HC Deb 25 March 1959 vol 602 cc1405-58
Mrs. Barbara Castle (Blackburn)

I beg to move, in page 2, line 11, at the end to insert: having regard to the rates of interest applicable at the time for loans to local authorities in the United Kingdom by the Public Works Loan Board".

The Temporary Chairman (Mr. John Arbuthnot)

I think that it would be for the convenience of the Committee if we discussed with this the next three Amendments, in page 2, leave out lines 12 and 13 in line 12, leave out from "fixed" to end of line 13 and insert: according to the purposes for which the loan is required", and in line 13, at end insert: so as to take account of the general economic situation existing at the time in the territory".

Mrs. Castle

I speak on this group of Amendments with all the more optimism in view of the remarks made by the Under-Secretary of State for the Colonies in reply to the Amendment on the previous Clause. The hon. Gentleman seems to be realising that we on this side of the Committee feel very strongly that this Clause is one of the most important parts of the Bill and as it stands is quite unsatisfactory, particularly when taken with the White Paper on the Colonial Development and Welfare Acts and the interpretation which it puts on the terms on which the loans are to be made.

The purpose of the four Amendments is to challenge the onerous terms under which, according to the Clause, this type of Exchequer loan is to be made. We, of course, welcome the principle of supplementing private loans raised on the London market with the issue of Exchequer loans. We feel that it is a valuable step forward for the Government to realise that the Colonial Territories would benefit by having loans raised with Government credit behind them, but surely the purpose of having Exchequer loans is that the terms should be easier for the borrowing Governments and not worse than those which private enterprise would give.

7.30 p.m.

We have, not so much in the terms of the Bill as in the interpretation put on this Clause in the White Paper, the revelation that the Government are doing two things at the same time. On the one hand, they are recognising the need for Government help to supplement private loans and, on the other hand, they are making the terms less attractive than the existing facilities on the London market. This is leading us into a ridiculous situation. The hint dropped by the Under-Secretary of State for the Colonies shows that the Government realise that their case on this will not bear examination.

The aim of the Exchequer loans should be to close the gap in colonial finances which private loans have failed to do. Therefore, they should be issued on infinitely more attractive terms. It is our view on this side of the Committee that development capital for colonial and under-developed territories should carry specially low rates of interest. They should not be merely no more onerous than the terms on the London market but they should command specially arranged low rates of interest. We make this point not only in our colonial document, "Economic Aid", but also in our other policy document, "Plan for Progress" where we state: Whatever the prevailing level of market rates, there is a case for financing some types of investment at specially favourable rates of interest which reflect the Government's power to borrow. We put high in the list of that kind of investment development capital for Colonies and under-developed countries.

What do the Government propose? I repeat, not so much the Bill itself—and that places us in a difficulty because this Clause merely leaves to the Secretary of State the fixing of the terms of the loan—but the White Paper makes it clear that the proposal is, first, that the Secretary of State will expect all Colonial Territories wishing to take advantage of these loans to look first to the London market and to regard the Exchequer in this context as a lender of last resort. Those were the Colonial Secretary's own words during the Second Reading debate.

Secondly, the White Paper tells us that the rate of interest which will be charged on the Exchequer loans will be 1¼ per cent. above the rate at which the Government provides loans for a number of public corporations. It has been estimated in The Times and elsewhere, and not challenged by the Government, that this should work out at about 5¾ per cent. Thirdly, the White Paper states specially that the loans will be repayable by …equated annual instalments of principal and interest combined. This will mean a very heavy burden on the borrower. In fact the White Paper admits that …the annual cost to the borrower of servicing an Exchequer loan is likely to be above the annual cost of servicing a market loan. So, I repeat, far from the Government adopting the point of view that they should put their credit behind the Colonial Territories to enable them to borrow at specially favourable terms, Government Exchequer loans will work out at a heavier annual cost of servicing than do private loans.

This is to render nugatory the value of the loans and we are at a loss to understand why it should be suggested, in view of the evidence produced in the earlier part of this debate, that they will begin to meet the needs of Colonial Governments. Indeed, there are many precedents for establishing that the Government themselves recommend that in certain circumstances Colonial Territories should not only borrow at specially easy rates of interest but should be given interest-free loans. Under the 1955 Act there was the example of Jamaica, for instance, which was given an interest-free loan of £1 million to enable her to establish a banana price stabilisation fund. There has been an even more recent example of interest-free loans being given to a Colonial Government, namely, Kenya.

The Minister of Finance for Kenya, Mr. Vasey, has announced recently that Kenya is to draw in 1959–60 a last instalment of aid from this country towards the cost of the emergency there, and the last annual payment will amount to £1,600,000. Mr. Vasey has pointed out that £800,000 of that will be grant and £800,000 interest-free loan. He also points out that in the period of the emergency ending March, 1960, Kenya will have been given, in addition to a grant of £25 million, an interest-free loan of over £6 million.

If it is right to make an interest-free loan to enable that Colonial Territory to deal with an emergency which has arisen from political unrest, surely it is all the more expedient to make interest-free loans to deal with the economic situation which may be helping to create the political unrest? What is good for Kenya is good for all the other Colonial Territories which are in the list of those needing our aid. It is intolerable that we should, on the one hand, recognise that many colonial Governments are facing acute financial crises and large budget deficits and, on the other hand, proclaim it as an act of policy that the Government propose to close that gap and enable them to meet their deficiencies by Exchequer loans which will actually increase the burden upon them. This is merely to postpone the solution of their difficulties and not to provide the solution.

It is not good enough as a solution of the problem we face. Even the Russians can do better than this. They have just made a loan to Iraq of £49 million at a rate of 2½ per cent., in addition to grants of free technical assistance for mineral surveys, for expert advice on industrial development, on irrigation surveys, road networks and the rest. We cannot begin to solve our colonial problem if we are thinking in terms of financial mechanisms which are even more onerous than the purely commercial terms of the London market loans.

In the Second Reading debate the Colonial Secretary made the point that colonial Governments have relied on external borrowings to meet the gap between their needs and their resources, plus colonial development and welfare grants. He also recognised, as did the Under-Secretary of State this afternoon, that the increased burden of recurrent charges which has to be met on the capital work that has already been carried out, further restricts the ability of colonial Governments to provide capital sums from their own resources. It is because colonial Governments are at this moment having to balance budgets which would be unbalanced by the weight of those recurrent charges and the fall in the revenue from their primary products because of the fall in commodity prices, that they are having to borrow on terms proposed in the White Paper.

In fact, what we are expecting colonial Governments to do is to balance tomorrow's budgets by mortgaging the budgets of subsequent years. Not only have those Governments to face the high rates of interest imposed by the Government but they have to face the provision that loans are to be repaid in equated annual instalments of principal and interest.

When we raised on the Second Reading this question of repayment the Under-Secretary of State said, "Oh, but this is quite a common practice", and that in fact the Labour Party had introduced it in relation to the Colonial Development Corporation. Of course, the terms of the loans for the Colonial Development Corporation were slightly different from that. Those loans were granted with a seven-year moratorium on repay- ment as a start, and the repayment of principal started only in the eighth year.

This is the same principle as applies to the Kenya loan to which I have referred. This is a loan to help Kenya to meet the cost of her emergency. This loan is not only interest-free but it has an eight-year moratorium on capital repayments, as far as we were able to understand from the White Paper. We should like detailed enlightenment on this point.

There appears to be no such moratorium proposed in loans under the Bill. The territories which in their desperation are having to borrow this money, will be faced immediately with the first annual instalment of repayment of principal, plus a crippling rate of interest. It is, therefore, not accurate to say that these loans will in any way close the gap.

The Under-Secretary of State knows perfectly well that many of these colonial Governments are managing to get by financially at the moment only as a result of short-term advances. They have to draw simply to close an urgent budgetary gap. It is because of the necessities of that situation that the Government are introducing Exchequer loans, yet the terms under which the Government are coming to their aid and supplementing the facilities on the London market are such as merely to postpone and exacerbate the crisis which the loans are supposed to meet.

7.45 p.m.

The Colonial Secretary made this clear in the Second Reading debate when he pointed out that for the next five years colonial Governments must be able to rely on a basic minimum of external loan finance. He indicated that colonial budgets could be balanced only by the help of external loans and that the internal resources of the territories would be inadequate. Grants under the colonial development and welfare scheme will also be inadequate. The Colonial Secretary himself is on record as saying that the gap in the development budgets for the next five years can be closed only by external loan finance.

What is the purpose of these loans, then, if not even to enable colonial Governments to expand their ideas of development and expand their development programmes to close the gap in the existing development plans? Therefore, unless these development plans are actually to be cut, the territories have to borrow this money. The only two places where they can borrow under the Government's proposals are the London money market, in competition with all the industries in this country and outside, and under intense competition at a time of inflation; or by Exchequer loans which, on the Government's own admission, will place a heavier annual financial burden upon the borrowing Governments.

This is the situation, after all our talk of encouraging colonial development, all the suggestions made by the Under-Secretary of State earlier, and the impression that he gave that the Government are anxious to meet all the development plans that colonial Government cared to put forward, that money was no object and that it was simply a question of the internal possibilities of each Colonial Territory. In this provision we have a situation which can lead, unless the Bill is amended, to the reduction of the development plans, because the cost of closing the gap by these means will be too heavy for Colonial Territories to face.

The Government's excuse, given when we raised these questions in the Second Reading debate, was, "If we made Exchequer loans on terms that all colonial Governments could afford, everybody would want Exchequer loans and there would be a run upon them". The Government said that this would be very unfortunate. It was desirable to encourage colonial Governments to go to the London market in preparation for their period of independence. It would help them to establish their credit-worthiness.

I find it difficult to believe that the Under-Secretary of State advanced that argument with any seriousness. What establishes the credit-worthiness of a Government is surely their ability to repay. We do not establish credit-worthiness by compelling them to accept financial burdens which are so crushing that they must either cut their development programmes or default. It is economic and welfare development alone which will establish the credit-worthiness of these Governments and while I hesitate to use the words "piece of hypocrisy", it must appear to be a piece of hypocrisy to advance an argument like that to Govern- ments which are struggling with such financial difficulties.

The Under-Secretary also made the point that rates of interest will not always be at the tremendous height they are now, and that conditions may change again. Indeed, they may. We may have a Labour Government, and we shall not have this inflationary situation and its very dear money concomitant. The point is that it is just at the time when these Governments will most need the Exchequer help that the rates of interest will be most high, because of the pressure on the money market.

The Under-Secretary said on Second Reading that he had often thought that there was a case for preferential loans, and that he had made various speeches about them. I hope we shall hear that sort of speech from him tonight. In making that speech, he said that there was a case for preferential loans, but he thought not in this context. Will he please explain why not in this context? Surely, this is the context of all contexts in which preferential loans are justified? I challenge him to say, if not now and in this context, when and in what context?

We have the evidence tonight of the urgent need of the Colonial Territories, and we are not going to help the colonial Governments by saying to them, in the first place, "Go to the London market to close the gap," and by repeating time after time, as is done in the White Paper, that only when they have been to the London market and have been decisively rejected, not only in London but everywhere else, only when they are desperate, can they come to us as a last resort, and that then we will see that the terms are financially more onerous than they would have got from the London market, because, otherwise, our sanctions would not work.

I suggest to the Under-Secretary that what is holding up, to some extent, the development plans of these territories is, as he rightly said earlier, the burden of recurrent charges. We cannot close that gap by loans on these sort of terms. The way to do it, as my hon. Friend said, is rather to see that we allow colonial development and welfare grants to be made in order to meet some of these recurrent charges, but certainly we shall not get the colonial Governments to carry the burden of these recurrent charges with a Bill such as this, and with the sort of rates of interest involved if the colonial Governments have to borrow under the terms of this Bill.

