THE ECONOMIC SITUATION AND PUBLIC EXPENDITURE

§ THE EARL OF DUNDEE

My Lords, there are still 23 of your Lordships who are likely to speak and, since none of us wants to divide at an inconveniently late hour to-night, I will try to be short. This Motion, moved yesterday by the noble Lord the Leader of the House asks us to approve measures announced last week which are intended to shift £500 million from home consumption to export, so as to correct our adverse balance of payments. I hope that none of your Lordships is under the illusion which sometimes seems to be entertained by some international bankers that every good and virtuous trading country should always try to achieve a trading surplus, exports plus invisibles always exceeding imports. For if all countries were to pursue this mathematical impossibility resolutely and simultaneously, international trade would cease entirely.

For about twenty years or so the United States of America has had a 312 huge and continuous adverse trade balance, to the enormous benefit of a whole world, including themselves, and I believe that the same is true of Japan. The Americans have been able to do this not because of their unnecessarily high (as I think) gold reserves, but because their economy has grown so abundantly that no one has ever doubted their ability to fulfil their obligations; and I shall not mention in this debate the steps which the American Government are now thought to be considering with the object of changing this position and creating a trading surplus which, if it were done, might possibly have rather serious effects on the Free World.

A country can be damaged by an adverse balance only if at the same time it is spending more than it earns, which is a very different thing, and if its economy is not growing, so that people think it will not be able to pay its debts and maintain its currency. Our own economy in Britain since the war has grown very fast, though not very constantly. It would have grown much faster and much less inconstantly if we had had as few restrictive practices in industry as the United States have had, and if it had not been for the prevalent post-war belief that the British people have some divine right, to be paid more money every year. In his admirable maiden speech yesterday, my noble friend Lord Thorneycroft referred to the assumption that if production should increase this year everybody may have a 3½ per cent. increase in wages which, I think he rightly implied, might not be a good thing for the future of our economic strength.

We have built on this British economy a heavy structure of social services, including an ambitious design for the advance of secondary and higher education, which unhappily has had to be deferred. Whether it is deferred for only two years or longer will probably depend on our success or otherwise in increasing our economic strength. At the same time, we have contributed more than our share to the defence of the free world.

We have all had some difficulties, including some litle local difficulties, as my noble friend Lord Thorneycroft will remember, and we have all had some setbacks, but until two months ago we had not been unsuccessful on the whole. 313 Our social services have expanded and our Armed Forces have carried out efficiently—indeed, brilliantly—the tasks which they have been given to do in Malaya, Korea, Indonesia, Africa and elsewhere, often preventing a little war from growing into a big war, to the great benefit of peace and of world prosperity.

In my view, there would never have been any need for the humiliating events of the last two months, the anger and dismay of our allies and those whom we still have a duty to protect, the reversal of so many solemn undertakings so soon after they were given, the devaluation not only of our currency but also of our credibility for the future, if Her Majesty's Government had been capable of good economic planning and of reasonable foresight. Our difficulty in criticising the Government is not to find some promise which they have broken or some crisis which they have failed to foresee. Our difficulty is to find any undertaking which they have not had to change, or any event of which they have become aware in time to do something about it. The Government's record makes me think of the famous letter written by W. S. Gilbert to the managing director of the Southern Railway: Dear Sir: Saturday morning, which occurs fairly frequently and at easily foreseen intervals, always seems to take your railway by surprise. I should like to congratulate the noble Lord, Lord Shackleton, on becoming the Leader of this House. This we all warmly welcome. His speech yesterday, I thought, was characteristically moderate and fair—but I will not say all the nice things which I really think about him in case it gets him banned for six months from Labour Party meetings. In his speech the noble Lord went back to the 1964 trade deficit. He said that he did not want to make a Party point of it, and neither do I. But I think that it is relevant to say that, whatever one may think about the nature of that trade deficit, no one can claim that it was not fully foreseen and fully provided against. Anyone who takes the trouble to read Mr. Maudling's Budget speech will see that he fully explained that he expected a very large adverse trade balance in the coming year, partly because he thought there would be large investments in foreign oil which he thought would be very remunerative, and which did happen, and 314 partly because he thought that there would be exceptionally heavy industrial stocking, which in fact took place, in preparation for a big new rise in industrial expansion. He also explained the ample credit guarantees which he had obtained in anticipation of this deficit from the International Monetary Fund, from the American Government and from Europe.

The first blow to my own belief in the Labour Government's ability to judge public affairs was their pretence—because I think it must have been a pretence—that they had not been properly informed about that trade deficit and that it had greatly surprised and upset them. In my view, they created an entirely artificial financial crises in the autumn of 1964, and they have been "bellyaching" about it ever since. The next blow to my belief in their capacity to govern was probably a perfectly genuine difference between my own economic views and theirs. I do not think that the bulk of the Labour Party or the majority of the Labour Government really believe or understand that the heavy increases of taxation, which they had said it would not be necessary for them to impose but which they did impose immediately after they came into office, were likely to have the effect—and in my view have had the effect—of retarding economic growth; and I do not think that they understand this now. There was £500 million of extra tax immediately after the Government took office, which arose to £1,000 million extra last year. The noble Lord, Lord Shackleton, in his speech yesterday, explaining the Government's policy said: Productivity was tackled through the tax structure, by corporation tax, by selective employment tax."—[OFFICIAL REPORT, 23/1/68; col. 134.] For reasons of time, I do not want to go into the economic pros and cons of that statement, but I think it is due to your Lordships to mention the fact that these two taxes happen to be two of the reasons why I am supporting the Amendment to the Government's Motion.

The thing that finally convinced me of the Government's inability to plan intelligently was the so-called National Plan, which purported to be a comprehensive guide to the course of the British economy for the six years 1964 to 1970. 315 It was published in 1965, a year after it was supposed to have begun; it was abandoned in 1966, four years before it was supposed to finish. I do not think it contained one single estimate which has not been falsified or one single proposal which has been carried into effect. It is now almost forgotten and completely unhonoured, not to mention unwept and unsung.

The noble Lord, Lord Shackleton, said yesterday—and I am sure it is true—that in the early months of 1967 the Government and their advisers had every reason to believe that their economic policy was working well. I am sure that they had reasons for thinking so, but I do not know anybody else who had. The early months of 1967 were anything from six to nine months after the financial crisis of July, 1966, which was totally unforeseen by the Chancellor of the Exchequer and which took the Government completely by surprise. I am bound to say—and I think it has always appeared to most people—that while it was difficult enough to hit our economic targets under the Tory record of "Stop-Go", it has been quite impossible to do it under the Labour record of "Stop-Stop".

In 1964 our index of industrial production went up by 9 points. That, I think, was a record figure, and if you could keep that up you could carry a pretty considerable trade deficit for a considerable time. In 1965 the index of industrial production went up by only 31 points, which is still not too bad. In 1966 it went up by 11 points. In 1967, the year in which the Government thought that everything was going well, I am sorry to say that it had slipped back by 1½ points, and it is now back where it was in 1965. The really terrifying thing, in my opinion, about this Government is that their achievements always seem to be in inverse ratio to their efforts: everything that they try to do is not done, and everything that they try not to do is done. Since the end of 1965 the British economy, which the Government have tried hard to foster and improve, has actually enjoyed less growth and less progress than the Rhodesian economy, which this Government have tried to destroy, or at least tried to injure. The Government's home policy has, unintentionally, inflicted more 316 damage on our economy than sanctions have intentionally inflicted on Rhodesia.

Even if the Government did not think up to the very last moment that devaluation would be forced upon them, would it not still have been prudent for a Government of planners to make at least some provisional plan against a contingency which they must have known to be possible, even if they did not think it was likely? Was it really necessary to tell us, first, that this was a release from the straitjacket, and then that it was an economic defeat? And was it right that we and our friends abroad should have to endure the spectacle of a squabbling Cabinet for two months, unable to agree either on how many recent promises should be broken to appease the Left-Wing "crackpots", or on how little should be done towards restoring the economic strength of the country?

Once upon a time there was a Prime Minister. His name was Lord Melbourne. He was not a very good Prime Minister, and he made a good many mistakes. But one day he said to his Cabinet: "Gentlemen, it does not matter what we say as long as we all say the same thing". Newspaper reporters in the 1830's were just as anxious as they have always been to find out what Cabinet Ministers were thinking, but they did not always guess the answer with such astonishing accuracy as they seem able to do now.

