest to him on any excess.

    These proposals may sound revolutionary, but such a system is in operation already in many other countries. I have had practical experience myself of making tax returns when living in Canada and the United States. I refuse to believe that the ordinary taxpayer in this country is less honest, less intelligent, less reliable, less sophisticated than the average taxpayer in Canada or the United States. The system works there. It saves a great deal of time for the staffs of the tax-gathering agencies, and, possibly even more important, there is a considerable improvement in morale, because the enervating delays in the collection of tax are eliminated.

    My hon. and learned Friend the Member for Lincoln (Mr. Taverne) was the first to mention wastage in the staff in the Inland Revenue. I listened to him with considerable interest and agreement. But I am concerned not only with the flow of staff out of the Department. I see no reason why we cannot be more ambitious than merely hoping to reduce that. If we apply the Fulton recommendations on the Civil Service energetically enough, there is no reason why we cannot hope for a flow into the Department of people in mid-career. It would not just be a matter of people coming into the Department in their early 20s, leaving after two or three years and being lost for good. We should also be able to expect to recruit skilled people well advanced in their professional careers, men in their 30s and 40s.

    The Board may care to consider whether it would not be possible to introduce more promotion opportunities for the staff outside London. I am well aware that every member of the Civil Service signs a paper to say that he will serve wherever he is called upon to do so during his career in the service, and from time to time he is asked to sign a renewal document saying that that remains a condition of employment. But the hierarchy of the Inland Revenue is very narrow structured towards an apex in London, and there could still be considerable opportunities for widening the area of promotion in cities outside London.

    There is one specific recommendation in the Report to which I should like to draw the attention of the House; namely, the first. I also draw attention to the comments of the Chancellor of the Exchequer. The recommendation is simple. It says:
    "The task of recruiting graduates for the Inspectorate of Taxes should be assigned to specially trained personnel officers."
    There is almost a full page of comment on that recommendation. I will not detain the House by reading the first two comments at length, but the final comment is:
    "The Recommendation also refers to special training in recruitment work".
    It is not a question of "also referring"; this is the only matter to which the recommendation refers.

    The only remaining comment from the Chancellor is that arrangements are in hand to take full advantage of opportunities, both inside and outside the service, for training members of the recruitment section in such aspects of their work as interviewing. That is simply not good enough. The present situation is that members of the staff are put on this sort of work for about 12 months, or two years if they are lucky, and then taken off with no chance to develop the sort of specialist skills of recruitment personnel for this type of work.

    I endorse what my hon. and learned Friend said about the amalgamation of surtax and income tax. I hope that proposals of this sort, which are not new, will be much easier to achieve after decimalisation day, when once and for all we shall rid cur tax system of such incredible items as fractions of two-ninths. I must confess that it has always been one of my ambitions to meet the gentleman who was responsible for introducing the fraction two-ninths, because I never understood it and I defy hon. Members to calculate two-ninths of almost any figure I like to name within something like half a minute; it is a total monstrosity. When we get decimalisation, that sort of nonsense will be exorcised for good from our tax system.

    I also have some views about corporation tax and capital gains tax with which I will not now detain the House. Those taxes add to the complexity of a tax system. I will not comment on some of the wilder observations of the hon. Member for South Angus (Mr. Bruce-Gardyne), but to suggest that all the complexities of the tax system result from 1965 and there on is totally to fail to read history. Surtax, which originally was supertax, was introduced in 1910. The first taxation of capital gains was introduced by the Conservative Party during their last Administration. Probably the most absurd element in our whole taxation system are the Schedules A to F, which we have grown up with and to which we have become acclimatised. As has been said earlier in this debate, they date from William Pitt; we have him to thank for them. Therefore, to blame all the complexities of the tax system, which is striving for equity, upon five years of Labour Government is too preposterous to be supported.

    We can all agree on how we want simplicity, we can agree that we want equity, but there has to be a trade-off between the two. Worse than that, one man's equity is another man's inequity and we shall never get agreement, even among hon. Members on the same side of the House, about what is equity in a tax system. There are no absolutes about equity, and there never will be.

    I entirely agree with my hon. and learned Friend the Member for Lincoln that we do not have enough consistent high-level study of fiscal matters. I know that my hon. and learned Friend has plans outside the House to try to remedy that situation. Endorsing what he has said, I hope that it will not be too long before we get a Committee of the House which will devote itself consistently to studies of tax matters and which will have the standing of the Estimates Committee and the Public Accounts Committee.

    6.52 p.m.

    I should like to begin by paying my tribute to the work of the Inland Revenue, both as a Member and, wearing another hat, when I still do a little work as a practising accountant, in which I have some connection with the Inland Revenue and know something about the work that inspectors of taxes do.

    We are told in the Report that the Revenue is understaffed and overworked. We were told by the hon. Member for St. Marylebone (Mr. Kenneth Baker) that it was administrative chaos. That is nonsense and the hon. Member should know it.

    It is not even bordering upon it. There is nothing in the Report that could lead one to believe that it is bordering upon administrative chaos. There is no basis for that sort of conclusion.

    My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), supported by my hon. Friend the Member for West Lothian (Mr. Dalyell), put it very well indeed when they analysed the Report and showed that it indicated not only that there was no administrative chaos, or even a situation bordering upon it, but that there was at least doubt about the extent of the understaffing and overworking of the Department.

    I accept that there is some under-staffing and overworking, but I would not go along with those who believe that there is now a situation which calls for some of the conclusions put forward in the Report. I refer in particular to paragraph 74, under the heading "Conclusion". In referring to this whole question, it states
    "Your Committee are of the same opinion, and hope that this request for a breathing space will be heeded."
    That is the most serious part of the Report because if the House or the Government were to accept it, the situation would be serious.

    The major reasons given by the Committee for the fact that the Department is understaffed and overworked appear in paragraph 73. The Committee refers to the Report of the Select Committee on the Parliamentary Commissioner and to the fact that over a two-year period in 30 out of 79 cases that were referred to the Parliamentary Commissioner there was evidence of maladministration. With 25 million taxpayers, to find 30 cases of maladministration over a two-year period is certainly not of itself evidence of understaffing and overworking.

    I could quote particular points, as other hon. Members have done. The hon. Member for South Angus (Mr. Bruce-Gardyne) gave only one or two examples. We could all cite constituents who come to us about repayments which take a long time. It would hardly be surprising to find that there was a mass of overworking and understaffing in the Inland Revenue.

    My hon. Friend's approach is generally right, but the evidence of the cases that were put before the Parliamentary Commissioner is hardly valid to support the point which he is making. Members of Parliament deal with a good deal of work, as a result of which what goes to the Parliamentary Commissioner is fairly minimal.

    I take the point made by my hon. Friend that the 30 cases would be only a small part of what comes to hon. Members, but even if that is multiplied by a large number, it still does not prove the point that my hon. Friend and the Committee are attempting to make. I am not saying that there is not an element of understaffing and overworking in the Department. What I am saying is that the Report certainly does not bring it out.

    I believe that there are ways in which the capacity of the Revenue could be improved. Some of the points have already been made, but there is one which has not been raised. I refer in particular to what goes on at the general commissioners. Accountants in practice will be aware that meetings of general commissioners constantly take place at which hours of time are wasted, not only of senior inspectors of taxes, but of accountants and of the lay commissioners themselves, who are generally solicitors and a similar type of people who give their time free. Much work, if not the great proportion of work, at the general commissioners' meetings consists of simple applications for an adjournment which in 90 or 95 per cent, of cases are granted.

    To get that, we have accountants sitting about for hours waiting for the case to be heard. We had the lay commissioners sitting to hear the cases. Perhaps in one in a hundred, or possibly even more, they have a serious job to do other than the granting of an adjournment. The inspectors of taxes have to give up much of their time to this work, which, I consider, could to some extent be avoided. I hope that the Government, in conjunction with the Inland Revenue, will consider reorganising the way in which the general commissioners work and the way in which the appeal system works on Schedule D cases in particular.

    We have heard a great deal of debate about recruitment. One thing which is clear from the Report is that, whilst there is a shortage of inspectors of taxes, clerks and tax officers of the lower grades are not in short supply, as was made clear by the Chief Inspector in reply to a question when he said that it was possible to get as many of the lower-grade staff as were wanted. There is, therefore, no great shortage of that type of staff, although there is the wastage which has been referred to by many hon. Members, and particuarly by my hon. Friend the Member for West Lothian who referred to the evidence of my right hon. Friend the Member for Sowerby (Mr. Houghton) in this respect.

    Some of the major changes I would like to see in our tax system, such as the abolition of the earned income relief, very substantial changes in personal allowances and the abolition of surtax, would not require the work of inspectors of taxes. They would involve the sort of administrative work requiring not an inspector but rather people at a lower grade, including the tax officers.

    I turn now to the question of the lower grades and of the recruitment of graduates to the service. One recognises—and this point was made by my hon. and learned Friend the Member for Lincoln (Mr. Taverne) and by my hon. Friend the Member for Dudley (Dr. Gilbert)—that there is wastage. The fact is that there is still room for improving the opportunities for people to go from the tax officer grade to become inspectors of taxes. A number of hon. Members, including my hon. Friend the Member for East Stirlingshire (Mr. Douglas), referred to the opportunities that there should be for obtaining suitable candidates from, for example, the polytechnics. My hon. Friend the Member for The Hartlepools (Mr. Leadbitter) also made the point that a good deal could be done about the period of training. I know that the Inland Revenue is looking at that aspect. I endorse the Committee's recommendation that much more can be done about bringing forward more quickly officers below the inspector level. However, although the percentage of graduate inspectors is not as high as we would like it to be, even at this stage it is still a higher proportion than the proportion of accountants who are graduates, although that, too, is increasing rapidly.

    It seems, therefore, that there is considerable room for increasing the numbers coming through from tax officer level to inspector level. But the problems which have been created by the shortage of staff have led many people, including some hon. Members, to put forward ideas about the simplification of the tax system—for example, along the lines of a value-added tax or similar measures, or a reduction in direct taxation, although on that point I do not entirely accept the logic of those who have proposed it Hon. Members opposite made out a superficial case in claiming that all we have to do is substantially reduce direct taxation and we thereby simplify the tax system. That was the purport of their argument, and I do not accept it. Admittedly, it is attractive on the surface both administratively and politically, but surely the Government, after their mini-budget, will perhaps not be quite so dedicated to a system of unfairness such as a massive cut in direct taxation would imply.

    One turns to consider other adjustments. The late Iain Macleod put forward the idea of introducing the American self-assessment system. It is argued in this connection—and there is some evidence for it—that our cost of collection is considerably higher than that of the United States. The American Government collect, from four times as many tax payers but with a similar number of inspectors, about 12 times the tax revenue that we collect. It is argued, therefore, that there must be something in the self-assessment system and we should consider introducing it here. This argument is worth examination, and I want to do so now.

    I take first the lower collection cost. I submit that the comparison is of doubtful value. Pages 286 and 287 of the Report indicate one of the reasons why the collection cost is lower. It shows that once again we have much to lay at the door of our low economic growth, because if our tax yield had been 50 per cent, higher the percentage cost of collection would have been reduced by 25 per cent. In any case, the comparison is misleading because to have a self-assessment system would be to transfer the cost to the tax payers.

    The hon. Lady the Member for Tyne-mouth (Dame Irene Ward) referred to the complications of our tax form. Ours is about six pages, but the American form, under the self-assessment system, consists of 48 closely packed pages. Some of it is explanatory but it is nevertheless a very much larger form. If our income tax form supposedly could be completed by a five-year-old child—in practice it cannot be completed by a 55-year-old experienced business man—then the American tax form, if introduced here, would be very difficult for many accountants to complete, and it would certainly be a nightmare for the taxpayers because it is so enormously involved. If anyone thinks that we would be introducing simplification by having the American self-assessment system, I ask him to look through the American tax form.

    Quite apart from that, there would be need for a very complicated assessment—a point which was recognised by my own organisation, the Association of Certified and Corporate Accountants, in a memorandum to the Estimates Committee which sat in 1960–61.

    Again, bringing in such a system would introduce a new growth industry—that of tax form fillers. In America, many more than half the income tax forms are completed not by the taxpayers but by tax form fillers. Here the great majority of our 25 million taxpayers complete the forms themselves. They would not be able to do so with the American style form. Indeed, in the United States, this new industry advertises extensively on television. An article in The Times on 11th August said
    "Over half of America's taxpayers seek professional help in filling in their forms …".
    It added that all sorts of firms were now getting on to the band wagon, and went on:
    "Department stores like Montgomery Ward and Sears Roebuck are now offering a tax service …"
    Naturally, the spivs are also on to it. The United States Government published an advice booklet. It can be purchased for 60 cents. It has been republished, with a flashy, four-colour cover, at a dollar or more by private interests. Yet the dollar edition sells well because the taxpayers who buy it think that the Government cannot be telling them about all the exemptions they can have. Perhaps those hon. Members opposite who are advocating commercial radio have in mind the use of it by tax form fillers advertising their ability to enable taxpayers to get through the complications of a self-assessment system.

    I doubt whether this type of self-assessment would suit our mentality in this country, quite apart from its considerable complexity. I hope that the Financial Secretary can assure us that the Government have now rejected any idea of introducing the American type of system.

    I hope also that the Government will not accept the demand in the Report for a breathing space. No Government should be prepared to put up with this sort of restraint on top of all the other restraints upon a Chancellor of the Exchequer. We may disagree with the Government politically, but we cannot accept that they or any Government should be constrained, in wanting to carry out tax reforms, by accepting the idea of a breathing space of, say, three or four years. I hope the Government will reform the taxation system, and no doubt I shall have my disagreements with them on aspects of such a reform, but I hope they will not allow themselves to be prevented from doing so by the idea of a breathing space.

    7.10 p.m.

    I was very glad that the hon. Member for The Hartlepools (Mr. Leadbitter) in his speech, most of which unfortunately I did not hear, paid a very well-deserved tribute to the Chairman of the Sub-Committee which made the Report. It is right that I should say that when Sir Eric Errington chaired the Committee he was not, for most of the time, in good health. The House stands very much in his debt. I echo what has been said by a number of hon. Members on both sides of the House by way of thanks to the witnesses from the Inland Revenue who devoted very many hours to answering the long and penetrating questions put by the members of the Committee.

    The debate has had its moments. It has been without some of the moments which it might have had. The right hon. Member for Sowerby (Mr. Houghton) has sat on the Opposition Front Bench during the debate, his benign presence brooding over our deliberations. There must have been few of us who were not aware that he probably knows 10 times as much as any hon. or right hon. Member about the subject we are debating.

    It seemed at times as if the debate was lapsing into a Budget debate. I was relieved that the hon. Member for Dudley (Dr. Gilbert) did not pursue his views about corporation tax and capital gains tax, but no doubt we shall be able to provide him with ample opportunities to do that in future.

    Normally I should not have dealt with any of the points which were really budgetary points rather than points of procedure, but I should say a few words about the subject of alimony payments which was raised by the hon. Member for Clackmannan and East Stirlingshire (Mr. Douglas) and my hon. Friend the Member for Tynemouth (Dame Irene Ward). There is a good deal of misunderstanding about this matter, and perhaps I can try to make the position clear in two or three sentences.

    If alimony due under a court order or agreement is not paid, the wife is perfectly entitled to ask for her Pas-As-You-Earn code number, if that is how she is taxed, to be adjusted. The Revenue will in general do that provided that it is satisfied that the failure to pay is not just a temporary, short-term interruption. The matter should be dealt with when the wife's income is assessed at the end of the year and the necessary adjustment made. If there is likely to be a continued failure she is perfectly entitled to have her code number adjusted so as to take account of the payments which are, or are likely to be, made.

    As one of the hon. Members who raised this point, may I ask whether a circular could be sent to tax offices to make that clear?

    I am sure that the officials of the Inland Revenue will have heard and will note what the hon. Gentleman has said.

    Reference has been made to the question of the children's income. I must draw a very clear distinction between income paid under a court order to the mother by the father in respect of the children, and income paid direct to the children. In the first case, the income is, and always has been, regarded for tax purposes as the mother's income. It is the law. If the court ordered the income to be paid to the children, even though actual payment might be made to the mother or some other person on the children's behalf, it was regarded for many years as the children's income. The 1968 aggregation legislation made it the mother's income and aggregated it with her own. In many cases this brought into tax quite small court order payments to children. We have given a firm undertaking to repeal the 1968 legislation, and I am sure that the House would not expect me to say more about that matter now.

    I will try to answer most of the questions raised in the debate. Perhaps I can begin by saying a few words about the staffing problem generally. It is worth reading the Committee's statement in paragraph 73 of its Report:
    "In Your Committee's opinion there is no doubt that at present the Inland Revenue Department is understaffed and overworked. Serious as this situation admittedly is for the Department itself it is even more serious for the public as a whole. The errors and delays which result from it cause widespread distress and hardship for which there is no legal right of redress".
    The hon. Member for Ashton-under-Lyne (Mr. Sheldon) suggested, in the nicest possible way, that that was an exaggeration and was not supported by the evidence given to the Committee. I am bound to tell him, from the full and thorough investigations which my right hon. Friends and I made on moving into the Treasury after 18th June, that the position is no less serious now than that described in the Report. Further, there is no doubt that it represents one of the major constraints on our freedom of manœuvre, and certainly it is one of the unhappier legacies which the Government have inherited from their predecessors.

    I must make it clear that the situation is not necessarily due to a failure to recruit at tax officer and tax officer (higher grade) levels. On 1st October this year, out of the establishment of the Inland Revenue we were only 238 bodies short. That represents a shortfall of 0·34 per cent., which I think the House will agree is minimal. But it was clear to us within a few days of taking office that, in spite of being numerically up to strength, the Department was short of the staff needed to administer the existing fiscal legislation, let alone to embark on reforms.

    The hon. Member for Ashton-under-Lyne asked for the evidence of this. The Inland Revenue has a very simple test which has shown its usefulness over the years, namely, the arrears of post which have not been dealt with by tax officers. Last January, for the first time in the history of the Inland Revenue, the items of post over seven days old totalled more than 1 million. By November, and as a result of very substantial overtime work by officials in the Inland Revenue—and I express the Government's warm appreciation of their effort—it was reduced to just over half a million items. I am sure that the House will agree that this is still a very disturbing figure and represents considerable arrears of work, and—perhaps more important from the point of view of morale, an aspect of which I am very conscious—it must be disheartening for the staff at all levels. Because the staff are overburdened with work, there follows almost inexorably a mounting level of public criticism about the mistakes which inevitably occur.

    It is not an exaggeration to say that in the two months after the General Election my office was swamped by a flood of letters from hon. Members on both sides of the House expressing constituents' complaints. That was immediately after the election when there had been a lacuna. But I am told, on making inquiries, that the rate at which I am now signing letters to hon. Members in reply to constituents' complaints is running at over 7,000 a year, represents a measure of the considerable public dissatisfaction about the matter we are discussing.

    In addition, the Chairman of the Inland Revenue handles a large number of letters, and many hon. Members write direct to the local offices, which is much appreciated and which produces a quicker and more effective reply. I urge on hon. Members the view that this might be the most effective way of dealing with the matter, not because I am trying to slide out from under but because they will get a quicker service if they avoid writing to Somerset House.

    One speaker in the debate said that this was, of course, the tip of the iceberg. To some extent this is right. There is, and I frankly concede it, a disquietening degree of public dissatisfaction. As I have said, I am acutely conscious of the effect of this on the morale of the Department. Nobody likes to work for a concern which is visibly finding it difficult to cope, and no one likes to go home at night knowing that there are piles of work left sitting on his desk to return to in the morning, and I have a very great deal of sympathy with the staff who face these conditions, and I am speaking, I am sure, for the whole House when I say that I applaud the loyalty and devotion of those who month in and month out continue to serve the public to the best of their ability.

    Of course, a consequence, which is also a cause—there is an element of the vicious circle in this—is the high turnover of the executive and clerical grades. Indeed, the hon. and learned Member for Lincoln (Mr. Taverne) and the hon. Member for Dudley asked me about the management consultants' report. The management consultants, A.I.C., were engaged last June to survey the reasons for this high level of turnover. I may say that it was originally on the initiative of the staff associations that the suggestion was put forward, and, of course, it has enjoyed their full co-operation, which I very much welcome. This has involved a rigorous examination of the Department's personnel policies and is a very substantial survey of staff attitudes relating to such matters as job satisfaction, and so on. I was asked when the report will be available, and I can say almost any day now.

    I was asked whether it would be published, and I am bound to say that this is more difficult. It has not been customary, as I said in answer to a Parliamentary Question by the hon. Member for New-castle-under-Lyme (Mr. Golding) in October, to make available to the general public copies of reports which have been commissioned for management purposes, and for the moment I find it difficult to see reasons why there should be a departure in this case. It is, after all, very important that people should give their answers freely and frankly knowing that those are going to be kept in reasonable confidence. However, I can say that the Department will pay the closest attention to any recommendations which may be made by the consultants in their report.

    One of the consequences of the turnover—a number of hon. Members have referred to this—is the high percentage of trainees in the Department. I am sure the House will appreciate that, with the best will in the world one cannot expect a trainee to be as fully effective as a fully-trained tax officer, at least not for some while. This, of course, in turn puts a greater burden upon the supervisory staff and distracts them from their own case work.