Therefore, we press these Amendments with all seriousness, and we hope that the Under-Secretary may be able to announce a really substantial concession here tonight. I repeat that, in our view, what is needed is that Government credit should be used to give the Colonial Territories rates of interest far more in the range of 2 or 2½ per cent. We also want to know whether these new provisions will mean that in future it will no longer be possible for territories to borrow on an interest-free basis, as Jamaica has done in the past. Will this rule out the kind of provision which has already been made, because there is a developing area in the Colonial Territories in which interest-free or very cheap loans are needed.

Let me give one example. The development of co-operative marketing inside the Colonies is one of the most important and hopeful developments on the economic side. Co-operative marketing organisations in these territories today have an annual turn-over of something like £100 million. If this is to be developed, with all its potentialities for the African producer, the farmer, the peasant absolutely on the bottom rung of the economic ladder in these territories, what is needed is the establishment of co-operative banks. If that is to be done, such banks must be provided with cheap initial working capital so that they can make short-term advances to member cooperatives against the realisation of their crops during the hiatus that comes before harvest time.

That is the basis of co-operative finance, and the Colonies urgently need lifeblood of this kind being pumped into them. That has to be done through cheap or interest-free loans. These provisions will only make the position worse.

Mr. John Tilney (Liverpool, Wavertree)

I have followed with interest the arguments of the hon. Lady the Member for Blackburn (Mrs. Castle), and I think that her argument is a little specious. So far as I can understand, she is arguing that artificially low interest rates are the only way of helping the Colonial Territories. Is not that really the argument of the old days of austerity in this country, when goods were in short supply, as, indeed, capital is in short supply all over the world today? If the hon. Lady accepts that argument, she must accept the rest that goes with it.

There is a very strong argument in favour of helping the underdeveloped territories of the Commonwealth, but I personally would much rather see some form of tax concession to private enterprise. The hon. Lady was very sceptical about private enterprise, and suggested co-operative banks. She is probably ignorant of the very large sums which have been advanced to farmers in West Africa by private enterprise today, which cannot be repaid for one, two or three years, at extremely low rates of interest, and frequently at a loss.

I must declare an interest as a director of a West African firm, but I can assure the hon. Lady that very large sums have been advanced, certainly to farmers in West Africa, over many decades. I am not saying that more could not be done, but I wish the hon. Lady would not continue to decry private enterprise completely. Surely, a loan, if it is to be made properly, should bear its market rate of interest, depending on the credit-worthiness of whatever territory may be concerned.

The hon. Lady referred to that creditworthiness, and also mentioned the great gap in development plans which there might be if money were not forthcoming. Of course, many development plans in many of our territories should be very much larger, but capital is in very short supply, and the only proper way of allocating that capital, in my view, is to see that it is properly used. It will only be properly used if the territories which receive that money spend it wisely.

Not always has the money which these territories themselves earned has been wisely invested. The hon. Lady referred to a 2½per cent. rate of interest. It is a pity that, during the time of the Labour Administration, many of the funds that accrued to the raw material producing territories were invested, through the Crown Agents, in 2½per cent. Treasury Bonds—the so-called "Daltons", which are now halved in value. Surely it is essential that money should be properly allocated, and that these territories should learn to finance themselves in an able way, and not dissipate the resources that they may be given.

We are discussing loans which ultimately will be given by the Government but raised from the taxpayer. Therefore, it is surely important, whatever the territory that is granted a loan, that it should have behaved properly to the people who have helped develop it in the past. I refer to one or two countries in West Africa which have forgotten the civil servants who were engaged in helping their development in past decades.

8.0 p.m.

Nigeria and Sierra Leone have not treated their civil servants in the same way as many territories, such as Malaya or even East Africa. Those civil servants have no one to speak for them. They have only a few votes scattered up and down the country and they have no "lobby". It is surely important, if we are to give British taxpayers' money, or to lend it, to territories, to bear in mind those who have looked after their former servants well. I know the difficulties which both Nigeria and Sierra Leone have had to face in the past, but if we can bear in mind, when we make advances which I hope will be made, that some territories have treated our people better than others, we shall have the helpers of the future for development which we all want to see.

I welcome this new development of loans, but I urge the Under-Secretary not to give way to the persuasions of the hon. Lady.

Mr. Philips Price

Our Amendments are aimed at introducing some elasticity into the financing of projects for colonial development. We think that the Minister should have power to finance at more favourable rates those enterprises which are likely to take longer to mature.

All these enterprises are different in their nature and in their rate of maturity. For instance, some investments would get fairly quick returns, such as those in development of roads, hydro-electric schemes, and harbours. I should not think it necessary to advance money to a Colonial Territory which was not in any serious difficulty for enterprise of that kind to be granted at particularly low rates. On the other hand, most of the development in Africa, at least that con- cerning land tenure, agriculture and forestry, is a long-term affair. Countries which are not strong in finance should have special rates for that kind of development. We do not think it fair to expect them to make their development dependent on the vagaries of the London money market.

Only in the autumn of the year before last we had a 7 per cent. Bank Rate and a state of affairs in which borrowing generally was extremely difficult. It is absolutely vital for long-term development that investment of the kind to which I have referred should be insulated against the vagaries of the money market, which would not so seriously affect enterprises of a quicker maturing nature. Particularly, welfare investment in education, building of universities and technical colleges, is of a kind involving enterprises which do not mature quickly and, when they do, they do not take a directly economic form.

That development is absolutely vital for underdeveloped countries, because it is no use investing in schemes unless there are people to run them when they have been provided. Technicians and engineers of all kinds are needed. We must give the Africans the opportunity to take on those jobs, but that takes years. All these Colonial Territories require special financial assistance. It is not good enough to say that they must rely mainly on the London money market.

When I was in Kenya, a few years ago, I saw interesting forestry development in the Mau forest and elsewhere. Such developments will all take time, but eventually they will bring about an improvement in an area threatened by erosion. One is particularly concerned with questions of agriculture and land tenure. For instance, in the Elgeyo and the Kiptagish tribes, in Western Kenya, I saw developments in farming with modern machinery. They had been taken out of the old tribal areas where no real development in cultivation was in the least degree possible so long as they were dependent on the old tribal laws and customs.

The interesting Swynnerton Report refers, on page 55, to the great need for improvement in developing credit for agriculture. I grant that a lot of this can be done by private enterprise, as the hon. Member for Liverpool, Waventree (Mr. Tilney) pointed out, but I do not think that private enterprise can, in all cases, be sufficient. Nor, even, can co-operative banks be sufficient without assistance from Government loans at favourable rates of interest. It is extremely important that land banks should be formed, and banks which can finance the African farmer to buy modern machinery.

When he has his farm the African farmer has cut out the old tribal customs and wants machinery. In the two areas to which I have referred I saw farms which would do credit to any good farmer in this country, or in America. All this requires capital and we cannot expect quick returns without assistance. The African farmers need special assistance in the form of low rates of interest.

It will not do to leave it entirely to private enterprise. A country like Kenya can find opportunities both for public and private enterprise. I suppose that is true of other territories which I have not had an opportunity of seeing. This is the kind of thing we have in mind in proposing these Amendments. We ought to insulate long-term investment for economic and social welfare from the vagaries of the London money market. I am not saying that it is not important for the development of these countries, but by itself it is not enough. We ought to have a much more flexible policy in dealing with these development problems.

Mr. Oram

My hon. Friends have made an outstanding case for favourable rates of interest in general. I wish to call the attention of the Committee particularly to the last of the Amendments which we are considering now. It seeks to put into the Bill the requirement that the terms of the loans shall be variable according to the economic circumstances of the borrowing country.

As it stands, the subsection to which the Amendments refer enables changes to be made in the terms, but does not lay down any guidance or any conditions according to which those changes are to be made. As my hon. Friend the Member for Blackburn (Mrs. Castle) said, it is left entirely to the Secretary of State. One suspects that what is intended in the subsection is that changes shall be made only in relation to alterations in the money market. What we think is very necessary is not only that the terms should be favourable, but that they should also be capable of being made more favourable when the borrowing country falls upon bad times.

These Colonial Territories, for two very good reasons to which I shall come shortly, are only too liable to fall upon bad times very suddenly. As was emphasised in an earlier debate, their economies sometimes depend very much on one, two, three or four primary commodities for their export earnings. As was also emphasised, the prices of these primary commodities are subject, and have over the decades been subject, to violent fluctuations. As a consequence of the dependability of the territories on a few commodities and the liability of vast fluctuations in the export earnings of their commodities, these territories are especially vulnerable.

May I give one or two brief examples? Almost 100 per cent. of Gambia's exports is in ground nuts. Almost 100 per cent. of the exports of Mauritius is accounted for by sugar. Coffee and cotton represent together 85 per cent. of the total exports of Uganda. The same is true in varying degrees of practically all the Colonial Territories with which we are dealing. I will not weary the Committee with the prices of these commodities. I think that it is sufficiently well known that their prices can change quickly from one year to another.

May I give but one example which I think is especially striking? In 1954 and 1955 the quantity of coffee exported by Tanganyika was almost exactly the same. In 1954 the exports of coffee earned for Tanganyika £10 million, but in 1955 almost the same quantity of exports earned just under £7 million. That is very good evidence that this type of economy is liable to run into difficulties at very short notice.

For that reason, we feel that the terms upon which these loans are granted should be flexible and it should be possible to relax the interest payments at a time of crisis in order to help the territories out of any difficulties into which they might run at any moment.

8.15 p.m.

I wish finally to make a comparison with a loan in which we were the borrowers. It is not unknown for international loans to be flexible in the way that I have suggested and the way that our Amendments suggest. Incidentally, the American loans were at 2 per cent. rather than at the money market rates suggested for these loans but, leaving that aside, the other terms of the American loan provided that, if this country ran into particularly difficult times, there was the possibility of suspending the repayments of interest. Quite recently, immediately following the Suez episode, this Government were only too eager to seize that opportunity in order to get themselves partly out of the difficulty which they had themselves created. There was no repayment of interest on the American loans either in 1956 or 1957.

Is it right that we as borrowers should not only negotiate, but eagerly seize upon these waiver clauses, unless as lenders we are prepared to do to others something that is equally to their advantage if they run into particularly difficult circumstances? That is why the group of Amendments is intended to enable the borrowing Colonial Territories to have terms allotted to them which are comparable with their varying economic circumstances over the years.

Sir L. Plummer

I want to address myself to the Amendment standing in my name, in page 2, to leave out lines 12 and 13.

The Under-Secretary will be aware that what I seek to do is to delete from the Clause the words and different terms may be fixed for portions of the loan issued at different times. That is not mandatory. The word "may" makes it clear that considerable latitude is allowed to the Secretary of State, but nevertheless I am concerned with the implications that exist if the words remain. Any major development scheme in a Colonial Territory seeking a loan has to be phased.

Let me give an example. Suppose that a colonial country decides that it will build a cement works, an electricity generating and distributing plant, or some roads. Despite what the Secretary of State said on Second Reading that the availability of technicians is much greater today than it was a few years ago—I am still agreeing to a very large extent with what he said—the public works departments of Colonial Territories are, on the whole, hard put to it to get on with the job they have in hand. The development of a scheme large enough for them to ask for loans through the C.D. and W. funds would put quite a strain on them, with the result that they would have to phase the work. It would be impossible for them to undertake in a short period of time—they may not be able to undertake it in the five-year period—the completion of the task for which they sought the loan.

They might build the works, but they might not be ready to put in the generators and dynamos. When they come to consider the economic liability of the scheme, they have to cost it. If they can go to the Government and ask for a loan to build the electricity works, the cement works or the roads and they know for sure how much it will cost them from the beginning of the operation to its completion, they can estimate carefully and properly. They then have some measure of control over the burden of recurrent charges, of which we have heard so much today. On the other hand, if they have to ask for a loan in instalments, as it were, not knowing from instalment to instalment what rate of interest they will have to pay, it is quite impossible for them to assess what the recurrent charge will be, or even to make a fair assessment of the ultimate cost of the product to the consumer.

