§ Order for Second Reading read.
§ 10.10 p.m.
§ The Minister of State, Treasury (Mr. Dick Taverne)
I beg to move, That the Bill be now read a Second time.
It is just over two years until Decimal Day, 15th February, 1971, the day appointed by the Treasury under the Decimal Currency Act, 1967, for the introduction of the decimal currency system. The Act did three things: it dealt with the decimal currency system itself, and said that the system was to be based on the £ sterling, divided into 100 new pence; it dealt with the decimal coinage; and it dealt with the constitution and functions of the Decimal Currency Board.
It was always contemplated that a second Bill would be necessary to effect the changeover, and that is what the present Bill sets out to do.
Where the first Act laid the foundations for the introduction of the new system, the Bill provides the legislative framework for the changeover. We have tried to make it as simple and straightforward as possible, and we have also published a White Paper to explain the main provisions of the Bill in plain terms and relate them to the decisions already taken.
The House will, however, have noticed that while some of the provisions are of wide and general effect others are of technical and specialised interest. My aim today is not to add to the explanations which can be found in the White Paper and the Explanatory Memorandum to the Bill but to state in general terms the sort of results the Bill aims to achieve.
Changing from the old to the new currency system involves a change in the coinage used for cash transactions and in the units used for accounting. This may sound obvious, but there are two points to be made. First, it is with the 1664 necessary consequences in law of these two changes that the Bill is concerned. Second, in thinking about the way in which the Bill works, or what is to happen in any situation where money is involved, we must be quite clear whether we are dealing with a cash or accounting transaction.
I now turn to the way in which the Bill will work in its general application. The first point is that it is impossible to make an overnight change. There must be a change-over period. Cash registers, accounting machines, slot machines—machines designed to record or calculate in £ s. d. or to be operated by £ s. d. coins—must be adapted or replaced. This physical task will take time. Therefore, there must be a changeover period when the coins of both the old and new currencies are legal tender, and when accounts can be kept in either currency.
The Decimal Currency Board has already estimated that that period need not last longer than 18 months. It may well be shorter. The Board will keep the position under review and will advise the Government when it considers that the period of dual currency working can be brought to an end, which will be done under the powers we seek in the Bill.
When the change-over period begins the present halfpenny, the half-crown and the 10 shilling note will have disappeared. We are all of us already familiar with the five and 10 new penny pieces and their identity in size and shape and value of the 1s. and 2s. pieces. By D-day we shall also be familiar with the 50 new penny piece which, by contract, is of an entirely novel shape. On D-day the only change in the coinage will be that the decimal bronze coins—the new halfpenny, new penny and two new penny piece—will rapidly come into circulation as coin of the realm. The old penny, 3d. piece and 6d. will continue in circulation until the end of the changeover although, for obvious practical reasons, they will not be as freely available at the end of this period as they will be at the beginning.
The consequence of this is that during the change-over period it will always be possible to make an exact settlement of a debt in either currency by paying cash 1665 as opposed to say, paying by cheque. If it is an £ s. d. debt, incurred either before D-day or during the change-over period, the exact amount can be paid in cash. It will not matter whether the amount is made up of a mixture of old and new coins, although if the amount is not a multiple of sixpence some old coins will have to be used. Similarly, debts incurred in the new currency can also be settled exactly.
At the end of the change-over period the picture will change. The old penny, 3d. piece and 6d. will be withdrawn from circulation and will no longer be legal tender. The only old coins in use will be 1s. and 2s. pieces, equivalent, of course, to five and 10 new penny pieces. It will then no longer be possible to make an exact settlement of an £ s. d. debt unless it is a multiple of sixpence, which is exactly equivalent to 2½ new pence. The Bill establishes how such an amount is to be paid by providing, in Clause 9, for the payment of the corresponding amount in the new currency as shown by Schedule 1 of the Bill. Thus, an amount to be paid in the new currency is certain in law.
Before I leave the coinage, let me turn to the bread and butter situations during the change-over period; for ex ample, buying goods in shops or paying fares on buses. As a rule, a shopkeeper will offer goods for sale at a price either in the old or in the new currency. Similarly, the fares on a bus will be in either the old or the new currency. It will not be open to the customer to decide, if goods or services are priced in the new currency, that he will pay the nearest amount in the old currency. Sometimes, no doubt, this may be what the shop keeper will accept, as a matter of con venience or goodwill; but it will not be the rule. To suppose otherwise is to misunderstand the purpose of con version tables to which I shall return later. The fact that some shops or buses—
§ Sir Douglas Glover (Ormskirk)
I do not understand what the hon. Gentleman has been saying. He says that bus fares are payable in either currency. I did not understand his next sentence when he spoke about not paying the exact fare in the old currency. How will we be able to go on a bus?
§ Mr. Taverne
If the bus fare is expressed in the new currency and a passenger cannot reach that exact fare in the old currency he will not be able to pay in the old currency unless it is accepted as a matter of convenience.
The fact that some shops or buses will be trading in £ s. d. prices and others in decimal prices need pose no special problems for the shopper. All he needs to be able to do is to tender either the exact amount of money due or a higher multiple of sixpence or 2½ new pence, which comes to the same thing. If he does so, it will always be possible for the shopkeeper or bus conductor to give him the exact change. Indeed, I would almost go so far as to say that if a shopper has this point firmly in his mind, there really is very little else that he or she needs to know about decimal currency.
However, the Decimal Currency Board will very soon be issuing two leaflets, one giving guidance to businessmen and the other about cash transactions during the change-over, which will deal with this sort of point in much more detail.
Next I come to prices. It may be asked why the Bill does not provide for the new halfpenny conversion table, set out in the Appendix to the White Paper as Table A, to be used as a matter of law for the conversion of retail prices of goods and services. The answer is that it simply would not be practicable to require by law that for all goods and services every single price of every one in the country should be converted in this way from D-day. The Government feel that the use of this table will be the general rule both in the public and in the private sectors; but, quite apart from the practical difficulties of enforcement, there are bound to be cases where departures from the table cannot be avoided, for perfectly respectable reasons.
It would be impossible to specify in the Bill the sort of circumstances which might justify a departure from the table or to set up some sort of machinery for looking at every exception. The Government do not believe that the business community, and retailers particularly, are out to make money out of the change-over by unfair means. The vast majority will want to play fair by 1667 the public. There may be a few who try to take advantage of the situation but if they do so they will forfeit good will. Experience from Australia and New Zealand strongly suggests that the public will look closely at price changes at this time, and competition itself will act as a check on abuses.
This is not pie in the sky. As I indicated, there is solid evidence from Australia and New Zealand. There, the value of the smallest unit of currency, when they changed over, was precisely the same as in our system—1.2 of our present pence. Their general policy on prices was much the same as ours. When we look at what happened in Australia in 1966 and New Zealand in 1967, we find no evidence in either country of any increase that could be attributed to the change to decimal currency.
Before leaving the subject of prices and conversion tables, I want to make one general point. It is a great mistake to suppose that, wherever one sees an amount of money in £ s. d., it would or should be converted to the equivalent amount by using the conversion table. I should like to give an example. If I want to buy 12 units of 1s. 1d. each, I would not have to work out 12 times 5½ new pence, using the new halfpenny table. The sum I would convert would be 13s. The thing to do is to add up the total first and then convert from the table. Any conversion to a payable amount is done at the latest possible stage in the calculations.