    One solution may be so to organise the Department that there is a pool of trainees of tax officer and tax officer higher grade level additional to the complement of staff in district tax offices. This is a matter which is under urgent study by the Government, and if there has to be some rise in the total numbers of the Inland Revenue—and I am bound to say that I say this with some bitterness—I hope the country will realise the cause and where some measure of the blame rightly belongs.

    I am grateful to my hon. Friend.

    It is fair to say about the Report that a substantial part of the Committee's time and investigation was spent on what is the most critical and intractable long-term problem—namely recruitment and retention of staff for the inspectorate—and it is right, I think, to spend a minute or two on this. Everyone agrees that the job of tax inspector is a very demanding one calling for the highest qualities of character and intellect, and no one who has read the evidence of Mr. Scott, the then President of the Association of Inspectors of Taxes, could doubt that. Everyone agrees that in the last few years, and in the last six years in particular, a very heavy burden has been placed upon the inspectors by new legislation passed by this House. To quote the evidence of the memoranda of the A.I.T., paragraph 10:
    "The Finance Acts of 1965 to 1968 laid upon the Chief Inspector's Branch additional and permanent responsibilities which can rarely have been imposed before on any Government Department."
    and since then, as my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) reminded us, we have had disallowances of loan interest and a number of complex new anti-avoidance sections. I would honestly say to hon. Members opposite that they are deluding themselves if they believe this has not been a major cause of the present difficulties from which the Inland Revenue is suffering. I am very grateful to the hon. Member for The Hartlepools, who heard a great deal of the evidence given to the Committee, and I am sure he would not dissent from that.

    The hon. Gentleman has adduced as evidence of overwork the backlog of letters as a major factor, which he himself has mentioned. Does he not understand that, following an election, it is quite normal for there to be a rise in the number of letters to Members of Parliament? My own correspondence, as a result, is very much greater—as a result of interest in these matters. The other point he referred to was the work caused by the extra imposition of the Finance Act, 1965. Does this mean that he has no reforms himself to introduce?

    I am coming to that; but on the question of letters, I made it perfectly clear that it was during the most recent two months that I was signing letters at the annual rate of 7,000, and I specifically excluded the first two months after the election, because I would have expected them to be very much heavier then. After all, we are now six months away from the election.

    To return to the inspectorate, here I dissent from one paragraph in the Report. I am sure we all agree that it is essential that we should not cut the standards of entry into this very exacting profession of tax inspector. If we did, we would risk reducing the quality of service to the taxpayer in what is a very sensitive area in relations between citizen and State, and it might result in the failure to implement decisions of the House.

    How are we going to remedy this difficulty about inspectors? There are two main sources of recruitment to the inspectorate, graduates from the universities and promotion from the grade of tax officer higher grade. I would stress that both are essential in order to get the numbers and in order to provide proper career opportunities for these tax officers higher grade and for graduates and to ensure that we have sufficient entrants with first-class brains to fill top posts in future decades. I would endorse very much what was said by the hon. and learned Member for Lincoln in the tri- butes he paid to the staff associations and the quality of the top management of the Inland Revenue. Anybody who has had any dealings with them would thoroughly endorse that.

    The Estimates Committee made a very intensive study of this problem and made a number of useful recommendations. It made clear that full-trained inspectors, who are, as it were, the top level of the inspectorate, numbered rather fewer than 2,000 in the whole Inland Revenue staff, which, at the moment, is just under 70,000. The current shortage in posts where full training is required is about 130 to 140, which is quite a considerable number.

    Looking first to graduate entry, when the Committee made its study the annual intake was 60, achieved in only two years during the whole of the decade of the 'sixties, and, as someone said in the debate, Sir Leonard Barford said:
    "We take everybody who reaches our qualifying standard who will come."
    The Committee recognised that this had to be stepped up and made suggestions for a more dynamic approach to recruiting. It suggested first that university recruitment should be the job of specially trained personnel officers. The White Paper makes it clear—and perhaps I can here answer the hon. Member for Dudley—that a new recruitment section has been set up at headquarters, and since then we have increased the target from 60 to 100. A major new effort is now being made to put across the attractions of a career in the inspectorate. This is not confined to the universities. I can tell the hon. Member for East Stirlingshire that liaison officers, as well as being appointed to universities, are also being appointed to polytechnics. We intend to spread the net as wide as we can to get men and women of the ability we need.

    The Committee suggested that there should be a review of advertising, with much greater emphasis on professional qualifications. I have no doubt that a number of hon. Members have seen the attractive advertisements which now appear in appropriate journals that reach people contemplating a career. The results, I am happy to say, have been encouraging. In the most recent year ended 30th October, 1970, we had over 100 successes in the tests and interviews compared with 60 the year before, and the Inland Revenue is confident that we shall reach the target of 100 new entrants. We have now raised our sights. We are next year looking for 125, and there is every reason to hope that this too will be achieved. This is for a job that requires a five-year training period. If I may say so, with the greatest respect to the hon. Member for The Hartlepools we are not training plumbers. We are training men whose attainments, skills and knowledge require a full five-year period. No one has suggested that the training could be achieved in less—

    I hope that, on reflection, the Financial Secretary will consider that to be an unfair point. I was explaining to the House that there are new approaches to this problem now. I was not saying that we had or should have plumbers in the Inland Revenue service.

    I was not suggesting that. A five-year apprenticeship to become a plumber is and has always been recognised as a protective practice in the plumbing trade, but it is not the same for a tax inspector.

    The Committee stressed the importance of removing material and psychological barriers, and referred to the old view, which crops up again and again in the evidence, that the inspectorate was a second best after the Administrative grade of the Civil Service. This is emphasised by the ludicrous £10 a year difference in the salary paid to a new entrant.

    This is on its way out. There are to be major improvements in pay for the direct entrant inspector under training, payable as from next January, although, because the whole pay is under review, the actual date of first payment may be a little later than that. The direct entrant inspector under training will be brought into line with the administration trainee grade which is emerging from the Fulton Report. Furthermore, there will be substantial improvements by way of increments and allowances to these entrants on passing examinations.

    These changes should ensure that the pay scale for the graduate entrant will be fully competitive with that of many other occupations which will be appealing to him. The Fulton reforms in the system of recruiting graduates as adminis- tration trainees will apply equally to inspectorate entrants. Under these arrangements graduates will have the choice of going either into the inspectorate or into the general administration, depending on their preference and suitability. The House will agree that these reforms will go a long way—indeed, we hope they will go the whole way—to remove what the Committee referred to as the "second best" image, and will in time make a significant contribution to easing the chronic shortage of fully trained inspectors.

    Before the Financial Secretary leaves recruitment, will he say something about recruitment from the Services?

    I am coming to that. I will deal first with promotion from the inside and then with two brief points on recruitment.

    On the other avenue of entry, promotion from tax officer higher grade, the Committee recognises that there have to be two stages. It is necessary to recruit to the Inland Revenue as tax officer higher grade men with the right qualifications who can go on for training as inspector; it is necessary then to select them and train them, or at any rate, those of them who show sufficient promise, to be promoted to inspector. It was the latter part, the selection and training, which was the major concern of the staff federation.

    The Committee recognises that on the initial recruitment the key lies in getting people from the sixth forms of schools, and the Inland Revenue has followed this up with considerable vigour. A major effort is being put into it. There was a pilot scheme earlier this year in the North-West, and other schemes have been launched in Cardiff and Manchester. As a result, the recruitment of tax officers higher grade in 1970 is now running far ahead of 1969. The figures will show the improvement. The target for recruitment has been increased from 520 to 1,300. Candidates who have been assigned so far are 950, compared with 350 in the previous year, and those who have actually taken up duty, up to last Friday, number 685, compared with 285. I think the House will agree that these are encouraging figures. I find it difficult to believe that there are not quite a number of potential inspectors in that lot.

    The Committee was much concerned, as indeed were hon. Members, with the long delays before the process of selection starts. The Committee recommended that the six-year wait between entry and embarking on the modified training should be reduced, and that the further four years before full training can start should be reduced. To take the four-year period first. This is after a man has become a tax inspector, grade III, and wants to go on to take the full training. Since the Committee reported, the Inland Revenue has begun to introduce a new training scheme leading to qualification as full inspector. Tax officers higher grade who achieve a sufficiently high standard in their preliminary training will go straight on to complete their full training with no wait at all. For those who do not qualify in this accelerated training, the waiting period before the review has been reduced from four to perhaps two and a half years.

    The earlier stage, the six-year period, to which the hon. and learned Member for Lincoln and other hon. Members referred, is more complex. The Inland Revenue give reasons for this in its observations, stressing not only the two-year initial training period for a tax officer higher grade but also the fact that he needs to gain experience on the job before embarking on the more strenuous training to be an inspector. There has in the past been a complication that it has always been felt undesirable to narrow the distinction between the tax officer higher grade who proceeds by way of the limited inspector competition, which is a competive examination, and the tax officer who waits for selection. However, as a result of the Fulton Report, the limited inspector competition is likely to be abolished with the introduction of the new administration trainee competition. This Fulton development provides a gateway both for new graduate entrants and for existing staff under the age of 32. The only qualification is that they have to have two years' service.

    Success in the administration training competition will enable tax officers higher grade to gain entry not only into the inspectorate but into other Departments of the Civil Service if they wish to. Thus, it provides a new avenue for advancement for "high flier" who enters the Inland Revenue as a tax officer higher grade. If he feels he does not want to attempt the examination, entry by selection is still open to him, but the six-year period obtains. It is certainly not the law of the Medes and Persians that it should be six years for all time. We recognise that conditions are changing, and I give an undertaking that it will be reviewed in due course.

    There are two other recommendations—and here I come to the point made by the hon. Member for West Lothian (Mr. Dalyell)—one of which was accepted and the other not accepted. The Inland Revenue has accepted that ex-Service officers could be a useful source of recruitment to the inspectorate and has produced a pamphlet called "A Second Career—A Second Command". Liaison arrangements are being established with units in the forces to seek to interest officers who are retiring at 40 or thereabouts in taking training as a tax inspector. The emphasis has been on the early stage at which a trained inspector achieves his own command and is in charge of a tax district.

    The recommendation which we cannot accept at this stage is the one about selecting sixth formers for university bursaries and seeing them through university. We believe that the contribution this might make to recruitment to the inspectorate is speculative. It has not been possible to assess how many would be attracted, or how many would be secured after taking their degree.

    It is interesting to note that in his evidence the right hon. Member for Sowerby reached the same conclusion, although for a somewhat different reason. He laid emphasis on the distinction between the graduate entrant and the entrant by promotion, and he felt that there would be an unfortunate discrimination against the latter if there were an intermediate position for somebody who began as a tax officer higher grade and got through the graduate loophole. I have discussed this with the Inland Revenue and it endorses what he said; so we have not felt able to accept that one.

    To summarise on the question of the inspectorate, the Government fully share the Committee's concern. We accept most but not all of its recommendations, and are encouraged by the improved selection and recruiting so far. It will be a few years before we really begin to feel the benefits.

    I now turn to the problem of mechanisation and computers. I shall deal generally with the position, and then with East Kilbride in particular. I welcome this chance to comment on a very major development for the Inland Revenue. I acknowledge the disquiet that has undoubtedly been felt in Scotland, and I shall answer some of the specific points that have been made.

    I do not need to dwell on the history, because it is well set out in the lengthy memorandum from the Inland Revenue, on page 206 of the evidence. Nor do I need to describe in detail the set-up at the new computer centre, although I could reinforce the invitation that the Inland Revenue has extended to all hon. Members—not only to those from Scottish constituencies—to visit Centre One at East Kilbride at any time they want to.

    The study goes back to 1957. Eventually the idea of nine computer centres throughout the country emerged, and East Kilbride is the first. It involves concentrating the records of about 80,000 employers and 2 million taxpayers into one centre, and also a running record of every taxpayer and employer on magnetic tape. I am fascinated to realise that each taxpayer occupies about half an inch of magnetic tape, and that the record is up-dated daily by feeding in the changes. Coding, assessing, and so on are done by the computer.

    I was asked about security. Here I can give a firm commitment. There are no remote access terminals to the computer. The only access is via the computer input equipment at the centre, and the Inland Revenue believes that it is as secure as any computer installation can be. It is very much part of the bedrock philosophy of the Inland Revenue that an individual taxpayer's affairs should be treated with the utmost sanctity, and anybody who has sought to obtain statistics based on individual cases will have realised how stoutly the Inland Revenue resists any such approach.

    In view of the points made by my hon. Friend the Member for South Angus and other hon. Members, I want to draw attention to three cardinal features about this computerisation programme. First, as with all major reorganisations, the main constraints are inevitably people. In this case I refer to the staff. It is not too hard to commission and programme a computer; it is not impossible progressively to concentrate files and extract key data and put them on punched tape. But to run down over 40 P.A.Y.E. centres all over Scotland and to concentrate their staffs in one location—there are 1,653 on the staff as East Kilbride—is a massive operation of great complexity. When, in addition, we have to maintain complete continuity for every employer and taxpayer throughout, the House will begin to realise some of the problems involved.

    One consequence has been that inevitably a high proportion of new staff has had to be recruited to staff East Kilbride, and to begin with they are inevitably inexperienced. We have 172 trainee tax officers and 46 tax officers, higher grade, under training at East Kilbride.

    The second point is that entirely new procedures had to be learned, even by existing staff. The system is quite different from that of a normal district office. Employees are grouped not by employers but by their National Insurance numbers. A separate employers' unit deals with employers. The tax officer for the employees no longer deals direct with employers but via the unit at East Kilbride. Tax officers must be familiar with input and output techniques, coding, and so on. This means that they have to learn many new procedures and forget much of what they were trained on in their earlier district offices.

    The third and more immediately relevant point to hon. Members—particularly to my hon. Friend the Member for South Angus, to whose pleas I have listened with much sympathy—is the effect on the public and the taxpayer. Instead of his having a local office to deal with in the town where he works, the taxpayer's affairs are handled at a distant office in a way that often seems remote and impersonal. I entirely understand that this might be even less bearable when letters go unanswered and when telephone calls seem to produce no results—when months pass and one's affairs seem to be neglected.

    On the question of replying to correspondence, I cannot do more than say that the Inland Revenue is doing its best. There is a standing instruction to all staff that letters which cannot be dealt with within seven days must have an interim reply, and staff are regularly reminded about the need for this. I equally recognise that on occasions this does not happen. I can only put it down to the inevitable human failures that will always occur in any organisation that has to deal with large numbers of people. We entirely accept the need for constant vigilance in acknowledging taxpayers' letters.

    The centre went through a rough period in the middle months of this year, after it became operational in March. This caused widespread concern, of which certain newspapers in Scotland made the most. I am satisfied that it is now getting a great deal better. I visited Centre One in September. 1 found the staff—and I think that hon. Members will have had the same experience—far from complacent, but gaining confidence that they were overcoming their difficulties.

    The delays, as measured by the post outstanding, compares well with the Inland Revenue as a whole, although I agree that it is not a particularly satisfactory situation. The level of serious complaints, as evidenced by complaints made to me, other Treasury Ministers or to the Chairman of the Inland Revenue, is falling, and, although we have some way to go, I can assure the House that there is great determination at East Kilbride to provide the standard of service to which Scottish taxpayers are fully entitled.

    Can my hon. Friend give the House an assurance that we shall not proceed with the establishment of further centres—I believe that Bootle is to he the first—until we are sure that we have got to the bottom of the problems that have beset East Kilbride?

    I am coming to that at once. I was dealing with access to the computer centre. There have been established at Glasgow and Edinburgh two principal inquiry offices which deal with a large number of personal inquiries and are linked by telex to East Kilbride. Also, in many towns there are local inquiry offices at the existing district offices which continue to deal with other tax matters, such as Schedule D and so on.

    We have found that the great majority of calls at these district offices can be dealt with quite happily without reference to East Kilbride. Somebody may want a form to report the birth of a child, or to get married, or to make an inquiry about such matters. Where it is necessary to refer to a taxpayer's own records, if people give a few days' notice of their intention to call at the district office the file can be obtained and there will be an officer to discuss his affairs with the taxpayer in person. I hope that taxpayers will feel that this is at any rate some measure of contact.

    There are a great many callers at East Kilbride itself: every 20 minutes a bus coming out from Glasgow deposits a new group of taxpayers anxious to pursue their inquiries with a battery of tax officers awaiting in the inquiry office there. But we always recognised that remoteness was a major disadvantage of computerization, and the Inland Revenue has now for some time had a working party looking into the whole question of P.A.Y.E. inquiry facilities, the adequacy of existing arrangements, whether proper publicity is being given to them and whether improvements are necessary.

    The hon. Member for West Lothian mentioned telephone contact. He will know that when the first tax districts, dealing with taxpayers in London, moved out of London to the provinces the Inland Revenue initially made use of the free phone facilities. The difficulty with this facility was that it proved to be very expensive even when available only to employers. The hon. Gentleman also asked about abuse of the facility. Although the abuse was not great, and I would not seek to put much weight on it, there were employees who learned the number and were thus able to make free telephone calls themselves to which they were not entitled, although they were entitled to make calls for the cost of a local call.

    As we see this concentration develop, the cost of a free phone service could become very considerable, and I will only say now that the working party will give very close consideration to what the Select Committee recommended. We are anxious that taxpayers should have all reasonable facilities for making contact with the computer centre, but this must have some regard to the cost.

    The hon. Member for East Stirlingshire asked about centralisation with the collecting offices. As the Report makes clear, it is intended that the centralised collecting offices should be linked with the computer centres, but there is always a need for local collecting officers because there are always those taxpayers who will not pay until someone knocks at their door and says that if they do not pay the bailiffs will come in. Although the number of such taxpayers is few, they are there.

    The Committee recommended that we should take the advice of outside experts in order to be able to keep up to date and take full advantage of the latest developments. The Board of Inland Revenue has accepted the recommendation. A review committee began work in April. It includes outside management consultants as well as representatives of the Department of Social Services, the Civil Service Department and the Department of Trade and Industry. Although it is early days yet, I have no doubt that the review committee will prove most helpful.

    Simplification and staffing were subjects referred to by a number of hon. Members, including the hon. and learned Member for Lincoln, who thought that the remedy for the Inland Revenue's difficulties was simplification of the system, and, if I may say so, this is absolutely right. We must reverse the pattern of recent years where we had complexity piled on complexity, where tax offices were swamped, where the public became bemused and where the standard of the Inland Revenue service and the tax morality of the taxpayer declined.

    This Government were elected on a pledge to reduce direct taxation and to reform and simplify the tax system, and I can state categorically that this remains our policy. We have already made a start, in a different field, with the new system of capital allowances—the 60 per cent. accelerated depreciation and the universal 25 per cent. reducing balance—which has been widely welcomed.

    Simplification of the pattern of capital allowances will ease problems both for tax officers and for businessmen.

    However, as many hon. Members have recognised this evening, simplification is not easy or painless—there is the age-old conflict between simplicity and equity to which a number of hon. Members referred—but I have no doubt whatever that in the last six years in particular the pursuit of absolute equity has gone to unacceptable lengths. The system becomes so complex that it is understood only by the tax expert and that in itself militates against equity. It has put a premium on good advice, and this cannot be right. I am sure that we are right to look for greater simplicity, even at the expense—and I was interested to hear the hon. and learned Member say it—of a few rough edges.

    The second point here is that it is essential to recognise that simplification cannot satisfactorily be achieved without structural reforms. Such reforms take time to plan, time to introduce and time to implement, and I obviously cannot say anything about this aspect in detail tonight. Nevertheless, I entirely reject the point made by the hon. Member for Ashton-under-Lyne that the Report in some way represents an overriding restraint upon tax reform. This has certainly not been the view put to us by the Inland Revenue. Yes, there are certain limited constraints of timing, and this we must recognise, but it certainly will not stop the Government's tax reform programme. But these are budgetary matters, and even if we want more consultation on reforms than has taken place in the past I must ask the House to await my right hon. Friend's Budget Statement.

    But I can assure the House that no reasonable proposal for simplification is being neglected in our studies including, I might say, self assessment, although the hon. Member for Heywood and Royton (Mr. Barnett) did not think much of it, while the hon. Member for Dudley asked us to introduce it. We have made a lot of pretty thorough investigations into the tax system in the last five years. It is possible that simplification may involve changes in the computer profile, and until proposals under review are further advanced we would not want to become committed to further computerisation or mechanisation. Our work on simplification necessarily includes a review of mechanisation, so work on the programmes other than that on the two computer centres being built is largely to be suspended for the time being.

    I was interested to hear what the hon. and learned Gentleman said about an independent inquiry for the purpose of simplifying and remodelling our tax system. Without wishing to be guilty of any discourtesy to the Estimates Committee, I might say that this is not a new suggestion, nor is it a practicable suggestion. My hon. Friend the Member for Tynemouth (Dame Irene Ward) was, if I may say so, entirely right in this context to refer to the work of the Procedure Committee. I think that we had better await the Report of that Committee before taking this matter further. In addition, there is the unofficial committee—the so-called tax simplification committee to which the hon. and learned Member referred—and we are looking forward to receiving that committee's unofficial report.

    The Estimates Committee heard a great deal of evidence, much of which repays detailed study, and made a lot of useful recommendations, but, as the Committee itself recognised, its proposals did not purport to be the answers to all the Inland Revenue's problems. Nor were they. We are faced with an over-complicated tax system, an over-stretched tax-gathering machine and an over-taxed citizenry. It is not to be expected that these ills can he put right overnight. Tax reform, tax reduction, tax simplification are among the prime objectives of the Government, and in our period of office we intend to make substantial progress on all three.

    Question put and agreed to.