It could be argued, I suppose, that they could ask for the whole sum even though they could not complete the project in one or two years. They would not want to do that, of course, because they would then be paying interest on a loan most of which they could not use and would, therefore, be adding to the burden of their recurrent charges.

Would it not be better, therefore, to consider that when a colonial country asks for a loan for a development which the Colonial Secretary approves but which will take rather a long time to complete, the borrower should be assured that the sum required, and agreed, shall be lent at a flat rate of interest from the beginning to the end of the operation? There would be no confusion or dubiety in their minds as to what the total interest would be. The Government would say, "We quite recognise your position. We understand that you will want this money in the future and that it would be wrong and wasteful for you to have it all at once. Nevertheless, we will make the loan at a fixed rate of interest for the whole purpose of the project."

I have tried to make the point as clear as I can to the Under-Secretary, and he has once or twice given an indication that he has understood what I have said. Therefore, when he replies, I hope that he will bear in mind that my effort is to reduce this burden of recurrent charges, which I think might be heavier if the lines I seek to delete are left in the Bill.

Mr. R. Edwards

This series of Amendments is really a plea for flexible loans. The hon. Member for Liverpool, Waver-tree (Mr. Tilney) said that all we were doing was to suggest that private loans should be discarded. We are doing no such thing. We know that private loans, loans on the London market, Government loans—a whole variety of loans—are required for the underdeveloped territories, and it is for those areas to make their own decision according to their requirements—

Mr. Tilney

What I was trying to make clear was that the supply of capital is limited. If we offer it at an unduly low price we will have to ration it, and it will be very difficult to say which Colonial Territory ought to get the capital.

Mr. Edwards

I am sure that there is a lot of money available. The N.A.T.O. Powers spend £40,000 million a year on defence, and we on this side think that if the purse can be opened wide for defence purposes it should be opened wide for the purposes of constructive peace. It will prevent war in the future, and, certainly, class war in some of the underdeveloped areas. I do not accept that there is this great shortage of capital, but that is not the point here.

We ask for more flexibility. The economy of the territories concerned should be considered. In some, it depends on a single crop or a single commodity, such as rubber, tin, rice, iron ore, cocoa or, as in Sierra Leone, diamonds. If, in circumstances over which those countries have no control, the prices of those products or foodstuffs collapse, the living standards of these poor people are completely shattered.

All we suggest is that some consideration be given to the economies of these countries and to situations created by world crises. Our imports of foodstuffs and raw materials last year were £260 million less than in the previous year, which meant that that much less went into the main primary producing countries, among which are the Colonial Terri- tories whose needs and difficulties we are now discussing.

It is quite easy to get private loans for the development of diamond digging. If one has a great mountain of iron ore that can be exploited with little capital investment, and it is easy to get the ore to the European markets, one can find plenty of capital, though it may well be that such capital investment, while being immediately profitable, will unbalance a country's economy in the long run.

In the Colonial Territories the real need is for capital for long-term agricultural development that may not be immediately profitable. Sierra Leone used to export rice, but now imports it. It used to export great quantities of palm oil. The kernels are still exported, but palm oil is imported to feed the people. Co-operative rice farming is now developing there and has been able, with a very small but strategic capital investment, to reclaim thousands of acres of swamp land which, hitherto, have grown nothing but reeds and tall grass.

Surely long-term development would be of immeasurable value to the people of Sierra Leone and to the Commonwealth because not merely does it give the people security and improve living standards, but it increases their consuming power and creates a demand for the products which we in this country manufacture. Apart from that, it helps them to balance their own economy.

8.30 p.m.

Last year, the economy of Sierra Leone was down by £10 million, mainly due to the fact that instead of growing its own food and rice and producing its own palm oil it was spending its currency in importing these products. Would it not be much better to have some flexibility in the Colonial Office which would enable small or relatively small loans to be made to co-operative rice farmers to allow them to buy tractors and mechanical equipment for the swamplands in order to increase their rice production? Would it not be much better to help them to establish their own credit societies? Cocoa, coffee and rice farmers need credit for only nine months. If they get credit for nine months, they will be able to harvest their crops and to repay the money. There have been no bad debts in Sierra Leone.

The importance of the development of co-operative farming production and credit societies, which I am glad my hon. Friend the Member for Blackburn (Mrs. Castle) mentioned, is that this is how the people and small farmers want to develop. In 1950, there were only 29 co-operative societies in Sierra Leone, but last year there were 313, 180 being producer societies. This is a vitally important point, because it proves that this is the natural way in which the people want to develop.

In considering the problems of colonial development, it is important that there should be sufficient flexibility at the Colonial Office so that funds for, say, a co-operative college, more co-operative registrars and advisers, more credit for mechanising and building mills for squeezing the oil out of the palms, or stores for cocoa and coffee are available. This kind of development does not require vast sums of money, yet it can transform politically the whole landscape of these important territories, because in developing along these lines they are also developing their own democracy. They are running their own little farms, villages, credit societies, banks and transport themselves and are learning from practical experience how to run their own institutions as a community. That is the first basic training in democratic practices.

I hope that the Under-Secretary of State will listen to the pleas made from this side for more flexibility so that loans for the underdeveloped territories through private investment, the London market, the Government, and particularly through new arrangements that will provide some strategic loans at very low interest rates, are made available.

Mr. Ronald Russell (Wembley, South)

I want to make only one point. I have a great deal of sympathy with the plea put forward by the hon. Lady the Member for Blackburn (Mrs. Castle). I agree, however, with my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) that the suggestion of hon. Members opposite is not practical in this form.

Much has been made by hon. Members opposite of the difficulties into which some Colonies get from time to time when their economy is in an awkward state. The hon. Member for East Ham, South (Mr. Oram) cited Colonies which depend on only one or perhaps two crops, and when economic times are hard they cannot repay loans or pay interest on them. What do the Government propose to do to prevent that kind of thing happening?

In winding up the debate on the last Amendment, my hon. Friend the Under-Secretary mentioned that the best way to help towards providing capital for the Colonial Territories was by encouraging the greatest possible amount of inter-Commonwealth trade.

This is a favourite topic of mine. What are we going to do to encourage more inter-Commonwealth trade? I am sure Members on both sides of the Committee would want to see this done. It is the best way to prevent a crisis occurring in Colonial Territories, and to prevent a huge surplus of crops becoming a burden. It is our duty, by legislative means if possible, to encourage people in this country to buy produce from the Colonial Territories rather than from foreign countries. Perhaps my hon. Friend will make some reference to this topic and outline what can be done to ensure that colonial crops and produce of all kinds are bought by this country. We should do everything possible to help them.

Mr. Arthur Skeffington (Hayes and Harlington)

I should like briefly to support the series of Amendments designed to give the Treasury and the Exchequer greater flexibility in regard to loans proffered under this Bill. If the Government are prepared to allow Exchequer loans only on the terms described in the White Paper, a good deal of the Government's financial proposals are not much more than a window-dressing.

In colonial matters, as in home affairs, unless we receive a more rational explanation than we obtained in the Second Reading, it appears that the Government have taken a definite political and philosophical decision to drive as much business as is possible to the London market and thereby to increase its profits. If that really is the case—and I shall be glad to hear that it is not—it will cause a great deal of cynicism in the Colonies about our alleged good intentions. That was the point that I thought the hon. Member for Liverpool, Wavertree (Mr. Tilney) overlooked in the argument he put before the Committee.

Why is it that the Government have taken the decision that Exchequer loans will be available only if there is evidence that the loan cannot be obtained in the City? Secondly, if those criteria are necessary, why have the Government made the conditions described in page 10 of the White Paper so much more unattractive and expensive, thereby adding to the financial burden of developing the territories? I sometimes wonder whether the acute financial difficulties of the Colonies that arise are appreciated by the Government. I know that they know the totals of the deficiencies in the annual budgets. I am not suggesting they do not, but I wonder whether they realise what cash shortage so often means in terms of human happiness and progress.

I want to give one example before I sit down. This does not affect a whole territory, but just one growing and expanding town with great potential. Having had the opportunity of going to Dar-es-Salaam, I am sure that those who knew the town will agree that that is the correct description of it. Recently, the trade union took a pay claim to arbitration. Very much to its surprise, it succeeded, but as a result I heard some very disquieting rumours. It was said that because the claim succeeded 200 people were to be dismissed. On 12th February, I put a Question to the Under-Secretary, who replied: I understand that a recent arbitration award will increase the Municipal Councirs expenditure by over £13,000"— which does not seem a very large sum— and this has led to some reorganisation of the services provided by the Council. While essential services are being maintained a reduction in others has compelled the Council to dismiss 73 men, and a further 65 will be dismissed in April…"—[OFFICIAL REPORT, 12th February, 1959; Vol. 599, c. 229–30.] What an astonishing conclusion to a successful arbitration claim! One hundred and thirty-eight out of work. This action may be due either to negligence or to the profligate nature of the city council. I do not know. However, I inquired whether the money could be advanced, and I was told that there was no way in which this sum could be made good within the territory. Accordingly, the men are being dismissed. We must think of this decision in terms of African morale, their belief in the real value of that arbitration principle and in trade unionism. The lack of such a small sum —£13,000—would sow seeds of unrest and doubt which would do untold harm to belief in constitutional processes. This situation has arisen because of the present inflexible arrangements. That is the sort of example which, multiplied a thousand times, can do infinite damage to the possibilities of the Commonwealth, and I hope that the Government will feel that their present schemes are too inflexible and that there is much to be said for the principle behind the Amendment.

Mr. J. Johnson

I should like to ask a question which I asked in the Second Reading debate, and to which I did not receive an answer. I have put my name to an Amendment concerning the provision of Government loans to the Colonies on the same basis as that upon which Governments of both complexions made loans, through the Public Works Loan Board, to local authorities. On 2nd March 1 said that the City of London moneylenders, which is what the banks technically are, were lending money to the territories at a rate half of 1 per cent. over that operating in the money market. In reply, the Colonial Secretary said: That will be dealt with by the Under-Secretary of State at the end of the debate."—[OFFICIAL REPORT, 2nd March, 1959; Vol. 601, c. 130.] During the course of the debate I had asked why the poor, non-viable Territories had to pay a rate of 6 per cent., 7 per cent. or 8 per cent. for their money in the market in order to build their schools and hospitals. When the Under-Secretary wound up the debate, I intervened and said: …would not the hon. Gentleman accept the view that, in education, perhaps, there is a place for a special fund for that specific social service in a Colony? The Under-Secretary of State said: That is not what development and welfare grants are supposed to meet. This is in addition to the grant. The grant is supposed to meet a certain area of the requirements of the Colonies. The loans are for a requirement over and above that. It is an additional requirement."—[OFFICIAL REPORT, 2nd March, 1959; Vol. 601, c. 159.] I do not understand how the Minister can say that the first £250,000 is for education and that the next £1 million or so for education is in a separate category. I do not see why there should be a grant for the first amount and then, for additional amounts, which form the solid Vote for the Colony, they should have to go to the London money market for dear money.

I plead for a special fund, chest or kitty, earmarked for this special social service. We have talked almost ad nauseam about the needs of the various Colonies, and have said over and over again that we are giving them insufficient money, especially in respect of their day-by-day needs. It is absolutely vital that we should educate the people, put them into hospital when they are ill, and build houses for them.

The amounts that we have been spending are completely inadequate, and we all agree that we must spend more if we can. Even though the amount we are spending has increased we still charge these poor Colonies heavy sums on the open market. I am amazed that money required for social purposes should be placed in the same category as money borrowed for mining in a Colony. Diamond mining in Tanganyika, or copper mining in Northern Rhodesia, or the production of oil from Nigeria, are activities which need capital sums for investment and which yield short-term dividends for the Colony. They are in a completely different category from the long-term, steady, slogging, day-by-day social needs of the populations of these dependent territories.