My noble friend Lord Jellicoe ended his speech yesterday with the suggestion that the Government should resign. I do not know whether or not they will accept this advice, but just in case they do not, may I be allowed to offer them a little more advice? I have often tried to do this before, and they have never accepted any of it; but I should like to go on trying. First of all, I would say to them: If you really think it right to take £500 million out of domestic consumption, for goodness' sake! use the regulator now and do not wait until March. Of course, there is no economic device that can stop all the unnecessary expenditure which you want to stop, and encourage all the productive expenditure which you want to encourage, but the regulator is the nearest thing that we have to it.

Next I would implore the Government to drop the Transport Bill, which is going to add £70 million to our industrial costs. 317 That extra cost will make a pretty big reduction in the benefits of devaluation. And may I repeat the warning which I gave in the Scottish debate last December; namely, that this increase in transport costs is going to hit a development area like Scotland very much harder, because long hauls there are more common I would ask the Government to abolish than in the English conurbations? Next the selective employment tax, which I would describe as the stupidest imposition which the misguided ingenuity of theoretical economists has ever inflicted on a bewildered people.

Then I would suggest that the Government should adjust their direct taxation with the deliberate purpose of encouraging savings and increasing incentives to industrial and commercial success: because we shall never have a satisfactory growth in the economy again until we get better incentives than we have now and a less stifling burden of direct taxation which penalises success.

My Lords, finally the noble Lord, Lord Shackleton, spoke about the incomes policy. As your Lordships will remember, when the Labour Party were in Opposition they would not support our incomes policy, on the pretext that the N.I.C. Statutory Instrument and White Paper did not refer to the control of profits; which was not true—it did. Nevertheless, I think most of us on this side wish to support the Government's prices and incomes policy. Certainly I would wish to do so. I have put it to the Government before, and I would end up by saying again, that the success of an incomes policy is bound to depend to a very large extent on the removal of restrictive practices. And I would put it to the Government that they should have the courage to tackle the problem of trade union reform now and remove restrictive practices, because I do not think that the country can afford to wait for the Report of the Royal Commission. My Lords, I think that if the Government could do all these things, they could still save a great deal from the economic wreck which they have created.

§ LORD BESWICK

My Lords, the noble Lord, Lord Windlesham, said in his quietly reasoned if somewhat despondent speech in the early hours of this morning that this has been an unusual 318 debate: unusual in its immediate causes; unusual in the number of speakers taking part; unusual in the number of maiden speakers. And, of course, we have had a moving contribution from the former Leader of the House, who had found it necessary to emphasise his words by resigning from his high office. To my noble friends Lady Llewelyn-Davies and Lord Carron, and to the noble Lords, Lord Franks and Lord Thorneycroft, I offer my congratulations. I believe that none of them stayed to hear all the tributes which were paid to them last night, but they were couched in very warm phrases indeed. I content myself by agreeing with the consensus that never before have four maiden speeches of such rare quality been heard in one day. Possibly I may also be permitted, as one who has worked under my noble friend Lord Longford in two Government Departments, as well as in my association with him as Chief Whip, to say how much I admire the dignified manner of his resignation, and to acknowledge publicly my gratitude to him for all his unique kindness.

References were made yesterday to the current fashion of criticising political life in Britain. But yesterday we heard from one public figure on this side that he, the only old Etonian in the Cabinet, had resigned office because others less fortunate than he were being deprived of educational opportunities; and from the other side another public figure, with probably more personal experience than anyone in the Opposition of the administration of our national finances, that he largely agrees with the policies of his political opponents. With these two examples before us, my Lords, surely it cannot be said that by the tests of integrity this country falls short of any other.

One advantage in having this debate: in your Lordships' House some days after that in another place is that it gave an opportunity for a more objective and balanced view of the measures announced in the Prime Minister's Statement. A more objective appraisal was certainly called for. As the Sunday Times said last weekend, there had been "too much hysteria". The noble Lord, Lord Cones-ford, rightly said that there is a duty to tell the truth. But there is a difference between telling the truth as an individual sees it and talking ourselves into trouble. 319 We cannot expect confidence abroad if it is undermined at home. After all, one fact which emerges from the debate here and elsewhere is that, whilst no one has been enthusiastic about everything in this Statement, everyone has agreed with something. From the far Left to the far Right parts of the package have been hailed as sensible, practical, courageous and even long overdue and historically important. The noble Earl, Lord Longford, felt it necessary to resign from the Cabinet, but even he made it clear that his disagreement has been over one item, an important item as he says, but still only one item in what otherwise he was ready to support.

It is said—and Lord Grimston of Westbury seemed to be saying it again last night—that the defence cuts have been put into the package only to appease critics of the Left, who otherwise would not tolerate prescription charges. But that is as unfair as it is untrue. It is unfair because it smears an honest attempt to get all sections and interests to make some contribution. The noble Lord, Lord Windlesham, characterised this as an excess in expediency. Well, it depends upon one's definition of expedient, but I thought he was confusing expedience with a proper political attempt to be fair as between one section of the community and another. And the charge is untrue because so many have welcomed this re-phasing of our run-down who by no stretch of the imagination can be called extreme Left-Wingers. Neither the noble Lord, Lord Gladwyn, nor Lord Boothby, nor indeed Lord Thorneycroft or Lord Longford would fit into the category of Leftists. And it is at least relevant to note that the official spokesman for the Conservative Opposition in the Commons has said that for Britain in 1967 to take a leading role in reinvigorating the military alliance in South-East Asia … seems to me not to be an act of imagination but … a symptom of hallucination". This re-phasing of our military rundown we hold to be reasonable and supported by responsible people. I will return later to political implications of this military cut-back, but now I want to support the claim that the cuts in civil expenditure are equally reasonable and can, with varying degrees of reluctance, be supported by all fairminded men and 320 women. Take first this contribution to economies made by education. The raising of the school-leaving age to 16 is to be postponed from 1970–71 to 1972–73. But it is quite wrong to assume that all educational advance has been halted. The school building programme as a whole will still continue at a record level. The expansion of the teaching force will not be affected. There will be a continual improvement in staffing standards, in both primary and secondary schools, into the early 1970s.

The Schools Council will press ahead with plans for curriculum development associated with the raising of the school leaving age. The postponement will give more time for this and for the retraining of teachers. There is, I agree, an educational loss to those who leave before 16, but none will leave compulsorily, and an anticipated 30 per cent. will stay on voluntarily. Though the quantity of education is not to be increased, it is intended that the quality will be improved, and among other indications is the estimated reduction in the average number of pupils per teacher, which in January, 1972, would have been 22.5 on the original plans, but with the two-year deferment should now be 21.7.

Then there is this cut in house building, which at first sight seemed such a serious blow to our original aspirations. In England and Wales there will be a reduction of 15,000 houses in each of the years 1968 and 1969, but the new house completions will still be a record. In each of the three years since taking office the Government have set a new record in house building for the United Kingdom. From 174,000 in 1965, completion of public authority houses has gone up until last year it was 211,000; and in 1970, with the cuts, the figure should be 220,000. The total for public and private building in 1967 is 425,500, a record figure, and the Government's support to owner-occupation, by the mortgage option scheme, and by 100 per cent. mortgage guarantee schemes, should ensure that this combined total is exceeded in the years ahead.

The re-imposition of prescription charges I confess seems to me the least justifiable of all the cuts. In this I can only agree with my noble friend Lord Brockway. On grounds of administrative economy, a straightforward insurance 321 payment must surely be preferable but, nevertheless, here again it is fair to consider the context. In answer to the straight question which my noble friend posed about £25 million, the fact is that the estimated saving does take into account estimated expenditure on the extra administration. The cost of prescriptions in 1949 was some £30 million. The estimated figure for last year was £146 million. If one makes special provision, as we propose to do, for the young, the old, the chronic sick and expectant and nursing mothers, surely this cut is the least damaging to Britain's health services? In answer to my noble friend Lord Brockway about the Medicine Bill which, as he said, should mean some reduction in our drug bill, a Bill should be introduced into the other place, if not next week, then probably the week after.

The noble Earl, Lord Jellicoe, yesterday regretted the cutting of the major roads programme. It will be cut by £40 million in the years 1968–69 and 1969–70. He accepted that the most weight of the cuts should fall on secondary roads, but he might have mentioned that the main objective of the motorway programme, 1,000 miles by 1970, is unchanged. He could have expressed some satisfaction that there are no substantial changes in the trunk road programme of 350 miles in Great Britain before 1970, but the noble Earl picked upon major roads. This game of agreeing with the economic cuts in general, but criticising them in particular, is surely something we carry too far. If we are to make economies, something has to go. The noble Lord, Lord Windlesham, and again the noble Earl, Lord Dundee, criticised the £70 million which they claimed would be expended on bus undertakings under the provisions of the Transport Bill. Of course, this does not represent any new expediture; this is not a question of a new charge on our national resources. This is only a matter of transferring a claim upon our national resources from one undertaking to another. I was greatly interested in what the noble Lord said about American techniques of securing cost effectiveness in Government Departments. I have not had the opportunity since midnight of checking what he said, but I give him an undertaking that I will find out what has been done on the documents which 322 he said he made available and I will write to him as soon as possible, and give him the reactions of the Treasury.