This is a sound general rule. In cases like this the conversion of the unit in accordance with either of the tables in the White Paper is neither required by the Board nor recommended by the Government; nor is it common sense. That is one reason why, as the White Paper says, the main provisions of the Bill concentrate on what happens when an amount of money has to be paid and why the general emphasis is on how the payment is made rather than on how to make conversions from one currency to the other.
So far I have concentrated mainly on the coinage, on cash transactions and on shopping and prices. I now turn to the implications of changing the unit of account.
§ Mr. Albert Murray (Gravesend)
I wonder whether the Treasury has given any thought to old-age pensioners, and whether it is possible to have conversion tables printed on their pension books before the introduction of the system in 1971.
§ Mr. Taverne
The question of publicity is a matter for the Decimal Currency Board, and one of the plans of the Board is to see that every household in the country receives a conversion table. I believe that every possible problem which may face the individual citizen in converting to the new currency will be fully considered by the time D-day arrives.
I was talking about changing the unit of account. To some extent this involves mainly technical and rather specialised considerations; the aspect that is of more general interest is payments through the banking system. It would not be practicable for the banks to work in both currencies. This fact has several consequences. The first is that for the banks there is no change-over period. When they open their doors on D-day they must be ready to work exclusively in decimal currency; they will be concerned with the old currency system only because banks will be the means by which the penny, threepenny piece and sixpence are withdrawn from circulation and the new coins are issued. During the changeover they will issue the old coins which are still legal tender to customers who want them.
The banks have an exacting task, because immediately before D-day they must clear £ s. d. items and then convert their machines and accounts entirely to decimal currency working. For this reason the banks will not be able to carry out normal business while they are engaged on the task of conversion. They will, however, be ready to provide a limited range of services, the details of which have been discussed between the banks and the Board.
The Bill provides for this situation in several ways. First, in Clause 13 it provides for the 11th, 12th and 13th February, 1971, to be non-business days. Second, it provides in Clause 4 for the conversion of bank accounts in accordance with the whole new penny table in Schedule 1. Third, in Clause 3, it 1669 provides for the alteration in accordance with tills table of cheques and similar instruments written before D-day in the old currency but not paid in before D-day.
Fourth, it provides in Clause 2 that bills of exchange, which includes cheques, and promissory notes, of course, will be invalid if written in shillings and pence. No doubt some people will write out cheques in the old currency after D-day, just as some people put the wrong year on a cheque in the first few days of January, but I understand that the banks will allow a period of grace in such cases.
All this means that, from D-day—
§ Mr. Ian MacArthur (Perth and East Perthshire)
May I ask for some clarification, since this could lead to a good deal of misunderstanding? Is the hon. and learned Gentleman saying that, although a cheque written in £ s. d. after D-day will not be admissible, banks will nevertheless allow a period of grace? What does this mean for the man writing out a cheque on D-day plus one? Will his cheque be admitted by the bank or not?
The banks are not bound to admit it, but in practice they will for the first few days. At the moment, if someone writes out a cheque dated 1st January, 1968, when he means 1969, the banks do not take much notice.
This means that, from D-day, all payments through the banking system must be expressed in decimal currency, with the exception of the period of grace, and this in itself, of course, will be a powerful means of speeding the changeover. Organisations of every kind will find if to their advantage to convert their accounts to decimal currency working as soon as possible after D-day and as Table B in the White Paper makes clear, they are recommended to use the whole new penny system in converting £ s. d. amounts to decimal amounts. This will keep them in step with the banking system and even out overall the inevitable small gains and losses.
If we now look back at the way the coinage and legal tender provisions of the Bill work, and the way the banking provisions work, we can draw two main conclusions The first is that the fact that all banking transactions must be in 1670 decimal currency is in itself a powerful instrument making for a speedy changeover, and this I think is generally accepted as a desirable objective. The second is that this does not prejudice the right of any debtor to make an exact settlement of an £ s. d. debt in £ s. d. coins at any time during the changeover period. Finally, the Bill makes it clear how any £ s. d. amounts are to be paid after the end of the change-over in a way which is certain and the same whether the settlement is in cash or by cheque, and which is fair overall to debtors and creditors.
Finally, I want to say a word on compensation. As the House will have seen from the White Paper, the Decimal Currency Board has recommended that there should be no compensation in any circumstances; the Government think that this recommendation should be accepted and they are therefore asking Parliament to relieve the Board of its function of receiving representations about compensation. A provision to this effect appears in Clause 17 of the Bill.
Perhaps I may remind the House that there has never been any question of a general compensation scheme to cover decimalisation expenditure. This was made clear when the decision to introduce a decimal currency system in 1971 was first announced. It was also made clear in the White Paper published in December, 1966; and in the debates on this subject when the first Decimal Currency Bill was before the House. The Government said at that time that they did not entirely rule out the possibility of compensation in special circumstances, although they were at pains to make it clear that any such cases would be exceptional; and there might be none at all.
Furthermore, the Government also made it clear in the House that they had a completely open mind on the sort of circumstances that might be held to justify a special compensation scheme. Their view was that the whole issue ought to be examined by a completely independent and impartial Board whose members were drawn from the main fields affected by currency decimalisation, so that they could form their own judgment.
When the Decimal Currency Board made its recommendation, the Government naturally considered very carefully 1671 the reasons which led the Board to its conclusion. The Board satisfied itself and it satisfied us that in no circumstances would it be able to propose any scheme for special compensation based on clear principles and capable of being administered fairly and soundly. Obviously, if the Government were to put before Parliament proposals for a scheme with which the Decimal Currency Board was not satisfied, and with which the Government were not satisfied, they would be open to severe criticism, and rightly so. In the circumstances, the Government are clear that since the Board has now been able to study in detail both the special and general problems of the changeover, its view on this matter should be accepted.
In my opening remarks I said that the Bill provided the legislative framework necessary to effect the change-over to decimal currency. I emphasise that neither the Bill nor the White Paper is intended to be a blue-print; we do not expect all the organisations affected by the change-over to find solutions to their individual problems simply by reading the White Paper and studying the Bill. But we believe that the important basic information necessary for bringing change-over plans near to completion is now available.
If those responsible for planning the change-over study the White Paper and the reference booklets which the Decimal Currency Board has already published and is to publish shortly, they should have the basic information which they need to make their detailed plans, tailored to their own organisations. We urge, in addition, that they should benefit by the lessons learnt in Australia and New Zealand and should make the utmost use of the two years that remain. This really is of vital importance.
A smooth and rapid change-over will not depend on what happens after D-day; it will depend on what happens between now and D-day. The immediate function of Parliament, in considering the Bill, is to see that the legal basis for the change-over is as sensible and straightforward as we can make it.
§ Sir D. Glover
The hon. and learned Gentleman referred on several occasions to the Decimal Currency Board taking 1672 decisions. Considering that we are merely discussing the Second Reading of the Measure, is it not a fact that the Board cannot know in what form the Bill will leave Parliament and whether Amendments will be included in Committee to restrict the Board's activities? Is it not wrong that the Board should be reaching and implementing decisions?