I ask the Minister to make a distinction between these two fields of development—on the one hand, the quick-yielding sharp investment for metals, and the other type of investment, which often does not yield dividends at all except in the invisible benefits of an educated, technically-equipped people who are able to look after their own affairs if and when we leave them to look after themselves. I do not understand why the Minister cannot see as clearly as I the difference between these two spheres of economic and social activity in the oversea territories.

8.45 p.m.

Mr. J. Amery

Let me deal at once with the two points raised by the hon. Member for Rugby (Mr. J. Johnson) in connection with our last debate. I apologise that in the pressure against the clock, I did not fulfil the undertaking of my right hon. Friend to reply to the points raised by the hon. Member.

Mr. J. Johnson

I accept that.

Mr. Amery

I am sorry I overlooked it. In a sense, however, it is as well for the hon. Member's reputation that I did, because if I understood the passage rightly, he slightly misjudged his homework. The figure is not one-half, but one-quarter, of 1 per cent. over the market rate.

Mr. Johnson

Surely, the Minister will not slay me because of one-quarter of I per cent., particularly in the dear money market which the Government are inflicting upon us. Surely, one-quarter of 1 per cent. will not break my reputation.

Mr. Amery

I am not making a great point of it, but the hon. Member spoke at some length on the matter. He flayed us for having this heavy rate of one-half of 1 per cent. and then exacted an undertaking that we would reply to his statement about this one-half of 1 per cent. I was merely saying that it was, perhaps, unwise for the hon. Member to raise the matter again as the difference was, not one-half, but one-quarter, of 1 per cent.

Concerning the hon. Member's second point, perhaps I did not speak with sufficient clarity. If, however, the hon. Member looks carefully at the sense of what I said, he will see that the word "not" should not have been included. I was talking about loans and the hon. Member interrupted me and asked whether education as a social service should not have its place. What I intended to say, although it is reported the other way, is That is what development and welfare grants are supposed to meet. This"— that is, the loan provision— is in addition to the grant. The grant is supposed to meet a certain area of the requirements of the Colonies. The loans are for a requirement over and above that. I hope that the hon. Member will accept my explanation.

Mr. Johnson

I accept the correction here and now.

Mr. Amery

The hon. Member for Hayes and Harlington (Mr. Skeffington) said that he doubted whether we fully appreciated the financial difficulty of the Colonies. Let me assure him that that is the absolute opposite of the position. It is because, in the period when commodity prices have fallen, we have become increasingly aware of the difficulties of the Colonies that we have come forward with this proposal.

I appreciate the motives which have led those who have spoken from the party opposite to criticise the provisions that we have made. They might, however, have shown a little more understanding of the fact that this is a fairly important innovation. Even if it does not approach the standards of perfection which hon. Members have in their minds, the offer of £100 million of money available for loan finance, which is very nearly as much as the total for grant, over the next five years is something which has never been done before and it is on a considerable scale.

If I understood aright the hon. Lady the Member for Blackburn (Mrs. Castle) and others of her hon. Friends who have spoken, their principal conception was that these Exchequer loans should be more, and not less, attractive than the market loans and that they should be tailored to some extent to the particular purpose to which they were to be applied.

It is very important in tackling this problem that we should distinguish between grants and loans. The object, in our view, is to make money available by grant for a wide range of development and welfare schemes, and more particularly for those development and Welfare schemes which are unlikely to produce a large profit themselves. The object of the Exchequer loan is over and above that requirement, and it is a requirement for which hitherto more money has been made available than could be spent. The object of these Exchequer loans is over and above the development and welfare grants to make money available for development purposes.

Let me emphasise the words "for development purposes" as the hon. Lady the Member for Blackburn was, I think, at one part of her speech under a misapprehension. She spoke of these loans being taken up, as she said, to meet urgent budgetary gaps. They would not be used for that purpose. They would be taken up only for development schemes. Financing urgent budgetary gaps is met if at all by this country by grants in aid.

We take the view that the right place for a Colony to come to raise a loan is the market. In the past the Colonies have come in a very big way to the London market and have established very good credit. There is, I think, no case on record of a Colony defaulting on its obligations. But in recent years it has been more difficult, and not only because rates of interest have been higher than they were before but also as a consequence of the general uncertainty in the world. Therefore, faced with the financial difficulties of the Colonies themselves, particularly in a period when commodity prices have been falling and when there have been difficulties in raising money on the market, we have come forward with this proposal to supplement the market by the provision of Exchequer loans.

Why do we deliberately make this more unattractive than a market loan? The reason is that we think it in the interests of the Colony itself wherever it can to come to the market for its money. Why do we take this view? The reason really is this—to establish creditworthiness. I would emphasise this to the hon. Lady, because I think she queried it in one part of her speech, and it is terribly important for a country which is moving towards sovereignty. A Colony which has borrowed on the London market once, or more than once—several times—and has met its obligations throughout, which has been tested by the market and found trustworthy in the experience of those who recommend the lending of money, will find itself in a much stronger position if it wants to borrow money again, once it is sovereign and has not the same financial backing from the United Kingdom that a Colony has. We think it is terribly important to the future of a Colony to establish its credit-worthiness at as early a stage as possible.

There is a United Kingdom angle in this, too. When the Exchequer makes money available my right hon. Friend the Chancellor of the Exchequer does not put his hand in his pocket or into a box to find the money to lend—and probably he does not even raise it by taxation but he borrows on the market on the credit of the Government and relends. So that whichever way it is done, it is done at prevailing rates of interest. If money were lent interest-free or at a lower rate of interest than the prevailing rate of interest, at any rate that part of the loan would be grant.

We are trying to distinguish here between areas which should be provided for by grant and areas which should be provided for by loan, and if there is, as there may well be—and I will come back to this a little later—what we may call a "grey area", with a little uncertainty about it, there is no inherent difficulty in financing it partly by grant, partly by loan. But we say all loans should be raised if possible on the market, and we must try to induce the borrower to come to the market to get a loan, and if the market does not provide the money, we are prepared to do so at a very, very small disincentive increase in rates.

Do not let us exaggerate the burden of the terms of the Exchequer loan. A quarter of 1 per cent. over the market rate is not in itself an excessive charge. Nor, on close examination, will the amortisation terms be found to be so very heavy. They provide, it is true, for the annual repayment of principal and interest. They follow distinguished precedents, including the Commonwealth assistance loan discussed at Montreal and the C.D.C. loans.

How much heavier is the burden? A loan raised on the market attracts the ordinary rate of interest—¼ per cent. less than the Exchequer loan—and will also attract a sinking fund charge which will not be less than 1 per cent., and at the end of the day the borrower has either to repay the capital or to embark on a conversion operation, which may be ex-pensive. In the years between the wars a great many smaller countries in Eastern Europe and South America, which were not very strong financially, raised loans in a hopeful period and got into great difficulty when it came to the conversion operation and the capital repayment.

In one respect at any rate the Exchequer loans are tailored to the purpose on which they are to be spent; that is, in terms of the length of time over which they have to be repaid. Paragraph 20 of the White Paper specifies that this will not normally be more than 30 years. But 30 years is a long period for loans of the type we have in mind.

This brings me to the point raised by the hon. Member for Deptford (Sir L. Plummer) who emphasised that the loans should attract a fixed rate of interest over the whole of their life, even if it should be a 30-year life. There is objection of principle and an objection of expediency to that proposal. The objection of principle is that we are trying throughout the proposal to keep the Exchequer loan as close as we can to a market loan, and, therefore, it should fluctuate in the interest rates which it attracts in the same way as a market loan fluctuates. I am not sure that the borrower is necessarily the loser. If one embarks on a loan operation when interest rates are high and one thinks the rate will come down, one can withhold taking up the next slice of loan against the day when one thinks the interest rates are likely to come down. Therefore, a good calculation on the part of the borrower might lead to the rate of interest being lower and not higher. It can operate the other way, but I should have thought that it would equal out over a long period.

The hon. Member for East Ham, South (Mr. Oram) asked me what provision there would be for an moratorium, an escape clause, in the event of a Colony which was borrowing getting into difficulties. If a Colony runs into difficulties, we are able to give assistance on the recurrent account by way of a grant in aid. That is the proper way for the United Kingdom Government to deal with a problem of this kind rather than to arrange special measures of relief in respect of certain items of expenditure. I say this all the more because of the importance of maintaining the creditworthiness of a Colony in respect of any loans it raises on the market. We would not want a Colony to be seen to be invoking an escape clause. We would rather that any assistance necessary came by way of a grant in aid, and it would be in the interests of the Colony just as much as those of anybody else concerned.

9.0 p.m.

I submit to the Committee that, taken together, the interest and amortisation charges on the Exchequer loan are not really as big or likely to be as big a burden on the Colonies taking up these loans as some hon. Members have suggested. There has been a tendency to look the "loan horse" in the mouth. By and large, I think it will be found that the cumulative burden of the interest rates and amortisation is a tiny fraction of the real recurrent charges which arise from any development scheme. One could imagine the recurrent charges on a new school—keeping the buildings in repair; increases in teachers' salaries; increases in new equipment which has to be bought. All that side of the burden is much heavier than the charges we are now discussing. These will be general in their effect one way or the other.

In her remarks at the beginning of the debate on this Amendment the hon. Lady the Member for Blackburn asked whether interest-free loans could still be provided in exceptional cases. That has been done in the past and there is no reason why it should not be done again in special circumstances. But they would not be in the ordinary run of development loans which is what we are here discussing.

Mr. J. Johnson

The hon. Gentleman has referred to recurrent charges. Obviously, they would apply in the case of education. Having built the school, as the hon. Gentleman said, there would be the salaries for teachers and so on. But does his argument apply to houses? Surely it would not apply where a Colony obtains a loan on cheap terms to build houses for Africans?

Mr. Amery

I would not be sure in respect of the maintenance costs of the houses once built and the cost of the basic services on a housing estate—sewage and so on. I should have thought that they would be very much higher over a period of years than the actual interest rates. That is an opinion I offer to the Committee for what it is worth.

The hon. Lady—I thought this was rather a debating point—referred to Kenya getting an interest-free loan for an emergency and asked why could not there be an interest-free loan for development which was so much more constructive. The truth is that, by its very nature, emergency expenditure is not capable of carrying charges because it does not develop, it does not produce new worth out of which to finance itself, so it is better that it should be treated either as a grant or as an interest-free loan. We have been discussing a development project which it is 'hoped will not only carry the kind of charges we are discussing, but will be able to contribute much more substantially to the development of the Colony.

As I said earlier, I think there may well be certain projects which could be financed by a combination of loan and grant. Where the kind of difficulty arises which some hon. Members have had in mind, and for which they would like to have seen a loan especially tailored or produced at special rates of interest, one way of meeting that problem would be by a combination of loans raised at the rate proposed, that is ¼ per cent. over the market rate, combined with a grant, which would, in fact, have the effect of tailoring the financial operation in respect of the issue concerned.

My hon. Friend the Member for Wembley, South (Mr. Russell) with whom I could not agree more—I think he was absolutely right and his view is being increasingly shared by other hon. Members—urged that in so far as these loans will represent a burden on the countries taking them up, the best way of easing that burden would be to encourage inter-Commonwealth trade and trade with the Colonies as much as possible. My hon. Friend asked how I thought that should be done. It is more a matter for the Board of Trade than for me, but there are obvious policies on which our colonial trade stands—strength of sterling, Imperial Preferences, progressive investment and the kind of loan finance which we have been discussing.—[An HON. MEM-BER: "And long-term contracts."]—Longterm contracts may also play their part in certain cases, like the sugar contract.

My own view is that the Colonies will take a more sanguine view than the party opposite has taken of these proposals. It will be interesting to see at the end of the five-year period whether they have hesitated to take them up and whether they will regard them as a burden, which is the impression that the hon. Lady the Member for Blackburn and others have sought to convey. My view is that they will take them up increasingly. Therefore, I must say that we cannot accept the Amendments.