    Resolved,

    That this House takes note of the Fifth Report from the Estimates Committee in Session 1968–69 and of the related Departmental Observations. (Command Paper No. 4314.)

    Meat And Livestock Levy Scheme

    7.59 p.m.

    I begin by apologising to the House for having a bad cold.

    I beg to move,
    That the Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order, 1970, a draft of which was laid before this House on 25th November, be approved.
    This particular Order is very much a technicality, and is very narrow in scope. As the House will know, the Meat and Livestock Commission is financed mainly by the proceeds of a levy on the meat and livestock industry, in accordance with Section 13 of the Agriculture Act, 1967.

    Subsection (5) of that Section requires that no charges under a levy scheme shall be made in respect of livestock slaughtered under the Diseases of Animals Act, 1950.

    Earlier this year, Parliament passed the Agriculture Act, 1970, Section 106(6) of which provided that the exemption from the Commission's levy must be extended to include animals slaughtered in accordance with any scheme, made under Section 106, for the eradication of brucellosis in cattle.

    All that this Order seeks to do is to confirm the Scheme which formally makes this exemption.

    8.0 p.m.

    I have been silent on agricultural matters for some time. I should hate to see my debut on the Opposition Front Bench marked by the House being thrown into darkness.

    We welcome the amendment which the Order introduces, first because of its merits. Everything that can be done to assist in the eradication of brucellosis should be done; and to the extent that the Order facilitates eradication we welcome it.

    We welcome the Order also because, if the provision as to the levy had remained, it might have been taken by the opponents of the Meat and Livestock Commission as one of the irritations which would have justified them in launching yet another attack upon the Commission's existence.

    We welcome the Order also because we believe that it is an indication that the Commission has a worth-while task to perform. The Government would not have taken up the time of the House and of the Ministry in the sophisticated variation brought about by the Order if they had not recognised that there was a worthwhile purpose in the Commission's existence.

    Perhaps the Minister, who has declared that the policy of the housewive should be one of commercial walk-about, will support the Commission's purpose in trying to standardise the housewife in what she should be buying from the butcher.

    8.2 p.m.

    I welcome the hon. Member for Merioneth (Mr. William Edwards) in his first appearance on the Opposition Front Bench.

    The hon. Gentleman was right in saying that the Commission has a worthwhile role to play which will be of use to the industry.

    My right hon. Friend the Minister said that the Order is in pursuance of Section 106 of the 1970 Act under which a scheme can be introduced. Only a voluntary scheme has been introduced so far; that was done in July by my right hon. Friend. I do not believe that that qualifies under the provisions of Section 106 of the 1970 Act.

    Whether it does or does not, what happens to those who have slaughtered their animals or had them slaughtered between that date in July and now? As I understood it, the Order exempts owners of livestock suffering from brucellosis from paying the 6d. or 1s. per calf. What about those who paid between July and now. Is there any possibility that they can get compensation from the Commission for moneys already paid?

    Finally, if I understand aright, paragraph 2 of the Order provides that the Scheme will come into effect as soon as the Order becomes law, which I suppose will be next week.

    With the permission of the House I will reply briefly to the points which have been raised.

    First, I congratulate the hon. Member for Merioneth (Mr. William Edwards) on his first appearance on the Opposition Front Bench as spokesman on agriculture, a subject of which I know that he has great knowledge. We shall welcome his contributions to future debates.

    I am grateful for the hon. Gentleman's support on this small Order. We all welcome any steps which will help to make the eradication of brucellosis easier. The hon. Gentleman cast a fly across me on the subject of the M.L.C.'s future. The Order, as I have been at pains to point out, is a very restricted one. Were I to reply to that point I should be strictly out of order. My hon. Friend the Parliamentary Secretary, in reply to a recent question by the hon. and learned Member for Montgomery (Mr. Hooson), stated the Government's position.

    I will have a look at the question raised by my hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) and write to him about it. My impression now is that the purpose of the Order is to confirm a practice which is already in existence and that up to now no payment on a reactor has been requested. My hon. Friend can take it that no farmer has suffered up to now and that the Order merely puts into proper form a practice which has been going on.

    With that short intervention, I hope that the House will agree to the Order.

    Question put and agreed to.

    Resolved,

    That the Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order, 1970, a draft of which was laid before this House on 25th November, be approved.

    Agriculture (Grants)

    8.6 p.m.

    I beg to move,

    That the Farm Capital Grant Scheme 1970 (S.I., 1970, No. 1759), a copy of which was laid before this House on 1st December, be approved.

    I think that it might be for the convenience of the House if with this Motion we were to discuss the following:

    That the Farm Capital Grant (Scotland) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.
    That the Ploughing Grants (Variation) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.
    That the Ploughing Grants (Scotland) (Variation) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.

    I am glad, Mr. Deputy-Speaker, that you agree that the House might find it convenient to discuss these four Schemes together, because they are all closely related.

    I will deal first with the Farm Capital Grant Scheme and the corresponding Scheme for Scotland. These replace most of the existing capital grants with a single unified Scheme. The aim of this exercise is, first, to recast the capital grant arrangements in a form more suited to the organisation of farming today and so make more effective use of available funds, and, second, to replace the differing requirements of the present schemes with fewer, uniform conditions and to reduce paperwork.

    As will be seen from Schedule 2, or from Schedule 1 to the Scottish Scheme, the Schemes cover broadly the same items as the arrangements being replaced, except that plant and machinery will not be eligible for grant. There are minor differences in the coverage of the Schemes for Scotland and for England, Wales and Northern Ireland to take account of different legislation relating to drainage and of different agricultural practices.

    The standard rate of grant under the Schemes will be 30 per cent, of eligible expenditure. Higher rates of 50 per cent, are payable on certain works and facilities for the benefit of hill land and remodel- ling works certified as a consequence of an amalgamation or boundary adjustment approved under the Farm Amalgamations and Boundary Adjustments Scheme. The highest rate is 60 per cent. on field drainage for the benefit of hill land.

    Applications received or approvals issued by 18th March, 1972 will attract an additional 10 per cent. grant to give effect to the increased rates announced at the same time as this year's Annual Review determination by the right hon. Member for Anglesey (Mr. Cledwyn Hughes).

    The works and facilities on which smallholdings authorities may qualify for the 10 per cent. supplement payable under Section 51 of the Agriculture Act, 1970 in connection with approved proposals for the reorganisation of smallholdings estates in England and Wales are listed in sub-paragraph (2) of paragraph 3 of the main Scheme.

    In fact they include all the works and facilities with the exception of two, one of which is drainage and one of which applies only to hill land, where the rates of grant are already 50 per cent. To qualify for grant, expenditure of a capital nature must have been incurred in connection with an agricultural business. Under sub-paragraph (2) of paragraph 4, the agricultural business must be one which is capable of yielding a sufficient livelihood to an occupier reasonably skilled in husbandry. The intention initially is to regard a net farm income of £880 a year as representing a sufficient livelihood in Great Britain. In Northern Ireland the statutory minimum wage for agricultural workers will be used, reflecting the different structure of farming in that country. For the future, the figures will be increased in line with increases in the statutory minimum agricultural wages.

    I mean that in the country as a whole each year the sufficient livelihood test, as it were, of farm income will go up by a figure in line with the minimum agricultural wage. Under paragraph 4(1), bare land holdings will not be eligible for grant on the full range of works and facilities listed in the Schedule. The purpose of that is to avoid the splintering of agricultural holdings. Some bare land will qualify. An exception is made, however, where a bare land holding was created more than five years before an application is made under the Scheme; or where the land in the holding is newly reclaimed for, or restored to, agriculture; or where the separation of the bare land from an equipped holding was not contrary to the interests of good estate management.

    Agricultural businesses which fail the sufficient livelihood or bare land tests will still be eligible for grant on certain items—this is important—mainly land operations—provided these would continue to be of benefit to the land occupied by the business if it subsequently became part of a larger unit through amalgamation. That includes such items as drainage and so on.

    The Scheme will differ from some existing schemes in not having tests of whether the proposed expenditure is prudent and economically worth while. In future we shall leave those matters to the good sense of the applicants themselves. What we are really saying is that if the applicant is prepared to put down his money, the Government for their part will be prepared to back it by their grant. But, of course, there will still be pretty stringent tests to see that the money is being properly spent. But, as announced at the last Annual Review, grants will not be paid on expenditure totalling more than a ceiling figure of £100,000 in respect of any single farm unit in any two-year period. A further difference will be that the "benefit to the land" test of the present Farm Improvement Scheme has been dropped.

    Expenditure which has qualified for the higher rate of agricultural investment grant introduced on 19th March, 1970 will count towards the ceiling of £100,000. The level of the ceiling, which we must watch carefully, will be subject to review. The ceiling will be applied administratively, as it is under the existing arrangements for the agricultural investment grant on fixed equipment.

    In administering the Scheme we shall also require the cost of the eligible work included in any one application to be at least £100, as under the current Farm Improvement Scheme, and that the proposed works and facilities are not unreasonable in cost. Applicants will still be required to obtain written authority from the Ministry before starting work.

    As in the past, applicants will have the choice of claiming grant on either the actual expenditure or standard costs. I hope, incidentally, to introduce a new set of standard costs in February to coincide with D-day. In the meantime existing standard costs will apply.

    Finally, under paragraph 7 of the Schemes, grant may be reduced or withheld where it duplicates other assistance or frustrates the purposes served by other grant-aided works or facilities. This is standard practice under most existing schemes.

    As I have already said, no further grants will be paid on plant and machinery. However, after this was announced approaches were made to me on the subject of bulk milk tanks, for which there is still a considerable demand. When the Farm Improvement Scheme was extended originally to cover plant and machinery, these tanks became eligible for grant and the current rate of that grant has been 40 per cent. This is a substantial grant, and those dairy farmers who wish to install bulk milk tanks and can still qualify for the grant by applying between now and 31st December would do well to take advantage of it. If they apply now and if they qualify in this way, they will get the 40 per cent. grant and the 60 per cent. initial allowance on the remainder. So they will do very well indeed. That, incidentally, applies to other plant and machinery including tractors and combine harvesters.

    I should emphasise that the amount of help available to the farmer wishing to switch to bulk milk collection is now very large. In addition to the grant under the Farm Improvement Scheme, the Milk Marketing Board has received an allowance of ⅜d. a gallon for five years on new bulk milk and we have recently extended this until 30th September, 1973.

    Since the Milk Marketing Board also gets a premium of ½d. a gallon for bulk milk from the buyers, and since the Board can use the proceeds of the ⅜d. a gallon in the way which gives incentives where they are most needed, the Board has been able to pay a premium of as much as 1·3d. a gallon to some small producers for the first three years after they change to bulk, with a premium of ½d. a gallon thereafter. The premium enables milk producers to recover a substantial part of the cost of a bulk milk tank over the first three years of operation.

    Under the Farm Capital Grants Scheme the grant of 40 per cent. on bulk milk tanks will disappear. It is a general principle of the Scheme that decisions on investment in plant and machinery should be left to the industry. The grant will be replaced by the new system of tax incentives. There will be a first year allowance of 60 per cent. of expenditure on a bulk milk tank, with a writing down allowance of 25 per cent. of the reducing balance in subsequent years.

    It has been pointed out to me that this would be somewhat less favourable for the farmer wishing to install a bulk milk tank. I know that, in spite of the allowance of ⅜d. a gallon to the Milk Marketing Board, to which I have referred, and the new tax allowances, the industry has been concerned about this.

    Successive Governments have recognised the advantages to the consumer as well as to the producer of more bulk collection of milk, both because of the economies of handling and on grounds of hygiene. I have to tell hon. Members from north of the Border that much better progress has been made in Scotland with this Scheme than in England and Wales where it is estimated that only about 45 per cent. of the total gallonage is collected in bulk.

    Obviously the full economies of bulk collection are felt only when a receiving dairy is handling all its supplies in bulk rather than by a mixture of bulk and churn. We have, therefore, agreed that the allowance to the Milk Marketing Board, in respect of milk converted to bulk collection between now and 30th September, 1973, and not qualifying for farm improvement grant, should be raised from ⅜d. to ⅝d. a gallon for five years. I am sure that this will be welcomed by dairy farmers and the Milk Marketing Board. The Milk Marketing Board will, no doubt, adjust its premiums in the way that should give maximum incentive for further bulk collection. In broad terms, what we are now doing will offset the effect of withdrawing the capital grant.

    I turn now to the Ploughing Grants (Variation) Schemes, which also were laid before the House on 1st December. Hon. Members will know that the Ploughing Grants Scheme is being replaced by the Farm Capital Grant Scheme. The purpose of the Variation Scheme is to make 31st December this year the last date for receipt of applications under the 1970 Scheme. Applications must reach the Ministry's divisional offices by that date to qualify for the £12 ploughing grant.

    Farmers whose applications are approved will have until 31st May, 1971, to carry out the work. After 31st December, it will be possible to apply under the Farm Capital Grant Scheme for a 40 per cent. grant on the cost of ploughing land of the type which is eligible for the £12 grant at present.

    I am confident that the Farm Capital Grant Scheme will enable us to give more effective help towards profitable investment by ending outdated restrictions and streamlining the various and complex procedures of the existing grants. I am, therefore, happy to have had the opportunity of explaining it and of introducing it to the House tonight.

    I am glad to acknowledge that the Scheme is based on the legislation which was brought forward by the right hon. Gentleman the Member for Anglesey (Mr. Cledwyn Hughes) earlier this year. He and his hon. Friends began the job. We have been able to carry it through to completion now, and I hope that it will have a favourable reception. The Scheme will considerably simplify the task of the farmer in applying for grant and the task of the administrator in deciding whether a grant is available. I believe that it will lead to all-round economies in the management of the Farm Capital Grant Schemes, and for all those reasons I invite the House to approve the Schemes.

    8.21 p.m.

    This has been the Minister's first speech at the Dispatch Box since he assumed office. We welcome him, and we are grateful to him for coming to address the House, in spite of having a bad cold. In wishing him well, I congratulate the right hon. Gentleman on selecting a safe subject. He was good enough to acknowledge that the Farm Capital Grant Scheme and the other Schemes stem from an Act for which I was responsible.

    May I at the same time welcome to the Opposition Front Bench my three hon. Friends the Members for Brentford and Chiswick (Mr. Barnes), for Merioneth (Mr. William Edwards) and for Caithness and Sutherland (Mr. Maclennan)? One could not have a wider territorial variety to bring colour to the agricultural scene, and I am sure that the House wishes them all well. I feel certain that they will make a valuable contribution to our discussions on agriculture.

    As I said on the Second Reading of the Agriculture Bill and during its Committee stage, I thought that the time had come to look at the range of schemes which had developed over the years and to simplify and rationalise them. I look back to the Committee stage with mixed feelings. As those hon. Members who served on the Standing Committee will recall, right hon. and hon. Members opposite made it as long and as arduous an exercise as they could, and we were lucky to get the Act before the dissolution of the last Parliament. However, "All's well that ends well", and the Government are now implementing the Act's provisions. I congratulate them on so doing. What is nonsense in Opposition often makes good sense in Government.

    I am sure that farmers generally will find the new Scheme much more satisfactory and effective. As the Minister said, it will save them a good deal of paper work. That was one of the objects which I had in mind, for as I went about the country meeting farmers, agricultural executive committees and branches of the union it was invariably put to me that farmers were overburdened by paper work. The Act and this Scheme under it will cut down that work substantially.

    The other important point was that, although there should be less paper work, there was not to be any the less money. I hope that the Government will stick to that, too.

    The Scheme implements the increased rates of grant which, as the right hon. Gentleman said, I announced in the Price Review statement last March. The main object of the increases was to inject money into the industry in the most effective and meaningful way after an admittedly difficult period for many farmers during 1968 and 1969. I was criticised at the time of the Review statement by right hon. and hon. Members opposite, sometimes in the most extreme language. It is worth noting that after six months in Government and having had ample time to reconsider the position, the Conservative Party has decided that the Scheme and the increased rates are worth putting into effect. I am grateful to the Government for that amount of conversion. Even Governments, from time to time, travel the road to Damascus.

    I shall not deal with all the works and facilities covered by the Scheme because I have done that in detail before on more than one occasion, but I shall refer to one aspect of the Scheme which, I know, the Minister takes as seriously as I do. I refer to the problem of field drainage.

    The unusually wet weather of 1968 and 1969 brought the importance of field drainage home to us in no uncertain terms, and, as we all know, there is a tremendous amount of work to be done throughout the country before we can begin to be satisfied that our drainage is up to a reasonable standard. The use of heavy machinery has contributed to the problem, and draining, re-draining and ditch maintenance are of the utmost importance. We must hope, therefore, that farmers will take the maximum advantage of the new rates of grant, as they are operative for a limited period. Perhaps the Under-Secretary of State for Scotland will tell us something of the progress which has been made in uptake of grant since I made the announcement last March.

    The House may recall that 12 months ago I invited the Agricultural Advisory Council, under the chairmanship of Mr. Nigel Strutt, to look into the problem of soil fertility and soil structure in this country. Its report, when published, may well have something of importance to tell us about drainage, and it will certainly be relevant to the Scheme which we are now debating. Could the Under-Secretary of State tell us when we are likely to see that report? I am sure that it is likely to be a most important agricultural report, and I hope that we shall have opportunity in due course to debate it in the House.

    I come now to the questions which I wish to put to the Minister. First, in what ways will farmers benefit, particularly small farmers who in the past have sometimes found difficulty in taking advantage of these schemes? What will be the administrative savings resulting from the simplification?

    Second, may we have an assessment of what the effect of the Scheme will be on capital investment in the industry?

    Third, the right hon. Gentleman referred to an exceptional arrangement—this is paragraph 4(1) of the Scheme—relating to certain bare land holdings. In what circumstances would these bare land holdings be eligible for grant? Can we be told more about the justification for this and the way in which the conditions outlined by the right hon. Gentleman will be applied?

    The House was interested to hear what the right hon. Gentleman had to say about bulk milk tanks. He has said that the grants here will disappear. But he has announced some concessions which obviously will he welcomed, although we must study what he has said to see what the full effect is likely to be. I understand that the Milk Marketing Board is now moving with bulk schemes into areas with higher proportions of smaller producers—producers who will benefit little by tax concessions, and including, for example, producers in South Wales, the West Country and, I assume, parts of Scotland as well.

    The whole of an area must, of course, join a bulk scheme for it to be financially successful. Since many smaller producers may find difficulty in raising the necessary credit to cover the whole cost of the bulk milk tank, is it not possible that the absence of these tanks from the items listed as eligible for grant aid will restrict the development of bulk collection to the detriment not only of the producers and the distributors but of the consumers as well? While I am grateful to the right hon. Gentleman for elucidating the position and making some concessions, we shall want to look at this aspect very carefully to see what the total effect will be, especially in the sort of areas I have mentioned.

    The right hon. Gentleman spoke about a ceiling on the level of grants to be applied administratively. Can the Under-Secretary of State tell us more about how this will be operated—for instance, in the case of separate units under single management? This is a small but important point which should be cleared up before we see the Order through.

    Again as a result of the Chancellor's statement on 27th October, the Scheme, as the right hon. Gentleman has said, does not provide for grant aid on plant and machinery, and harvesters. They will now become eligible for allowances instead. We need to look at this carefully. What will it mean for the industry? How does the Minister see it working in practice? Surely this will mean a financial loss for many of the smaller farmers. The larger farmers will benefit but many smaller farmers will not. I want an estimate of how many farmers the Minister thinks will benefit from this provision.

    For example, the average acreage in Wales is substantially lower than the average acreage for the United Kingdom as a whole. How will this affect the Welsh farmers? That is the question which will be put to my hon. Friend and me when we go round the Principality during the Christmas Recess. The larger farmers will benefit, and indeed they can afford to wait for the benefit which will come from a tax allowance. But many farmers cannot afford to wait. As we all know from experience, credit is difficult for them. We need to know a little more about this proposal.

    In large part, the success of the Scheme depends on the Ministry's advisory services—on the members of the Agricultural Advisory Service, of the Land Service, of the Veterinary Service and of the Drainage Service. These are the men who will be going to the farmers and discussing the Scheme with them. They are the vital link. The Farmers will decide on their advice what schemes they will put in hand, and their importance is therefore crucial. It is necessary to ask the Minister about the future of the advisory services because there is a great deal of uncertainty about it. We are told that a Departmental inquiry is going on and that farmers may be charged for some of the advice they get. But we do not yet know what will come out of the inquiry.

    I am fascinated to know how the right hon. Gentleman is relating his advice about the advisory services to the Order.

    I am sure, Mr. Deputy Speaker, that we are grateful to the hon.

    Member for Derbyshire, West (Mr. Scott-Hopkins) for doing your job for you.

    The success of the Scheme depends to a very large extent on the advice which is given, and, therefore, it is crucial that we should know what the future of the advisory services is to be. It has a vital bearing on the Order and on the success of the Scheme. I would he grateful if the Under-Secretary of State would tell us what the Government propose. If there are to be changes of this kind—and I think the hon. Member for Derbyshire, West will agree with me here—we shall need to debate them properly and at length. We certainly want to know what is to happen, and certainly whether certain charges are to be imposed in order again to make some small reduction in public expenditure. My fear is that the people who may lose the benefit of this advice because the cost will be inhibiting may be those who need it most. That is the danger.