§ Mr. Taverne
I do not think that I misled the House. I made it clear that the Decimal Currency Board, which was set up under an Act of Parliament, was asked to consider certain problems, such as the question of compensation. It reached the conclusion that there was no basis on which to devise a reasonable special scheme. It advised the Government of that decision and the Government have taken their decision. Whether or not the matter is finally accepted is something for Parliament to decide.
§ 10.33 p.m.
§ Mr. Terence L. Higgins (Worthing)
It is typical of the shambles to which the Government's programme has been reduced that the House which has been asked, and agreed, to spend £3 million on publicity on decimalisation, should be asked to debate the major principles of the Bill after 10 o'clock at night when it is perfectly clear, particularly in view of the earlier events of the day, that the matter will get the absolute minimum of publicity. There was no reason why, a decision having been given to have a Standing Order No. 9 debate earlier, the Government could not have deferred this debate until a time when the subject would have had a reasonable degree of publicity and could have done something to augment the expenditure of £3 million being spent on publicising the change to decimal currency.
The smoothness of the transitional period, a subject on which the Minister placed great emphasis, will depend on the speed with which people begin to make plans for their companies and organisations. This speed will occur only if we have a sense of urgency about the matter. I detected very little sense of urgency in the hon. and learned Gentleman's speech. He said that he was clarifying the position. If the average 1673 housewife had sought clarification about what was going to happen in the transitional period and had listened intently to the Minister's speech, she would have been terrified, not least in view of the exchanges about whether or not a given coin was likely to be accepted on, for example, buses when the two denominations are not precisely the same.
It is important that we should look at this Measure in the context of the Decimal Currency Act, which was debated in 1967. At that time, we debated at great length the choice of the actual type of decimal currency we were to have, Eventual y, it was decided to select the £-pence system. Two points need to be made in that connection. First, it was a matter pushed through on a party Whip basis although it was clearly not a partisan matter. The decision resembles the decision on British Standard Time. It should have been decided on a free vote.
Many people, including my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) and myself, during the debates advocated the 10s. system. It is worth spending a moment on this, because the system selected is making the operation of the "nuts and bolts" which this Bill is concerned, more difficult than it need have been.
It was generally agreed on all sides that there was a strong case for going decimal, but there was disagreement about the actual system. The Halsbury Committee summed up the matter in a crucial paragraph on page 87, paragraph 373, when it pointed out that the real distinction between the two systems was that the case for the £-penny system was the international case for sterling, and the case for the 10s. system was on the ease with which the system could be introduced, because of the greater "associability" of the 10s. system.
None the less, the Government were determined in March, 1967, because of the international case for sterling, to insist on the £-pence system. What have we had since? We have had a situation when the £ was devalued, and the case for the £ system was considerably reduced. We no longer have the main advantage of the £ system and we have lost the advantage of the 10s. system.
§ Mr. A. 19. Macdonald (Chislehurst)
Does the lion. Gentleman recall that, 1674 whatever may have been said in the Halsbury Report, the Government were at pains not to give so much emphasis to the international aspect as did the Halsbury Report? With respect, is it accurate to say that the Government rested their whole case on the international argument? I believe not.
§ Mr. Higgins
They did not rest their whole case on it, but like Halsbury, they were prepared to say that the international case was very important.
We debated the other arguments in detail and I tried to get the Financial Secretary to the Treasury to give a ranking list of the priorities. Alas, he produced an answer which could not be described as clear.
The transitional period we face now will be more difficult because of the system the Government have selected. We must accept that, and do everything possible to ensure that the transitional period is as smooth as we can make it.
It is with this objective that we on this side will look at this Measure. The complete reversal of the Government's policy with regard to specific compensation is not likely to increase the confidence of those most involved in industry and commerce. It would be wrong for those on this side to advocate any increase in Government expenditure in the present economic circumstances, where the rate of economic growth has been slow and the burdens of taxation are ever increasing. I am not advocating any increase in Government expenditure. But I think that some may have expected an apology from the Minister of State tonight for the change in the Government's policy on compensation.
Let me spell out the position qua the House of Commons. Clearly the number of people who will be adversely affected to a significant extent as a result of the changeover would be greater if we adopted the £-penny system than if we adopted the 10s. system. I think that will be common ground on both sides. Therefore, the fact that the Government said that the Decimal Currency Board would consider requests for compensation in special circumstances must have weighed in our considerations of whether we thought that the £-penny system was the right system. In fact, we got the 1675 £-penny system on the specific assurance that requests for compensation would be considered.
Now the Government have gone completely in reverse and are saying that, as a result of the investigation that the Decimal Currency Board has made, they have decided that they are not going to go ahead with the payment of specific compensation after all.
In these circumstances I do not think it is surprising that certain organisations, particularly those most affected, have made charges of bad faith. I want to go into this in a little detail, because it is something which is adversely affecting the atmosphere in which the changeover is taking place. It is well known that the original White Paper of 1966 said:'"If it can be shown to the Decimal Currency Board, however, that there are grounds for giving some assistance in special cases the Government will consider any recommendations the Board may care to make. But such cases, if there are any at all, will be exceptional.That is what the Government said in 1966. It was backed up by the then Financial Secretary and embodied in Clause 5(1)(d) of the 1967 Bill.
The Board was charged with the specific function of looking at specific cases—not the general case for compensation. No one was arguing for general compensation, because everyone would gain from decimalisation, which would in general balance the costs; but if a particular interest was adversely affected that would be considered by the Board. I understand that 60 organisations of one kind or another made representations. A considerable time—something over six months—elapsed between the date when oral evidence was taken and the date when these organisations were told that their applications for compensation had been refused.
I want to go into this point, because the Annual Report of the Decimal Currency Board makes a statement on compensation. It sets out a number of criteria which might justify the payment of compensation. I hope that the Minister of State will tell us which of these criteria were not met by those organisations which applied for compensation. Let me take as an example the Automatic Vending Association of Britain. 1676 The Board's statement points out that it was not empowered to consider general applications for compensation. It then says:The Board will examine carefully any other representations they may receive but they will not consider making recommendations to the Government for compensation unless the representations are in respect of costs which meet all the following requirements:(i) they must be necessarily and directly incurred as a result of decimalisation and would not otherwise have been incurred",I think it will be admitted that the vending machine operators fall within that criterion.
The next criterion is:(ii) they must be clearly identifiable and measurable".This is an odd criterion, because it will be generally accepted that many of these costs will not be measurable until we get closer to, or perhaps even into, the transitional period. None the less, that they would be measurable and identifiable in principle I do not think would be disputable. Therefore, that criterion was met.
The next criterion is:(iii) they must be manifestly disproportionate, after taking into account all tax allowances, both to the costs incurred generally by organisations and to the benefits deriving from the changeover".I do not see why there should be that criteria. The Board thought the loss must be "disproportionate". If there were any significant loss, there might be some case for compensation. But anyway, certain groups such as the vending machine operators would seem to face a manifestly disproportionate burden compared with the rest of the economy.
The next criterion is:(iv) they must be for the conversion or replacement of machines purchased before 14th July 1967".Fair enough: that obviously applies to the vending machine operators. Then:(v) they must extend so far beyond the normal financial fluctuations and hazards of business that they cannot be readily absorbed in normal operating costs".I do not see why the Board felt normal fluctuations and hazards of business were relevant. None the less, surely it is clear that in the case of machines which have to be completely scrapped or converted at considerable expense: this criterion was met, too.