So it is possible to go through each of the items in the list of civil economies and show that each is reasonable and can be fitted into a socially responsible attitude. Indeed, I can well see some noble Lords—and I can well see the thought passing through the mind of the noble Lord, Lord Carrington—anxious to criticise the Government, saying that we are being too reasonable and that these cuts will not add up to a sufficient reduction of public expenditure. To that charge I draw attention to two factors. One is the inescapable increase in the section of our community which make special claims upon public expenditure, the young, up to school-leaving age, and the older, after retirement. In 1955, 18.3 million of our people came within these two broad categories. By 1965, 20.5 million came into these categories. By 1975, the trend will have increased to an estimated 23.5 million, and so the same cost of public expenditure must rise.

In debates in both Houses, both Opposition and Government speakers have continually demanded improvements in social services, in education, and in the health services. Time and again we have had demands for more and better roads, and it is just not good enough to demand proper improvements and then complain when the bill is presented. The other fact of life which some of those who now demand further cuts in public expenditure appear to ignore is that, despite popular belief, we even now spend less on public account and more by way of personal consumption than almost any other industrial country.

The recently published O.E.C.D. statistics are especially interesting. They show that up to 1965 the proportion of our gross national product privately consumed in the United Kingdom was 64 per cent. The comparative figure for France was 63.8 per cent.; for Germany, 56.8 per cent.; for Italy, 62.3 per cent.; and for Switzerland 58.4 per cent. Even the United States—which is held to be a country where everyone can choose how he or she spends money—are below ourselves with 62.6 per cent. Only Belgium in the Western World appears to have had a greater proportion of private consumption. The Chancellor, nevertheless, 323 has made it quite clear that in order to reduce home demand, and to free an additional portion of our national output for the export market, he will, as necessary, reduce private consumption by increased taxation.

The noble Earl, Lord Dundee, posed the question as to why these proposals are not announced at the same time as the cuts? Of course, it is always easier to be dogmatic about these things if one has not the responsibility for executing them. The Chancellor's reasoning is understandable. In the first place, all this talk about a "spending spree" is unsupported by basic information. The relative facts will not be known for some weeks. It would have been quite wrong to impose restrictive measures on motor cars such a short time after the previous measure, before the latest sales figures were known. Moreover, at this time the economy can afford a surge in demand: there is slack to be taken up; we still have too many unemployed. Many of the consumer durables bought over Christmas and before are actually produced in the development areas. I understand that some 75 per cent. of all the washing machines on sale in this country come from the development areas. The increasing export effort has not yet made its impact on goods in the pipeline or in the retail shops. Soon we should see—and we shall be happy to see it—increasing competition between export and home demand for available resources. By that time, additional measures will need to bite. Meanwhile, the Chancellor has announced that he is bringing forward the date of his Budget.

Many noble Lords, and the noble Earl, again, referred to the importance of the prices and incomes policy. Some spoke of this as if it were something that did not affect human beings. I am bound to say on this that I attach more value to what was said by the noble Lord, Lord Carron. He at any rate knows from hard experience just what human problems are involved in bringing down this abstract theory of an incomes policy to the practical operation of restricting the money which a man takes home to his wife in his pay packet.

We should not underestimate what has been done so far in a democratic society to operate an effective prices and incomes 324 policy. Between the first and second halves of 1967 the total wage and salary bill, seasonally adjusted, rose by 2 per cent.—well below the 3.6 per cent. increase in 1965 and the 4 per cent. increase in 1964. In the first half of 1967 the prices charged by the manufacturing industry and the home market were virtually unchanged. Between the fourth quarter of 1966 and the fourth quarter of 1967 the index of retail prices rose by 2.1 per cent., considerably less than the average rate of increase over the years 1960 to 1966. Therefore no one should underestimate the efforts that have been made. But I accept, and the Government accept, that probably the greatest single difference between success and failure in the post-devaluation export effort will be the result of the renewed efforts now being made to get agreement, one way or the other, to prevent wages chasing prices. As the Chancellor has said, he could take out of the economy the total amount put into it by increased wage demands, but not, of course, before higher wages had put up prices for the export markets.

I add only this. The efforts of the Government are not made more easy by speeches like those made yesterday by the noble Lord, Lord Macpherson of Drumochter, or by remarks like those, in an otherwise interesting speech, made by the noble Lord, Lord Belstead, who seem to regard all increases of income to the better off as incentives, and all improvements in wages of the lower paid as inflationary.

§ LORD MACPHERSON OF DRUMOCHTER

My Lords, if I may interrupt the noble Lord for a moment, I should like to say that in fact I did not say anything of the sort in my speech last night.

§ LORD BESWICK

My Lords, we are at some disadvantage, of course, in not having the copy of Hansard before us. I can only rely upon my notes, and if they prove to be inaccurate I apologise, but the formula which I understand the noble Lord was putting to this House was that on the one hand we had to have additional incentives for the executives, and on the other hand if there was industrial unrest among the operatives we needed legal powers to deal with it. That kind of attitude and approach does 325 not make the task upon which the Government are at present engaged, in trying to get an agreed incomes policy, easier.

My noble friend, Lord Chalfont, last night dealt thoroughly and authoritatively with the whole practice and philosophy of overseas military operations in the modern world, by a country in our position. It was a powerful speech—I think that is commonly agreed. In a sense, as an answer to the arguments advanced in support of the Opposition Amendment, it was a case of a sledgehammer to crack a nut.

There was, in fact, little left of the main Opposition case on this point, after the speech of the noble Lord, Lord Thorneycroft. If any were disposed, as the noble Earl, Lord Dundee, appears to be disposed, to believe that our economic troubles started with Mr. Wilson, I hope they will read again what Lord Thorneycroft said about playing on the edge of bankruptcy in the days of Mr. Macmillan. There were few of the noble Lord's listeners who did not take, and one sensed it, a deeper breath when the noble Lord said that if his warnings in those days had been heeded, his Party may well have lost an Election but the country would have been spared its present humiliation. But I would say to the noble Lord, in fairness to Mr. Macmillan, that I do not believe our real trouble even started under his Administration.

I have been looking at the figures provided to me for overseas military expenditure for each of the years since 1952. No doubt they are familiar to some; they are worth pondering again by all. In 1952 our gross military expenditure overseas was £158 million, but it was reduced by payments of one kind or another, mostly in that year from the United States of America, to nothing more than £12 million. Steadily that £12 million has risen: £17 million the following year; £60 million in 1954; up to £129 million in 1959; £267 million in 1964 and £272 million in 1966. Can anyone really say that it is incompetent to resolve to cut that figure by 1971?

Apart from the consequences to our balance of payments position, can we be certain that military expenditure on this scale has kept the peace in, say, the Middle East; that it has kept the Suez Canal open; or kept the oil flowing? 326 It was an official Defence spokesman for the Opposition in the Commons who actually said: It was just because we were physically present in the area that our oil and our reserves were in danger when other people's were not. As to South-East Asia, an area of increasing importance and one of the most richly endowed parts of the world's earth surface, the noble Lord, Lord Gladwyn, and the noble Lord, Lord Thorneycroft, had some reservations about a total withdrawal. We were all impressed by what they said, and it will be considered. But as my noble friend the Leader of the House told us, constructive discussions are going on about the establishment of a joint air defence system for Singapore and Malaysia. It is good to see this collaboration of Singapore and Malaysia—just as it is to see signs of similar collaboration in the Middle East. That kind of collective security, by the countries immediately concerned, may well prove far more effective in maintaining political stability than military intervention by an outside foreign Power. After all, it has not exactly been proved conclusively that military intervention in Vietnam will guarantee political stability in the area.

The cry that went up in two world wars that "Australia will be there" is at once one of the most simple and the most moving slogans that I have ever heard, and I am sure that it would be said in reverse if ever Australia or New Zealand was in peril. The noble Earl, Lord Jellicoe, said it would be inconceivable that we should not go to the aid of those two countries if they were attacked. Of course he is right. There is an emotional involvement there, but the determination is none the less real for that. My noble friend Lord Chalfont dealt with the military implications of that determination, and I cannot add more to what he so well said.