    Can the Under-Secretary say, therefore, when the Minister will make a statement on this subject? He has said on more than one occasion that he wants to see the farmer standing on his own feet. This generalisation needs analysis. According to the Minister's definition, farmers in the E.E.C., for example, have been standing on their own feet for a long time. But the agricultural industry in the Common Market has not been as efficient as that in this country—not by a long chalk. For all these reasons, I hope that the Minister will soon tell us what he has in mind for the advisory services.

    The last sentence of Schedule 1 on page 5 caused me great pain, for it says "Wales, excluding Anglesey", which is my constituency. I am afraid I shall have to put up with that.

    Subject to those points, I wish the scheme well. My hon. Friends and I give the Order our general support.

    8.37 p.m.

    Like the right hon. Member for Anglesey (Mr. Cledwyn Hughes) I congratulate my right hon. Friend on the promptness and efficiency with which he has brought in these Schemes, particularly the Farm Capital Grant Scheme.

    The hill areas of this country are deeply affected by a Bill which is going through the other place. When dealing with the problem of the hill areas, unlike the right hon. Member for Anglesey, I would say that the fencing of roads was even more important than drainage of the land. In many areas in my constituency the loss on roads which go through moorland areas is six sheep a week. That was a figure quoted only last weekend by the chairman of the Blackface Sheep Breeders Association. It would be of tremendous advantage if we incorporated into the Scheme greater encouragement for the fencing of hill roads, particularly in view of the Animals Bill. Under this Scheme, hill farmers will get a 60 per cent. grant. Will the Minister consider this problem? It may be that it is hard to ask for his Vote to pay more than 60 per cent. grant. But at present, keeping sheep off the roads and preventing their slaughter is not merely the responsibility of the Minister of Agriculture; it is a national obligation. Will the Minister consult his colleagues to see whether he could give a larger grant for this purpose in the period up to 1972, so that, from the points of view of humanity to the animals and farmers' profits, we can remedy this problem.

    My right hon. Friend talked about bulk milk collection. In that connection, one important point should be borne in mind. If farms in many hill areas are to produce milk, it is vital for their economy that they should be on bulk milk collection and not on the old churn system. In most parts of the country, before contractors will convert to bulk milk collection, they must be assured that there are no gates barring the way of their bulk carriers. That means not only that roads have to be fenced but that grids must be installed. The latter requirement gives rise to great difficulty. Most highway authorities claim that it costs £750 to construct a grid, which the Ministry's Advisory Service considers completely ludicrous. But, again, cattle grids should be provided more generously in hill areas in order to get our hill farmers advanced.

    As I see my right hon. Friend's responsibilities, one of his greatest problems is how to advance the efficiency of hill farming areas. Provided that the rest of his policy goes right, as I am confident that it will, I am not greatly worried about the ordinary farmer in lowland or even upland areas. But the hill farmer has many problems, and he must be helped urgently to become efficient. Roads and cattle grids are two ways in which that can be achieved and on which my right hon. Friend should concentrate his attention.

    There is a third way. I notice that the Scheme refers in the Second Schedule to bracken control as being one of the objects for which a grant is given. I should like to hear how the Government contemplate this form of bracken control. Looking ahead, I think that Irish stores will cease to be a source of supply for beef production in a few years. We have to get more stores on the hills. The great drawback to that at present is the large acreages of hill land which are at present under bracken. A late constituent of mine invented the Holt Bracken Breaker, an important endeavour in killing off bracken, though it took some years and longer than the inventor thought. But it held back bracken and in some hill areas eliminated it. I believe that the way to exterminate bracken will probably be by aerial spray, as is being done with other weeds in many parts of Africa. At the moment, it is extremely expensive. I should like the Minister to attack this problem. If he could exterminate bracken in the hills, he would make a large area suitable for raising stores, and that would be extremely valuable for Britain's future.

    I merely ask him to consider this bracken control, and whether in hill areas 60 per cent. is a reasonable contribution or whether there should be a larger grant for the purpose, which would be much more in the interest of the nation than those of individual farms. In the course of his administration, which I know will be very successful, I hope that he will consider this problem. We want more store cattle. We can get them from the hills if the pasturage there is not poisonous, as it is at the moment with the land under bracken.

    Farm Improvement Schemes administered by successive Ministers of Agriculture have always had a stupid administrative provision, and I wonder whether my right hon. Friend has been able to eliminate it in this Scheme. In a remote area like that which I represent, anyone intending to make an improvement to a farm building finds that it is not sufficient to get a responsible tender from a local builder and that he must obtain an alternative estimate. How that alternative estimate is secured when the next builder probably is 15 miles away is best left to the imagination. I assure hon. Members that one of a sort is always obtainable after a time, but clearly it would be uneconomic for another builder to go into the problem of the cost of providing an improvement when he might have to travel another 15 miles and arrange a survey which might cost him £10 or £15. I hope that the Minister will get away from this system of alternative tenders.

    I know that most people, not excluding those in the Ministry, are convinced that the present system is a waste of time. I do not want the Minister ever to authorise the payment of a grant for a tender which is extravagant, but I know from my knowledge of those who serve the Minister that having an alternative tender is unnecessary, for they know when a tender is bogus. I know that the Minister is trying to streamline administration in his Ministry and I hope that he will try to eliminate what was a waste of time when the right hon. Member for Anglesey (Mr. Cledwyn Hughes) was Minister and during the time of his predecessors, for this is a nonsense which runs across the parties. If a constituent of mine wants to improve a cottage under the Housing Act he does not have to get an alternative tender. The body which examines his application for a grant takes the trouble to see whether it is an economic tender by a prudent builder, and that is how I should like this grant to be administered.

    An alternative way is to give a little more on the standard grant system so that more people work on the standard grant system than on a grant based on actual cost. The standard grant is successful except that at the moment there is a considerable difference between the amount which may be obtained under the standard grant system and what may be obtained against the actual cost. In other words, as prices are always going up, the standard grant system tends to fall behind. It would help the Ministry and eliminate much of the administrative work if the standard grant were made a little more generous. At the same time, I hope that the Minister will do away with the system of the alternative tender.

    These proposals are a landmark in the history of farm improvements and the new Minister is to be congratulated on the way in which he has introduced them.

    8.45 p.m.

    I join my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) in congratulating my right hon. Friend the Minister on the introduction of the Scheme. I am certain that it will make things much easier for the farmer. It will improve and streamline administration and do away with many aggravating and annoying delays. I agree wholeheartedly with what my right hon. Friend said about the standard grant, but I will not pursue that matter now.

    I am delighted that the Minister has introduced a definition of hill land, which will play an important role in the future of the farming economy. In his definition he has detailed the counties within which the hill land is to be. I am surprised that he should have defined it in this way now that we are starting with a Scheme like this, and I wish that his definition had gone a little wider. Over the years there has been constant friction about whether hill land has come within the old definition. Some land in some areas is outside the counties mentioned in the definition and it will not qualify. Perhaps my right hon. Friend will consider whether the definition should not be widened as experience is gained of the working of the Scheme.

    I am glad to see that it is provided that when land has been improved, as it always is by the expenditure of these grants, it will not be taken out of the definition of hill land and so be unable to qualify for further help in later years. This is a great improvement. In the past, it was one of the restrictions which caused enormous bitterness among hill farmers. They applied for grant, they got it and they used it. Their land was thereby improved, sometimes only marginally, but it was improved. They then found that the Minister had excluded that land because of the improvements which had been effected on it. I am delighted to see that my right hon. Friend has done away with this restriction. I am sure that this is right.

    I am a little confused about the definition and the separation between agriculture and agricultural businesses. This applies particularly to the land and build- ings provisions in paragraph 4 of the Scheme. According to subsection (3), the Minister can make an arbitrary division between agricultural business and the land. This occurs also in the case of buildings, and so on, of agricultural businesses. Perhaps my right hon. Friend can define a little more clearly the exact difference in this context.

    I am particularly glad that provision has been included in paragraph 4 that land which has no buildings on it shall not qualify for Schedule 2 grants and that land which has been hived off from a farm to form another smaller unit shall equally not qualify for grant unless, under the provisions of subsection (5), it is in the interests of good estate management.

    There has been a great deal of confusion about this from Ministry officials during the past two years concerning the interpretation of the existing Statutory Instrument. There have been cases in my constituency in which Ministry officials have recommended for the purposes of the grant the splitting-off of one farm from another. Great difficulty has been caused because, accordingly to the existing provisions, this should not be done.

    I imagine that there is a small drafting error in paragraph 4(3), which refers to
    "any work or facility which is of a kind specified in any of paragraphs 4 to 17".
    I assume that this must refer to Schedule 2, although it does not say so. The comma at the end of the line makes this a separate reference.

    There are several parts of Schedule 2 where I hope that my right hon. Friend will be able to increase the level of grant, although it is fairly generous until 1972. I have in mind particularly land which is liable to river or sea flooding, in respect of which the levels of grant after 1972 could well be looked at. The reclamation of waste land is another point which, I hope, will be considered, because this is an excessively expensive operation and I do not believe that it will be covered, or can be covered sufficiently, by the grant which will operate after 1972.

    The right hon. Member for Anglesey (Mr. Cledwyn Hughes) made a cogent point concerning small farmers. I was particularly glad to hear what my right hon. Friend said about bulk milk tanks. I do not think that there is any dispute between my right hon. Friend and I on this. If possible it would have been better to say that the bulk milk tanks for a certain period of time would continue to qualify for grants. I understand his reasons for taking all fixed machinery out. It is difficult, if this is done for the purposes of grant, to start making exceptions for this or that particular type. I hope my right hon. Friend will bear in mind that the smaller farmers, be they in Wales, or Cornwall, my old constituency, or my present one of Derbyshire, West, will feel the pinch here.

    True, the initial allowance of 60 per cent, brought in by the Chancellor will be there. A farmer has to make a reasonable profit to get the full advantage of this allowance, and there are some small farmers who will find it difficult to get this grant.

    For some time now it has been known outside that the fixed equipment grant was coming off and would last until 31st December. The initial investment allowance was announced by the Chancellor and there has been a period of time when the two have been running side by side, the 40 per cent. grant and then the 60 per cent. on the remainder as initial allowance. It has been very nice for those farmers who have been able to get their applications accepted.

    It has been brought to my notice that a lot of manufacturers of equipment are refusing or discontinuing their out-of-season discounts over this period. This is something at which my right hon. Friend should look, although I know that there is not much that he can do. It is a practice which I very much deprecate. Manufacturers are taking advantage of the fact that the customers are receiving the 40 per cent. and the 60 per cent. grant and refusing to give the out-of-season discount allowances.

    Turning to the grants which are to come, my right hon. Friend said that in the new Scheme the ploughing grants will remain the same. I do not believe that this is so, because in subsection (14) of Schedule 2 the wording for an application of the percentage ploughing grant is for land which has not been ploughed or used for arable crops for at least 12 years. That is not exactly the same wording as in the existing Statutory Instrument, which reads:
    "Only if the Minister is satisfied that the ploughing operation is likely to involve expenditure which is substantially heavier than normal for such operations…"
    What this means is that the new ploughing grant will not have the qualification of having to be more extensive than the normal ploughing operation for which no ploughing grant was available. My right hon. Friend is opening the door wider than before, and it is arguable whether this is right or wrong. As long as he is clear about that, then I agree that it is an advantageous thing to do. I believe that it will make things easier in agriculture. I am not convinced that sufficient emphasis has been placed on the plight of the smaller farmer, particularly in the hill areas. I am not sure that he will benefit as much as I would like, but by and large, the "pluses" are so much bigger than the "minuses" that I can with great pleasure welcome this Scheme.

    9.0 p.m.

    Perhaps the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) will forgive me if I do not take up his remarks as I wish to confine my comments to the Scottish Capital Grant Scheme.

    The Scheme is a fruit of the previous Government's sensible decision to seek to simplify the capital grant system, and it has been widely welcomed on that account. I wish to add my welcome to it and to put a few specific points to the Under-Secretary of State. Perhaps one should qualify one's enthusiasm by pointing to an unfortunate omission from the Scheme, to which the Minister referred, namely, the fact that plant and machinery, tractors and harvesters will cease to be eligible for grant after the end of this year. This is perhaps somewhat surprising in view of the tempestuous discussion which we had on this matter during the Committee stage of the parent Act.

    We welcome the fact that the Government have seen fit to introduce a sensible scheme not only rationalising the applications for grant but also implementing the levels of grant which were set by the previous Administration at the Agricultural Price Review. As the percentages seem not to have been varied, I should like to ask the Under-Secretary of State whether he can say anything about the effectiveness of the increases and tell us the rate of take-up in Scotland of the existing grants under the previous Capital Grant Schemes. I do not expect him to enumerate all eleven Schemes in this debate but perhaps he can give us some idea whether the unfortunate downturn in the take-up which was noted in the spring has been arrested. His reply will put us in a better position to judge whether the levels of grant in this Statutory Instrument are adequate to the purposes for which it has been introduced.

    I was glad to hear from the Minister some further detail than is contained in the Statutory Instrument about the "sufficient livelihood" requirement. Setting the figure at £880 per annum may not convey exactly how many people will be precluded from applying for capital grants, particularly in the hills and uplands of Scotland, where a number of farmers find it quite difficult to achieve an income of that order. Perhaps the Under-Secretary of State will tell us what percentage of farmers, particularly in the hills and uplands, he would expect to be covered by the Scheme and to be able to apply for capital assistance under the Scheme.

    A point which may be of some significance in Scotland which was referred to by the Minister concerns the reduction or withholding of grant where assistance may be given otherwise than under the Scheme. As I understand it, he referred to this as standard practice. But there is a special case in Scotland, and perhaps the Under-Secretary of State for Scotland may have something to say about it; namely, where the Highlands and Islands Development Board may be interested in particular schemes, to which it might give capital grant or loan assistance. As I read the Scheme before us, it rather suggests that the Highland Board is to be precluded, as it has been in the past, from topping up grants, by the prospect, at least, that the Department would cut back on capital grants if the Board were to make grants itself out of its own funds. Is this, in fact, the purpose of the Scheme, or would it be its effect?

    I would like to ask why the opportunity has not been taken, in view of the strong pressure which the previous Administration bore from hon. Members opposite when they were in Opposition, to reclassify those buildings intended for temporary accommodation of livestock in the hills as eligible for the 60 per cent. grant under paragraph 9 of Schedule 1 of the Scottish Scheme instead of only 40 per cent. under paragraph 1. It seems that this would have been the opportunity, which some of us were expecting that the Government would seize, to put right the anomalous situation of the hill shelter which consists of more than three sides being ineligible for grant at the rate of 60 per cent. I wonder whether the Under-Secretary of State would look at this point. If he is not able to answer it tonight, perhaps he would give me some indication in another way.

    Next, there is a point which appears to apply only to the Scottish Scheme. It relates to paragraph 6 of Schedule 1; grants available under the Scheme for the making, improvement or alteration of the banks or channels of watercourses. It occurs to me that not only is this different from the English provision—and the Minister has referred to the different legislative histories of these drainage and protection schemes—but it could conceivably be rather too restrictive in its effect in its reference to watercourses and not, for example, to banks of standing waters or lochs. It seems to be rather narrow. The sort of situation which I have in mind is where a loch is flooded, or it is apprehended that it might be, so that its banks are broken by an unusually heavy rainfall—the kind of situation which we have seen only last week in Sutherland, at Loch Shin. There is, so far as I see, a real possibility of this sort of work not being eligible for grant. If so, then I think that unfortunate.

    In conclusion, I should like to add my own welcome to the Measure before the House. It implements the intentions of the previous Government in rationalising the Capital Grant Schemes, making the lot of farmers applying for assistance a much easier one, and greatly simplifying the administration of the Schemes.

    9.9 p.m.

    The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office
    (Mr. Alick Buchanan-Smith)

    I should like first of all to congratulate the hon. Member for Caithness and Sutherland (Mr. Maclennan) upon making his first appearance at the Dispatch Box tonight. I am personally particularly pleased to welcome him there because I have debated with him on many previous occasions when I was on the back benches and he was on the back benches, and it is very nice that we should be able to continue our battles from the Front Benches as well. I know how close to his heart are the interests of Scottish farmers and Scottish agriculture. We look forward to his constructive contribution to these debates.

    We also welcome other members of the Opposition team to the Front Bench. My right hon. Friend and I am impressed that the Opposition felt they had to double up for each of us on this side of the House. We are quite prepared to take them on on those terms, not only tonight but in the future.

    There have been many references to the debates in Committee earlier this year on the Agriculture Bill. It is perhaps fortunate that neither my right hon. Friend nor I were members of that Committee, since we were in no position to give to the Opposition any hostages which they might have been able to quote tonight. We appreciate that the genesis of the Schemes was the Bill and, although the right hon. Member for Anglesey (Mr. Cledwyn Hughes) may have supervised the gestation period, we will look after the child he has delivered to us very carefully. From the way in which the Scheme has been welcomed we can see that the right hon. Gentleman feels that he has handed it over to good hands. We will look after the interests of the industry and continue the good work.

    I shall try to answer as many as possible of the many points which have been raised. I hope I shall be forgiven if I miss any technical points and I shall try to answer them in other ways if I do not manage to do so tonight.

    The hon. Member for Caithness and Sutherland raised several specific points about Scotland. He mentioned shelters and water courses. I assure him that I will look at these technical points. If he knows of specific cases where an application for a grant has been refused and there has been difficulty I shall be pleased to hear about them. Specific examples are helpful.

    The hon. Member mentioned the Highlands and Islands Development Board. He is correct in saying that the Board is not permitted to top up other agricultural grants and subsidies. Any assistance from the Board would be taken into account in assessing the amount of grant payable under the Scheme. This means that, whilst a producer in the Highland areas is eligible for grants from the Board, he does not get specially favoured treatment in relation to the Scheme compared with producers elsewhere.

    On the take-up of grants, which was raised by several hon. Members, there has been a considerable increase in the take-up of grants since the rates were increased by the right hon. Gentleman at the Price Review earlier this year. I know the right hon. Gentleman is interested in drainage and it is a matter which is important to many other questions. There has been an increase of about 24 per cent. in the rate at which drainage applications are coming forward. For example, in 1968–69 grant has been paid on about 146,000 acres. For 1969–70 it would appear that grant is likely to be applied for in relation to about 200,000 acres. It is therefore clear that there has been a considerable increase in take-up. The same is true of grants under the Hill Land Scheme. In that case applications seem to have risen even more—by about 35 per cent. It is encouraging to see this increase in the rate at which grants are being taken up.

    My hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) raised many points. It was significant that he, like other hon. Members, showed concern about hill and upland areas. Scotland does not have a specified definition of counties containing hill land, because of her different situation. In England and Wales this is done by reference to counties because we believe it best to continue the existing definition, which makes clear the areas that we intend to benefit. Some hills, the Downs and the Chilterns, for example—are outside these counties, but in the generally accepted meaning of the term, hill farming is confined to areas of mountains, hills or heaths—to use the classical definition—in the counties named in Schedule 1 to the Scheme.

    My hon. Friend also raised the question of agricultural businesses, which is very important. By providing grants for capital expenditure for an agricultural business we can pay grant on expenditure that would previously not have qualified under the narrower concept of expenditure for the benefit of agricultural land. For example, if a farmer proposes to erect buildings for livestock which will depend mainly on bought-in feedingstuffs, in the past we have been unable to pay grant assistance to him for his improvements, because they could not be said to have benefited the farming of the land. But such expenditure will be for the purposes of the agricultural business, and we shall be able to pay grant on expenditure of this kind under the new Scheme.

    Is my hon. Friend saying that if I put up an intensive unit on a small acreage of land and the stock inside subsists entirely on bought-in foods it will qualify for grant? If so, it is a great widening of the previous definition.

    There is a widening. I know that the hon. Member for Caithness and Sutherland and the right hon. Member for Anglesey will bear me out that in many cases, especially in some hill and upland areas, the only way in which farmers have been able to survive is by intensifying their farm businesses as such and by carrying on an enterprise which is not necessarily totally supported by the farm. This extension wil be of great benefit to such farmers.

    My hon. Friend the Member for Derbyshire, West also raised the question of ploughing. The types of ploughing that will qualify are made easier to understand in the explanatory leaflet that will be issued.

    The last of my hon. Friend's questions concerned drafting. I can assure him that the words in paragraph 4(3,a) are meant to be as they appear. If he reads the words as being in brackets rather than between the commas in which they now appear, he will see exactly what is meant. I have looked at the provision several times. I may not have his probing eye, but to me it is understandable.

    My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) among a number of points referred in particular to hill areas and to the Animals Bill. It would obviously be out of order here to refer in detail to that Measure, but I might in passing say that in another place an Amendment was moved which I hope will be helpful. We will be able to debate this matter in more detail later.

    But that Amendment has nothing to do with the slaughter of sheep. What this Bill should seek to prevent is the slaughter of the sheep, and if the Minister would give a higher rate of grant for the fencing of moorland roads he would stop the slaughter of the sheep.

    As I understand him, my right hon. Friend is going even further than did those who in another place criticised the Bill more superficially. However, I take note of what he says.

    My right hon. Friend referred to cattle grids. These grids are helpful but grant in respect of them is payable at the higher rate of 60 per cent. and not at the lower rate that was payable under the old Farm Improvement scheme. It is encouraging to see the increased rate of uptake under the hill land scheme as well as under this Scheme. One thing that concerned me was whether, knowing the economic situation in the hill areas, we would see this greater uptake resulting from higher rates of grant, and it is significant that this has taken place.