Mrs. Castle

The hon. Gentleman has not answered the points which I made. I would not take up the Committee's time were it not for the fact that he has seriously called into question a statement which I made in the main point of my argument. The hon. Gentleman said that I was quite wrong in imagining that these loans were meant in any way to meet a budgetary gap, even a development budgetary gap at present being closed by short-term advances. That was my point, and I got it from the White Paper.

I would refer the hon. Gentleman to page 8 of that White Paper, which deals with loans, and points out that When plans for the current development period were being made in 1955 it was hoped that a steady flow of external loan finance would be available for the colonial territories. In fact, however, there has been a serious shortage and this, together with the fall in commodity prices with the consequent effect on the revenue, has adversely affected the pace of development. Then comes the really important sentence: Even to finance the rate of development expenditure achieved in certain territories has only been possible by the maximum use of short-term advances in anticipation of loans, so that by the end of this financial year a number of territories will be in urgent need of loans to retire these short-term advances. The White Paper adds: It is against this background that the need for a greater degree of assurance about the availability of external loans for the colonies has to be considered…

I maintain that I am justified by the words of the White Paper. In view of that, and the fact that the hon. Gentleman has not answered the other points, we shall divide the Committee.

Mr. Amery

There is, of course, nothing wrong with it and there has been a good deal in the past of drawing on short-term advances in anticipation of long-term funding operations. That has long been the policy with market loans and may be even with Exchequer loans, but that is not what these loans really will be used for. Their main use is for development plans and not for the bridging of current budgetary gaps, which is the impression I got from the hon. Lady's speech. The loans will be used much more for embarking upon new development schemes.

Mrs. Castle

It is the urgency of the situation to which the White Paper refers that should justify the Government's proposals.

Question put, That those words be there inserted:—

The Committee divided: Ayes 108, Noes 146.

Division No. 78.] AYES [9.10 p.m.
Abse, Leo Hall, Rt. Hn. Glenvil (Colne Valley) Parkin, B. T.
Allen, Scholefield (Crewe) Hamilton, W. W. Plummer, Sir Leslie
Awbery, S. S. Hannan, W. Popplewell, E.
Blenkinsop, A. Hayman, F. H. Price, Philips (Gloucestershire, W.)
Boardman, H. Herbison, Miss M. Pursey, Cmdr. H.
Bottomley, Rt. Hon. A. G. Hobson, C. R. (Keighley) Randall, H. E.
Bowden, H. W. (Leicester, S. W.) Holman, P. Rankin, John
Boyd, T. C. Hunter, A. E. Redhead, E. C.
Burton, Miss F. E. Hynd, J. B. (Attercliffe) Robens, Rt. Hon. A.
Butler, Herbert (Hackney, C.) Irving, Sydney (Dartford) Rogers, George (Kensington, N.)
Butler, Mrs. Joyce (Wood Green) Jeger, Mrs.Lena (Holbn & St. Pncs. S.) Short, E. W.
Callaghan, L. J. Johnson, James (Rugby) Silverman, Sydney (Nelson)
Castle, Mrs. B. A. Jones, Rt. Hon. A. Creech (Wakefield) Skeffington, A. M.
Champion, A. J. Jones, David (The Hartlepools) Slater, J. (Sedgefield)
Cliffe, Michael Jones, Jack (Rotherham) Smith, Ellis (Stoke, S.)
Collick, P. H. (Birkenhead) Key, Rt. Hon. C. W. Sorensen, R. W.
Cronin, J. D. Lawson, G. M. Soskice, Rt. Hon. Sir Frank
Crossman, R. H. S. Lindgren, G. S. Sparks, J. A.
Davies, Harold (Leek) Mabon, Dr. J. Dickson Spriggs, Leslie
Deer, G. McCann, J. Stewart, Michael (Fulham)
Delargy, H. J. MacDermot, Niall Stonehouse, John
Dodds, N. N. Mclnnes, J. Taylor, John (West Lothian)
Dugdale, Rt. Hn. John (W. Brmwch) McKay, John (Wallsend) Thomson, George (Dundee, E.)
Ede, Rt. Hon. J. C. McLeavy, Frank Warbey, W. N.
Edwards, Robert (Bilston) MacPherson, Malcolm (Stirling) Weitzman, D.
Evans, Albert (Islington, S.W.) Mann, Mrs. Jean Wells, Percy (Faversham)
Evans, Edward (Lowestoft) Marquand, Rt. Hon. H. A. Wells, William (Walsall, N.)
Fitch, A. E. (Wigan) Mikardo, Ian Wheeldon, W. E.
Foot, D. M. Mitchison, G. R White, Mrs. Eirene (E. Flint)
Forman, J. C. Moody, A. S. Wilkins, W. A.
Fraser, Thomas (Hamilton) Morris, Percy (Swansea, W.) Williams, Rt. Hon. T. (Don Valley)
Gordon Walker, Rt. Hon. P. C. Morrison, Rt. Hn. Herbert (Lewis'm, S.) Williams, W. R. (Openshaw)
Greenwood, Anthony Mort, D. L. Winterbottom, Richard
Grey, C. F. Moyle, A. Woof, R. E.
Griffiths, David (Rother Valley) Noel-Baker, Rt. Hon. P. (Derby, S.)
Griffiths, Rt. Hon. James (Llanelly) Oram, A. E. TELLERS FOR THE AYES:
Griffiths, William (Exchange) Palmer, A. M. F. Mr. J. T. Price and Mr. Simmons.
Agnew, Sir Peter Garner-Evans, E. H. Maydon, Lt.-Comdr. S. L. C.
Allan, R. A. (Paddington, S.) George, J. C. (Pollok) Medllcott, Sir Frank
Alport, C. J. M. Gibson-Watt, D. Mott-Radclyffe, Sir Charles
Amery, Julian (Preston, N.) Glyn, Col. Richard H. Nairn, D. L. S.
Amory, Rt. Hn. Heathcoat (Tiverton) Godber, J. B. Neave, Airey
Anstruther-Gray, Major Sir William Goodhart, Philip Nicholson, Sir Godfrey (Farnham)
Armstrong, C. w. Green, A. Nicolson, N. (B'n'm'th, E. & Chr'ch)
Atkins, H. E. Grimond, J. Noble, Comdr. Rt. Hon. Allan
Baldwin, Sir Archer Grimston, Sir Robert (Westbury) Noble, Michael (Argyll)
Balniel, Lord Grosvenor, Lt.-Col. R. G. Nugent, G. R. H.
Barber, Anthony Gurden, Harold O'Neill, Hn. Phelim (Co. Antrim, N.)
Barlow, Sir John Harris, Reader (Heston) Osborne, C.
Batsford, Brian Harvey, Sir Arthur Vere (Macclesf'd) Page, R. G.
Baxter, Sir Beverley Harvey, John (Walthamstow, E.) Partridge, E.
Bell, Philip (Bolton, E.) Heath, Rt. Hon. E. R. G. Peel, John
Bell, Ronald (Bucks, S.) Henderson-Stewart, Sir James Pitman, I. J.
Bldgood, J. C. Hill, John (S. Norfolk) Pitt, Miss E. M.
Biggs-Davison, J. A. Hirst, Geoffrey Pott, H. P.
Bingham, R. M. Hobson, John (Warwick & Leam'gt'n) Powell, J. Enoch
Bishop, F. P. Holland-Martin, C. J. Price, David (Eastlelgh)
Bossom, Sir Alfred Holt, A. F. Price, Henry (Lewisham, W.)
Bowen, E. R. (Cardigan) Hornby, R. P. Profumo, J. D.
Braithwaite, Sir Albert (Harrow, W.) Howard, Hon. Greville (St. Ives) Rawlinson, Peter
Browne, J. Nixon (Craigton) Hylton-Foster, Rt. Hon. Sir Harry Ridsdale, J. E.
Butcher, Sir Herbert Iremonger, T. L. Roper, Sir Harold
Butler, Rt. Hn. R. A.(Saffron Walden) Irvine, Bryant Godman (Rye) Russell, R. S.
Cary, Sir Robert Jenkins, Robert (Dulwich) Sharples, R. C.
Channon, H. P. G. Johnson, Dr. Donald (Carlisle) Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Chichester-Clark, R. Johnson, Eric (Blackley) Stanley, Capt. Hon. Richard
Cooke, Robert Joseph, Sir Keith Steward, Sir William (Woolwich, W.)
Cordeaux, Lt.-Col. J, K. Kerr, Sir Hamilton Stuart, Rt. Hon. James (Moray)
Corfield, F. V. Kershaw, J. A. Studholme, Sir Henry
Courtney, Cdr. A. Kirk, P. M. Thomas, Leslie (Canterbury)
Craddock, Beresford (Spelthorne) Langford-Holt, J. A. Tilney, John (Wavertree)
Crosthwaite-Eyre, Col. O. E. Leavey, J. A. Vane, W. M. F.
Crowder, Petre (Rulslip—Northwood) Legh, Hon. Peter (Petersfield) Vickers, Miss Joan
Currie, G. B. H. Lennox-Boyd, Rt. Hon. A. T. Vosper, Rt. Hon. D. F.
Dance, J. C. G. Linstead, Sir H. N. Wakefield, Edward (Derbyshire, W.)
Davidson, Viscountess Lloyd, Maj. Sir Guy (Renfrew, E.) Wakefield, Sir Wavell (St. M'lebone)
Deedes, W. F. Longden, Gilbert Wall, Patrick
de Ferranti, Basil Low, Rt. Hon. Sir Toby Ward, Dame Irene (Tynemouth)
Doughty, C. J. A. Lucas-Tooth, Sir Hugh Webster, David
du Cann, E. D. L, McAdden, S. J. Whitelaw, W. S. I.
Dugdale, Rt. Hn. Sir T. (Richmond) Macdonald, Sir Peter Williams, R. Dudley (Exeter)
Duncan, Sir James McLaughlin, Mrs. P. Wilson, Geoffrey (Truro)
Elliott, R. W.(Ne'castle upon Tyne. N.) Macmillan, Maurice (Halifax) Wolrige-Gordon, Patrick
Finlay, Graeme Macpherson, Niall (Dumfries)
Fisher, Nigel Maddan, Martin TELLERS FOR THE NOES:
Fletcher-Cooke, C. Marlowe, A. A. H. Colonel J. H. Harrison and
Gammans, Lady Mathew, R. Mr. Bryan.
Mr. Sorensen

I beg to move, in page 2, line 30, to leave out from "if" to "he" in line 31.

The Clause as it stands—[HON. MEMBERS: "Speak up."] I am getting a little hoarse—lays down that the Secretary of State shall not approve a proposal for a loan which involves the execution of any works if, (except in the case of the Aden Protectorate) he is not satisfied that the law of the Territory provides reasonable facilities for the establishment and activities of trade unions, or if (in any case) he is not satisfied that fair conditions of labour will be observed… The general purpose of the Clause is laudable and will not be objected to on this side of the Committee, or probably on the other side, but it carries a curious omission. Much depends upon which is meant by "Aden Protectorate". Does it include Aden and Aden Colony as

distinct from what is known as "the Protectorate"? In any case, one wonders how there could have been this omission. It may be because of the development towards federation in the Protectorate area, both East and West. But only six out of 23 native States in the Protectorate area have yet acceded to the proposed Federation. The great majority have not yet acceded, including the unfortunate Sultanate of Lahej.

I imagine that the best thing for people in this area, before any further developments take place, would be for us to stipulate here that it is desirable for them to have the proposal in the Clause embodied in the Federation. It is true that there may be no trade unions at present in the Protectorate area, and I rather suspect that that is so; although that does not apply to Aden, where there is a thriving and healthy trade union move- ment. Hon. Members may think this wise or unwise, but, certainly, in Aden there is a vigorous trade union movement and, I understand, a very happy industrial relationship between employers and employees, even in the oil refinery area of Aden.