§ LORD CARRINGTON

My Lords, may I interrupt the noble Lord for a moment? As I understand it, and I have been following his argument very closely, he is saying that our troops overseas in the last few years have not added to the stability of the areas in which they have been based and it would have been better if they had not been there. This is an argument which the noble Lord, Lord Gladwyn, has advanced for three years. 327 I think it is a perfectly tenable argument. I do not happen to agree with it. What I do not understand is why the Government have been saying precisely the opposite until now.

§ LORD BESWICK

My Lords, it is perfectly possible to make that point. I think this is a matter in which the arguments have been going backwards and forwards. I think now the truth is beginning to emerge much more clearly, and what has been said by Mr. Powell, the noble Lord, Lord Gladwyn, and by, among others, the noble Lord, Lord Boothby, is, I think, beginning to gain ground. That I think is one of the interesting factors of the present debate that is going on. The noble Lord may think he scored a debating point, but these are serious issues. These are matters in which we have to establish the truth, and I believe the truth is as I have just explained.

I would refer again, if I may, to the words of my noble friend Lady Llewelyn-Davies, when she said that in many areas of the world to-day, where once we relied upon military power for our influence, new factors are of growing importance. Economic aid and technical assistance are now more helpful in the securing of social stability, and are much more likely to lead to political influence.

My Lords, I would only add this about Australia and New Zealand. Now that some of the dust of the Common Market controversy has settled, I should like to see a great new effort to rebuild the proportions of trade which once we did with each other. I agree absolutely with what the noble Lord, Lord Carrington, said in a recent newspaper article about the value to both sides of renewing British investment in that part of the world—once we can afford it.

I believe there began to emerge from the debate yesterday a clearer picture of the position that Britain can hold in the world of the future. Our concentration of military capability may well prove as decisive to our political and economic advance as did the French withdrawal from Indo-China and Algeria. The Britain of the future will have commitments which she really can fulfil. Slowly, and indeed painfully, our in 328 dustry is reshaping itself to fit modern technical facts. The industrial troubles in coal, transport and the docks are themselves only indicative of the process of change that is going on. The mergers in shipbuilding, in the motorcar industry, in the electrical industry, Government assisted if not inspired, are part of the process of modernisation. Devaluation, a defeat, as my noble friend Lord Shackleton said, for the policies which we had previously pursued, makes one vital difference to this package of economic cuts. This time, as against the other stops in the "Stop-Go" cycle, we have the opportunity to divert spare capacity to the export trade.

I absolutely agree with my noble friend Lord Longford that there is a need, a crying need, to identify and brighten our moral principles. I should like to think that if Britain accepts, as so many in industry to-day appear ready to do, the present economic challenges, we shall not only be ready to proclaim our principles, but we shall have the material basis on which we can apply them.

§ THE EARL OF SWINTON

My Lords, in this wide-ranging debate I propose to confine myself to one single subject, namely, to press the Government, with all the force at my command and all the reasoning which I hope to give to the House, to reverse their fatal decision of refusing to send ships and aircraft to South Africa. In doing so I am responding to an appeal made to me by my noble friend, Lord Jellicoe, in what, if I may say so without impertinence, I thought an absolutely model speech in every way. He said that on this subject I could speak with a unique authority. Well, I do not know about authority, but I certainly can speak with a knowledge that I suppose nobody else in this House can have, because the agreement known as the Simonstown Agreement was negotiated and made by the noble and gallant Field Marshal Lord Alexander of Tunis as Defence Minister and myself as Secretary of State for the Commonwealth, assisted, of course, by all the Chiefs of Staff, and we were negotiating with Dr. Erasmus, who was the Minister of Defence in the Union of South Africa.

The Simonstown Agreement was a very comprehensive agreement in every way. First of all, strategically it covered the 329 whole range of command from Gibraltar right round to Mombasa in the Indian Ocean. In the second place, it gave to the United Kingdom and her allies in any war the full use of the South African ports. Some people have talked as though that just meant Simonstown. It does not, of course. Simonstown is relatively unimportant from that point of view. The vital ports on such an occasion, as to-day, are Durban and Cape Town. When I was the Resident Minister in Africa in the latter part of the war it was my duty to make constant visits to South Africa, when I was always the guest of General Smuts. I was able to see in those years, when the Mediterranean was closed, how invaluable those ports were. I think I am right in saying that in those two years of the war before the Mediterranean was open again upwards of 1 million tons of Allied shipping used the ports of Durban and Cape Town. That is just as important to-day. It was referred to very effectively by my noble friend Lord Milverton, whose speech I read—I was unable to hear it—and who worked so closely with me in those days.

But the supply side was equally important, perhaps even more important. South Africa agreed to place in the United Kingdom all orders for ships and aircraft which they would require for their defence programme under the Agreement, and those were estimated at the start at not less than £18 or £19 million and were certain as time went on greatly to increase. Observe, my Lords, that there was nothing in this agreement for the supply of ships, the supply of aircraft, which could conceivably in any respect affect apartheid.

The Agreement was not signed in August, 1954, because Mr. Erasmus, with whom negotiations were extremely cordial all through, not unnaturally was anxious to be quite sure. He had been unable to be in touch with his Government the whole time on some matters. I remember, for instance, that one occasion was a Saturday afternoon. It is not always easy to get in touch with Governments on Saturday afternoons. He wanted to be quite sure that, though he himself was in the fullest agreement, he had not exceeded his authority. In fact, when the Agreement was referred to the Union Government the Union Government fully approved the whole Agreement 330 which was accepted and endorsed in every single detail.

What has appeared odd to some people, not unnaturally, is that when the Agreement came to be published and formalised it was put into the name of the Secretary of State for Foreign Affairs, and not into the name of the Commonwealth Secretary or the Defence Minister. I understand that the reason for that was that, being in the nature of a Treaty, the documents had to stand in the name of the Secretary of State for Foreign Affairs. But the Agreement as set out in those documents in that Treaty (if that is the right way to express it) was in every single particular the Agreement which Lord Alexander of Tunis and I had negotiated with Mr. Erasmus. The British Government and the South African Government gave full effect to that Agreement from then onwards, and it certainly operated greatly to our mutual advantage.

Now I want to tell the House something else, which will be complete news to noble Lords, because it will not be found in any Treaty. At the time, in March, 1961, when South Africa was forced to leave the Commonwealth, much against the wishes, as I know, of Mr. Macmillan, the British Prime Minister at the time, I found myself, at a dinner given by my noble friend Lord Fraser of Lonsdale, sitting next to Dr. Verwoerd, the Prime Minister of South Africa. He said to me: "Whatever happens, I mean to continuo in full force the Agreement that Alexander and you made with our Government."

I think your Lordships will agree that that was a most generous gesture to be made by South Africa, at a time when, one can imagine, they were feeling pretty sore under the collar. Those are the facts, and this is the Agreement, so invaluable to us in every way, which the Government insist on breaking—at a time when we need exports most and, as was said over and over again yesterday, at a time when the use of the ports is more valuable to us than ever. Does it not seem strange that although we export and sell readily—I do not dissent from this—to Russia, whose treatment of her nationals shocks us just as apartheid shocks us, but who acts also against us in a great many places in the world, by subversive activities and in other ways, we refuse to sell ships and 331 aircraft to South Africa who seeks only to remain our ally and our friend?

I have told the House the full story of the Simonstown Agreement and its sequel. No one can deny those facts. I therefore beg the Government, in this critical time, to reverse their foolish decision. Can folly go further than to persist in this embargo? I hope that noble Lords will bear those facts in mind in the vote which they give to-night. I do not know what answer we shall have from the Government; but whatever they say, I hope that they will not seek to deny those facts.

My Lords, I said that I would deal with only one subject. That was my intention. But as so much has been said with which I most cordially agree, about the importance of wage restraint and an incomes policy it may not be wholly irrelevent, and I hope not impertinent to the Government, to remind them of what happened in the National Government of 1931. I agree that it was then not a question of increases coming forward, but of a number of cuts being made. The highest cuts in the different salaries and so on rose to 12½, per cent. What the National Government at that time did was to say, "If those cuts are to be implemented, surely we ought to set an example", and the Government themselves made a cut of 20 per cent. in their own salaries. That may perhaps not be wholly irrelevant, and I hope not unhelpful as a suggestion to-day.

§ LORD MORRIS OF GRASMERE

My Lords, I appreciate that it is the wise custom of this House that those who rise to speak to your Lordships for the first time should cast their remarks in a non-controversial form; and I shall try to say what I wish to say in accordance with that good custom. Like the noble Earl, Lord Swinton, I wish to speak about one point only, but it is a matter on which I have strong feelings and strong convictions, and I confess I should have found it easier to say what I wish to say in rather fiercer language.