    My right hon. Friend is right in saying that bracken is a scourge of many of our upland areas but, as I have seen, and as I am sure others have seen, where general schemes of land improvement are carried out it is very noticeable how, quite apart from specific measures, bracken can be controlled in the process. If I had the time, I should like to take my right hon. Friend on a tour of some places in Argyll where a considerable improvement has been carried out, as a result of work of no exceptional nature nor involving the use of new techniques. Proper stocking has had its effect on the bracken. Nevertheless, we take to heart what my right hon. Friend has said about the need, by research and in other ways, to make sure that our techniques are best suited to deal with this problem.

    Will my hon. Friend give us just a hint of how he got rid of bracken?

    I have not claimed that I have got rid of bracken but I know that it can be controlled, and if my hon. Friend would like to see for himself I can give him the necessary references.

    My right hon. Friend referred to tenders. I appreciate as well as he does that in the remoter areas, and I represent that sort of area, tendering can present a very practical problem. Administrators and department officers are sensible in this respect. Where they realise that it is not reasonably practical to get more than one tender and where the tender submitted shows a reasonable cost they are already prepared to dispense with the requirement of further lenders. Care has to be taken, obviously, because we are here dealing with public money and we must make sure that the costs are reasonable. We are at the moment reviewing the general requirements for tendering and I am sure that what my right hon. Friend has said will be borne in mind.

    I turn now to some of the major points raised earlier in the debate by the right hon. Member for Anglesey. I already dealt with the question of drainage, but he also referred to the Strutt Report on soil structure. We on this side regard this as an extremely important and valuable Report, and on behalf of my right hon. Friend I may say that he is very grateful for the work that has been done by the Committee. There is no doubt at all how important it is. We hope that the Report will be published soon—I should think early next year, if not sooner. I again emphasise that we regard it as a Report of major importance.

    I assure the right hon. Gentleman that we shall see how the question of bulk milk tanks operates and ensure that the benefit percolates through to the ordinary producer.

    I come now to the two most fundamental points which were raised in the debate. I apologise if I have missed out any more detailed points. The two most fundamental points which have been raised concern the effects of the grants first on the hill and upland areas and, second, on the small farmers.

    I will mention in passing a point of detail which I have not dealt with so far. It is the opposite end of the small farmer problem, namely, the upper limit of £100,000. This is one which we shall cover in relation to separate units. Units must be in single ownership; but if they are separate in terms of agricultural production or work force or organisation they will be looked at on their own merits. The assurance the right hon. Gentleman wanted is that this will not militate against the interests of agriculture as a whole.

    The concern that we have for production in the hill and upland areas has been shown by what I have said in relation to drainage, which is so important, and in relation to the small farm problem; because the small farm problem and the hill farm problem are often synonymous.

    To deal specifically with the question of the small farmer, I believe that the new unified grant scheme will be of benefit to him, as it is of benefit to the larger farmer. After all, the first benefit of the Scheme is that it simplifies matters. By simplifying matters, it helps in particular the smaller farmer, who does not necessarily have the same access to advice or understanding of the complications of a series of different Schemes which answer different needs. The mere fact of making the Scheme will benefit the smaller farmer.

    The main advantage is that we drop the benefit of land test. This is the point I mentioned earlier in relation to a matter raised by my hon. Friend the Member for Derbyshire, West. The dropping of the requirement that farms must be sufficiently large to grow half the food for their livestock affords the livestock farmer—often the smaller farmer is the livestock farmer—a greater opportunity to take advantage of Schemes like this.

    It is also helpful that there is now no requirement that the land occupied by a business must be in single ownership or occupation. In future, a producer who owns part and rents part of his holding may qualify for grant on the whole of the expenditure instead of just the proportion relating to the land that he owns. This again is important as helping the small farmer, because it is the small farmer that has to face this problem at present.

    The other advantage that the small farmer has is that the small farmer who does not satisfy the sufficient livelihood requirement will now be able to get grant for many items, provided that they will continue to be of benefit to the land if it subsequently becomes part of a larger unit. The sufficient livelihood test does not apply to improvements which will benefit the land.

    I reiterate the point that the sufficient livelihood test applies after the improvement has taken pace. Therefore, in considering any application, even if a farmer is below what is called the sufficient livelihood level at the moment if the fact of the improvement will take him beyond that this will obviously make him eligible and bring him within the terms of the Scheme.

    Hon. Members opposite made a number of points in relation to the removal of plant and machinery grants and their replacement by tax allowances. This was compared with the removal of grant for which the Labour Government were responsible in relation to tractor and combine harvesters.

    All I would say to the hon. Gentleman is this. Whilst obviously the removal of plant and machinery from this Scheme will reduce the amount of money applied through the Capital Grants Scheme—the right hon. Member for Anglesey is correct in this—it will only reduce it in proportion to the amount that was earmarked for plant and machinery. It will have no effect on other items. Hon. Members opposite removed tractors and combine harvesters from grant, but in contrast to that, whilst we are taking plant and machinery out of the terms of the Scheme, we are introducing more generous tax allowances for fixed plant and machinery. When hon. Members opposite removed the grant from combine harvesters and tractors, it was not replaced by any comparable concession. We are introducing tax allowances which will help those who will not benefit directly from capital grants. It is, therefore, wrong for hon. Gentlemen opposite to cricise us on this point. We are merely replacing that section which was previously eligible for grant with a new form of assistance which, I may say, has been welcomed by many sectors in the industry.

    Finally—and I am sure that this is uppermost in the minds of everyone in the House—a Scheme like this, valuable as it is to help farmers and to improve the structure and competitiveness of agriculture in Britain, must be looked at against the background of the prosperity of the industry as a whole. These grants are only percentage grants and a very large part of expenditure is left to the individual producer to find for himself. The advantage of this Scheme is that it gives back to the producer much more control over his own investment decision. This is the important factor. But it still leaves him having to find a large part of the expenditure necessary.

    This is something with which I know my right hon. Friends the Minister of Agriculture, Fisheries and Food, the Secretary of State for Scotland and the Secretary of State for Wales are concerned. Schemes like this can only be a supplement to making sure that the conditions in the industry are right, that the returns and prices are right within the industry so that farmers may be enabled to take up the opportunities given to them. I hope that they will take up the opportunities of this Scheme, and, for that reason, I have pleasure in commending it to the House.

    Question put and agreed to.

    Resolved,

    That the Farm Capital Grant Scheme 1970 (S.I., 1970, No. 1759), a copy of which was laid before this House on 1st December, be approved.

    We have already debated with that Scheme the next three Schemes which appear on the Order Paper.

    Resolved,

    That the Farm Capital Grant (Scotland) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.—[Mr. Buchanan-Smith.]

    Resolved,

    That the Ploughing Grants (Variation) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.—[Mr. Prior.]

    Resolved,

    That the Ploughing Grants (Scotland) (Variation) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.—[Mr. Buchanan-Smith.]

    Horticulture

    9.33 p.m.

    The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office
    (Mr. Alick Buchanan-Smith)

    I beg to move,

    That the Horticulture Improvement Scheme, 1970, a draft of which was laid before this House on 1st December, be approved.

    It has been agreed that we shall take this with the next Order on the Paper—

    That the Agricultural Investment (Variation of Rate of Grant) (No. 2) Order 1970 (S.I., 1970, No. 1756), a copy of which was laid before this House on 1st December, be approved.
    We shall discuss both together.

    I intend to deal briefly with the Horticultural Improvement Scheme. All that it does is to bring to horticulture the same removal of unnecessary restrictions as the Farm Capital Grant Scheme, which we have just debated, is bringing to agriculture.

    As the House will realise, the two Schemes are essentially far more matters of procedure than of policy, and I assure hon. Members that the adoption of these simpler procedures does not in any way reflect a change in the general policy which underlies the provision of grant aid for horticulture. I shall not deal with the matter in detail, but there are one or two points of difference in this Scheme from those which we have just debated.

    In drawing up the new and simpler Scheme, we have removed an obsolete provision under which grants were paid to co-operatively-run horticultural producers' marketing businesses. These grants were superseded by the introduction of the Agricultural and Horticultural Co-operation Scheme. At the same time, we have removed the provision which allowed grant to be paid by instalments. This provision was little used, apart from the grants which are now made under the Co-operation Scheme.

    The second point of difference is that we have brought up to date the list of items eligible for grant. I assure the House that none of the items covered by the 1966 Scheme is being withdrawn. We are adding fresh items and bringing the whole Scheme much more into line with advances in horticultural practice. For example, a grower will be able to claim grant on structures of approved design for cladding with film plastic. This is one type of improvement which was not previously eligible.

    In addition, a grower will now be able to claim grant on further items for use in mechanised bulk handling of produce and on plant and equipment for prepackaging. Those are just two examples of the new items now eligible as a result of advances in horticulture.

    Next, there is the rate of grant itself. Under the Horticulture Act, 1960, the rate of grant was set at 33⅓ per cent. In 1967 a supplementary grant of 5 per cent. was added, making the rate 38⅓ per cent. This supplementary grant of 5 per cent. is now replaced by a rate of 1⅔ per cent. under the Agricultural Investment Order, the second Order now under debate, and the net effect of the change is that the total effective rate will now be 35 per cent. We have made that change to take account of the general discontinuance of investment grants and their replacement by the new tax allowances.

    The Scheme has been brought forward in full consultation with the unions. I trust that it will be welcomed by the industry, and that it will contribute to the industry's efficiency. I hope that growers will avail themselves of it so that they can provide themselves with the best and most up-to-date equipment. As in the previous Scheme, all we are anxious to see is that our industry is helped in every possible way to increase its competitiveness vis-à-vis industries elsewhere. I commend the Scheme and the Order to the House.

    9.38 p.m.

    We welcome the introduction of the Horticulture Improvement Scheme, which matches the Farm Capital Grant Scheme. The existing Improvement Scheme was brought in by the previous Labour Government, as were many of the schemes we have been discussing tonight, and it represented a big step forward on the previously existing arrangements. We are glad that the list of items eligible for grant is to be extended. We are glad, also, that the conditions for eligibility are to be relaxed and that, for example, a grower is no longer required to meet the security of tenure test.

    We recognise the special difficulties which horticulture faces in relation to the negotiations for Great Britain to join the European Economic Community. We therefore welcome everything that can be done to help the industry to become more efficient both in production and in marketing.

    I have several questions to ask. First, can the Minister say something about the level of take-up of the present Scheme during the current year? Secondly, what progress is being made with glasshouse acreage? The hon. Gentleman said that one of the reasons for relaxing the cost benefit test was that the Government felt that if the applicant was prepared to put down his own money, it should not be for the Government to approve the scheme, provided, of course, that he met the other qualifications. Thirdly, therefore, in view of the competition in horticulture, which will increase, does not the hon. Gentleman feel that this move by the Government may encourage some schemes to be embarked upon which will not be completely realistic?

    Subject to these questions, we welcome the Scheme and we hope that it will be very well taken up.

    9.40 p.m.

    I, too, welcome the Scheme, but before launching forth in my welcome I shall draw some slight contrast between this debate and the previous debate. Then, my right hon. Friend the Minister of Agriculture and my hon. Friend the Under-Secretary of State for Scotland congratulated hon. Members on the Opposition Front Bench on their elevation to high office, and the congratulations were reciprocated. It seems to me that there is a fine showing on the Opposition Front Bench at the moment—they are still all there except for the Shadow Minister—but that there is a total dearth of interest in agriculture and horticulture on the back benches opposite. This contrasts with the attendance on these benches. My right hon. and hon. Friends are present from every horticultural constituency in the country and a great many more besides. My hon. Friend the Member for Ross and Cromarty (Mr. Gray) is in his place, as is practically every Kent Member.

    Order. The hon. Gentleman will not be out of order if he now comes to the Scheme.

    Is the hon. Member for Maidstone (Mr. John Wells) aware that we have the same kind of problem as he is mentioning when the House is discussing industrial affairs? We then have very few hon. Members opposite present in the Chamber.

    Anyway, it shows that there is massive support for the Scheme on this side of the House.

    We welcome the simplification of the new items contained in the Scheme. For example, in the Schedule there is the inclusion of the grubbing-up of orchards. This is of the essence of the future profitability of the horticultural industry. If we are to get a proper price for our apples in this country, there must be a substantial reduction in the acreage. Are we going to get enough take-up of the grubbing-up of orchards encouraged by the Scheme? The hon. Member for Brentford and Chiswick (Mr. Barnes) raised the question of take-up under the existing Scheme. I do not believe that the take-up for grubbing-up grant bears any relation to the national need. Will the Minister be able to come to the House in the foreseeable future and extend or modify the Scheme to allow a much higher level of grant?

    The fourth item in the Schedule refers to
    "Land levelling work, including filling in of ponds .…".
    At this time, when there is lack of water supply and a great move towards irrigation and other chemical washes, we should have been thinking more of the digging-out of ponds rather than the filling in. Item 16(ii) refers to irrigation equipment and so on, but does not actually list reservoirs or ponds. So the creation of reservoirs or ponds does not seem to be included. Perhaps I misunderstand the Scheme and such provision is included in the jargon, but if it is, it is not clearly set out. Incidentally, I congratulate the Minister in general on the extreme way in which these things are set out in the Order. But it seems that the creation of reservoirs and ponds.

    which is badly needed and for which grant aid is needed, particularly in horticulture, should have been included somewhere. I hope that it is and that I have misunderstood it. Section 15 says:
    "Provision of water supply, other than for the purpose of the growing of horticultural produce."
    But what on earth is it for? Is it for washing hands, or what? Perhaps the Minister can tell us more about that.

    One appreciates that the Order should be as wide as possible but it seems that the making and improvement and renewal of cattle grids, under Item 6, is a little wide of the necessary requirements.

    The item particularly welcomed in my part of the world, and in the King's Lynn area, is the provision of bulk bins, mentioned in paragraph 20(ii) of the Schedule. It is slightly oddly worded. It says
    "bulk bins for use in temperature-controlled stores."
    Then we refer back to Item 17, which says,
    "packing platforms for use in orchards."
    But anybody with practical experience of modern orchard methods will know that a great many bulk bins are loaded in the orchard and taken to a packing shed and may or may not go into the temperature-controlled stores. I hope that there will not be any niggardly attitude about the bulk bins people use in the orchard, and that they are not told that because they are not packing platforms they cannot have grants on them. I hope that this will be interpreted in the widest possible sense.

    Paragraph 20(vii) says,
    "heating equipment (other than portable heaters)".
    Here I speak from the heart. I have a small commercial greenhouse in Kent which suffered a power cut this morning. I was trotting along laying out night lights, lighting them and covering them with inverted clay flower pots. I do not seek to obtain a grant for my night lights, but it seems a bit silly, against the background of today, that portable heaters should be specifically excluded. I realise that the Civil Service and the Treasury are always dead scared of people using a vast piece of agricultural or industrial machinery, of perhaps the width of the Chamber, in their living room once they have obtained a grant for it. But this is too ridiculous. The sort of portable heaters needed in the horticultural industry or in ordinary industrial application could be used only for commercial purposes. There could not possibly be any misuse of this equipment. Might it not have been better if the Scheme had been worded "other than portable heaters of a value of less than £200"?

    Order the hon. Member for Maidstone (Mr. John Wells) cannot amend the Scheme.

    I know, Mr. Speaker, and it is a tragedy. But I have urged my right hon. Friend to come to us in the near future with a new Scheme and one or two further improvements such as those I have outlined, for example the grubbing-up grant, and I hope that this sort of item might be looked at. One could say that, although paragraph 20(vii) specifically rules it out, under the glorious new paragraph 21—which enables one to do absolutely anything and is like somebody drafting articles of association of a rather ropey company, for people could carry out any operation incidental to the provision—one could, I suppose, have a massive portable heater.

    Unlike my hon. Friend the Under-Secretary of State for Home Affairs and Agriculture, Scottish Office, I wonder whether at this juncture it is wise to remove the security of tenure provision. At the present time horticulturists face grave difficulties not only from the possible threat of the E.E.C. but from many other causes such as the import of Eastern European produce. I cannot enumerate them tonight. If I attempted to, I would be out of order. But my right hon. Friend knows the underlying anxieties of those engaged in horticulture.

    When an industry faces grave upheaval and possible bankruptcies and failures of large private companies, is it entirely wise to encourage people to take up public money where there is not security of tenure? My right hon. Friend may be surprised that I take this line, but I should be glad to have an official view on it. It may be that my right hon. Friend has greater confidence in the industry's future than would appear to be the view of the N.F.U. and those engaged in horticulture, but a phrase about security of tenure must give us food for thought.

    Horticulturists will welcome the Scheme wholeheartedly, but we would like an explanation of these few small matters, and we hope that my right hon. Friend will make a major horticultural pronouncement on matters on which we cannot touch tonight without getting out of order.

    9.51 p.m.

    I rise briefly to ask one question of interpretation of the conditions of eligibility in Schedule 3. It refers to

    "… the person carrying on a horticultural production business, or … the landlord of land occupied for the purposes of such a business …"
    Is the word "person" all-embracing? I have in mind especially co-operative societies carrying on the business of horticultural production as groups of members of the Agricultural Co-operative Association, or persons carrying on horticulture as part of the business of a retail co-operative society. I am thinking especially of the Enfield Highway Co-operative Society, which conducts a large horticultural business in the Lea Valley. Does the word "person" include a group of people carrying on that kind of business?

    9.52 p.m.

    I am grateful to hon. Members who have taken part in this short debate, and I must congratulate the hon. Member for Brentford and Chiswick (Mr. Barnes) on his performance at the Dispatch Box. He won a famous victory at the last election by holding his seat in difficult circumstances. I am certain that he will prove a worthy debater on food topics in the next few years.

    The hon. Gentleman asked first about the glasshouse acreage. The position is that the area under glass has increased by about 15 per cent. since 1965, or by a total of 529 acres, and has now reached 4,158 acres. In the four years ending March, 1969, approximately 1,100 acres of new glass was erected, which is nearly 30 per cent. of the total acreage. But there still remains scope for further modernisation since some 34 per cent. of the total glasshouse acreage was erected before 1945.

    Whereas we should like to see more modern glasshouses erected, we hope that growers will look carefully at the sorts of businesses into which they intend to go before taking advantage of grants to put up glasshouses. They must look to the future. We do not want a situation where a lot of growers spend large sums on new glasshouses and decide in a few years that they cannot make their businesses pay. The one thing I do not want to do is in any way to encourage the industry to take action which is not good sound marketing sense. This is very important to the industry, and I am prepared to give it what help I can in taking decisions.

    The level of take-up grants has been extraordinarily good and they are currently being approved at the rate of about £5 million a year. Looking back as far as the 1960 Act, by the end of September, 1970, the total value of work approved for grant under the Horticultural Improvement Scheme was £70·9 million. This is a considerable sum of money put in by both the growers and the Government of the day and I should have thought that it had done a great deal to help the efficiency of the industry.

    The hon. Gentleman asked whether growers would commit themselves to unwise schemes of improvement. We must leave that to the judgment of the growers, but, in view of what the hon. Gentleman said about the Common Market, it is important that they should think carefully before going in for these schemes. It would be folly to fail to do so.

    I pay a warm tribute to my hon. Friend the Member for Maidstone (Mr. John Wells) for the work he has put in on behalf of horticulture for a number of years. He comes from Kent which does not always make things as easy for its Members of Parliament or the Minister on horticultural matters as do some other counties. He has spoken up on all occasions for horticulture. He has come to know the industry extremely well and he is held in high esteem. His contributions to our debates are always lively, if not always quite in order.

    He asked about grubbing up. As he knows, I have been having some consultations with the National Farmers' Union on the subject of grubbing up. Consultations are going on and I am not yet in a position to make a statement. The present situation is that some 40 per cent. of all the trees which are shown in the June returns each year are now more than 20 years' old. As far as we can tell, that is an acreage on its own of some 40,800. To that must be added another 15,400 acres of apples and pears which are classified as non-commercial and there must be many more in back gardens and small orchards and so on which are not added even to that total. I agree with him that we will need to keep out of the industry large acreages of unproductive fruit. They do nothing to improve the quality of the fruit market and the Government must look carefully at schemes to give them greater encouragement. This is what I am doing and I hope in due course to be able to make an announcement to the House.

    My hon. Friend asked about reservoirs and irrigation equipment generally. As I know from personal experience, reservoirs are grant-aided, but, because they are used for both horticultural and agricultural activities, they are included in the Farm Capital Grant Scheme and not the Horticultural Scheme. My hon. Friend will see that they are mentioned in paragraph 5 of Schedule 2.

    He asked whether it would be wise at this stage to alter the provisions for security of tenure. We have come to the conclusion that this is a question for the tenant himself to decide. If the tenant or applicant feels that he has sufficient security of tenure to make it worth while putting in his own money, we felt that it was no business of ours to say that he should not. We are trying to move away from the idea that Whitehall and "Auntie" always knows best and to rely much more on the individual himself to make up his own mind what he wishes to do.

    My hon. Friend also asked about portable heaters. He recognised, I think, from what he said, that this was a difficult one. I am sorry to hear, incidentally, that his greenhouse has suffered from a power cut today. I hope that no irreparable damage has been done. The difficulty is that these heaters could, perhaps, be used for non-horticultural purposes.

    I want to be very careful not to bring any Scheme into disrepute. One often hears hair-raising stories—always, I think, proved to be untrue—of farmers or horticulturists who have used grants for heating swimming pools or items of that nature. All this has been proved to be untrue, but it gives a bad impression to the industry and to the Department and I wish to avoid anything of that sort. Therefore, we had to draw the line at portable heaters.