1677 If this is the limit of the Board's criteria, and—the statement says:In considering representations the Board will apply the criteria … above"—why did the Board find that there was not a case for compensation in specific instances?
I should like the Minister of State to tell us in what respect the criteria were not met in the 60 cases which were put forward, and particularly the example that I cited.
Next, why are we being asked in this Bill to cut out the possibility of further representations? There does not seem to be any reason, since it is written in as a statutory responsibility, that we should remove from the Board the duty to receive representation from people at subsequent stages who may come forward with an identifiable loss coming within the Board's criteria. If the Government adopted their original policy, at present embodied in Statute, why is this to be overruled at this stage?
The Board says that it cannot devise a system. There are two points on this. First, what consultations have there been with industry about the possibility of devising a workable system? I understand that there have not been any such consultations. Is this true or not?
Secondly, has the Board considered the Canadian experience of a change in coinage, where, I understand, a system with regard to compensation was devised? Why does the Board now think that it is impossible to devise a similar system?
Whatever may be one's own view on compensation, this is a series of arguments to which one ought to have some reply from the Minister, given that there is a complete reversal of his own policy.
He says that the Board has now had a chance to look at the question of specific compensation. But the Halsbury Committee had years and years to look at it, and the Government themselves had years and years after the Halsbury Committee's Report to look at it. This policy was embodied in the Statute of 1967 and now we are told in this Bill that we must reverse it. I hope that the Minister will give us an explanation.
I now turn to another point. If the Government are adamant that they are not going 10 make any compensation to 1678 any particular group, will the hon. and learned Gentleman seriously consider the possibility of extending the use of the 6d., the equivalent of the 2½ new pence piece, beyond the transitional period? Clearly, the extent to which individual groups of people are badly affected by these Government measures will be considerably diminished if the 6d. remains because, as the Halsbury Committee pointed out, the 6d. is one of the major coins used in vending machines. It also has important implications in some other industries, to which I will turn in a moment.
The arguments against the retention of the 6d. are not very strong. It is true that the Halsbury Committee, on balance, came down against this coin. But in paragraph 396 of the Report it is pointed out that the series ½ cent, 1 cent, 2½ cents, 5 cents, 10 cents, 25 cents, 50 cents, 100 cents was a ratio or series of numbers which provided a reasonable permutation. It is true that with a 2 cent piece as well, the position of the 2½ cent piece would be slightly odd. Yet the experience that we have had over the years with both a 2s. piece and a half crown piece does not suggest that the degree of confusion which is likely to happen if the 6d. is retained will be as great as some experiments have suggested. At the least, there is a case for keeping it beyond the transition period. If it falls into disuse, well and good; in due course it can be demonetised. But why decide at this stage to demonetise the 6d. straight away at the end of the transitional period?
If the Government are determined to reverse their own policy on compensation, there is a case for seriously considering retention of the 6d. It is of particular importance in several other contexts. For example, it appears that the minimum coin for parking meters, if we demonetise the 6d. or a 2½ new pence piece, will be 1s. or a five new pence piece. There are many spheres in which the 6d. is a convenient denomination, or, rather, the 2½ new penny is a convenient denomination, and its retention will help to offset the inflationary effect which the Government say they are anxious to offset.
What is to be the position as regards telephone kiosks? We have had the experience already of the 3d. piece being knocked out. If the 6d. is demonetised, 1679 there is no other alternative to going up to the 5 new penny piece, that is, the equivalent of appreciably more than the present 6d. I hope that we shall hear from the Minister about that. The same is true—the Minister mentioned bus fares—of the new Red Arrow buses which have a slot machine which takes 6d. If the 6d. is to be demonetised, is the fare likely to go up or down? Not only the Red Arrow buses but other buses in the North of London, I understand, are fitted with slot machines with a similar fitting to take the 6d.
That is a point which the House ought seriously to consider, but I turn now to the whole question of the cost of living. Quite rightly, the Government say that they are anxious to keep down the cost of living. I shall not go into the ghastly details of their failure to do so since 1964—a rise of 19 per cent. since October, 1964, or a rise of 6.6 per cent. since devaluation. However, although the Government are absolutely right to insist that the decimal change-over ought not to lead to inflation, there is no doubt that, if the general trend is inflationary, the incentive for people to round downwards will be much less. If they round down, when the trend of prices is rising rapidly they would take a squeeze in profit margins and subsequently make a big increase in price. It is far more likely, if they expect costs and prices to go up, that they will anticipate the rise. That is not a good thing, but it is a likely result of the decimalisation process taking place at a time when the trend of prices is faster upwards than at any previous date because of the Government's economic policies. Therefore, while I hope that there will not be any inflationary effect, I fear that there may well be because of the environment in which the Government are making their appeal.
Particularly in the light of the controversy in today's debate on the Post Office, one must ask what is to be done about the 4d. and 5d. post. By reference to the Government's conversion table, it is difficult to ascertain what is to happen here. It looks as though there will inevitably be some merging of the two rates. We ought to have a clear statement from the Post Office soon. In general the Government ought to say whether they will use the official conversion 1680 tables and no Department will do otherwise unless there are good reasons to the contrary.
There are grounds for concern about the inflationary effect of decimalisation, though I go along with the Minister's general view that the effects of competition will be the real determinant of whether people round up or down. If the market is very competitive, they will probably round down. If it is not, or if conditions in the market would in any way justify an increase in prices, they may well round up. But it is ridiculous for the Government White Paper to make the usual genuflection towards the prices and incomes policy, since everyone knows now that that policy, certainly as regards prices, has been absurd and unfair in its incidence anyway.
The Minister of State has rightly said that the sooner the transitional period can be ended, the better. The figure now being suggested is 18 months. Has that period been agreed in consultation with those most concerned, or is it an arbitrary diktat revision of the previous estimate made by the Decimal Currency Board?
§ Mr. Higgins
Yes. My question was simply whether this had been agreed by those concerned. Has it been shortened from the period previously agreed and, if so, on what basis? One gets the impression that the Board is making a number of arbitrary decisions which have not been taken after great consultation with the industrial and commercial interests involved.
Much of the speed with which the transition can be made will depend on the availability of the machines. In this connection, what will be the Government's decision about the import deposit scheme? Clearly, if machines are not available in this country and the Government want to speed the transition, it is desirable for machines to be imported as rapidly as possible. Has the Minister had any representations about this matter and, if so, what has been the Government's reply?
§ Mr. Taverne indicated dissent.
§ Mr. Higgins
The hon. and learned Gentleman shakes his head, but I hope 1681 that he will consider that question before the debate ends, for it is important.
Finally, as I said at the beginning of my speech, publicity is extremely important and anything which can be done to facilitate a smooth transition should be encouraged. We have doubts about a number of Clauses in this Bill and we shall seek to amend the Bill in Committee. However, on the overall issue, we hope that the transition will be as smooth as possible and that the Government will not take with this "nuts and bolts" Bill the same sort of dogmatic attitude towards specific problems which they adopted when debating the main Act.
§ 10.57 p.m.