I am most alarmed—I repeat, alarmed—about the school-leaving age decision. I stand firmly behind the Government in their courageous approach to the problem of cutting public expenditure where necessary. I am well aware that all those 332 who have the great national services at heart will have one service or one point in one service about which personally they feel particularly strongly. But I want to argue—and I hope to convince some of your Lordships—that this particular decision about postponing the raising of the school-leaving age is in some ways in a special position. The cutting of established and accepted expenditure is one thing. The postponement of a planned and long-determined and accepted advance in education is another.

It seems to me that something has gone wrong with the priorities. It would appear that even this Government have not appreciated what risks they take and what in general is the significance of such a postponement The Government have shown, admirably, in my view, that there are some things which can be saved. The old and the chronic sick are protected from the prescription charges, and there is to be no cut—quite rightly in my view—in the number of teachers. Therefore, some things can be saved. But the cause of the school-leaving age has for the time being been lost. I have said that not even the Government, despite the persuasive advocacy of the noble Earl, Lord Longford, can realise the risks they are taking and the significance of this decision. I take note that the saving is a pretty small one in such a very large issue.

I am told by statisticians, whose knowledge and calculations I greatly trust, that the savings will be considerably less than those mentioned by the Prime Minister. The Prime Minister's calculations they tell me—and evidently a good deal is known about these figures—make sense only on the assumption that the capital expenditures which are to be cut are on minor buildings account. In that event, that would quite soon begin to affect the coming in of the bills and would therefore have an effect on expenditure. But if, as applies in a great many cases, the expenditure which is tied to the raising of the school-leaving age in 1971 is inextricably bound up with major buildings, then any cuts which are made, if they can be made, will not begin to affect the bills in the years under consideration, except very much more slowly.

In these circumstances the Prime Minister's estimates are probably likely 333 to be in excess of what can be done; indeed, what can be done will not be more than two-thirds of what the Prime Minister said. So, in relation to what would be a great advance, if one accepts it as a great advance, the savings are small. They will not be quick; they will not come in in the years which are important, before the military cuts begin to take effect; and in general it is difficult not to conclude that the economic arguments alone, in the eyes of those who know the facts, cannot have been sufficient to cause a decision of this magnitude and importance.

I think of those of us in my generation who have fought for the great educational advances of our time. When I say "my generation", I mean the generation who were young soldiers in the First War, and the generations immediately following. We think of the causes which have been fought for and won; the universal introduction of secondary education; three-year training for teachers, the expansion of the universities; and now the revolutionary transformation—not before it was duc—in further education and in the rest of the field of higher education. Those of us who have fought for these great advances in education know that they are not easily attained. They are not great, popular measures which command enormous numbers of enthusiastic votes where politicians are driven before the fury of the masses. We all know that any decision about raising the school-leaving age is a matter of judgment, a difficult matter, and a matter in which it takes some time for opinion to settle down and come to the correct decision.

The parents who wish their children to remain at school after the present school-leaving age can keep them there; and no doubt they will do so. The real argument is about those children who, given the economic forces involved, will want to go out into the market to earn money and join the happy teenage plutocracy. It is an advance that will come, not by being forced by public opinion, but only by statesmanship. All these great educational advances—of which there have been several, many of them very difficult to decide—have come about when the leaders of the nation, the statesmen, have at long last, usually pretty late in the day, come to the view that it is time they ought to occur. Yet 334 now the opportunity has been taken, when faced with not very strong economic arguments, to allow a great setback to take place.

Your Lordships may think that I am exaggerating, but those of us who have been in the university business in these days of expansion and have done what we can to promote it and to see it through, know that with these advances it is necessary to keep up the momentum, and that when momentum is lost a great many more things will almost certainly be lost than those one thinks are in fact being put at risk or postponed. Momentum in such matters is almost everything. Many people in the universities, to their great credit, have fought hard through the years. They have kept their eye on the ball; they have watched what has been happening, and in advance have tried to keep their teeth in the reform of the expansion of the universities. If they had lost the momentum of advance, then the history of these years would have been very different. The universities were caught napping—perhaps your Lordships will think to their shame—over the question of fees for overseas students. They heard nothing about the proposal to increase fees until about 24 hours before it was announced. They said nothing very vigorous for a few days, and then the Government were so committed in the matter that they could not possibly consider any arguments from anybody. This illustrates the point that if you are caught napping about one of these reforms of the kind which requires momentum and the maintenance of momentum, you are lost.

We have to recognise that this question of raising the school-leaving age will be a very difficult one in 1973. The year 1971 was carefully chosen. The year 1969 was looked at; 1970 was looked at; and 1971 was chosen.

As your Lordships know, the great Act of 1944 committed itself to the raising of the school-leaving age to 16 at the right time. As you also know, the Crowther Report came out in two chapters, arguing with very great cogency that this reform was overdue, both in the interests of the nation and in the interests of the individual young. This advance has been being built up for a long time and has been accepted—at least, so we thought—and the year 1971 was 335 chosen. The arrangements were put in hand, and since planning—though, perhaps, so soon in the history of planning, it is not as good as we should all like—counts for a very great deal, putting back the processes of planning is a very serious matter.

After 1971 the relevant age groups go up in numbers. When we come to look at 1973, the numbers to be provided for will look somewhat larger, and rising as compared with the numbers of 1971. The whole educational climate of the argument in 1973, as those of us who have to argue for educational causes in Whitehall and Westminster well know, is hardly likely to be easier than it has been. Let me therefore speak and face the future. We have been fighting for twenty years for this cause. It is a cause requiring judgment, statesmanship, planning, determination, getting your teeth into it and sticking to it. Here we are, with a very grave setback. After fighting for twenty years, I am sure we must reconcile ourselves to two more years of hard arguing and hard persuading, or we shall find ourselves in a worse position on this issue in 1973 than we are in now. In other words, unless we fight hard, and begin as from to-day, we may well find that we have lost this great reform after all these years of argument and difficult deliberations, not for two years but for ever, or at least for another long period of time.

§ THE DUKE OF NORFOLK

My Lords, it is my privilege this afternoon, on behalf of your Lordships' House, to offer congratulations to the noble Lord, Lord Morris of Grasmere, on his maiden speech in this House. The noble Lord has made a great contribution with his speech this afternoon and, if I may say so without being impertinent, it is a joy to listen to someone who is so well-educated that he does not have to be burdened, as I have to be, with notes. I believe I am right in saying, if my education is sufficiently wide for me to be correct, that the noble Lord was Vice-Chancellor of Leeds University and he is either pro-Chancellor of, or has had a great deal to do with, Bradford University. I am sure your Lordships will welcome him back again, if he makes another contribution such as he has made this afternoon.

336 I also come now to one subject, as the last speakers have done, and that subject in my case is, of course, the Territorial Army; and I make no apology for taking your Lordships' time on this vital question as we face it to-day. I should like to make it quite clear that I intervene in this debate in my position as Chairman of the Territorial Army Council, which I have had the honour to serve for some years. Before I go any further I want to tell your Lordships that my Council and I, and the various chairmen and even commanding officers, are perfectly aware of the very serious situation in which this country finds itself to-day. We are not asking any of you to listen to us; we are not asking for favours; we are not asking for sympathy. We are asking for common sense.

I believe it is two years ago this very week that we had what I thought was the end of the match, and only last week I realised that a second innings was to be played. I would let your Lordships know that that second innings will be played. It may not be as exciting as an innings that is being played elsewhere in the world this afternoon. It might have been quite fun, were it not for the terrible situation and the vital questions which have to be answered. I should like to take this opportunity of recording my deep appreciation of, and thanks for, the enormous number of telegrams and letters that are pouring in. How many of your Lordships have been favoured, as I have in the past week, sitting at my breakfast table and opening one after the other of these messages? It is very moving and very touching; but it makes me realise even more the great responsibilities that I bear to my Council and the Territorials this afternoon.

I do not propose to weary your Lordships with a lot of details of the past, but I would remind you that in 1965, in the spring and in the summer, the reorganisation of the T.A., as we knew it then, was under consideration by the Government. It was at the end of July that, without any consultation at all, I was informed about the changes which were to take place, but those changes did not at that moment include the T. and A.V.R.III Force. We of the Council played our part in the Ministry of Defence, and the Opposition quite rightly played its part. Then we came to the 337 autumn of 1965. In December there was the debate in another place where the majority came down for the Government, though I think it was of only one or two. Through fear at that moment, we opened negotiations again; and eventually, two years ago this week, the T. and A.V.R. was founded.