    My hon. Friend asked a question about bulk bins which I have noted carefully. We will try to administer this as fairly and as properly as we can. He also drew attention to the good, attendance on this side of the House for this debate. I wonder whether, perhaps, it does not have something to do with the debate which is to come rather than the debate in which we are now interested. [HON. MEMBERS: "No."] I am glad to hear from my hon. Friends that that is not the case.

    The horticulture industry has always been treated as the Cinderella of agriculture. It has made a good deal of progress in recent years. The Scheme gives a little more grant when one takes into consideration the initial allowances as well, and it considerably widens the scope to a number of items which have previously not been grant-aided. I hope that all this will give confidence to horticulture that the Government wish to help and want to see a prosperous industry.

    My hon. Friend expressed the hope that we would have a debate before long which could take into account all the problems of the industry. I agree with that. Nothing would suit me better. I hope that the horticultural industry will not spend the next few years writing itself down or writing itself off. I believe that there is a good future for it. We are looking at ways and means of trying to assist it sensibly, but it must make up its own mind about what are proper marketing opportunities and then take them. If it carries on as it has done for the last three or four years, modernising its equipment, putting up new glasshouses and grubbing out old orchards, I believe that with a little extra help it has a prosperous future ahead of it. It is in that frame of mind that I ask the House to approve these Statutory Instruments tonight.

    Question put and agreed to.

    Resolved,

    That the Horticulture Improvement Scheme, 1970, a draft of which was laid before this House on 1st December, be approved.

    Resolved,

    That the Agricultural Investment (Variation of Rate of Grant) (No. 2) Order, 1970, (S.I., 1970, No. 1756), a copy of which was laid before this House on 1st December, be approved.—[Mr. Prior.]

    Estate Agents

    10.5 p.m.

    I beg to move,

    That the Restriction on Agreements (Estate Agents) Order 1970 (S.I., 1970, No. 1696), dated 10th November, 1970, a copy of which was laid before this House on 18th November, be approved.
    I will move the Order shortly and then attempt to reply with arguments of more substance after hon. Members have made their contributions.

    The Order renders unlawful collective agreements which give rise to the practice of charging fees at standard rates in connection with the sale and purchase of unfurnished houses. The Order came into force on 20th November. Where arrangements were in operation at that date, they must be brought to an end before 30th June, 1971.

    The Order is made under Section 3 of the Monopolies and Mergers Act, 1965. It gives effect to the recommendation of the Monopolies Commission in its Report on the Supply of Certain Services by Estate Agents—published in February, 1969—that such arrangements operated against the public interest and should be discontinued.

    In reaching this conclusion the Commission said that the arguments advanced for charging estate agents fees at standard rates appeared to carry no more weight that those in the past advanced for avoiding price competition in the supply of goods. The disadvantages were very similar. The Commission considered that the charging of fees at standard rates meant that at least in some cases fees were likely to be higher than they otherwise would be; that resources were likely to be wasted; that the incentive to introduce or experiment with new methods was likely to be reduced; and that the customer was denied the option of a lower price if he did not want the full service which went with the standard price.

    There was full discussion of these proposals. The Monopolies Commission sat from September, 1966, until February, 1969, and took both written and oral evidence from the seven societies of estate agents, which combined into a single committee to present their case to the Commission. From February, 1969, up to the present time both the last Government and the present Administration have been in constant discussion with the agents about their representations.

    The national societies have remained firmly against the Order throughout, but the former Government and this one have said that they are in favour of laying it. The consultations to which I have referred resulted in this Government making three concessions to the agents, to do with restrictions on advertising, compulsory purchase and the time for the implementation of the Order at six months. The national societies tried to persuade the Government to allow them to make it clear that the scales were not mandatory, but we considered that this was not sufficiently quick-acting or strong in its effect, and, moreover, it left out the many estate agents who were not members of any association and would, therefore, not have been caught by it.

    The Order makes unlawful restrictions on charges or advertising but it does not make unlawful rules by the national societies to prevent undesirable forms of business such as harrying clients by telephone or the practice known as "coffin chasing." It does not apply to furnished lettings and to cases of compulsory purchase. The Government believe strongly in competition, and it would be meaningless to have a strong competition policy if charges of this sort were exempt from it. It applies equally to services as to goods. We believe that it will lead to innovation and experiment, to a wider choice and better standard of service for customers and eventually perhaps to rationalisation of an industry in which there are 7,000 firms. Perhaps it might also lead to fees being less high.

    I know that there is some concern about those in the profession who do not have the highest standards of conduct. Some can only be described as "sharks." I recognise fully what the seven societies and many reputable and honourable firms of estate agents have tried to do to control standards in the past. It is unfortunate that the two attempts to legislate to set up an estate agents council have not come to anything, but it is clear that the question of the "sharks" in the profession can be dealt with only by control of standards, and it may well be that more will need to be done if the very few who let down the reputation of the profession continue to thrive.

    I believe that the Order is more likely to make it difficult rather than easy for such people. If there are people who are in the profession only for what pickings they can get and whose standards are not as high as they should be, they will thrive more easily in conditions in which there is a fixed scale of fees rather than in conditions where there is competition in fees offered by the agents. But there is a separate issue. The restrictions on entry due to standards will certainly not be greatly affected by the Order and the matter must be dealt with, if it is to be dealt with, by entirely different means. However, the Order may make a small contribution.

    This is the first reference of a profession to the Monopolies Commission. It should not be confused with the general report on the professions which formed the second Monopolies Commission Report, which has recently been published. This raises wider considerations which it would not be in order for me to discuss tonight, but it is the Government's intention to treat each case on its merits. The merits differ as between one profession and another, and, therefore, the Order is laid only because we believe it has, on merit, a great deal to be said for it in relation to this profession.

    We shall watch the operation of the Order and the way in which estate agency is carried on under it. If it leads to undesirable or unexpected results, the Government will always have an open mind and be prepared to consider whether further or different action should be taken. But we believe that it would be quite wrong to have a competition policy which did not apply to all. Therefore, as an earnest of the Government's belief that competition is the best thing to rely upon both to protect the consumer and to keep fees, charges and prices at their lowest level, I commend the Order to the House.

    10.13 p.m.

    I listened with interest to the case made by my hon. Friend the Under-Secretary of State. The conclusions which he and the Government have drawn are open to challenge.

    I have been associated with this matter for many years. I practise as an estate agent. Many hon. Members will remember the efforts of my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) and myself to secure, under the private Members' procedure, the passage of estate agents Bills—that of my hon. Friend in 1963 and mine in 1966 which was lost on the dissolution of Parliament in that year.

    I was a little surprised when my hon. Friend said that it was desirable that an estate agents council should be established. One was established by the previous Administration in October, 1967, and it received the personal support of those in the profession and in the business of estate agency. It enjoyed substantial financial support for two years from the various institutions engaged in this business and profession. In fact, in the report which was published of those who had registered with the Estate Agents Council in March, 1969, no fewer than 11,000 practising estate agents' names appeared. The unfortunate winding up this Estate Agents Council puts into question many of the hopes which there were for it, but its aims were frustrated, for a number of reasons.

    One of them was the acceptance by the then President of the Board of Trade of the Monopolies Commission Report of 29th February last year. Paragraph 249 said that
    "arrangements for the registration of estate agents should not be such as to restrict entry".
    My hon. Friend, in referring to the rogue of estate agents—he did not use quite that word but it is a similar term—emphasised the problems with which the business of estate agents is faced where the market is free for anybody to start up as an estate agent, and this was essentially the difficulty which faced the members of the Estate Agents Council. Of course, this denied completely the professional competence which estate agents need to have if they are properly to advise those who wish to buy or sell houses.

    There has been also substantial criticism by members of the Estate Agents Council of the manner in which the Monopolies Commission conducted its proceedings. It gave the professional bodies no opportunity to consider criticisms made against them, or any chance to make any representations to the inquiry, or to cross-examine witnesses, or deal in argument with objections posed by members of the Commission. This is quite exceptional in its incidence and, I think, a very grave defect in the proceedings. It denied the most elementary rights laid down by the rules of natural justice as generally understood in this country.

    When we look at the Monopolies Commission's Report we see the considered opinion of the Hon. T. G. Roche, Q.C., in paragraph 268, and I think that for the record this ought to appear, and I quote paragraph 268 in which he said:
    "I prefer therefore to express my conclusion in this way. I consider it wrong and unwise to condemn arrangements that are old established, working well and affording the public a reasonable service at a reasonable cost unless it is established by evidence that the abolition of the arrangements in question will produce an even better position. I do not consider that the evidence does establish that the new position will be even as good as the present let alone better."
    I think that those comments were soundly based, and that opinion was based on the evidence which had been submitted to the Monopolies Commission.

    I myself saw Mrs. Dunwoody on 2nd October last year when she held her position at the Board of Trade, and I emphasised the highly competitive nature of the housing agency business and the new ideas on house transfer which had been tried out in recent years. Hon. Members will remember the local authority registration, multiple listing, the national property register. I pointed out that newcomers could enter estate agency without let or hindrance; only members of the society were asked to operate the recommended scale of fees; and new members were thus an important competitve element, being free to fix their own charges. Many agents regarded the scale of charges as a maximum guideline, but if this were to be removed far more people would charge what the market would bear and the effect might be the opposite of that intended by the Minister.

    I quite agree with the Minister that estate agency needs a system of bonding so that there shall not be a substantial loss of public money because of defraud- ing estate agents, but without licensing this could be a grave threat to the public in the hands of unscrupulous agents. There is widespread public concern on this question.

    Although my hon. Friend says that both Government and Opposition are in favour of the Order, the test is that the previous Administration did not lay the Order. I do not know whether I was able to influence the previous Administration, and I wonder whether I shall have any joy in trying to influence this one. The previous Administration were hesitant, but my hon. Friend is now going back to the rigid and uncompromising position adopted by the Board of Trade 18 months ago and asking for an outright prohibition of scales. This is an unfortunate decision which I do not think will have the effect for which my hon. Friend hopes.

    Scales of charges will have to be published. They are necessary and are not prohibited under the Order for the sale of commercial, shop and industrial property. The order relates only to unfurnished dwellings. The Government's purpose would be simply met by the publication of those scales with, perhaps, a footnote to the effect that they do not apply to unfurnished dwellings. This would be a simple solution which I know on good authority would be generally accepted by the profession. Instead of being dogmatic and striking at well-established principles, there should be a reservation included in the scales which are published for the sale of other types of property. Perhaps wording to this effect could appear below the scale:
    "The above scale applies to commercial property. So far as unfurnished dwellings are concerned the scale is only a guide to the public and to house agents. Members of the profession are free to charge on any other basis or at any other rates either generally or in particular cases."
    I object to the Order on the ground that it is likely that the scales for the lower-paid properties are likely to increase. The owners of these properties perhaps do not have the commercial knowledge to enable them to do a deal with the local agent on his charges. The profession will go to the market for the standard of its charges rather than to recommended scales.

    The scales applying in other countries are contained in Appendix 14 of the Monopolies Commission's Report. From that it will be seen that our charges, almost without exception, are lower than those in any of the countries listed. The only exceptions are where urban and rural charges are compared. Where there is a gap between charges the Monopolies Commission's Report says:
    "… it does show that expenses are treated as additional to the sale fee in at least two places where the sale fee is low (Amsterdam and Dublin)."
    But if we consider the situation in France and Germany—in the light of our prospects of entering the Common Market—we find that in the Paris area the sale of a £5,000 house, for which the charge under the recommended scale is now £137 10s. in the United Kingdom, is £350, and in Nice it is no less than £400, while in Germany the national average is £235. There is substantial evidence that our scales are modest in comparison with charges made elsewhere, in comparative economic conditions.

    My objection is that the Order may encourage unqualified and financially unsound people to enter the business of an estate agent on a cut-price basis. It will remove advice on the level of charges for which, over some years, there has been advocacy for increases. The present charges are about the lowest in the world.

    I hope that the Minister will deal with the final sentence in paragraph 3(b) of the Order, which, relating to charges, says:
    "Provided that this paragraph shall not prevent the acceptance of restrictions which relate solely to the making known of charges by personal call or telephone."
    My interpretation of that provision is that a person wishing to sell his house and wanting to know the agency fee will be able to ring up or inquire by personal call what the fee is likely to be, but if he writes to the estate agent he will not be able to get the information that he is seeking.

    My final objection is that the absence of recommended scales will mean that agents will be encouraged by the Order to charge what the market will stand. That will bear heaviest on the owners of lower-prices properties. I am confident that the Order does not dispose of my fears, and for that reason I object to it.

    10.27 p.m.

    I entirely agree with my hon. Friend the Member for Northants, South (Mr. Arthur Jones). I share his misgivings about the Order. I am entirely in favour of competition in the manufacture and sale of goods and the Government are absolutely right to move in this direction. But one must have some reservations where the provision of a professional service is concerned, whether this in respect of medical treatment, the giving of advice in legal matters, or in the valuation and sale of property. I take the last case because that is what the Order is about.

    For most people, buying or selling a house is the most important financial transaction that they are ever likely to make. It involves upheaval, family anxiety, and much expense. It is imperative that they should be assisted in such transactions by persons of impeccable character who observe recognised rules and whose fees are known in advance. There is, of course, competition in this field now. As far as I am aware, anybody can enter it. That leads me to express the view that the right way to tackle this business would be, first, to insist upon a proper system of registration, an essential feature of which would be that estate agents are bonded.

    That step alone would give considerable security to the general public. Instead of that, it seems from what my hon. Friend has said that the Government believe that the outlawry of recommended scales of commission on the sale of unfurnished houses will automatically bring down prices and serve the public interest. There is nothing that my hon. Friend has said or that I have read on the subject that convinces me that this will prove to be the case. The only justification for the Order is that it will reduce fees, but there is no evidence at all that that will happen.

    Even the Monopolies Commission itself was filled with doubt on the subject. It stated in paragraph 241:
    "We cannot predict what changes are likely to occur…"
    In paragraph 251 it states:
    "… we do not think that the removal of the present restrictions would cause widespread competitive reduction of fees … In any case the Commission has no ground for suggesting that the present method of charging is inherently objectionable or that any other methods that have been discussed would in general be preferable."
    On the Commission's own arguments it seems hardly worth introducing the abolition of recommended charges.

    Does it not go even further? If the Commission could not predict what would happen, is it not a little difficult for the Commission to say that something is against the public interest?

    With the succinctness that we always associate with him, my hon. and learned Friend has put his finger on the point.

    In any event, as the Hon. Mr. T. G. Roche pointed out when dissenting from the Commission in this matter, the Commission's conclusions were not based on a sound study or a nationwide survey of agency practice. If that had been done perhaps we would not be debating the Order now. On the contrary, there is very good reason to believe that some fees will rise once the recommended scales are abolished, particularly those charged in relation to lower-priced houses.

    The Seven Societies Committee in their comments on the Report had something to say on the subject, and I hope that my hon. Friend will tell us something about it. They say:
    "The profit margin for house agency is relatively narrow. There is pressure in three respects for the charges to be raised. First, house agency is labour intensive and salary costs are going up at a higher rate than returns from commissions on house sales. Secondly, the house market is gradually becoming a buyers' market and tending to increase the standards of services expected of house agents. Thirdly, far more houses are now of a price range in which the existing scale tapers from 2½ per cent. to 1½ per cent. By giving a lower pro rata yield, these factors are leading to increased representations from members of the profession that charges should be raised."
    If the Order goes through, is that not precisely what will happen right across the board?

    Is the hon. Gentleman in a position to say on behalf of the seven societies that if the Order does not go through charges will not be raised?

    No, Sir. I am not in a position to say anything on behalf of the seven societies. I am the hon. Member for Essex, South-East, and have been for many years, and I am speaking on behalf of my constituents.

    The seven societies go on:
    "The existence of standard rates of commission have kept these representations within limits."
    Mr. Roche remarked in his note of dissent:
    " … if the recommended scales had never existed vendors of houses would now be paying commissions higher than those that now prevail."
    What could prove the point more eloquently than that?

    But let us look at the recommended scales. Do these compare unfavourably with those prevailing in countries comparable with our own? My hon. Friend the Member for Northants, South has given chapter and verse, and I will not go over the same ground, but Appendix 14 of the Monopolies Commission's Report provides the relevant information. I understand that the president of the equivalent professional society in Ireland said only last month that the scale of charges in that country—a flat rate of 5 per cent. for selling a house—was amongst the lowest in Europe. He was right. Anybody who doubts it should read Appendix 14 of the Report.

    I am waiting to be convinced, but the seven societies have little doubt that if the recommended scales in this country are abolished fees for house agency services will go up rather than down, and it is at the lower end—that is, the houses of low value—where it will be more difficult to sell, because this is the least profitable sector in the market under the present scale of charges.

    I do not think it is irrelevant to remark, particularly as my right hon. Friend the Secretary of State is here, that the impact of this upon the mobility of labour may be considerable. We should be making it easier for people, particularly those living in the cheaper houses, who wish to move and change their jobs, to sell rather than to make it more difficult. Moreover, once there is a free-for-all there may be less co-operation among estate agents. As I see it, the advantage of having a recommended scale is that everyone—the agent, the vendor, the purchaser—knows where he stands. In any event, under the present arrangements the agent gets no commission unless he sells the property. It is well known that abroad agents derive a substantial part of the remuneration from sharing the profit. No wonder the Hon. Mr. Roche concluded with the words that were quoted by my hon. Friend. If I may put it another way—this is appropriate for me speaking as a Conservative—what Mr. Roche was saying was, "Why tamper with a well-tried system without the assurance that it will be replaced with something better?"

    I shall therefore listen attentively to what my hon. Friend says, if he catches your eye, Mr. Deputy Speaker, to see whether he can allay the fears that I have expressed as to what the real effect of the Order will be. Will it create conditions which will increase prices or conditions which will reduce them? Has he any more certainty on this point than the Monopolies Commission?

    I therefore seek from my hon. Friend three assurances. First, can he say with any certainty that if prices go down, this will not affect the quality of service the public is getting from the established members of the profession? Second, is it intended not to pick upon the estate agents alone but in due course to move in the same direction with the other professions; because, if it is not, this is grossly unfair?

    Third, what remedies does my hon. Friend offer to people who may be cheated by some of the dubious folk to whom he referred earlier who are now given special encouragement to enter a profession which has, not without difficulty, been endeavouring to raise its ethical and business standards? This surely is the nub of the problem. It is of the essence of a profession that there is an element of trusteeship, that malpractices shall not be tolerated by its members. On this the Estates Gazette, which I believe is the most widely read journal in this field, said recently:
    "The element of trusteeship, which governs much more than the care of deposits, is present in every transaction. Many agents include free advice as to purchase price in accepting intructions for sale. Many could themselves snap up under-valued properties and re-offer them at market prices: the law is powerless against such abuses, but the professional societies have been able to prevent malpractice. Is all this gain to society to be thrown away with the bath-water of fixed scales, scales which are moderate in amount, known in quantity and strictly related to the benefits derived?"
    I should like to have the answer to that question before I could possibly support the Order.

    10.40 p.m.

    Nobody is more vehement than I am in furthering the cause of competition and private enterprise, and I do so for a variety of reasons, none more cogent than that the system is in the best interest of the consumer. If I thought that this Order was presented simply and solely in the hallowed name of private enterprise and competition, I would support it. But investigation of the effect of the Order, and, indeed, the tenor of the speeches made by my two hon. Friends, indicate quite clearly that this is not the case.

    If the publication of a recommended scale of charges meant that no estate agent could charge other than the scale of charges, if it were a sort of seven societies' tables of Moses, this Order might be in the best interests of private enterprise. But, as I understand it, these scales are not mandatory and never have been mandatory. They are entirely permissive. Nobody is drummed out of the profession if he charges less than that which the scale prescribes. Indeed, I understand that many estate agents charge below the prescribed fee. I dare say that a few even charge above it. Some people sell their own houses, without the services of estate agents, anyway. Indeed, it is an entirely free market.

    I dislike the Order because it fails to recognise that the publication of recommended scale charges is part of a parcel which benefits the consumer. Paragraph 2(b) states:
    "'association of estate agents' means a body (whether incorporated or not) whose purpose is to further the business interests of its members and which has for or amongst its members persons who are or who represent estate agents".
    There is nothing wrong with that. But it seems to me—and the Minister fails to understand this—that there is very much more to an association of estate agents than merely the aim of furthering their business interests. Over the years the profession has made positive and effective efforts to put its own house in order.

    Of course, there are "sharks", as the Minister called them, in this business. But I think the estate agents themselves have been quick to recognise the existence of these "sharks" and have done their utmost to get rid of them. They have, indeed, tried hard to recognise their responsibilities as a profession to the public. In some areas estate agents band together, and in the area where I live there is such a banding together. Part of the effect of this is that there is a scale of charges which one pays whether one goes to an estate agent at one end of the town or to one at the other end of the town. What happens is that if one wishes to sell one's house, as a result of this banding together if one goes to one estate agent the house is on the books of 14 or 15 others automatically. It is very much easier for the seller. A buyer can go to one estate agent and get the whole picture, right across the area, of the houses which are on the market. This is of very read benefit to the consumer.

    If right across the association or band of estate agents one pays the same amount of money to whomsoever sells one's house, I think it is a fairly cheap price to pay. All this will go when this Order becomes effective. There is nothing in the Order to stop such banding together; but it must go. It would not be possible to have a sort of association of estate agents working as they do at the moment if some were to charge one fee and others charged another. It is part of a parcel which certainly helps the consumer, as I have said.