§ Mr. George Darling (Sheffield, Hillsborough)
When making speeches on subjects of this kind the hon. Member for Worthing (Mr. Higgins) always works to a familiar pattern: he begins by labouring a usually poor case of criticism against the Government and then goes on to his usually sensible and constructive proposals. On this occasion he has made one or two proposals with which I thoroughly agreed, particularly that for retaining the 6d. for longer than the transitional period, until the question of inflation arising through the change of currency is completely out of the way.
I want to refer to the difficulties in which retailers, shopkeepers and people engaged in services such as laundries and garages, will be involved in paying for the new machines, accounting machines and cash registers and the slot machines, or in paying for the conversion of their existing machines. These are not cheap machines for many small operators and some modern cash registers are very expensive.
At this stage I am not pleading for compensation. I accept the recommendation of the Decimal Currency Board, after what I imagine, from reading the Board's Report, to have been a thorough investigation, about compensation for the cost of machinery. I thought that the hon. Member for Worthing was not sufficiently generous to the Board in this respect. I think that it gave the subject careful examination. I am firmly of the opinion that it would be inequitable, as the Board says, and inefficient in practice to try to devise a scheme for helping hard 1682 cases. Either one must give compensation to cover the cost of new machinery to all people who have to buy it, or to none.
I want to raise the question of tax allowances on this, and in case the hon. Member for Worthing should think I am a penitent coming to confess my sins, because I had some responsibility for the change from tax allowances for investment of this kind to investment grants, let me hasten to say that I am firmly convinced we were right to make the change to cash allowances and right to put the emphasis on manufacturing equipment and to treat in rather niggardly fashion initial allowances for equipment going into service trades. However, I should like to tell my hon. and learned Friend the Minister of State that even the best fiscal policies must now and again be adjusted to new circumstances by refining them to meet the changing conditions; and perhaps altered, because there is a case for altering fiscal policies to meet the consequencies of new Government policies.
The service trades need to be efficient, no less than manufacturing industry and they need, and should be encouraged, to install, not only new machinery to deal with decimal currency, but new modern equipment whenever they can.
To what extent shopkeepers and other traders have been deterred from renewing equipment by not getting investment grants, which they are barred from getting is a matter I cannot pursue in this debate, but there is no question that they have to get new equipment. They cannot help it. There is no option but to buy new machines or to convert old ones for the new currency system, and it is inescapable that the Treasury should take the problem into account.
I do not want to pursue this because, if there is going to be a change to provide for additional tax allowances against profits to cover expenditure for this machinery and equipment, it must be brought forward in the Finance Bill and cannot be brought forward here. I ask my hon. and learned Friend the Minister of State to give this full consideration. It can be pursued on another occasion, but if the Treasury is to respond to an appeal of this kind, it may have to be considered during the Committee 1683 stage of this Bill, even though the provision must come into a Finance Bill.
This follows something which the hon. Member for Worthing put forward when he was talking about keeping the 6d. coin for a longer period, with which I thoroughly agree. We should bear in mind that unless something is done many traders may have to put up prices more than we would expect in the change-over period, merely to cover the cost of new equipment. This applies especially to small traders for whom the cost of new equipment may be a sizeable item in one year's accounting if they have to pay for it outright or over a little longer period when they have a short-term hire-purchase agreement. This should be taken into account and, unless traders are helped in this way, the solemn warning to traders not to run up prices unfairly to their customers should be withdrawn.
It is no use blaming the trader for running prices up apparently unfairly if he is only trying to cover the cost of new equipment which he cannot do without. I therefore agree with the hon. Gentleman the Member for Worthing, we do not want to give any traders a case for increasing prices. We want to keep prices steady during the changeover to the new currency and I therefore ask the Minister of State to ask his right hon. Friend seriously to consider the case for allowing traders to charge the cost of new equipment against profits or Income Tax in the year of purchase. This would be desirable.
§ 11.05 p.m.
§ Sir Douglas Glover (Ormskirk)
It is an outrage that at 11 o'clock at night we should be debating the Decimal Currency Bill because of the Government's inefficient management. We have had an emergency debate today, and the Government should have withdrawn the Bill and brought it on at a more suitable time. The Bill, which will affect every person in the nation, needs an enormous amount of publicity, and it is scandalous that it should be debated at a time when it will receive hardly a remark from television, radio or the Press.
However, we are having the debate and from the Government's point of view 1684 it is most unfortunate that we are dealing with £ rather than 10s. decimal currency, but it would be out of order for me to pursue this. The new system poses many problems, and if I might pay a compliment to the right hon. Member for Sheffield, Hillsborough (Mr. Darling)—if I might call him that, as we are, outside the Chamber, such good chums—what he said tonight was very valuable.
I am dubious whether the Decimal Currency Board is right to have taken a decision about compensation at this early stage. If it has taken that decision and if the Government intend to do nothing else, then the right hon. Gentleman is absolutely right—traders cannot be expected to face very considerable losses as a result of the change-over and then be expected to round their prices.
Basically in the consumer and service industries we live in a free enterprise society. People are in business to make a success of their business and to make a profit. If the Government of the day, for many good reasons, alter the system of currency which causes traders to incur considerable expense, they should automatically get back such costs, which are a direct charge on the activities of the business. The service and consumer industries cannot be expected by exhortation or threats to sacrifice profits by rounding, and at the same time to shoulder a considerable burden of expense in buying new machines to deal with the new currency system.
As the right hon. Gentleman said, to a small firm the expense will be enormous. There will be a very heavy burden on the small village shop, for instance, in having to buy a new cash register. In the capital investment of that shop a cash register is the largest capital expenditure which it enters into in 20 years. It is not like buying a couple of pencils; it is something which is thought about for five years before it is bought, a serious item. Because of Government action—and I am not criticising the Government for changing to decimal currency—these small traders are faced with this heavy expenditure.
I want to make a strong plea in support of the right hon. Member for Sheffield, Hillsborough, when he asks the 1685 Chancellor to take this factor into account in the Budgets before the date for the change-over. If he does not, there will be a far stronger head of steam towards an inflationary atmosphere in our price structure than would be the case if traders were given reasonable allowances to assist them in getting new machinery, instead of putting the cost of it on their prices.
My second point is to make another very strong plea for the retention of the 6d. Today, the 6d. seems to be about our most useful coin. One can get by without half-crowns or 2s. pieces, but it is almost impossible without the 6d. They are required for public telephones, parking meters, vending machines, and so on. Under the Bill, they will disappear.
We hear a lot about the expenses of vending machine operators. Their immediate costs would be reduced enormously if we allowed the 6d. to remain legal currency for a longer period than the proposed 18 months. If it was made five years, a good many machines would have paid for themselves or become obsolescent by the end of it, and new machines could be installed which would cope with the new currency. If the 18-month period is to remain, it will necessitate an enormous expenditure on new machinery which I gather from the Decimal Currency Board will not be subject to help from the State.
This country used to have a reputation for common sense, though we are rather losing it at the moment. Keeping the 6d. for a five or six year period seems to be good sense, and I can see no reason why it should not be done. By that one step, a great sum of money can be saved, and the Government will spare themselves from a good deal of unpopularity, not only from those in the vending machine business but from members of the public who may be deprived of many of these outlets.
Without the 6d., the present 6d. parking meter charge will be increased to the next coin. A 6d. telephone call will go up to 7£d. at the minimum. If I know anything about the working of these systems, it is more likely to go up to l0d.—the nearest equivalent to 1s. Members of the public will have less hostility to the working of the new currency if the State adopts a sensible approach and 1686 retains the sixpence as legal currency for a longer period.