When the reorganisation took place the regiments, the yeomanries, the artilleries and the battalions were to lose all our names, all our titles and everything that meant. But by the advent of the T. and A.V.R.III those were retained to the tune of 87 units, and those who could possibly have retained some in other ways gave them up and were willing to join this Force in order to preserve their identity.

Now the members of this Force were armed with only a uniform and a rifle, and they had a few land-rovers. They were put on the Home Office Vote—nine-tenths of it was paid by the Home Office and one-tenth of it by the Ministry of Defence—but they were administered by the Ministry of Defence. And though they were so lightly equipped, they were, my Lords, soldiers of the Queen. This Force, we were told by the Home Office, would be allowed a maximum of £3 million per year. As our budget stands, by April 1 of this year, at the end of the first full year of this Force, we shall have made great strides, and we shall in fact have existed on £2½ million. This, my Lords, is what the Government propose at this moment to abolish. This afternoon I listened to the noble Lord, Lord Beswick, standing at the Government Box here, talking of £70 million, £50 million and other such sums. In comparison, this is a pittance. I know it is important—that every pound may be. But here we have this Force of young enthusiasts who wish to give some voluntary help to their country being told, after having been formed nine months, "You are not wanted. Go home".

I have had a letter from the Colonel of the 9th Battalion Territorials, the Queen's Regiment, Royal Sussex, of which I have the privilege to be Honorary Colonel. He wrote to me on Saturday: I have explained to all the troops what all this means, but they just will NOT go home". That is the spirit, my Lords, that this Government wish to destroy.

338 I was never a very great soldier, but it is forty years ago next April that I first became a Territorial. I should have thought that when the Regular Army was going to be cut down one thing was essential, and that was to maintain your Reserve; and you should, I believe, technically increase its power. If this Force is to be abolished there will be areas where for quite a few miles there will be no troops at all, and the whole of the strength of the country will be so limited that I tremble to think of the responsibilities that will lie at the feet of those who take this step. Have your Lordships forgotten that in 1938 the Territorial Army was doubled overnight because of the crisis at that time? Must I remind you that all those battalions were virtually up to strength by August, 1939, and within twenty-four hours of the call-up they were virtually 100 per cent. on parade? These, my Lords, are the people that you want to throw away. You have never understood them. Why do you not ask some people—I could name them—to come and tell you a little about the Territorials and what they stand for in this country?

The idea of this Force was to help the civil police. These men were used at the "Torrey Canyon" oil disaster, and they have been helping with the foot-and-mouth epidemic through this winter. Conversations were going on with the police authorities to see how much use they might be to them, and the police, I know, were looking forward to having them. I must make it clear now that I summoned my Executive to meet me last Monday, and at the end of the meeting there was unanimous agreement. It was not a case of looking for it: I felt it. I said, "Are we agreed that if this takes place and we are abolished, never again can we possibly raise the Territorials?" That, my Lords, is the sad fact.

On Monday of last week, at 10.30 o'clock in the morning, I received a message that the Secretary of State for Defence, Mr. Healey, would like to see me at 12 o'clock on the Tuesday. An inquiry was made to discover if there were any alternative hours, and I was informed, "No; it will be 12 o'clock on Tuesday." I went, and I was given the news in much the same way as I received it some two-and-a-half years ago. There was no consultation there was no decision. In fact, there is no plan, because 339 I said to Mr. Healey, "You mentioned care and maintenance. What does this entail?". His answer to me was roughly this: "We have not had time to consider the future, and of course we cannot get on without the help of your Council." How long, my Lords, have I to stand and listen to all this? How long do you expect me to be treated like this? I look after the Territorials to the best of my ability because of this country, and I put my personal pride to one side; but there may well be a limit to what can be expected.

This morning I had a talk with Mr. Reynolds, the Minister of Defence for Administration. I asked him point blank: "What happens if I come here and say that I want the Force, the T. and A.V.R.III, to continue exactly as it is, and you must withdraw?". He said, "It would be absolutely useless, and the discussions which I have suggested we might have for the care and maintenance would never get off the floor. They would be dead." Then I asked him whether he felt that the situation was such that we might possibly have some useful discussions; and we probed in one or two places and I came to the conclusion that if we were going to be killed without discussion, that was not the part I would play. I told Mr. Reynolds this morning that I would discuss with my Working Party, which I had already set up, and that we will meet people at various levels of the Ministry of Defence to see what we can work out with whatever money they can give us.

But as I have been informed that it is worthwhile to have these discussions on the care and maintenance (and if you are going to care and maintain against the day when you may be able to expand, so as to bring us back to where we are or to an even greater strength) may I ask the noble and learned Lord, the Lord Chancellor, who, I believe, is to reply for the Government to-night, whether that means what I believe it to mean: that the abolition of the T. & A.V.R. III will not take place?—because there will be no point in having these discussions if there is nothing upon which to build when that moment may come. I want to send out a message to the Territorials of this country that something will be saved and that the word "abolition" itself is abolished from that statement.

340 The question of redundancy creeps in again, and I asked the Minister this morning to make it quite clear that no steps will be taken before we have had a chance to examine our proposals and to discuss them; and I understand that this will be undertaken. Eighteen months ago, in July, 1966, I informed my Council that I did not propose to continue after July of this year. During the last week I have given great thought to whether this was not the moment when I should retire. But I have come to my own conclusion that my place is beside the Territorials at this hour. They have been good enough to show their confidence in me. I will bat on in this second innings, in the hope that we shall obtain something which I shall be able to hand over to my successor next July. If we meet with final defeat I shall apologise to the Territorials of this country for my failure. I shall never surrender.

§ LORD WIGG

My Lords, I am exceedingly grateful for the kindly tradition that enables your Lordships to regard with sympathy those who speak in this House for the first time. This tradition is a great comfort to me and I will do my best not to abuse your Lordships' benevolence.

I regard it as extremely opportune that I speak after the noble Duke because I support a great deal of what he has said. I should regard it as detrimental to the national interest to handle the A.V.R. problem in a way that would result in the total abolition of the Territorial Army tradition. However, I would ask your Lordships to think for just a moment of how this problem came to arise. It came because the problem of the reserve forces in general, and the Territorial Army in particular, was left to "go bad" in a substantial way. The present Administration, when it tackled the problem of the Territorial Army, found—and this was only a very small aspect—that at least 40 Artillery regiments were armed with 25-pounder guns of the last war which, if they were to go into action, would require their ammunition to be specially reconstructed.

When one is faced with problems of this kind—and with burdens of cost weighing heavily overall—it is not surprising (and it has happened before, 341 under all Administrations) that Gresham's Law applies: the bad drives out the good. I believe that the A.V.R.III is a military necessity but I would not put it in military terms. I would say that it has been one of the major factors in the stability of our political life. This has been so largely because, from the 17th century onwards, a dialogue has been carried on in a civilised way between the Army and the rest of the nation. It is part of the Army's glory—and I speak here as a Regular soldier—but the occasions upon which Regular soldiers, while serving, have sought to interfere in politics are extremely rare. We have to search our memories very hard to discover even isolated instances.

The fact that the dialogue has continued—and is carried out—in a civilised way is due, in my judgment, to the existence of the Territorial Army. It is a fact that we live in times of great instability—instability in the international field, instability at home. The new generations are coming along and I look at these young people and I wonder (and this is a sure sign that I am getting very old) whether they will face up to responsibility quite as I would wish them to do. But the fact that a body of men exists who are prepared to give up their leisure time in the service of their country is a major stabilising factor. Their numbers are not very great; the original figure for A.V.R.III was 22,000; and I suppose that by now they have recruited up to 15,000 or so. But if, on the budget which the noble Duke mentioned, they have done that, then I think the present Administration, of which I was recently a member, would be very wise to look again at this problem.

Your Lordships who have held administrative positions of much greater responsibility than I, will know what can happen when an unwanted item or a recently-acquired item gets on to the budget of a Department which is suddenly faced with an economy call. This item, which you have not had for very long, which you do not particularly want and which you do not know very much about—out it goes! The A.V.R. III is the victim of the fact of its transfer to the budget of the Home Office. I would suggest to your Lordships that one of the things the Government should do is bring it back from the Home Office to where 342 it belongs, in the Ministry of Defence; and they should keep it on something more than a care-and-maintenance basis, because if it is left on such a basis for a number of years, then the tradition upon which is is founded will die, or at least tend to wither away.