It is said that in the Protectorate there seems to be little, if any, industrial development, and that, in consequence, trade unionism may not have yet appeared there. If there is to be any economic development of the Protectorate as well as political development, quite obviously, there may be small minor industries operating, and, with them, also consequentially, the need for trade unions to protect the interests of the employees and workers.

In these circumstances, I urge most strongly that we should get in right at the beginning to lay down that, indeed, for the whole of this area, which may become completely federated, there should be the stipulation that that which we think is highly desirable elsewhere should also apply there.

Mr. Ellis Smith (Stoke-on-Trent, South)

Are there any trade unions there?

Mr. Sorensen

My hon. Friend asks me whether there are any trade unions there. So far as I can tell, in the Protectorate itself, as distinct from the Colony, there are no trade unions and no industrial workers to speak of. That is part of my case, and I assume that the reason for this deliberate omission is mainly because of the political development towards federation, and possibly the feeling that we should leave it to the future rulers of the Protectorate to decide what they should do in a matter of their own internal affairs.

I would emphasise that, in fact, extensive federation has not yet obtained. We are still a long way from the Aden federation of all protected areas, and, therefore, I believe, certainly in regard to those outside the six acceding States, that the position is as it was before. They are protected by this country, and, therefore, we have a certain amount of responsibility for them.

Our responsibilities extend at present to the other areas as well, and, therefore, I would urge that we should require from the Under-Secretary particularly some explanation as to why this omission has been deliberately inserted. Secondly, whether my surmise is correct or not—and in any case, after what I have said—I think that it would be wise to withdraw this provision, so that the whole Clause should apply to all colonial protected areas without any discrimination whatever.

Mr. John Dugdale

I, too, like my hon. Friend the Member for Leyton (Mr. Sorensen), was amazed at this omission. There must be a mysterious reason for it which none of us understand. If it is because it is a Protectorate, I can see no reason why we should not do our best to help people who have been having our protection. I understand that they would have no objection.

If it is because there are no trade unions, surely there have been no trade unions in many of the Colonies in the past, but they have gradually grown up. In fact, the development of trade unionism in the Colonies since 1945 has been quite remarkable, and has taken place in parts in which it was thought that it would never have done. The Clause provides that these territories shall be helped. It states that: (4) Where a purpose in aid of which a loan is proposed under this section involves the execution of any works, the Secretary of State shall not approve the proposal if (except in the case of the Aden Protectorate) he is not satisfied that the law of the territory provides reasonable facilities for the establishment and activities of trade unions, … What is wrong with that? What is there about that that cannot be applied to Aden to the fullest extent? Why should we not lay down that there should be fair conditions of labour? Why should they not have trade unions, one of the very things which we in this country think to be very desirable; certainly we on this side of the Committee, and I think on both sides? They were fought for with great toil in the nineteenth century, and we in Britain managed to achieve them. If they have been acheived here, why should they not be achieved in Aden?

When I was with my hon. Friend the Member for Leyton in Aden and in the Protectorates, we flew at one time through the outlying parts and over the area of the Sherif of Behan, who is a great friend of this country and who thinks a great deal of it. One of the reasons for that is that he realises that we stand for the very things of which he himself approves, although in Aden they have not been developed very far yet. In his territory there is a notice which says that certain things must be observed. It says there must be freedom of speech, freedom of assembly and also freedom from arbitrary arrest—three things, be it noted, all singularly lacking at the moment in Rhodesia, but they are allowed there in Aden and are something for which all of us stand.

Why should there not be added to these freedom to combine and to form unions in order to get the best conditions possible in the Territory? For those reasons, because Aden apparently is not to be allowed this special help in the direction of forming trade unions, I join with my hon. Friend in opposing the proposal to leave out Aden.

Mr. J. Amery

I begin by making clear to both hon. Members who have spoken that the words in brackets to which they have taken objection do not apply to Aden Colony, where there is a strong industrial movement with which we are in close contact and co-operation, as I think is the T.U.C. This applies to the Protectorate only. The omission in this Clause of the Bill only follows a similar omission which has figured in all previous Colonial Development and Welfare Bills beginning with Section 2 of the 1945 Act, which, I suppose, was accepted by the right hon. Member for Wakefield (Mr. Creech Jones) when he was at the Colonial Office.

Mr. Ellis Smith

That would not make it right. When one makes a mistake one should admit it.

Mr. Amery

I was only surprised at the indignation of the right hon. Member for something which gained currency in his time.

Mr. Creech Jones

It was not a Labour Government, but a Coalition Government, and the Secretary of State at the time was Mr. Oliver Stanley.

Mr. Amery

Many things have happened since then, including the introduction of other Colonial Development and Welfare Acts in which this has always figured. What we are doing here is to apply to the loan provisions what has existed throughout with reference to grants. We have said that what was considered acceptable where grants are concerned should also be considered acceptable where loans are concerned.

Now I come to the reason for all this. It is extremely simple. The Protectorates are independent countries in treaty relationship with us. Our rights in these Protectorates are concerned with defence and foreign relations and we have no power whatever to legislate for their internal affairs. We have to move as we can and think right, by persuasion and other means, but internal legislation is their affair.

This question of trade union rights, as I think the hon. Member who moved the Amendment recognised, is at this stage a theoretical question, because there is no industry at the moment in any of the protectorates. Agriculture and pastoralism are the way of life, so this problem does not yet arise. There is no issue on which we could use our powers of persuasion. That could apply only if there were a problem in existence. That being so, I think that the Committee will agree that the loan provisions, should the Protectorate wish to avail itself of them, should be on the same footing as the grants. Throughout it is on the perfectly reasonable basis—I can see no other basis we could have—that we have not the right Or power 'to interfere in their internal matters on questions of this kind.

9.30 p.m.

Mr. Sorensen

May I ask three questions? First, is the Aden Protectorate in this respect different from all other Protectorates? Secondly, if we are prepared to apply this Bill to other Protectorates, why cannot we deal with the Aden Protectorate in the same way? Thirdly, if we have no legal power to apply the provisions of the Bill, why should Aden even be mentioned in the Bill, as legally it is outside the area which the Bill can cover?

Mr. Amery

I think that Brunei and Tonga are in the same position. We have no internal powers there. I confess that the third point did not occur to me this morning. No doubt it ought to have done.

Mr. Sorensen

What about Brunei?

Mr. Amery

That is an extremely wealthy State and it has never asked for loans or grants. The whole problem arose because at the time of the 1945 Act it was desired to help the Aden Pro-tectorate. As applications were being made to the Colonial Office, it was, therefore, decided to make the position quite clear in respect of the Aden Protectorate. I think that the Committee will agree that with the new Federal development it is very much to be desired that we should help them in their way forward. When the problem arises there may be room for persuasion. The problem is not before us yet.

Mr. Dugdale

I realise that we cannot make these laws, but we are to lend the money. Can we not say that, if we lend the money, we hope that they will make the laws and we do not intend to lend unless they do?

Mr. Amery

The problem does not yet arise, because there are no industries in the Protectorate and, therefore, no trade unions. It would be a little theoretical to insist on legislation being enacted in the Protectorate when there is no practical problem on to which it could bite.

Mr. Sorensen

One is aware that Brunei is a very wealthy State, producing as much per head as this country, although it does not share it, I am afraid, with the neighbouring territories. If Brunei applied, as it might conceivably apply, for a loan or a grant or some financial assistance, what would be the position? Should we then have to reject the application and declare to Brunei that it does not come within the orbit of the Bill? If so, surely the latter applies also to the Aden Protectorate?

Mr. Amery

I should want notice of that. I will look into it and get in touch with the hon. Member.

Amendment negatived.

Mr. Ernest Thornton (Farnworth)

I beg to move, in page 2, line 32, after "territory", to insert makes adequate provision for the protection of women and children engaged in employment and". The need for the provision is underlined by what has happened in the industrial development of Hong Kong in recent years. Last year I revealed to the House the cruelly long hours worked by women and young persons in industrial undertakings in Hong Kong. The allegations that I made at that time have not been refuted from any official sources.

I should like to recall the allegations, because they reveal a tragic story related to relatively uncontrolled industrial development in one of our Colonies. It is a story of women working twelve-hour shifts, seven days per week, with only four days holiday in a whole year. They have a working week of 80½I hours. It is a story of labour laws which legally permitted women and 16-year old children to be worked in industrial undertakings continuously 13 hours a day without a break, which legally enabled women and 16-year old children to be worked 98 hours in a single week for eight weeks in a year. For the remaining 44 weeks they could be worked for 91 hours a week. That can be done in industrial establishments in the Crown Colony of Hong Kong.

I pointed out that these labour laws did not provide for any weekly rest day, except for young persons under 16 years of age; that they did not provide for any statutory holidays, and permitted even young children under 16 years of age to be worked for 54 hours a week. This incredible legislation is not a relic of ancient industrial history. It is comparatively recent. The copy that I have here is dated 18th August, 1955, and bears the signature of the then Governor, Sir Alexander Grantham. Such recent legislation is a disgrace to the House of Commons, which is officially responsible, and it is especially disturbing when we remember that the International Labour Organisation has been in operation for almost 40 years.

I accuse ex-Governor Grantham and his Legislative Council of grave neglect of their responsibility to the masses of the people of Hong Kong. Tens of thousands of women have worked these cruelly long hours at a time when tens of thousands were unemployed—a most fantastic situation. During that period, huge profits were made. I am not against profits as such. In a developing economy there must be profits to carry forward further capital development and the like, but we have it on credible authority that some of the new textile mills recovered the whole of their capital in their first 12 months of operation. I estimate that the sum represented by that would be equal to at least three times the amount of their annual wage bill. Yet, in many cases, the people worked 12 hours a day for seven days a week.

The comparison I wish to make is not with the United Kingdom but with the rest of Asia; with countries such as India and Pakistan, which recently secured their independence. Their labour legislation protecting women and young persons is far better than that which pretended to protect women and young children in Hong Kong.

It is because of the experience in Hong Kong that I feel that this Amendment is necessary so as to ensure that that story is not repeated in industrial development in other Crown Colonies. I have been to Hong Kong several times and, in my opinion, ex-Governor Grantham, who has had a very big build-up, and his Legislative Council paid too much attention to spectacular developments, and neglected conditions existing behind the scenes. The ex-Governor has referred to Hong Kong as one of the marvels of the world, and has said that it is remarkable what can be done when a country gets rid of "isms" and "ocracies".

I have given the Committee an example of one of the marvels of Hong Kong. These stories lay behind the scenes, and emerged from the masses of the people. Governor Black has a difficult task to clear up this debris, and I wish him luck in it.

I want to make it clear that not all employers in Hong Kong took advantage of these deplorable labour laws. Some employers operated eight-hour shifts of their own volition, but regrettably even they worked their operatives seven days a week in most cases. Many of these employers had excellent welfare facilities, and I pay my tribute to them, but even they allowed themselves to be used by the less scrupulous elements.

For example, Members of Parliament on Parliamentary missions to Hong Kong who have been taken by industrialists to some of the new cotton mills have come back and reported that conditions are good and that workers in Hong Kong work eight-hour shifts. It is true that the mills to which Parliamentary delegates and responsible industrialists from this country were guided gave the impression that this was the pattern of work in Hong Kong, but in fact it was not. In the main, mills and factories in Hong Kong operate on 12-hour shift systems.

I do not associate the Commissioner of Labour for Hong Kong with this concealment. When I asked him questions based on information which I had received from the trade unions, he was quite forthcoming, and if one refers to the Annual Report of the Commissioner of Labour the record of excessive hours of work will be found from the statistical table. But again, in the Annual Report, there was an indication of interference, because the Commissioner refers to the 19 new textile mills in Hong Kong, and in relation to the hours of work he says that nine of them work eight-hour shifts but he makes no reference to the other ten mills, which work on the 12-hour shift system. This indicates perhaps that there had been some interference in the Commissioner's Report.