If this debate was taking place at an earlier hour, I would have much pleasure in keeping the House listening with great interest, I am sure, to many other arguments. At this late hour, I will refrain from giving hon. Members the benefit or otherwise of my wisdom, except on one final point.
Under the heading:Effects of the Bill on public service manpowerthe Explanatory Memorandum says:The Bill will not cause any increase in the staff of the public service.I should not accuse the Government of terminological inexactitudes, but it is not true. I shall never be able to prove that, because nobody will be employed to do something just because of the Bill. But with any change of this sort there is bound to be a slowing down of the mechanism of our daily lives for at least two or three years. For example, when an office acquires an electric typewriter, the long-term result may be increased efficiency. But the short-term result is that the girl who has been working the ordinary typewriter takes twice as long to type her letters because she has to get to know all about the new machine.
There will be a great slowing down while ordinary people are calculating new decimal currency coins in terms of half crowns, sixpences and threepenny bits. Is anybody going to tell me that the girls behind the counters in the post offices will be as quick in paying out pensions in the new currency as they are with the old? For weeks and months they will be much more anxious to see that they do not make a mistake and therefore have to put some money into the till at the end of the day. It will be the same in shops.
The result in the public service is bound to be an increase in staff. It will probably iron itself out after a couple of years, but it is not true to say that this will not occur when we are making one of the biggest changes in our history. Every person in the country will have to get used to new coins, new systems and new prices. The speed of action of the staff in Government offices and post offices will be hindered because the public will be much slower in making certain that they have the right amount of 1687 money, working out in the old currency whether it is what it should have been. Human beings being what they are, many pensioners will for the rest of their lives work out their pensions as the £4 10s. or £4 12s. 6d. they were getting before, and that will slow down the process. Therefore, it is absolutely untrue to suggest that a change of this sort can be made without being a charge on our resources of manpower and an additional charge on the resources of the nation in all the other fields such as finance and so on.
Because there are so many issues in the mechanics of the Bill it is an outrage that we are debating it at this time of night. I know that my hon. Friend would recommend otherwise, but I feel so strongly about this that I should have liked to divide the House, not against the Bill, but to show our displeasure and disgust that the Government are bringing in such an important Bill, affecting every man woman and child in the country, at this hour of the night.
§ 11.19 p.m.
§ Mr. Gwilym Roberts (Bedfordshire, South)
I will not, at this late hour, revive the argument about the 10s. and £1 pieces, even if that was in order; but I want to support some of the matters which have been raised on both sides of the House.
I do not support the arguments, however valid they may be, put forward by the hon. Member for Worthing (Mr Higgins) about compensation. I think that our aim should be to avoid cost and the necessity for compensation.
§ Mr. Higgins
The hon. Gentleman must not misunderstand me. I did not say that I was advocating compensation. I said that I thought that people were entitled to an explanation of the Government's complete reversal of policy.
§ Mr. Roberts
I accept that.
I support the argument that has been put forward from both sides for the retention of the 6d. There is an outstanding case for its retention. I agree that we have something here which is half way between two coins—2.5d. However, 2.5 is nothing new in our currency. For many years people have dealt very successfully with half-crowns and half- 1688 pennies, so this will not complicate matters. It might simplify matters. It is absurd to be pushing it out so hurriedly when, as has been pointed out, we have just introduced it in so many different spheres. I will not go through them all. There is a 100 per cent. case for retaining the 6d. piece for telephone boxes.
We have the one-man buses. The members of the Transport and General Workers' Union took a long time to be converted to that idea. A lot of good will was needed by many members of that union to accept that type of bus. Now that they have accepted it, we reach a position where the whole basis of the system will be changed again. The same argument applies to parking meters.
I suggest to my hon. Friend that even at this late stage—and it is a late stage, because some of the conversions are on the way—he should seriously think again about the retention of the sixpence. I think that it will greatly simplify what will be a very complicated process.
I should like to refer now to what has been said about postage where there are foreseeable complications. Many on this side of the House would be very sorry if the first tier went up to three new pence because, doing a bit of quick mental arithmetic, that would be a 44 per cent. increase, which is very substantial. Obviously, some thinking will have to be done about future postage rates.
The conversion table leaves me slightly unhappy. I wonder on what kind of statistical sampling basis this was produced. Was some statistical sampling carried out to determine, in normal transactions, what the relative effects would be? Apart from the point made by my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling), it is clear to me that there is a very real point about the cost, particularly to the small man who perhaps does not have the direct cost, but is faced with a marginal price change. If he deals with a large number of small transactions and takes the lower price he can operate at a loss. If he takes the higher price, through no doing of his own, he can make an abnormal marginal profit. These are the only choices open to him. Therefore, we should look very carefully at this matter.
Finally, my hon. Friend, introducing the Bill, said that this was largely a 1689 matter of good will. I agree. But imagine the situation on buses, for instance, if we removed the 6d. The hon. Member for Ormskirk (Sir D. Glover) referred lo post offices and shops. One can imagine crowded buses, and the sort of situation which might arise with people dealing in two currencies, one of which seems like a foreign currency to them. We have all heard people who have come back from a holiday abroad who, when asked how they liked it, have replied, "It was a good holiday, but I am sure that I was cheated many times over the currency." That is the feeling which people have in these matters because of the complexity of transactions, and I am afraid that with that complexity ill will will be created, because people will imagine that they have been cheated when they have not.
Our aim should be to minimise the difficulties of this exercise, and the greatest single contribution would be the retention of the present 6d. as long as it is usable. I am afraid that some people will ask, remembering the old slogan on the railways, "Is the whole exercise really necessary?"
§ 11.26 p.m.
§ Mr. A. H. Macdonald (Chislehurst)
At this late hour I must resist the temptation to comment on some of the remarks made by hon. Members opposite. That is rather a pity, because I disagree profoundly with some of them. I shall let them go and shall try to bash out one or two points of my own. I have one or two queries about the Bill. I emphasise that they come from no concealed spirit of hostility; I was not only a supporter of decimalisation but a hearty supporter of the method that the Government adopted. Therefore, my queries arise from an anxiety to see this exercise a success.
I refer first to the proposal for the four-day closure of the banks at the beginning of the change-over period. I want to know how this four-day period was determined, and how the Board and the Government satisfied themselves that this was the appropriate period. In particular, I should like to know what consultations were held with the banks and with bank employees. I had the privilege of serving on the Committee of the earlier Decimal Currency Bill, and because I foresaw that the co-operation of 1690 the banks would be critical to the success of the exercise I ventured to press for a member of the National Union of Bank Employees to be co-opted on to the Board.
I shall not reopen that topic now, but it is proper for me to quote what was said in reply by my right hon. and learned Friend who was then Financial Secretary to the Treasury and leading for the Government in that Committee. He said:I am sure that such consultations will lake place in this case … I am sure that the Board will be eager to receive the representations of the N.U.B.E. and will pay the greatest attention and care to what it has to say. I am sure that, at the end of the day, there will not be any complaint about lack of consultation …"—[OFFICIAL REPORT. Standing Committee A, 2nd May, 1967, c. 221.]I should like to be told—if not now, in Committee—about the consultations that took place. I deeply regret that my understanding is that none did take place. This is a critical point, because at this stage of the exercise the co-operation of the banks is basic and essential. I stand here speaking on a day when 11,000 bank clerks attended this honourable House. It will be seen that this is a body of people who will not lightly be set aside. They are anxious that the exercise shall be a success and I am anxious to be satisfied that the Government have created the conditions in which they can carry out this change-over in a successful manner.