    What will happen in the future? A person wishing to sell a house, I presume, will shop around all the estate agents in the area and find out whether one agent will charge a little less than another. If after he has put his house on the books of one estate agent it comes to the vendor's ears that another agent—in most areas, there are many estate agents—will sell his house more cheaply, does he withdraw it from the first agent? Surely, this system will give the person who wishes to sell a great deal of extra trouble in finding out whether it would be advisable to take the services of one estate agent rather than another. The scale of charges is only a guide, and I believe that it has been of benefit both to the seller and to the buyer.

    Not nearly enough thought has been given to this whole matter. The Minister said that the Monopolies Commission took evidence, both written and oral. I know that there is a feeling in the estate agents' profession—of which I am not a member, I hasten to say—that there was not sufficient consultation. From the consumer's point of view, there is certainly a feeling that we have here something which has been of benefit, an element of consumer protection, but it seems that that must now go.

    I was interested to hear the solution offered by my hon. Friend the Member for Northants, South (Mr. Arthur Jones). I was interested also to hear what the Minister said, suggesting that he would keep his eyes open, and if the effect of the Order was not as he hoped, it might be changed or revoked. I should prefer neither my hon. Friend's solution nor the Minister's solution. I should prefer the Order not to be made at all.

    10.46 p.m.

    May I intervene in this family quarrel? It shows how hard is the path of those who wish to promote competition, particularly in the Conservative Party. All hon. Members who have spoken from the benches opposite have begun their speeches by saying how much they favour competition—except in this case. Competition is always an easy slogan, until one actually comes to the point of applying it in the particular instance, at which point every argument against it can be discovered by vested interests. So it is tonight.

    I hope that the Minister will say something about the comments of the hon. Member for Northants, South (Mr. Arthur Jones) on the way the Monopolies Commission conducted its inquiry. I do not think that what the hon. Gentleman said was true. I suspect that he was confusing this inquiry with the other inquiry into professional services generally which the Commission made. If that is so, as I believe it to be, and if the Minister confirms it, I hope that the hon. Gentleman will withdraw what he said.

    I am not confusing the issue. As I understand it, the representatives of the professional institutions in estate agency did not have an opportunity to comment on the evidence which had been submitted to the Monopolies Commission; neither were they asked, or given the opportunity, to give oral evidence against it. I think that the right hon. Gentleman will find that he is at fault.

    I leave it to the Minister to deal with the point. No doubt, he will have advice on the question. My own impression is that this inquiry was properly conducted, the whole matter was properly investigated, and there is no justification for making charges against the Monopolies Commission.

    When the Report on estate agents was published, my right hon. Friend the Member for Grimsby (Mr. Crosland), then President of the Board of Trade, said in a Written Answer on 25th February, 1969, after summarising the content of the Report:
    "The Commission have produced a useful report and I accept in principle their conclusions. In particular, I think it undesirable that estate agents should not feel free to offer alternative methods of charging, or to experiment with different combinations of service and charge. My Department will now discuss with the estate agents how the Commission's recommendations might best be implemented."—[OFFICIAL REPORT, 25th February, 1969; Vol. 778, c. 289.]
    That was the position taken by my right hon. Friend when the Report was published, and he took it on the basis that the Report was, in his judgment, clearly a good Report.

    Hon. Members have referred to the fact that the Report was not unanimous, that one member of the Commission disagreed with his colleagues. This is true, but the large majority of the eminent persons on the Commission took the view explained in the Report. There were one dissentient but something like six in favour, and the arguments which Mr. Roche advanced, and which hon. Members have advanced, were considered fully by the Commission, which made its judgment despite them.

    There was, for example, the argument that unqualified and financially unsound people might enter the business on a cut-price basis. The Commission considered this. The first thing we have to notice is that this is happening now. I have noted the remarks of the seven societies. They point out that a large number of cut-price agencies have gone bankrupt. The Commission claimed that the entry of such people into the profession is made easier by the scale charges. Thus the Commission thought that the argument about the entry of cut-price people into the business was precisely a reason for the conclusion to which it eventually came.

    It was also argued that there might be malpractices by people coming into the business. But there are malpractices at the moment, and the Commission reported on them. Surely the hon. Member for Northants, South attempted to do something about them some time ago. The thing to do if one has a malpractice is to take steps to deal with it and not eliminate competition from a business in which, in the judgment of the Commission—and of the Government, I am glad to see—competition is desirable.

    What does the Minister intend to do about the Estate Agents Council? I do not accept the argument of the hon. Member for Northants, South about why the council failed. I think it is a grave reflection on the seven societies that it did fail. We would have been in a better situation today if they had continued to support it. What will the Government do? It is clear that some regulation of conduct is necessary, and, in view of the situation for clearly explained by hon. Members opposite, it is surely desirable for the Government to introduce legislation to deal with it, the voluntary system unfortunately having failed.

    The Government believe in frameworks. We have frameworks for industrial relations and frameworks for competition. One creates a framework and then sits back and watches. The Under-Secretary of State said that the Government will watch what happens. I think it is necessary to watch what happens. Competition does work—and I am glad that hon. Members opposite are learning this too—but it sometimes has a curious way. We recently had the Report of the Prices and Incomes Board which showed that competition worked to put up the price of tea. When the price of the leading brand was increased, the others had to go up too because otherwise their quality would not have been regarded as respectable.

    The seven societies argued that if competition is introduced into this business, prices will go up. I accept the vigorous assertion of the hon. Member fo Essex, South-East (Mr. Braine) that he was speaking on behalf of his constituents and not on behalf of the seven societies. But I notice with interest the reference in the report of the seven societies to the pressure that they were under to increase the scale of charges. It is interesting to note that they are under this pressure and that, clearly, they are not prepared to give any assurance that those charges will not be increased if the Government do not put through this Order. Therefore, if subsequent to this Order the level of charges goes up, at any rate the Government should be interested in whether they have gone up for good or bad reasons.

    In prosecuting our competition policy, we believed that it was necessary not just to create a framework but to have instruments of investigation to see how competition was operating. That is why we had the National Board for Prices and Incomes, which was a useful instrument for such investigations. That is why we were in process of creating the Commission for Industry and Manpower, which would have been a similar instrument for investigating how competition was working. It does not always work in the ideal fashion that hon. Gentlemen opposite think—except in the case of estate agents. It may act in different ways on certain occasions, as it has evidently in the case of tea.

    I ask the Minister to elucidate a little on what he told us about keeping a watch on this matter. How will he do it? What instrument will he use? If he finds that competition, having been engendered in this situation, does not operate in the way that he foresaw, what will he do about it?

    Before the right hon. sits down, will he say why the previous Government did not introduce this Order in the 16 months between the publication of the Monopolies Commission's Report and the General Election?

    We were in the course of detailed and lengthy discussions with the seven societies, during which we hoped that some way of handling the matter which was acceptable to them could be found. For that purpose, we gave as much time as we thought reasonable. Unfortunately, by the General Election we had not yet found such a way. I notice that the present Government, too, have not found such a way.

    10.58 p.m.

    The right hon. Member for Birkenhead (Mr. Dell) spoke about this debate being a family quarrel, but he has sadly misinterpreted the mood of hon, Members on this side of the House.

    For my part, I welcome the assurance given by my hon. Friend the Under-Secretary of State for Trade and Industry when he spoke of supporting the aspect of competition and the sharpening of the edge of competition, and added that he will watch the effects of it. It is on the possible effects of competition that we want to give him warning of the dangers and pitfalls which may lie ahead.

    It is not just a matter of watching whether prices go up. It is also one of watching whether service goes down. I agree about the danger signals seen by Mr. Roche in his note of dissent. Those are dangers which I am sure that my hon. Friend will look for and, if they are apparent, will act to avert. His assurance on this point is extremely helpful.

    In its Report, the Monopolies Commission appears to have directed its attention too much to what has happened to goods, and too little to what might happen to services. It says that there has been no substantial evidence of the effect of the removal of restrictions from services, and certainly it quotes no evidence. It is to be hoped that this is a case which my hon. Friend will watch with care, in order to see the impact of this Order.

    The effect of the removal of this type of restriction on goods could be very different. Removing controls on the price of a tin of baked beans is a quite different proposition from removing restrictions on charges for an essential personal service. One can look in the shop window next door to see whether the price of a tin of baked beans is different, but the kind of service rendered by estate agents is very much a one-off operation. Great reliance is placed on the expert knowledge of the person one consults and the charge for it is relatively small in relation to the amount involved in the sale of the house.

    I hold no brief for the estate agents. When I was in practice as a solicitor, I had dealings with many estate agents in all parts of the country and in places like Nice which have been quoted as comparisons. There are the good, the bad and the indifferent. The good are very good, the bad are very bad. I am not canvassing for them: the good will look after themselves, and the bad I do not care about. But I share the Minister's concern for the customer, because it is the customer with whom we are concerned.

    I ask the Minister to watch the situation carefully, because the removal of the recommended scale, which was not a fixed scale, which also involves the removal of the ceiling, may present certain hazards. There may be a danger of the "sharks" in the business advertising price cutting and then making a quick sale at not necessarily the best price in order to achieve their margin without giving the customer or client the right service.

    My hon. Friend the Member for Northants, South (Mr. Arthur Jones), who has left the Chamber, would join me in condemning the "sharks". Certain members of the profession adopt standards which are unacceptable to hon. Members on both sides of the House. There is the practice adopted when someone advertises his house for sale in his own name and the estate agent arrives and says that he has a potential buyer, no fee is payable, and the price asked is reasonable. He produces a form, and a few days later he says that his client has decided that he does not want the house but he knows that he can find someone else at no less a price. He then gets a sole agency form signed and has the opportunity of selling the house at a much lower price than the original asking price.

    That sort of practice and many others are adopted by the disreputable agents. It is this aspect of estate agency which must be put into order. I am sure that the Minister will watch the situation to see whether the Order gives such agents encouragement. If it does, we welcome his assurance that he will take whatever action is necessary to put the matter right.

    The Report concedes that the Order is unlikely to lead to any substantial general reduction in fees, and experience over- seas, referred to in a footnote—Washington is the only place where the scale of fees appears to have been removed—indicates that there is not likely to be a general reduction in fees. Therefore, it is important that my right hon. Friend the Secretary of State should see that if there is not a substantial reduction in fees so that customers benefit that way, there is certainly an improvement in the services that go with them. I am confident that he will keep his eye on this to ensure that standards are maintained.

    In supporting the promotion of competition which the Order is designed to achieve, and which I welcome, I also ask my hon. Friend the Under-Secretary to say, when he replies to the debate, that he will watch those points—and there are many more valid points than merely those which I have raised—in achieving the objective of this side of the House of increased competition, and not merely competition in price, but competition in service, recognising that we are here to serve the general public and not to protect a section of the community at the expense of the public. If my hon. Friend can assure us about this, he will reinforce my wish to support him, as I do in the Order.

    11.6 p.m.

    My only reason for intervening is that in March, 1963, I attempted to introduce a Bill to try to help the profession of estate agency to clean up its own house. Heaven knows, there was need for it to be cleaned.

    What I find most regrettable about the Monopolies Commission's Report on this matter is that it has failed to comprehend the extent to which the best elements in the profession have tried to pursue the purposes of my Bill, and that of my hon. Friend the Member for Northants, South (Mr. Arthur Jones), in attempting to get some discipline into the profession, which at one time had some very disreputable members who engaged in the most appalling exploitation of a great many innocent people, very often at an age when they were least able to defend themselves.

    The right hon. Member for Birkenhead (Mr. Dell) was entitled to tease us a little bit about our love of competition and our readiness to find difficulties of implementing it in a certain direction. If, however, the purpose, as I hope it is, is to ensure that so far as possible, through the Order or any other form of legislation, we enable the best deal to be given to the public—which ought to be the purpose of competition—I would say to the right hon. Gentleman that it is rather too easy for him to make the debating point which he sought to make.

    As I understand the position, there is very little doubt that as a result of the Order, some of those who seek to acquire the smaller properties will probably have to pay more than they do today. This is a pity.

    In seeking to introduce my Bill in 1963, I started from scratch. I knew very little about the profession but, as I approached it, I realised how extremely complex and sophisticated the whole question of estate agency was. The need for qualifications in itself is worthy of a great deal more study than the Monopolies Commission appears to have given it in its Report. Although I sympathise very much with any of my right hon. or hon. Friends who find themselves in office suddenly having to take on a subject as complex as this, I suggest that they should be very careful indeed before they rush to conclusions in a subject of this kind.

    I fear a little bit that in drawing up the Order, certain people had done some work before they came into office and now, having come into office, have been somewhat stampeded into introducing the Order. We know that there are many reasons why this has come about, not least the death of the late lain Macleod. The shifting of responsibilities in Departments consequent upon that has led to great difficulties, and I fully appreciate them.

    The Order needs a great deal more time fully to contemplate than my right hon. Friend the Secretary of State or my hon. Friend the Under-Secretary, who introduced it tonight, has had. I sympathise with them not having had more time. I realise that to some extent this Order has been introduced somewhat precipitately. I have studied this problem over the years since my Bill was defeated, not on merit but simply because, after an all-night sitting we were unable to command enough votes to force the Closure on a Friday afternoon.

    However much I have studied the matter I am absolutely convinced that the ordinary laws of competition do not apply here. We have to give this much more sophisticated study. What we are dealing with is often the biggest capital expenditure to which an individual ever commits himself. Because of this, factors enter the picture which are not present when a person buys sweets, or any other form of commodity. It is not a consumer commodity exercise at all; it deals with something quite different. Because of that it demands a sense of dedication by the profession, an expertise among those carrying it out which does not normally apply.

    It is because of this that I am disturbed by the Order. That is why I was relieved to hear the Under-Secretary say categorically that the Government would consider carefully how this worked out and would be prepared to reconsider it should the prognostications, both of the Monopolies Commission and the Department, prove to be wrong. This is not a matter where we ought to start guessing and taking chances on a somewhat hazardously calculated risk. This needs to be approached in the most scientific way possible. If we study the Monopolies Commission's Report, and if we study what the noble Lord, Lord Kinnoull, said in another place during the debate last week, I would say that there is absolutely no doubt that the Monopolies Commission has not fully comprehended what is really involved in this exercise.

    Because I know how hurried the present Ministers have had to be in assessing all this and how complicated it is, and although I am prepared to let the Order go through, I do so with the greatest misgivings. I hope that my hon. Friend will ensure that the undertakings he has given to watch this carefully will be implemented. In my calculations this will almost certainly put up the prices to those for whom prices should be reduced.

    11.13 p.m.

    I believe that there is a misconception as to what a standard charge means. The Royal Commission took it to mean a minimum charge. The Minority Report of Mr. Tom Roche clearly says that this is not so at all, that recommended charges are something very different from minimum charges. The standard charge of the estate agents is a recommended charge and it is not necessary for an estate agent to stick to that charge. It is mentioned in the Minority Report that there has been no case since the war of anyone being disciplined by one of the professional bodies for breaching the standard charge. It is common knowledge that anyone can go to an estate agent and negotiate a charge. It is not necessary to accept the charge laid down as the standard charge. What is wrong with the recommended charge? What happens in a supermarket? A person sees something labelled "Recommended price 3s. 11d.—our price 3s. 10d." Is that so evil? Yet that is what is being legislated against by the Order.

    Paragraph 3 of the Order says:
    "It shall be unlawful to make any agreement or arrangement … to make any recommendation with respect to the charges made by estate agents …"
    There is value in having a recommended price. If an individual is told by an estate agent that the price for a job is £60 and he regards that as excessive, he may go to a professional body and ask whether it is the sort of price which that body would recommend. But if the Order is passed, it will be a criminal offence for the professional body to give advice, and that seems to be tragic. The "sucker" will be the person to whom the biggest price is quoted, and that is not my idea of fair competition.

    I do not believe that it is right to legislate against the recommended price, although it may be right to legislate against the minimum price. I appeal to my hon. Friend to reconsider whether the Order is right in its present form. I earnestly request him to withdraw it and to change the wording so as to avoid legislating against a recommended charge.

    11.17 p.m.

    In the previous debate, my right hon. Friend the Minister of Agriculture said that we were getting used to the view that "Auntie" did not know best. My hon. Friend the Under-Secretary does not look the part of an auntie, but certainly the hand of some auntie in Whitehall drafted the Order. It is designed to meddle in a profession which on the whole has high and honourable standards.

    All of my hon. Friend's arguments have been answered, but he made one com- ment which I should like to probe. He said, as if there were something wrong with it, that there were 7,000 firms of estate agents. I thought I heard him then say that the Order would have the effect of "rationalising" that number. I do not know what he meant by "rationalising". I suspect that it was a euphemism for exerting economic pressure on the profession.

    I hope that my hon. Friend will consider what the consequences of that might be. We all know that the profession of estate agent has a commercial element as well as a substantial professional element, which is by far the larger. If my hon. Friend believes that the Order will drive out the commercial element, he is much mistaken. What is far more likely is that those who try to set high professional standards and who provide professional services and often give free advice, who are willing to do things which are not always commercial, which are not always quantifiable in profit terms, will be forced to lower their standards and give their clients lesser service. That is the danger of the Order and I hope that, if not tonight, my hon. Friend will think again about this decision.

    11.20 p.m.

    I welcome this Order and I wholeheartedly agree with what the Minister is trying to do. I am rather dismayed that so many hon. Members praise competition but then contradict all the rules of competition, and suggest that as a consequence of the Order there will be increases in the prices of houses. I reject this. The rules of competition will work.

    The Order comes at the finest time, because the profession is being offered the finest of all productivity deals. There is no doubt about it. We have an increasing market for the sale of houses, and an increasing turnover is being offered to the profession. Already we have wider property ownership; in our new policies we are going to increase home building; we are going to offer council houses for sale to sitting tenants. What a wonderful market is being provided for those who will increase proficiency in the profession.

    It has been said that our prices and charges are the lowest in the world, but people who are selling houses in the range from £3,000 to £5,000 have to pay professional fees, and it is not only estate agents whom they have to pay, but others as well, and they think that those charges are a quite considerable amount which they have to pay for simple transactions.

    I for one shall be watching very carefully indeed to see which way prices go, and I shall be questioning Ministers if I find that prices are going in the wrong direction—and that is upwards; because, quite frankly, I think they should come down, and the small property owner must be protected.

    I have said that I reject the idea that prices will increase. People must gear themselves to meet this increased market, and I am certain they will. We are told that those charging low prices will go out of business. If they do that will be because they fail to get continued turnover, but the larger and well-established companies, with their excellent and unequalled reputations of service to home buyers and sellers, can do wonderful service, and can give of their wider experience. If they do then the only chance of their going out of business, if they lower prices, will be that they fail to gear themselves to meet the increased number of sales there are and will be.

    I welcome the Government's action in protecting the lower-wage earner—because that is what this amounts to. I think hon. Members must have faith in competition and I hope that they will not have so little faith in it that they will not do for this profession what they do for others, or say they will make some people put up with competition which they would deny themselves. If it works for others, it should for them.

    11.23 p.m.

    By leave of the House I will try to reply to the many points which have been raised. As I have so little time I hope my hon. Friends will forgive me if I deal with the points of lesser significance at a gallop before coming to the main burden of the arguments.

    My hon. Friend the Member for Hemel Hempstead (Mr. Allason) will be glad to know that it will not be a criminal offence for a society to give advice to a person who inquires what is a reasonable fee. What will be unlawful will be ganging up to concert fees and to fix a scale of charges all the same.

    My hon. Friend the Member for Northants, South (Mr. Arthur Jones) asked whether it would be unlawful to quote charges by telephone. The Order has the effect of making it lawful for the societies to make regulations which are binding on all members to prevent their harassing clients by telephone—the practice to which I referred and which is known as coffin chasing—to persuade the elderly or infirm or the uncertain to sell houses which they may not be willing to sell. That is the purpose of the passage which he quoted from the Order.

    My hon. Friend also asked about the procedure of the Monopolies Commission, and I confirm that the Commission did hear oral evidence as well as taking written evidence from all the seven societies. The only reason why certain persons were not allowed to be cross-examined was that they gave evidence to the Monopolies Commission secretly because of the fear of victimisation which they themselves felt and expressed. I assure the House that there was absolutely no question of anything but the normal and proper procedures being followed by the Commission, and that full opportunity was given to the agents to make their case.

    My hon. Friend the Member for Essex, South-East (Mr. Braine) asked me three specific questions, all of which I should like to answer. I will start with his second one: will other professions be treated in the same way? The answer is that the wider report on the professions in general has now been delivered, and my right hon. Friend the Secretary of State has written to all the professional societies asking them to give him their observations and letting them know what action he intends to take on the report. Each case will then be considered on its merits. The merits are very different; safety, health and other such factors will enter the consideration of each profession, and we shall judge each case on its merits. There is in no sense a vendetta against estate agents—quite the reverse; this happens to be the first case which has come forward, but it is by no means the last that will be considered.

    I can answer my hon. Friend's other questions in relation to the general argument which developed. First, it is impossible to say whether, if the Order were not made, the fees of estate agents would tend to go up or down. Therefore, it is impossible to say, if the Order is made, whether the situation will be better or worse than it would have been if it had not been made. The alternative must always be a hypothesis about which there can be no certainty.