I would congratulate the Government and the noble Duke on the fact that there are to be talks, and that in the talks there will be a careful look at the care-and-maintenance basis. An examination should be made with great care to see whether A.V.R. 111 can be preserved, not in terms of its current military value but in terms of its value as an area which fosters an understanding of the Armed Forces and which may also provide a recruiting ground (the noble Duke did not mention this), and a very valuable recruiting ground, for A.V.R. II and the Regular Army. It is for these reasons that I support the noble Duke's plea this afternoon.

I would say, however, to the noble Duke—and this point is made in no sense as a rebuke—that he was a little hard when he suggested that those who happen to hold the views that I share, or at least shared until I sat on the Cross-Benches, do not understand the Territorial Army. I joined as a volunteer when I was a youngster about the age of 16, and what I always regarded as for my sins I served in a Territorial battalion until I became a Regular. I know that the noble Lord, Lord Chalfont, also served in a Territorial unit. I understand the anxiety of the noble Duke, but I hope he will not think that, because there are those who do not go the whole way with him, we do not understand and sympathise with the cause he has espoused.

My Lords, I must be very mindful of the pressure of time, but I wish to trespass on your Lordships' kindness this afternoon as there are one or two things that I think should be said. I shall go into the Division Lobby to-night in support of the Government, but I have doubts; not about the package deal, but what I would call some of the reasons on which it is based. I would remind your Lordships that in Defence matters policies take a long time to come to fruition. The period of gestation is, what?—ten years, twelve years? The wrath of the gods which is visited upon 343 us now does not stem primarily from the acts of the present Administration. In my judgment it originated in the 1957–58 Defence White Paper.

What was there done by that White Paper? We abolished conscription under political pressure, and prematurely in my judgment, without regard to the consequences. What was the consequence? A bill which, at the present time, contains about the same percentage for pay, and what I would call allowances and non-effective charges, including the pay of civilians, now as then. But now ten years later we have 300,000 fewer men serving in the Armed Forces and over 100,000 fewer civilians. The result has been—because of the steps that were taken in 1957—a constant pressure on the Defence expenditure ceiling, with the result that, first, we cannot afford the equipment and, secondly, if the package deals mean anything we now cannot afford the men. I do not cast any blame. Both Parties have their share.

But there was another factor. If one reads the 1957 White Paper, one does not have to go very far before one finds it was actuated by precisely the same principles and forces which forced the Government to take the action they have taken in the present situation; precisely the same. The then Government put all their money on an independent British nuclear weapon, Blue Streak. We carried on for four years. This was succeeded by other weapons which cost a lot and achieved nothing and then in due course we progressed through Skybolt to Polaris and then F.111. But, my Lords, one of the things that astonishes me about the present White Paper (and, may I say, about that very highly intelligent band of gentlemen the defence critics) is that not one word, so far as I can discover, has been said about the continuance of Polaris.

My Lords, if you are going to withdraw from the Far East, and if in actual fact you have long since given up, as I hope we have, any belief in a British independent nuclear deterrent, what now is the purpose of the Polaris submarines? There are to be four. The first one, "Resolution", will become operational shortly. Where is it to operate? In the Atlantic, armed with A.3, at a time when the Americans have dozens of 344 missiles with even greater hitting force than Polaris, and when it adds nothing to our strength? Or it is to go to the Far East? Are we going to deploy it there at the very time when we are withdrawing from the Far East? Are we going to send this expensive complex into the Far East and, if so, at what cost? What we do know is that the bill, even now, over the next decade, will run into hundreds of millions of pounds—and here we are, saving a few millions on postponing the raising of the school leaving age or saving £2½ million to get rid of A.V.R. III.

My Lords, I am always happy to place my services at the disposal of your Lordships, and I would put forward a constructive proposal. It is that the Government should offer to re-sell Polaris back to the Americans. If we could re-sell it back to them they could afford to reconstruct it. They could arm it with Poseidon. Western hitting power would thereby be increased and we should accumulate at once—because they could afford to pay us over the exchanges—some hundreds of millions of pounds which would be of practical value in the situation in which we now are.

My Lords, I turn to another factor, the position of the British Army of the Rhine. We are told in paragraph 11 of the Government White Paper—here I must try to get my quotation reasonably right—that our security lies fundamentally in Europe. This is a doctrine which has been taken abroad, in my submission, for no military reason. Oh, yes!—politically, very important. This is our second obsession. It is an addition to the independent nuclear deterrent. If it is based on the intention to go into the Common Market regardless, then yes; you have to pay lip service to it. But, my Lords, how did this European commitment come about? Sir Anthony Eden, as he then was—the Earl of Avon—went in October, 1954, to a Conference in Paris—there is a very readable account about what took place in Lord Moran's book Churchill. The story is told of how Lord Moran came next morning, full of joy and great triumph, and talked to the then Prime Minister of how M. Mendes France and M. Spaak had congratulated Sir Anthony Eden on his great triumph. He recalls that General Eisenhower had said that this was 345 of fundamental importance, and that Britain had taken a most tremendous step in undertaking to keep four divisions in Europe and the 2nd Tactical Air Force. Mr. Churchill said, "That? That is of no importance. We can break that at any time." And so before the ink was dry on the Paris agreement the four divisions became 77,000 the 77,000 was run down to 64,000 and then to 55,000. My Lords, if noble Lords on the Opposition Benches want to talk about broken pledges they should look at the number of occasions on which the most categorical assurances were given to our European allies and members of NATO that that 55,000 would be available. But we have never reached that figure at any time in the past ten years.

There is something even more than that. It depends for its fighting capacity on what? On atomic tactical weapons. The two we possess, the Honest John and the 8 inch Howitzer are American and they are obsolescent. That is not all the story. At the present time inside the Northern Army Group we have fewer troops than the Germans. They have 65,000 and they provide Army nuclear support weapons—the "Sergeant" and the "Pershing" without which B.A.O.R. could not fight for five minutes. If our military position in the world depends upon NATO and our position in Europe, then it is our clear duty to ensure that our forces in Europe are up to strength, that they are militarily viable and that they are armed with the weapons which are necessary for the discharge of their function.

The picture is even more ludicrous than that. In order to save offset costs, what is done is to maintain in Europe battalions which are under strength, because it makes a smaller claim on our foreign exchange if the numbers are fewer. So we have the picture of battalions at home up to establishment, and when they go to the Rhine Army they are reduced in strength. That is all right so far as display in the shop window is concerned, but in military terms it deceives nobody but ourselves. On this occasion I will not trespass further on your Lordships' kindness beyond making two suggestions, couched in military terms, both of which will help enormously our economy and our prestige. Get rid of Polaris, and either bring back the Rhine Army or equip it and man it 346 to the point where it is militarily viable. If you cannot do this, bring it back.

That leaves me one final point. It is the practice, commonplace now, to denigrate the Prime Minister's integrity. Anything that can throw doubt upon his word is an accepted form. I am one of those people who judge men not by what they say but by what they do. I agree with the noble Earl, Lord Jellicoe, when he said that this country can do much better than it is already doing, bat it can do so only if we recognise facts. The Prime Minister, when Leader of the Opposition, with great courage did something that no other leader of a political Party since the end of the war has had the courage to do. While leading a Party which contains an element of men who do not regard the use of force as morally justifiable in any circumstances, the Prime Minister offered talks in order to elevate defence beyond the Party struggle. He did that in Opposition and he has done it three times again since he became Prime Minister, with the specific intention of trying to get this problem right. Because on this a great deal depends, not only in terms of power but also in terms of prestige and of the economy. He made no progress. Would it not be fitting if your Lordships' House took the lead in this matter and on defence questions tried on all occasions to clear our minds on the facts before we argued on matters of opinion? Thus by establishing the facts we can make our contribution to building an informed public opinion, without which in a democracy little will avail.

§ LORD AMULREE

My Lords, there falls to me the privilege of congratulating the noble Lord, Lord Wigg, on his maiden speech. Your Lordships are always pleased when we get new Members who know what they are talking about and that applies to the noble Lord, to whom we were so delighted to listen this afternoon. We hope that on future occasions he will be able to inform us about his work in his new job, in the same way as he has informed us to-day about matters of defence. We shall look forward to hearing him on a great many other occasions.

In the short time at my disposal, I want to deal with our domestic problems rather than with our problems overseas. 347 First I want to say a word about housing. I think it is lamentable if we do not try to build the largest number of houses we possibly can. All those who have worked in any form of social service realise that good housing is essential, and that if people are properly housed it lessens the demand for other services. I have for a long time been particularly interested in the elderly, and one of the great problems is connected with the houses in which they are forced, through economic and other circumstances, to live. A large number of my colleagues in the medical profession would agree that the amount of sickness which is either caused by bad housing or accentuated by bad housing is substantial. If we have first-class housing, we shall cut down the bills in all sorts of other directions. That is why I am sorry that the housing programme may be affected. I am sure that that is wrong. Turning to fields about which I do not know so much, I feel that a good deal of juvenile delinquency and broken families is caused by bad housing. To have too many people living together in cramped conditions breeds reactions and emotions which may lead finally to some kind of explosion.