Another aspect of the closed period is that the Bill says that these days "shall" be non-business days: it is not optional. How far is the closure to extend? Will no foreign exchange business be transacted? Are the trustee departments to be closed? What of the Trustee Savings Banks? What about the finance houses, at least one of which is by legal decision a bank? There are also the acceptance houses and discount houses. Will it be an offence for any institution, which, in the Government's view, is a bank, to stay open? Will the Post Office Giro close? If not, what will happen to money passing through it during the change-over? At what point will the values and denominations be changed and by whom?
The Bill says that, during this period, the banks may present and pay cheques, and nothing else. But in paragraph 18 1691 of the White Paper and by my hon. and learned Friend we were told that they may provide a minimum service on request. There seems to be a discrepancy here. If presenting and paying cheques is all that the banks may lawfully do during this period, what will happen about the things which they would have done if not forced to close, like remittances under standing orders? What if non-payment leads to disadvantageous consequences for their customers or themselves? Will there be any indemnity? Was this considered by the Decimal Currency Board when it recommended that there should be no compensation. Suppose the banks receive instructions to buy or sell securities and the price changes during the closed period, so that the price realised afterwards is different. Will there be any indemnity for any consequent loss?
All these queries arise from this concept of a closed period; they should have been answered and are not cleared up in the Bill or the White Paper.
Another significant point is the proposal in Clause 3 that instruments may be altered. This will have to happen, but I want to be satisfied either now or in Committee about the exact circumstances in which it will be done. I presume that it will be done in the banks and that such alterations will not have to be approved or initialled by the parties to the instrument. We are embarking on an understandable course but one which may be dangerous if not circumscribed. The banks will be able to alter the face of an instrument without necessarily the knowledge of the parties, whose consent will have to be assumed. Suppose there is inadvertently an error. What situation is likely to arise?
My third query arises from the proposal that during the transitional period both sets of currency shall be legal tender. This is natural and sensible. Hopes have been expressed that the transitional period will be short. I hope so. But who will be responsible for the segregation of coins, separating out the old from the mixture of old and new that will be circulating during that period?
I presume that the banks will freely accept and issue the new currency during this period—that they will accept over 1692 the counter old currency or mixtures of old and new in multiples of five new pence, and, if requested, will issue old currency or mixtures of old and new, again in multiples of five new pence. But all this will involve a great deal of segregation, and I should like to know who will do it. Are the banks expected to do it? If so, have there been consultations? Not long ago I served on the Estimates Committee looking into the affairs of the Royal Mint, and a witness from one of the banks expressed some anxiety about the ability of the banks to perform this act of segregation.
Other points that I had in mind can wait until the Committee stage, but I cannot resist the temptation to make a minor point. Clause 2(2) refers to a certificate made in writing by a banker. I should love to know the definition of a banker. It has vexed many people for a long time. It would be just as well to know, because the term appears in the Bill without a definition. At some stage I should like to hear more about that.
§ 11.37 p.m.
§ Mr. Albert Murray (Gravesend)
I hope that after the completion of the Bill the Opposition will make a commitment not to create difficulties and oppose the decimal currency when it comes into operation in 1971 in the same way as they have made political points over the introduction of British Standard Time.
I am concerned about publicity—I raised this earlier with the Minister of State—and old-age pensioners particularly. We must go further than issuing a leaflet to every household. As politicians, we know what happens to many leaflets that go through the doors at election times. Sometimes people do not get them or they put them on the mantel shelf and then they disappear. This information ought to be printed in pension books. It should be remembered that these people are from the penny-farthing age in more ways than one.
§ Mr. Gwilym Roberts
Would not my hon. Friend agree that if the leaflets are anything like the conversion table they will be completely unintelligible to probably 70 per cent. of the population?
§ Mr. Murray
I could not agree more. Pensioners, having lived all their lives 1693 with pounds, shillings, pence and halfpence, will suddenly have an entirely new system thrust on them. We must take special care of them. Younger people, and especially children, will soon get used to the new system, but I urge my hon. and learned Friend to remind the Board about the difficulties which older people will experience.
I reinforce what has been said about keeping the 6d. piece. Rather than ex tend the transitional period, I would keep the 6d. piece as a two-and-a-half new penny piece and as part of the decimal currency system. I am equally concerned about the way in which prices will be rounded up or down. How will you round down or up the price of, say, a box of matches, which now sells for 3d.? You will have a job rounding up or down—
§ Mr. Deputy Speaker (Mr. Harry Gourlay)
Order. It is not the responsibility of the Chair to round anything up or down.
§ Mr. Murray
I take the point, Mr. Deputy Speaker, although you may well have to perform this exercise.
When rounding off a small item like a box of matches, will the trader charge one-and-a-half new pence, representing 3.6d., or one new penny, making it 2.4d.? If we retained the 6d. piece we would avoid this: trouble, and two boxes of matches could be purchased for that coin. I can think of many items, including parking meters, for which the 6d. piece would be invaluable.
The possibility of overcharging is a problem which is exercising many people's minds. Will there be a department responsible for looking into this matter, with inspectors like those who at present watch matters like weights and measures? Will somebody be ensuring that while this rounding up and down process is going on people are not overcharged?
Having raised these points, I believe that the Bill is to be welcomed. We need to go decimal, and I hope that the Measure receives a speedy passage through the House.
§ 11.43 p.m.
With the leave of the House, I will reply to the questions which have been raised in the debate, many of which we can go into with more profit 1694 in Committee, such as that mentioned with considerable knowledge by my hon. Friend the Member for Chislehurst (Mr. Macdonald) about banking. On that matter the Treasury is satisfied that there is no contradiction between the White Paper and the Bill; but we can argue the matter further in Committee.
The first major point put by the hon. Member for Worthing (Mr. Higgins) was his belief that the Government had more or less persuaded the House to accept the £ unit with a promise of special compensation. That was not so. He read a passage from the White Paper which said that cases for special compensation would be exceptional, if there were any at all—clearly implying that there might not, or need not, be any such cases. The Act placed a duty on the Decimal Currency Board to consider the possibility of making provision for compensation in special circumstances, but it was always made clear that there might be no compensation at all.
The hon. Gentleman then wondered what guidelines had been laid down and whether, in connection with the Decimal Currency Board, there had been any criteria which had not been met. I wish to make it clear that the Government did not in any way attempt to influence the Board in coming to its decision about whether or not there should be a special compensation scheme or about the kind of scheme that should be drawn up. The matter was left entirely to that expert body. It was the statutory function of the Board, and not the Government, to consider representations. It is not the job of the Government now to say exactly in which respects individual representations did or did not meet the guidelines laid down by the Board.