    On the other hand, if the Order is made, there are strong arguments which make it likely that fees will go up less than they would otherwise have done or come down more than they would otherwise have done. If fees are raised unreasonably, it will be open to somebody else to come into the market and to quote lower fees. If any group of agents tends to raise fees in an area, others are likely to try to undercut them. There is another discipline, which is that anyone may sell a house by advertising in the newspaper or simply putting up a postcard in the village shop. This is a strong deterrent to fees being raised. There is competition from processes which cost nothing, and this must act as a downward influence on fees as a whole. Thirdly, if we abolish the rigidity of the present system with its fixed scale of fees, new experimentation in techniques will be encouraged. Such techniques as sole agencies and others that my hon. Friends have mentioned will certainly have an effect.

    Here I come to one of the main questions. It must be right to offer to people the opportunity to buy the standard of service which they wish to have. Several of my hon. Friends asked whether the standards of service would deteriorate as a result of the Order. A customer may wish a lesser standard of service and to pay less for it. This opportunity will be available to him. That is the answer to the first question of my hon. Friend the Member for Essex, South-East. Also my hon. Friend the Member for Leicester, South-West (Mr. Boardman) was very concerned that standards might drop. It is right that standards should remain high for those who wish to pay a higher charge but that for those who do not there should be a lesser service available. That is what the true nature of competition is about.

    There is one other point which I am sure will be greeted with a certain scepticism; it seems to me that if the Order were thought to result in higher fees it would not be opposed so vigorously by the profession. It seems prima facie that the profession would be inclined to give it a slightly less rough passage if it thought that it would mean higher fees and therefore higher profits. Whatever may be the pressure that exists for higher fees at present, the Order is bound to moderate it, and therefore I believe that my hon. Friends are not well founded in fearing the opposite course.

    I must deal in some depth with the question whether the Order will have an adverse effect upon the fees charged for the sale of cheaper houses. The first point to make is that those who are not well off are more sensitive to levels of fees, because they are more determined to get the maximum they can for the house they sell than are those who are relatively affluent. Moreover, they form by far the bulk of the market. It is therefore likely that in order to secure a high share of the market any agent will have to make certain that his charges for the selling of cheaper houses are competitive.

    Secondly, I would remind my hon. Friends that many cheaper houses are of standard design or shape, and that in many cases new houses on housing estates are exactly the same. There is no reason, therefore, why there should not be considerable economy of scale in their sale by agents. This will enable agents, if they wish, to take advantage of economy of scale to reduce the fees they charge for the sale of such houses. Further, the present scale of fees penalises the cheaper houses, because it starts at a higher rate for the lower brackets and tails off in the higher price ranges. There must therefore be some presumption that the effect of bringing in the Order will be to lower the fees charged for the cheaper houses rather than have the effect feared by my hon. Friends.

    Many of my hon. Friends have made much of the suggestion that the fees are not mandatory but merely recommended. I quote first from the Monopolies Commission's Report which, in paragraph 244, says:
    "Moreover such fee-cutters in the past have been regarded as not respectable, have been excluded from the national societies and in many cases have been refused co-operation by local agents."
    Where an agent has attempted to cut his fees or step out of line pressure has been brought to bear upon him by threatening him with expulsion from one of the societies. I quote anonymously from a letter from an agent, which says:
    "We understand from our client that you have been offering his above property for sale and as we have been appointed his main agents we are writing to instruct you to withdraw the property from your books. As referred to in our letter of 22nd May, we regret that we are unable to co-operate with you in this matter as it is not our custom to co-operate with agents who are not members of one of the professional bodies or of the local association."
    That is typical of the sort of pressure put upon agents who have departed from the recommended scale of fees. I would point out to my hon. Friends the Members for Birmingham, Edgbaston (Mrs. Knight), Hemel Hempstead, and Northants, South, that it is not generally found possible to get agents to depart from the scale in the way they have suggested.

    Finally, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Kinsey) put his finger on the point in saying that no competition policy can be credible unless it applies to all. My hon. Friend the Member for Edgbaston said that it would be bound to cause people to shop around and take their pick as between various agents asking various charges. But this is surely what competition is about, and it is what every housewife does when she goes shopping to fill her basket. As the sums of money here involved are very much greater than those involved in the housewife's shopping, there must be every advantage in accepting the Order. But I give my assurance—

    It being one and a half hours after the commencement of proceedings on the Motion, Mr. SPEAKER put the Question, pursuant to Standing Order No. 2 (Exempted Business).

    Question agreed to.

    Resolved,

    That the Restriction on Agreements (Estate Agents) Order 1970 (S.I., 1970, No. 1696), dated 10th November, 1970, a copy of which was laid before this House on 18th November, be approved.

    Clyde Estuary (Industrial Projects)

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

    11.35 p.m.

    I wish to raise the question of future industrial projects on the Clyde Estuary. I asked the Secretary of State for Scotland to reply to the debate: I am sorry that he is not present but has appointed my good friend, the Under-Secretary of State for Development, Scottish Office, to take his place. I am sorry that the right hon. Gentleman has not taken this opportunity to announce his decision on the Hunterston inquiry—a decision he has promised us for so long. I suggest that he is afraid to give us information this evening because he is not yet able to do so. The decision is now out of his hands, and in my opinion is now in the hands of other Ministers who know nothing about the Clyde and even less about the Hunterston project.

    On 24th June, 1969, the Ayr County Council, the local planning authority for the area, submitted to the Secretary of State a formal amendment of the development plan for the area in order to allow the construction of a deep water terminal for ore carriers, a possible integrated steel works in the vicinity and a deep water terminal for oil tankers and oil refineries. That was nearly 18th months ago.

    Since then we have had a very lengthy public inquiry, an equally lengthy time during which the recorder has prepared his report and we are now in another lengthy period in which the Secretary of State has given and is giving consideration to that report. That period still continues. This debate is the end of a long series of Questions and Answers, and a long series of letters from people interested in the result of the public inquiry and in future projects on the Clyde Estuary.

    On 8th July I asked the Secretary of State when we could expect the report to be published and he indicated that it would be out soon—as, indeed, it was. He also stated, in reply to a supplementary question, that in view of its importance to Scotland's industrial future he would try to give a quick answer. On 4th September the hon. Member for South Ayrshire (Mr. Sillars) and myself sent a letter to the right hon. Gentleman asking that he come to a quick decision. He indicated on 22nd September that a decision was imminent. On 5th November, in reply to a Question from the hon. Member for South Ayrshire, he stated that he expected to reach an early decision. In a further letter, dated 24th November, the Secretary of State wrote to me:
    "I said in the House the other day"—
    the other day being 5th November:
    "that I expected to announce my decision very soon."
    It is now 7th December. Reports in the Scottish Press today suggest that the Secretary of State does not know when his decision will be announced.

    The economy of Central Scotland, and particularly of west Central Scotland and the Clyde Estuary, has in the past been built on the heavy primary industries such as the mining of coal, the making of iron and steel, and the building of ships. With the working out of iron and coal, the decline in the demand for coal, and the changed conditions in the shipbuilding industry, new conditions have emerged which constitute a definite and serious threat to the present and future prosperity of the area.

    At the first meeting of the West Central Scotland Steering Committee, recently established by the Secretary of State, senior officials of the Scottish Development Department referred to the accelerating decline of the economy of the region and said that the decline was in its nature and extent beyond anything being experienced or likely to be experienced in any other region of Great Britain.

    It is clear that west Central Scotland and the Clyde Estuary have very considerable economic and industrial problems which can be solved only by the creation of new economic bases to supplement and replace the bases which have been in the past provided by the traditional heavy industries now in decline. These new bases can be established on the fact that we now know that the estuary of the Firth of Clyde is one of the few deep water harbours, not only in Britain, but in the whole of Western Europe. Not only have we this great new natural asset, but we also have in the immediate vicinity flat land ready for development and available to be taken over by the great new industrial bases which we know can be established.

    With the recent and continuing spectacular increase in the size of oceangoing bulk ore carriers and oil tankers, it has become clear that the Clyde Estuary and the Portencross-Hunterston peninsula in particular are able to offer terminal facilities for these large ships with the possibility of appropriate industrial development in the vicinity which are unrivalled elsewhere in Britain and probably elsewhere in Europe.

    The future of Scotland as an industrial nation depends not only on a decision, but on the correct decision. Ships up to ¼ million tons now come into the Clyde. Our friends the Japanese are building ships of up to million tons. Ships of up to ½ million tons are planned. We now have in Scotland a new asset to replace the old traditional asset of raw materials like coal, iron ore and lime stone. No one in Scotland, apart from a very small selfish group in the West Kilbride area, can deny that the Scottish people have the right to use this great natural asset to give us the new industries and the new basis to build a new industrial prosperity.

    I ask the Under-Secretary—I know I shall not get a reply, because he is here tonight so that the Secretary of State will not give a reply—what will be the decisision on the future industrialisation of the Clyde Estuary. The Secretary of State has stated publicly that he thinks that the people in Ayrshire who have been pressing him for a quick decision are being unfair. I am not a very suspicious man normally, but on this occasion I am very suspicious of the Secretary of State's intentions, because of the following list of facts and of evidence that leads me to suggest that the Secretary of State is not coming clean on this issue.

    On 1st August, 1970, the Secretary of State spoke at the Bute and North Ayrshire Unionist Association's annual fête. Certainly officially he never mentioned Hunterston, but from that date it is a strange fact that all of the opponents of industrialisation on the Clydeside suddenly became silent. Did the Secretary of State unofficially tell the objectors to industrialisation at Hunterston of his decision at that date? The hon. Member for Bute and North Ayrshire (Sir F. Maclean) is here, and he knows that what I am about to say is correct: up till that time we had nothing but letters in the local newspapers from the opponents of industrialisation attacking people like myself and my hon. Friend the Member for South Ayrshire for trying to industrialise this area of Ayrshire. In fact, at one stage I was writing four letters a week in reply to opponents of industrialisation. But, immediately the Secretary of State finished speaking at the Unionists' annual fete, all these letters ended.

    I am not a suspicious man, but I would say that any normal person would be slightly suspicious, especially when he knew the people concerned.

    The hon. Gentleman should give way when he makes an allegation of that kind.

    The second point to which I draw attention is that at the end of August I wrote to the Secretary of State asking him why he had not come to a decision, and suggesting that because of the delay the oil company had changed its mind and was going to develop on the Continent. We had received word in Ayrshire that the Chevron Oil Company had shut down its site investigation office in London and had transferred it to Brussels, that the company was going to use the available capital, not to build an oil refinery as part of this industrialisation scheme but to build oil refineries on the Continent of Europe. I also said at that time that by his delay it looked from the evidence available as if we were going to lose this great industrial asset of an oil refinery upon which we were going to base the petro-chemical industry in order to get industrialisation going in the west central area of Scotland.

    On 10th November I again wrote to the Secretary of State, following publication of an article in the Glasgow Herald by Mr. Arthur Bell, the Scottish Divisional Officer of the Iron and Steel Trades Confederation. In this article it was suggested that there was no mention of Hunterston in the future plans for the expansion of the British steel industry. I again suggested to the Secretary of State that because of his delay in coming to a decision on the Hunterston inquiry we were allowing the enemies of Scotland in the British Steel Corporation the right to ignore Scotland and to transfer their attention to other areas in the United Kingdom.

    In the same letter I suggested that the delay in making a decision was because of pressure from other Ministers in London, that the decision had been taken away from the hands of the Secretary of State and handed over to other Ministers. I did this because we had had in this House statements about the Government's intention on capital investment, especially capital investment in the public sector, and this Government's policy of a cut-back in capital investment, especially in the public sector, had given other Ministers the right to say what should be the decision on Hunterston.

    In reply to that charge, I received a letter from the Secretary of State on 24th November denying my charges and stating again that a decision would be given at a very early date. But, on the previous day—that is. 23rd November—articles from political correspondents appeared as if by magic in every Scottish morning and evening newspaper. I know that my friends in the journalists' profession have a habit of seeking out information. That is their job. Sometimes one of them can make a breakthrough and get a "leak". But when every one of them gets a "leak", then I am suspicious, especially when the "leak" comes out on Monday, and when we know that in Scotland most of the licensed premises—which is where most of the information comes from—are shut on the Sunday. That also leads me to be suspicious.

    What was it that came out through that leaked information, which could only have come from the Secretary of State? The Glasgow Herald, 23rd November, 1970:

    "Decision soon on Hunterston project … in about a week's time. Mr. Gordon Campbell, Secretary of State for Scotland, is aiming to announce his findings by the end of this month, and the signs are that it will be within a day or two of that target."
    The Daily Express:
    "Go-ahead likely for steel plant. Campbell's decision soon … It now appears that Mr. Campbell has made his decision and will announce it by the end of the month."
    I do not object to any Minister giving advance information to the Press and stating that at a certain date he will make a decision. What I object to is that, although we have been trying in Parliament and in other ways to get a decision from the Secretary of State, we find that he gives his decision in private to journalists, a decision which he refused to give to right hon. and hon. Members. [HON. MEMBERS: "No."] I see the Under-Secretary of State shaking his head. I am not objecting to the Minister saying that he will announce a decision by the end of the month. I object to his giving the actual decision to the Press.

    The proof is here. If the hon. Gentleman spent more time in Scotland and read the Scottish papers, he would know more of what is happening.

    I am sorry, no. I have only a certain time. If I finish early, the hon. Gentleman will have an opportunity.

    Order. Both hon. Members know the custom of the House. If the hon. Member who has the Floor does not give way, the hon. Member for Perth and East Perthshire (Mr. MacArthur) must resume his seat.

    I am sorry, no. In the report in the Daily Express, it is said:

    "Scottish Secretary of State Mr. Gordon Campbell is expected to give the go-ahead to the multi-million pound steel complex planned for the Clyde coast."
    He was gradually conditioning the Scottish people to accept that we were to have some industrialisation, and that, as a result of the Hunterston inquiry, we were to have this multi-million pound steel complex. But he also said, according to the Daily Express—
    "Chevron's plan is expected to be turned down on the ground that it will spoil the amenity and tourist potential of the area."

    Mr. Leslie Anderson, along with every other reporter in Scotland who was given this statement by the Secretary of State or by one of his officials on the Sunday, for publication on the Monday.

    The only concrete application which the Ayr County Council has for industrialisation is the application from the Chevron Oil Company to build an oil refinery in the area. The Secretary of State, if these reports are correct, is about to turn down Chevron's application, and in so doing he will deny to the unemployed, and those who have just been warned of redundancy, the right to take part in the 2,000 or 3,000 jobs which would come directly from the construction of that oil refinery. The other projects are projects for the future. The steel mill is for the later 1970s and the 1980s. The oil refinery could give us an immediate start with 2,000 or 3,000 jobs.

    The Secretary of State leaked the information to the Press in an effort to condition the Scottish people to accept—

    It is not that I am objecting to the fact that the Secretary of State, by leaking this information, has tried to condition the Scottish people to accept that we are going to get this great industrial project right away. What I am objecting to is that on a previous occasion, he stated that his decision would be his own and would not be conditioned by what is happening in London. In my opinion, and from the information I have, the Secretary of State expected to make a decision on Hunterston by the end of November but that decision was sent to London and was modified, and the Secretary of State is studying the modification and will have to change his original decision because of pressures from Ministers in London.

    In Scotland, unemployment is rising. We have now about 100,000 unemployed. Six per cent. of males are out of work. The latest figures, published this week, show that Scotland's proportion of the United Kingdom unemployed is rising for the first time for a number of years. The Government's statement today on industrial development certificates will mean that Scotland will no longer provide an incentive for small firms to develop there. In my area we are getting nothing but redundancies after redundancies. Even an old established firm like I.C.I. at Ardeer, with a hundred years of history there, is declaring redundancies. It is a disgrace that the Secretary of State has taken so much time to consider this report. I ask the Under-Secretary of State to give an assurance that the report will come out as soon as possible.

    11.58 p.m.

    I am sorry that the hon. Member for Central Ayrshire (Mr. Lambie), who was lucky enough to get this debate, has not given me enough time decently to reply to the allegations he made. He might at least have given me time to reply properly.

    I do not wish to be unkind or unnecessarily impolite, but I would say to him that in expressing his political differences he has made most disgraceful accusations against my right hon. Friend the Secretary of State, who is not the sort of person, as the House knows, who would on any occasion on any matter where an inquiry of this sort was involved leak information to the Press or to other people behind the scenes.

    It would have done the hon. Member's case a great deal more good if he had confined himself to making political arguments as well and strongly as he can make them without descending to unsupported and unsupportable allegations against my right hon. Friend. I can think of nothing more extraordinary than his suggestion that the decision is out of my right hon. Friend's hands.

    As I am sure the hon. Member for Greenock (Dr. Dickson Mabon) will agree from his experience at the Scottish Office, the final decision as the result of a planning inquiry is a matter for the Secretary of State and the Secretary of State alone. Any idea that it could be shuffled off by him on to anyone else is fanciful and without regard to the facts. I hope the hon. Member will take this from me in the best possible way.

    The hon. Member may possibly not fully appreciate the procedure for public inquiries in planning matters, which is what really lies behind what he has said. We should address ourselves to what that procedure aims to do and I want to refer first to whether my right hon. Friend should be here to answer this debate. The hon. Member has not been long in this House and he may be unaware that it is very rare indeed for a Secretary of State or any other Cabinet Minister to answer an Adjournment debate. I am sorry that the hon. Gentleman does not appear to think that I am adequate to do so. But it is normal procedure for the junior Minister concerned to answer these debates, and it is a practice which almost invariably has been followed by Governments of all parties in the past. My presence at this Box is no exception to this procedure. The fact that the hon. Gentleman has had correspondence with my right hon. Friend the Secretary of State gives him no prescriptive right to expect the convention to be broken in his case.

    The hon. Gentleman's speech suggests that he has some misapprehensions about inquiry procedure and about my right hon. Friend's functions. Where objections are made to planning applications on changes in development plans and a public inquiry is necessary, the Secretary of State appoints a reporter. In addition to the conduct of the inquiry, the reporter is responsible for summarising the evidence, presenting his findings in fact and making recommendations. The Secretary of State must base his decision on the evidence presented by the reporter and on the reporter's findings in fact. If he proposes to do otherwise, he must notify the parties to the inquiry.

    I emphasise this because it is wrong to suggest that the Secretary of State has an absolute discretion to accept or reject the evidence summarised by the reporter or the conclusions which the reporter has drawn from it, or to substitute any decision that he likes for the reporter's recommendations. If he does, he may be landed with an appeal to the Court of Session to set aside his decision, at great cost in time and money to all concerned. The regrettable history of Tweedbank, where the first move was made almost four years ago, is a warning of the dangers if the procedures are not followed. Accordingly, in a matter of this kind, my right hon. Friend has no alternative but to give close and detailed consideration to every aspect.

    Let me refer now to the time factor. An inquiry in this case was inevitable and, after the necessary processes of preparation, including the circulation of more than 400 documents to over 100 parties to the proceedings, the inquiry began on 17th November last year. From then, it ran with the minimum of interruption until 13th February. In all, the reporter sat for 42 working days and, in addition, four days were spent on site inspections. His report is dated 30th July. My right hon. Friend has said that he intends to make an announcement very shortly, and that is still the position today.

    No, I cannot give way. Slightly over four months have elapsed since my right hon. Friend received the report of the inquiry. The hon. Member for Central Ayrshire, regards this as indicating unwarrantable delay. He cannot have done much homework. I accept that it is impossible in inquiries to compare like with like. But, though this may not have been a unique inquiry, it was very unusual. It was one of the longest inquiries ever held in Scotland. Perhaps the most relevant comparison is with the Murco case, where the inquiry lasted 31 sitting days, the report ran to 59 pages, and the time between report and decision was 117 days. The Hunterston inquiry lasted 42 days, and the report runs to nearly 200 closely typed pages. It is now 130 days since my right hon. Friend received the report. I should have thought that these figures would have been sufficient to satisfy any hon. Member that there had been no unavoidable delay.

    Without becoming involved in the merits of the case, I would argue that the issues involved are, in some respects, of greater economic importance to Scotland than in any other previous inquiry. Whatever my right hon. Friend does, he will undoubtedly be criticised. That is to be expected. But what is not to be expected is that he should leave himself open to criticism for having dealt with this massive issue in a slipshod fashion.

    I hope from what I have said that the House will accept that this was no ordinary inquiry and that the issues are no ordinary issues. I cannot say what my right hon. Friend will decide in the light of the report, but, whatever his decision, it will have consequences running through this decade and no doubt for a long time ahead.

    Faced with issues on this scale, we know what the hon. Gentleman would do if he were Secretary of State, and it is a sobering thought. In his letter of 10th November to my right hon. Friend, the hon. Gentleman said:
    "… it is inconceivable that you should need to consider a decision on the Hunterston project."
    After 46 days of intensive inquiry, an enormous report containing detailed facts, analysis and recommendations on issues which will have nationally significant consequences, the hon. Gentleman would have my right hon. Friend ignore it all and treat it as a mere piece of window dressing.

    The allegation of delay will not stick, and when my right hon. Friend makes his announcement it will be clear that he has given the matter the exhaustive consideration which it requires and deserves.

    I can understand the hon. Gentleman feeling strongly about the need for industrial development at Hunterston. Others feel equally strongly about preserving at all costs the amenity there from industrial incursion. Most of us have publicly expressed views on this, though not all of us have done so in such extreme terms as the hon. Gentleman. I am on record about this, and so is my right hon. Friend, who initiated a debate in this House 17 months ago on planning and development in the Firth of Clyde. But the question before him—

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

    Adjourned at five minutes past Twelve o'clock.