In the matter of attempted concealment, as recently as last Saturday there was on television a repeat performance of a Hong Kong interview with Mr. Silas, who is a director of two cotton mills in Hong Kong and who was formerly director of the Manchester Chamber of Commerce. When asked about working hours, Mr. Silas said: By law we are only allowed to work them eight or nine hours a day, and we are certainly not allowed to work them at night. Mr. Silas must have known that that statement about eight or nine hours a day was untrue. I think that Mr. Silas should withdraw that statement, because he occupies an important place in the business community of Hong Kong. Millions of people in this country saw and heard him make that observation as recently as last Saturday, and it was untrue.

By the Amendment, we want some guarantee that this very tragic and deplorable story of Hong Kong will not be repeated, because inevitably other Colonies, as their populations grow, will become industrialised. There is a responsibility upon the House to ensure that this appalling story is not repeated in other Crown Colonies. I should like the Under-Secretary of State to indicate the pattern of labour legislation which the Colonial Office envisages will govern hours of work of women and young people in the various Colonial Territories. The Committee is entitled to know that.

9.45 p.m.

Is it to be based on Sir Alexander Grantham's notorious regulations which legally permitted women to be worked 13 hours a day without a meal break, or is it to be based on the new regulations which came into operation on 1st January following Miss Ogilvie's Report. If I am not too immodest, she was sent to Hong Kong to investigate the situation in preparation for new legislation following the revelations I made which disturbed both sides of the House. Will the Under-Secretary of State make available in the Library a copy of Miss Ogilvie's Report for Members to see? We are entitled to know what she found as a result of her investigations with regard to the true conditions relating to excessive hours of work in the Colony of Hong Kong.

The new labour regulations appear to be a marked advance—perhaps I may even say a stupendous advance—because these new regulations reduce the maximum working week of a woman or young person by 32 hours. That is a measure of the appalling nature of the former regulations. However, under the new regulations it is still possible for a woman or a young person of 16 or over to be worked 66 hours a week for not more than eight weeks, or an average over the year of not more than 62 hours a week. The maximum working day now becomes 10 hours with provision for overtime not exceeding 100 hours a year.

The new regulations provide for a compulsory day of rest each week for women and young persons. This is a marked and very long overdue improvement, but these hours of work are still considerably in excess—and I am not comparing the figures with those of the United Kingdom, because that would be an unfair comparison—of the daily legal maximum hours of work in other Asian countries, particularly India and Pakistan where the maximum daily hours of work are nine for women and young persons. In Japan the hours of work are even shorter, although in some of the small undertakings in country districts, where the labour regulations do not seem to apply, excessive hours are worked and conditions are almost as bad as those in Hong Kong.

Having made investigations in several of these Asian territories, I can say that in our British Crown Colony of Hong Kong the hours of work for women and young persons in industrial establishments were worse than anywhere in the world, and that is something we ought to be thoroughly ashamed of.

These new labour regulations are an interim measure only, but I urge the Under-Secretary of State to take a personal interest in this matter. Our prestige as a colonial Power is at stake. Hong Kong is on the doorstep of Communist China and it could provide an opportunity for us to show what can be done in a free community, but I know from my experience of Hong Kong that just the opposite is being demonstrated.

In Hong Kong we have one of the most outstanding exhibitions in the world of the contrast between wealth and poverty. There are large numbers of immensely wealthy people, but far larger numbers of people who are miserably poor, depressed, hungry and suffering from malnutrition and neglect in every way. I hope that serious interest will be taken in the basic problem of safeguarding the lives of these masses of downtrodden people, as many of them are. There is surely a need to bring the eight-hour day into Hong Kong at the earliest possible moment, if only for the purpose of sharing out the work among the masses of unemployed people there. It is not because industry is unprofitable in Hong Kong; very great profits are being made there.

I hope that the Colonial Secretary will make it unmistakably clear to colonial Governments, administrators and employers, that if Parliament makes money available to them for industrial development purposes they must ensure that women and young persons are not worked for longer hours than in independent Asian and African countries. That is necessary for our good name as a colonial Power. I regret to say that the record of excessive hours of work for women and young persons in Hong Kong factories will come to be one of the darkest chapters of our twentieth century colonial history, and I urge the Government to see that this sorry story is not repeated in other Colonial Territories.

Mr. Creech Jones

I should like the Under-Secretary to satisfy me on one point. He is aware that many schemes have been introduced for the benefit of Hong Kong under the Colonial Development and Welfare Acts. In respect of all grants and other issues from the funds established by that Act it was always a requirement that fair labour conditions and facilities for trade union activities should be enjoyed in the territory concerned. How, then, does it come about that such a deterioration has been allowed to develop in Hong Kong while that territory has been continually enjoying the facilities of the Acts?

If this sort of thing is happening in Hong Kong, may it not also be happening in other territories where industry is developing and women are being caught up in it? Is adequate supervision provided by the Colonial Office? A few years ago we appointed a woman assistant labour adviser. Is she able to get round territories enjoying the benefit of the Acts, discover conditions for herself and report to the Secretary of State upon them?

Mr. John Stonehouse (Wednesbury)

I support what my hon. Friend the Member for Farnworth (Mr. Thornton) said. The Amendment will apply not only to the Colony of Hong Kong, but to many other territories for which we are responsible. For instance, in the industrialisation of countries like Uganda and Kenya there is increasing employment of women in factories. Thousands of them are now being employed in the developing industries of Uganda, and the Amendment goes a long way towards strengthening a reasonably good cause. But we must also bear in mind the employment of African children in industrial undertakings in countries like Kenya and Northern Rhodesia.

In Northern Rhodesia, for instance, in the tobacco-grading establishments children of as young an age as 12 are employed, some of them doing very heavy jobs indeed, being expected to carry heavy weights and do long hours of arduous toil. The question of the employment of African children has to be watched very closely.

I have a great deal of respect and admiration for the work done by our labour departments in these territories. Only a few weeks ago, I was talking about this problem with the officials of the labour department in Northern Rhodesia and I have a great deal of respect for the job they are doing. We must, however, strengthen their hands, and one of the ways of doing so is by agreeing to the Amendment, which has been so ably moved by my hon. Friend.

Mr. Ellis Smith

It is not my intention to detain the Committee for more than a few moments, but I did not want to sit here without placing on record my hearty appreciation of the informative speech by my hon. Friend the Member for Farnworth (Mr. Thornton).

My hon. Friend is a well-known representative of the cotton industry in Lancashire. He has a great record to his credit. He has the confidence of the Lancashire cotton operatives and he has been truly representative of the Lancashire cotton operatives in the speech that he has made this evening. He has travelled the Far East on several occasions and has done his duty by the people whom he represents. He has reflected their ideas in moving the Amendment. The least I can do is to give credit where it is due. We ought to have more of this kind of thing in the House of Commons, because conditions throughout the world require it. I am very pleased with the Amendment.

Mr. Sydney Silverman (Nelson and Colne)

I have no desire to delay the Committee. I know that there has been a full debate and that the issues raised are wide issues of general application and not merely of local importance. I hope, however, that the Committee will forgive me for only one minute to make just one point.

There are repercussions of these matters at home. My own constituency and Lancashire generally are suffering severely in their basic industry, which in many constituencies is the sole industry or almost the sole industry. The competition is difficult because of these very low standards of labour conditions. The importance of this matter to Lancashire and to our home industry may be realised if I point out that there was no textile industry whatever in Hong Kong until 1953 and that in six or seven years after that, the textile industry was responsible for 60 per cent. of the exports from Hong Kong and represents now 20 per cent. of all the imported manufactured textile goods into this country. We have, therefore, a very direct selfish interest in the matter, as well as our general duty to maintain good living standards in our own Colonies, especially the Crown Colonies, for which the House of Commons has a direct responsibility.

Mr. J. Amery

The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) congratulated his hon. Friend the Member for Farnworth (Mr. Thornton) for speaking on behalf of the Lancashire cotton operatives. The hon. Member for Farnworth, like myself, is a Lancashire Member. I thought, however, that the way in which he put his case showed that he was thinking not so much of the competition from which we in Lancashire are suffering as of the real human problem which exists in Hong Kong.

Mr. Thornton

I should like to make it clear that I raised the matter solely as a humanitarian issue. In the investigations for which I went out, I went for the International Confederation of Free Trade Unions to do a survey of the Asian textile industries as preliminary work for the Asian textile workers' conference. What I have suggested is that if the Hong Kong industry went on to eight-hour shifts instead of 12-hour shifts, I am sure it would be more efficient. The best-managed firms have already discovered that. We discovered many years ago that to work people excessive hours means expensive labour costs.

10.0 p.m.

Mr. Amery

I was sure that that was the hon. Gentleman's point of view. I thought it right to draw attention to that point. I think, perhaps, that he is like me in that I first got interested in the problem of wages in the Far East because of the problem of competition with Lancashire, and when one goes into it one finds it becomes a human problem far greater than that of the local considerations with which we have to deal.

The problem of Hong Kong, and especially the labour problem, is particularly difficult, as I am sure the hon. Member, having been there, realises quite as well as anybody else in the Committee. The population has more than trebled since the revolution in China. There is a rush for jobs of any sort, and the chief task of the Government of Hong Kong has been to try to attract capital, money, and means of employment into the Colony. There have been, as the result of circumstances arising from the revolution on the borders of Hong Kong, circumstances created which have reproduced in the middle of the twentieth century some of the worst features of the Industrial Revolution of the last century.

We have been trying to cope with the problem, and I am glad, as the hon. Gentleman himself recognised, that there is new legislation enacted in recent months which has considerably improved conditions by comparison with what they were before. We believe—it is our intention—that those are only the first steps, and that we shall go further along the road on which we have been travelling in this recent legislation.

Of course, one of the difficulties of this is that the trade union movement, as the hon. Member probably knows, is sharply divided between the Communists and the Kuomintang supporters, and they spend a good deal of their time fighting one another and not enough of their time agitating for proper conditions for the people they are supposed to represent.

There is on top of all this, and in spite of the difficulties and the conditions of which the hon. Gentleman has spoken, an enormous urge to escape from China and to come into the Colony. A hundred thousand people or more a year try to come inside, despite all the precautions which are taken to let in only genuine. bona fide, refugees.

I would be quite prepared, and I am sure that my right hon. Friend would be, to discuss this problem of Hong Kong in greater detail on another occasion, but I think there are difficulties, which, I am sure, the hon. Member will appreciate, in attempting to deal with this matter by, as it were, tacking it on by this Amendment proposed to the Bill. My right hon. Friend is in the fullest agreement with the general principle which inspires the supporters of the Amendment in wishing to see established in the territories for which the Government are responsible the highest possible labour standards, particularly in relation to the employment of women and children, but, as I say, there are some difficulties in trying to introduce this into the Bill.

The Bill already requires that my right hon. Friend must be satisfied that the law of the territory provides reasonable facilities for the establishment and activities of trade unions and includes a fair wages clause and a minimum age for children in connection with works on which C.D.W. money is actually spent. It reproduces those conditions for the new Exchequer loans as, of course, the old grants. I think that is as far as it is reasonable or wise to go in attempting in general terms to regulate conditions in these matters in Colonies by detailed stipulations in United Kingdom legislation. A lot of this has to be done locally rather than here.

The Amendment would apply not only to works on which Exchequer loans are actually spent but to any and every form of employment in a Territory.

Mr. Callaghan

Why not?

Mr. Amery

It may well be that there is a case, but I am not arguing that for the moment; but if there is such a case this is not the place—getting it in by the back door as it were—to put it. There ought to be a great Measure to deal with the matter, and not only an Amendment introduced during the Committee stage on this Bill.