The Board looked at these cases very carefully. It received a large number of representations and considered how far it could work out an equitable scheme. Such a scheme had to have a number of features. It had to have clear and logical principles, which justified treating people differently, which justified putting some people in and some people out, in a way not unfair to those left out, and it had to be a scheme whereby it was possible to translate such principles, on the basis of clear criteria, in a way capable of being administered efficiently equitably, and without risk of abuse. 1695 This highly-qualified Board looked at this, and came to the conclusion that there simply was no way in which such a just scheme of compensation could be worked out. It was not for the Government to examine the individual cases.
It is asked: why abolish this now; why not keep the position open, in case someone comes forward with a good case? That would be the worst of all possible worlds, because then, far from facing the fact that they must adapt, and make their plans on that basis, there would be an inclination to defer certain decisions on the ground that perhaps compensation might be obtained. It is better to be clear, when the Board has made this careful study of the matter, and have a decision on which everyone could act. Everyone would feel that they were an exceptional case of hardship. The Board would be bound to go into numerous claims put up to it. This would not be at all desirable. The Board has already made a study, and the Government have accepted its recommendation.
It is said "All right, there will be no compensation, but can we not ease the position of those who are particularly badly hit—those with vending machines—and keep the 6d.?".
§ Mr. Higgins
Before the hon. and learned Gentleman leaves that point, if the Government are accepting the recommendation of the Board that there is no viable scheme, but that the Board laid down some criteria and that these appear to have been met, surely either one must conclude that the criteria were put forward as some sort of bluff, or else the Government should accept that the criteria were met and explain why this was not sufficient?
The Board made it clear that this was not the scheme it was putting forward. It said that all these things had to be satisfied before it could consider a case, and no one was to apply who could not satisfy those criteria. It had to see if it was possible to form a scheme, and it could not. It felt this extremely strongly.
Several speakers have suggested that we keep the 6d. and save money. This is not necessarily the case. Studies have shown that if one has more coins, particularly fractional coins, the whole ease 1696 of handling, with which this Bill is concerned, the whole decimalisation process would be slowed down. If there were seven instead of six decimal coins, the mechanics of payment and change-giving would be slowed down and all people handling cash would suffer. It is said that it will affect manpower. If the whole process of decimalisation is slowed down, if it is not as efficiently planned, this would mean a loss of manpower, less efficient use of manpower. It is asked: what about parking meters, telephone coin boxes, vending machines? It is a mistake to suppose that it is impossible for these machines to be adapted equally efficiently, and that the only alternative to the 6d. telephone call is a five new pence call. One could have a two new pence call for a shorter time. We have chocolate machines taking 6d. pieces, and the size of the chocolate bars has been made smaller. There are all sorts of ways in which these problems can be met, and have been met, as different charges are made, as a result of duties imposed on different objects.
§ Mr. Gwilym Roberts
Following this to its logical conclusion, is my hon. and learned Friend suggesting that the same principle should be adopted on the new buses and we should take a shorter journey?
What bus fares are decided on cannot possibly be stated two years in advance. What can certainly happen in many cases, such as machines selling chocolate, and telephone boxes and parking meters, is that adjustments can be made with new coins which mean that the cost of the item is not increased. For example, many machines now use half-crowns. It was then found that as the duty on cigarettes was raised they had to be adapted to use two units together. Such a solution is perfectly feasible in the vast majority of coin boxes and vending machines which at present use the 6d. piece. I concede that the abolition of the 6d. and not having a 2½ new penny piece will in some cases cause extra expense, but this factor must be balanced against the undoubted slowing down of the cash handling system in general and the convenience of the public as a whole.
§ Mr. Higgins
The crucial matter is the minimum amount. If the 2½ cent piece 1697 is abolished, the minimum charge for telephone calls and other things will rise. It may be, though I doubt it, that there is some slight inconvenience involved in retaining the 2½ cent piece in transactions, but there would be an advantage in that there would be less rounding up and inflation and people who are not to be compensated would not suffer so badly.
§ Mr. Taverne
The hon. Gentleman is wrong. It does not necessarily involve rounding up, because in the case of telephone calls the time unit can be adjusted. In the case of machines, the size of what is offered can be adjusted. This does not affect the sixpence. In the case of the matchbox referred to by my hon. Friend the Member for Gravesend (Mr Murray), it is possible to adjust the size of the matchbox; it does not necessarily involve rounding up. This is precisely what has been found in countries where decimalisation has been introduced, because they have had exactly the same problem with the penny and the 1–2d. and the problem which is inherent in going to a slightly larger unit or a slightly smaller one. We can return to this point in Committee, but there is no doubt that there is no necessity for rounding up in every case.
My hon. Friend the Member for Bedfordshire, South (Mr. Gwilym Roberts) asked about tables. Studies have been made about conversion tables. The studies show that, taking the average household and converting by means of the table the old coinage into the new coinage, there is a negligible effect on the average cost. In some cases items may be put up. In other cases items may be put down. Exactly the same kind of fears which my hon. Friend has expressed were expressed before decimalisation was introduced in Australia.
A news letter issued by the Decimal Currency Board shows what happened to prices down under. The decimal made no difference to the result as far as prices were concerned. A smaller rise occurred in the six months following D-day than had occurred in the corresponding period of the previous year. In New Zealand, again there was no evidence of any kind that the price index rise was affected by decimalisation. All these fears which were expressed there, as they are being expressed here, were not realised.
1698 I was asked about the 18-month period. The Board's announcement that the length would not exceed 18 months was the first announcement of length. It was the hope of the Halsbury Committee that it would not exceed two years. The Board has had elaborate consultations. It has found it impossible to find a period which pleases everybody. It is more desirable to have a short period if this can be managed, but in the end it will be for the Government to decide. The Board recommended 18 months, but the final decision will be for the Government.
As for tax relief, if the hon. Gentleman reads my speech he will see that the position will be set out fully in a booklet, "Points for Businessmen", which the Board will publish on Monday. Briefly, the present position is that conversion costs count as revenue expenditure, replacement costs count as capital expenditure, and each qualifies for the appropriate relief. The question of free depreciation is something which the Government will carefully consider.
Lastly may I say something which is central to the whole scheme. That is the question of publicity. I agree with my hon. Friend the Member for Graves-end that it is vital that there should be a really effective simple publicity campaign which reaches everybody—old-age pensioners, people who have difficulty with figures and those who have difficulty in understanding documents. We have not had this campaign yet. The strategy of the Press publicity campaign has been to concentrate so far on management. This is to enable management to plan ahead for the change-over period 1970–1, because planning is vital there at this stage.
Only at the end of 1970 and the beginning of 1971 will the Board concentrate all its resources on a huge campaign aimed at the general public. If there were a great campaign today and if nothing were done later at the appropriate time, it would be useless because people forget. Use will be made of all the available publicity media. The Board will contact every household in the United Kingdom. It will bring its main publicity campaign to bear very late. It is no good hoping, as the hon. Member was apparently hoping, that what is said in this debate will affect 1699 the attitude of the housewives. At this stage it is management that must make its plans. The campaign addressed to housewives and the public at large will have to come in the period immediately before Decimal Day. I have no doubt that these kinds of things can safely be left to the Board. The Board is well qualified. Banking interests have been fully represented, and every commercial interest that has been concerned with decimalisation has been fully represented on the Board.
Many of the things which hon. Members have feared have been taken into account by the Board, which has looked at this matter in a way in which the House as a whole can have confidence.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).