The loans to be authorised under the Clause will be required for important economic and social development programmes aimed at the wellbeing of the particular community concerned. I wonder, therefore, whether it is reasonable that the community should be deprived of these services through the refusal of United Kingdom financial assistance merely because laws have not been enacted to deal with matters which may already be satisfactorily governed by local agreement and practice, and perhaps in fields in which we in Britain have not yet legislated.

There are many aspects of the employment of women and young children in this country which are a matter of practice and not law. Hours of work in the agricultural industry are not stipulated, nor does legislation provide a weekly day of rest for all workers in this country. It is important to bear in mind that the Bill already provides for the development of trade unions and the elimination of bad practices. This is something in respect of which we can increasingly rely on the growing trade union movement in the overseas territories.

Mr. Ellis Smith

In this country we have a fair wages clause. Before a Government Department gives out contracts it asks whether the fair wages clause is being applied. My hon. Friend is saying that before we grant a loan these standards should be applied.

Mr. Amery

The Amendment adds up to something much more sweeping. We have always had in the Colonial Development and Welfare Acts certain provisions governing questions like the employment of children on C.D. and W. projects and facilities for establishing trade unions. This is going a good deal further in joining by legislation here some things which may be better left to practice and others which should be legislated for locally and may not always be immediately required. To stipulate that all these matters should be dealt with by law is to go further than we ourselves have done in a great many respects.

There is another difficulty. If those conditions were to be included in the provision for loans, it would be logical to amend also that portion of the Bill dealing with grants. This would cause very serious administrative difficulties. There are many schemes already under way which cannot, without much loss, be stopped while legislation is being enacted. During the 19 years in which this legislation for development and welfare grants has been in operation, no suggestion for such a limitation has ever been made.

After careful thought, we have reached the conclusion that the improvement of conditions of employment will in many of the Colonies concerned be not a very rapid matter. The pace will depend on what is practicable in each country. In a number of territories we have reached the position where responsibility and power in social matters is largely delegated to local powers. It would not be wise or logical to specify in too great detail exactly what standards have to be observed in each Colony, particularly the ones moving towards greater self-government. That would not apply to Hong Kong, which is very much under Governor and Crown Colony rule.

Mr. Dugdale

Does this mean that the hon. Gentleman contemplates giving loans in cases where industries are run without making adequate provision for the protection of the women and children employed?

Mr. Amery

We have been giving grants to Hong Kong over a number of years, and if there is a need to do that, it would be wrong to withhold them, particularly when one thinks of the problems in existence in Hong Kong.

In conclusion on this matter, I would say that the hon. Member has raised a number of extremely important points. As I said earlier, I am sure my right hon. Friend would be very glad to discuss these in a different context, but I think that the hon. Gentleman will, on reflection, agree that if a problem of this sort has to be dealt with by legislation—I am not sure whether that is the right way to deal with it—it should not be done by way of an Amendment to this Bill, but should be given more general discussion and treated on its own merits separately.

Mr. Callaghan

We have had a Departmental reply from the Under-Secretary in response to what was undoubtedly a masterly exposition of the subject by my hon. Friend the Member for Farnworth (Mr. Thornton), whose knowledge of the labour conditions in the area of which he was speaking is unrivalled in the House of Commons.

I could not follow the Under-Secretary's arguments. We are introducing into the

Bill at this stage a new principle and proposing for the first time to make loans to these Territories. What the Opposition are asking is that before the loans are made there should be reasonable protection in the employment of women and children in the Territories concerned.

That is the request which the Under-Secretary rejected on two grounds. First, he said that we should not use the Committee stage to introduce Amendments, because that would be "dragging it in by the tail", and, secondly, feeling that that was not very strong, he said that we had already given grants and should, therefore, give loans.

I turn that argument round. This is a very good way of introducing the principle, on loans, and saying that if these areas are to have loans, British public opinion will demand that they should have laws which make it possible for the women and children of those areas to be adequately protected in their employment. British money is to be lent and British public opinion has the right to express its views about the conditions under which the money should be lent. We have had a purely Departmental brief in reply to the Amendment, and I recommend my hon. Friends to divide the Committee.

Question put, That those words be there inserted:—

The Committee divided: Ayes 94, Noes 137.

Division No. 79.] AYES [10.12 p.m.
Abse, Leo Griffiths, David (Rother Valley) Noel-Baker, Rt. Hon. P. (Derby, S.)
Allen, Scholefield (Crewe) Griffiths, Rt. Hon. James (Llanelly) Oram, A. E.
Awbery, S. S. Griffiths, William (Exchange) Palmer, A. M. F.
Blenkinsop, A. Hall, Rt. Hn. Glenvil (Colne Valley) Parkin, B. T.
Boardman, H. Hannan, W. Plummer, Sir Leslie
Bottomley, Rt. Hon. A. G. Hayman, F. H. Price, J. T. (Westhoughton)
Bowden, H. W. (Leicester, S.W.) Herbison, Miss M. Price, Philips (Gloucestershire, W.)
Burton, Miss F. E. Holman, P. Pursey, Cmdr. H.
Butler, Mrs. Joyce (Wood Green) Hunter, A. E. Randall, H. E.
Callaghan, L. J. Hynd, J. B. (Attercliffe) Rankin, John
Castle, Mrs. B. A. Irving, Sydney (Dartford) Redhead, E. C.
Champion, A. J. Jeger, Mrs. Lena(Holbn & St. Pncs. S.) Robens, Rt. Hon. A.
Cliffe, Michael Johnson, James (Rugby) Rogers, George (Kensington, N.)
Collick, P. H. (Birkenhead) Jones, Rt. Hon. A. Creech (Wakefield) Short, E. W.
Crossman, R, H. S. Jones, Jack (Rotherham) Silverman, Sydney (Nelson)
Davies, Harold (Leek) Lawson, G. M. Skeffington, A. M.
Deer, G. Lindgren, G. S. Slater, J. (Sedgefield)
Delargy, H. J. Mabon, Dr. J. Dickson Smith, Ellis (Stoke, S.)
Dodds, N. N. McCann, J. Sorensen, R. W.
Dugdale, Rt. Hn. John (W. Brmwch) MacDermot, Niall Soskice, Rt. Hon. Sir Frank
Ede, Rt. Hon. J. C. Mclnnes, J. Sparks, J. A.
Edwards, Robert (Bilston) McKay, John (Wallsend) Spriggs, Leslie
Evans, Albert (Islington, S.W.) MacPherson, Malcolm (Stirling) Stewart, Michael (Fulham)
Evans, Edward (Lowestoft) Mann, Mrs. Jean Stonehouse, John
Fitch, A. E. (Wigan) Marquand, Rt. Hon. H. A. Taylor, John (West Lothian)
Foot, D. M. Mikardo, Ian Thomson, George (Dundee, E.)
Forman, J. C. Mitchison, G. R. Thornton, E.
Gordon Walker, Rt. Hon. P. C. Moody, A. S. Warbey, W. N.
Grey, C. F. Morris, Percy (Swansea, W.) Weitzman, D.
Wells, William (Walsall, N.) Williams, W. R. (Openshaw) Yates, V. (Ladywood)
Wheeldon, W. E. Winterbottom, Richard
White, Mrs. Elrene (E. Flint) Woof, R. E. TELLERS FOR THE AYES:
Mr. Simmons and Mr. Wilkins
Agnew, Sir Peter Goodhart, Philip Medllcott, Sir Frank
Allan, R. A. (Paddington, S.) Green, A. Mott-Radclyffe, Sir Charles
Alport, C. J. M. Grimond, J. Nairn, D. L. S.
Amery, Julian (Preston, N.) Grimston, Sir Robert (Westbury) Nicholson, Sir Godfrey (Farnham)
Armstrong, C. W. Grosvenor, Lt.-Col. R. G. Nicolson, N. (B'n'm'th, E. & Chr'ch)
Atkins, H. E. Gurden, Harold Noble. Comdr. Rt. Hon. Allan
Baldwin, Sir Archer Harris, Reader (Heston) Noble, Michael (Argyll)
Balniel, Lord Harrison, Col. J. H. (Eye) Nugent, G. R. H.
Barber, Anthony Harvey, Sir Arthur Vere (Macclesf'd) O'Neill, Hn. Phellm (Co. Antrim, N.)
Batsford, Brian Harvey, John (Walthamstow, E.) Osborne, C.
Bell, Philip (Bolton, E.) Heath, Rt. Hon, E. R. G. Page, R. G.
Bidgood, J. C. Henderson-Stewart, Sir James Partridge, E.
Biggs-Davison, J. A. Hill, John (S. Norfolk) Peel, W. J.
Bingham, R. M. Hirst, Geoffrey Pitman, I. J.
Bishop, F. P. Hobson, John (Warwick & Leam'gt'n) Pitt, Miss E. M.
Bossom, Sir Alfred Holland-Martin, C. J. Pott, H. p.
Bowen, E. R. (Cardigan) Holt, A. F. Powell, J. Enoch
Bralthwaite, Sir Albert (Harrow, W.) Hornby, R. P. Price, David (Eastleigh)
Browne, J. Nixon (Craigton) Howard, Gerald (Cambridgeshire) Price, Henry (Lewisham, W.)
Butcher, Sir Herbert Howard, Hon. Greville (St. Ives) Profumo, J. D.
Butler, Rt. Hn. R. A. (Saffron Walden) Hughes-Young, M. H. C. Rawllnson, Peter
Carr, Robert Hylton-Foster, Rt. Hon. Sir Harry Ridsdale, J. E.
Channon, H. P. C. Iremonger, T. L. Roper, Sir Harold
Chichester-Clark, R. Irvine, Bryant Godman (Rye) Sharpies, R. C.
Clarke, Brig. Terence (Portsmth, W.) Jenkins, Robert (Dulwich) Spearman, Sir Alexander
Cooke, Robert Johnson, Dr. Donald (Carlisle) Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Cordeaux, Lt.-Col. J. K. Johnson, Eric (Blackley) Stanley, Capt. Hon. Richard
Corfield, F. V. Joseph, Sir Keith Steward, Sir William (Woolwich, W.)
Courtney, Cdr. Anthony Kerr, Sir Hamilton Stuart, Rt. Hon. James (Moray)
Craddock, Beresford (Spelthorne) Kershaw, J. A. Studholme, Sir Henry
Crosthwaite-Eyre, Col. O. E. Kirk, P. M. Tilney, John (Wavertree)
Crowder, Petre (Ruislip—Northwood) Langford-Holt, J. A. Vane, W. M. F.
Currie, G. B. H. Leavey, J. A. Vickers, Miss Joan
Dance, J. C. G. Legh, Hon. Peter (Petersfield) Vosper, Rt. Hon. D. F.
Deedes, W. F. Lennox-Boyd, Rt. Hon. A. T. Wakefield, Edward (Derbyshire, W.)
de Ferranti, Basil Linstead, Sir H. N. Wakefield, Sir Wavell (St. M'lebone)
Doughty, C. J. A. Lloyd, Maj. Sir Guy (Renfrew, E.) Wall, Patrick
du Cann, E. D. L. Longden, Gilbert Ward, Dame Irene (Tynemouth)
Elliott, R. W. (Ne'castle upon Tyne, N.) Loveys, Walter H. Webster, David
Fisher, Nigel Lucas-Tooth, Sir Hugh Whitelaw, W. S. I.
Fletcher-Cooke, C. Macdonald, Sir Peter Williams, R. Dudley (Exeter)
Gammans, Lady McLaughlin, Mrs. P. Wilson, Geoffrey (Truro)
Garner-Evans, E. H. Macmillan, Maurice (Halifax) Wolrige-Gordon, Patrick
George, J. C. (Pollok) Maddan, Martin
Gibson-Watt, D. Marlowe, A. A. H. TELLERS FOR THE NOES:
Glyn, Col. Richard H. Mathew, R. Mr. Bryan and Mr. Finlay.
Godber, J. B. Maydon, Lt.-Comdr. 8. L. C.

Clause ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.