I regard the roads as being part of the country's capital assets. We do not have the road system in this country that we need to have. It works all right, but we are behind some countries in Europe. I should like to think that no suggestion will be made that road programmes might be reduced, because they are of enormous practical value to this country. In parenthesis, I would add that it seems to me a curious thing that local authorities maintain secondary roads to the same standard as first-class roads. That is a practical habit if you have all the money in the world to do it with. In foreign countries secondary roads are reasonably kept up, but not to the same level as here. I wonder whether it would be worth while looking at this point—I do not go into questions of danger and accidents—because it seems to me something that might be considered.

I should now like to turn to one or two matters affecting health. I have no particular view about the issue of milk in secondary schools, but I would sug 348 gest that there are some children who will not benefit from it. A good many boys and girls do not get it. I know that when I was young milk was a drink I could not stand. I took every opportunity I could of pouring it out of the window when my parents gave it to me. So I am not madly keen to give milk to boys and girls of higher ages. But I think that it should be available to children who need it, those who do not get a good breakfast before they come to school. Would it not be possible to make some kind of scheme which would allow such children to get milk without at the same time giving it to all the older schoolchildren?

I regret—although here again it may lead to other things which are good—the increase in the dental charges from £1 to 30s. I regret it not because I mind people having to pay it but because we have not a very good standard of dental hygiene in this country. In fact, a large number of people who have something wrong with their teeth go to the dentist and say, "Pull out my teeth", and do not try to conserve them. It is a bad thing to have one's teeth out, and the more one can keep one's own teeth in, the better. It is rather expensive, but that is what the dental service is for. I am wondering, now that prices for the operations are going up, whether the newly-formed Council for Education could do something to teach people to value the conserving of their teeth, even though it may cost a little more money.

Then we come to the vexed question of the prescription charges. I do not really like them, and I am not sure that, with the innumerable exceptions there are going to be, they will bring in as much money as is expected. Will they really save the doctors any time? I doubt whether they will save much time, because the people who want a prescription can often be dealt with in one or two minutes if they go and see their doctor, and for that they have to pay, whereas patients can go and see their doctor on some personal matter which they wish to discuss—matrimonial difficulties, or whatever it may be—and that may take quite a long time, for which no money changes hands at all. Yet the value to the patient can be just as great as if he is given a prescription for a drug. That, I think, is what one found when prescription 349 charges were in before. There is also a danger of doctors' over-prescribing for people. They tend to give their patients more than they require so that they do not have to go back and pay an extra sum. That can take up quite a lot of the money and drugs which one would expect to save on prescription charges. The same thing applies to what I think have been called "blunderbuss" prescriptions, with people trying to get several different things put on the same prescription because they think it may be something the patient may want, though they are not sure. That again, I think, is one of the troubles that will happen if we get prescription charges.

Then there are the people who are possibly rather mean, economical, or maybe have not much money. They will not take their prescriptions to the chemist because they do not wish to spend the money. That may be a deplorable thing. I am not going into a moral judgment of it, but it may mean that somebody who needs medicine quite urgently does not get it simply because of that little difficulty put in his way in going to get it.

Another thing which I find very distressing over the prescription charges is that we have gone back to the dreadful old phrase, the "chronic sick." It is a hangover from the bad side of the Poor Law. What it means, and how it can be defined, I do not know. On one or two occasions I have put down Questions, both Starred and Unstarred, to try to find out who the Government think the chronic sick are, but I have never yet succeded in getting a satisfactory reply. Does this mean that the unfortunate doctors will have to decide who are the chronic sick? Does it mean that the Ministry will lay down certain categories? As I say, who the "chronic sick" are, I do not know, and it is a bad old phrase to have brought back.

Finally, I am pleased to see that there is to be no cut in the hospital building programme. But I wonder whether we could make some saving in the programme by cashing in on what I might call local patriotism and local interest. In the old days, before the National Health Service came in, the money was raised voluntarily for hospital rebuilding, hospital departments, and that sort of thing. When the Health Service came in in 1948 that was not allowed. But it is coming back a 350 little now, with money subscribed by the friends of the various hospitals. One wonders if one could not make a real saving of money, a contribution, if you like, by encouraging local patriotism to collect money for new buildings or remodelling old buildings. One is told that any surplus money there may be is mopped up in taxation. I do not think for one moment that this is true, because one sees what large sums certain lucky voluntary agencies get regularly every year from the general public, and one sees legacies left to certain voluntary organisations. I think there is not so much money as there was, but there is a good deal of money floating around now which I believe could be tapped and which would go some way towards increasing the amount of money available for hospitals, and so go some way towards reducing the cost to the State. I have put these few points quite briefly before your Lordships because there are a number of other noble Lords to speak, and I do not want to take up too much time.

§ LORD LLOYD

My Lords, I do not normally inflict my views upon your Lordships, and indeed I should not have ventured to do so to-day were it not for the great anxiety which I feel about the Government's policy on the Persian Gulf. This is an area with which I have a certain acquaintance, and where I should declare a business interest: indeed, I have visited the area since the devaluation crisis.

Before I come to this particular topic, I should like quite briefly to say a word or two about the economic crisis in general. I think the matter was admirably summed up for us yesterday in the brilliant speech which was made by tie noble Lord, Lord Franks. He pointed out that we had really come to what was a turning point in the affairs of this nation. He pointed out that steadily over the years our position had worsened; that rather than make economies in the past we had borrowed money abroad until eventually our credit was exhausted, and that then, in default of anything else, we had had to devalue. The noble Lord pointed out that this was, in effect., really the last chance to restore our affairs, and that if we failed now we faced nothing but further devaluation and a steady dc-cline in the prosperity of this country and 351 the standard of life of our people. I believe that, by and large, this is true.

In a situation of this gravity, frankly I do not believe that this is the moment to throw political brickbats. As the noble Lord, Lord Franks, said, what we need is leadership from the Government and a national effort by the people of this country. I, for one, am convinced that if we can get the first the second will follow. But if we say this, I do not think it means that we should not face up to the causes of our present position. Indeed, in my view, if we are to survive it is absolutely essential that we should do so. On this matter I agree with a great deal of what was said by my noble friend Lord Jellicoe yesterday, and also by the noble Lord, Lord Franks.

In addition to this, I should like to pray in aid the views of Dr. Erhard, and I do this for two reasons: first of all, because as the architect of the German economic miracle I think Dr. Erhard is somebody to whom we must all listen with respect; and, secondly, because I feel sometimes that views of a friendly outsider, such a person, can see our problems more clearly than we perhaps can see them ourselves. Also, after all, Dr. Erhard has always been a very good friend of this country. I should therefore like to quote to your Lordships a passage from an article he wrote in the Sunday Telegraph of the 14th of this month entitled, "Why not a British economic miracle?" In that article he attempted to analyse the causes of our difficulties and wrote this, which I think is something to which we might pay attention: The root of the evil, as I have already indicated, lies partly in wrong decisions of principle as to which social and economic policies were best suited to overcome the baleful after-effects of the war. Britain decided to move towards the Welfare State. But an attempt to maintain and even expand such a Welfare State without the necessary economic strength, discipline and order can, in the long run, only end in economic collapse. Of course, a State cannot be blamed for wanting to give its citizens social security and protection from want. But it can be blamed for that ideological obstinacy which turns this aim into a so-called sacred cow—into a doctrine of absolute value that must be proclaimed and practised even where there is no real need for it and where large sections of the population have never accepted it. We Germans should be especially wide-awake and watchful in this respect, for among 352 us also there are signs of a disturbing tendency to make welfare a form of compulsion. If the phenomenon of the complete Welfare State has become known as 'the English sickness' then it is not the social welfare system long practised in Scandinavia that is meant so much as this deliberate refusal to keep everything within the limits of what is materially possible. The dangers from continuing this trend, which reaches far beyond Britain, threaten the social structure of the entire free world. For if the bill being run up cannot be covered by rising productivity, the result can only be inflation. To follow such a course is no longer a pious illusion; it is deliberate self-deception. Those words are, I think, something that we should all think about, and we might ask ourselves whether there might not be a good deal of truth in what Dr. Erhard has said. So much for the causes of the crisis.

I now should like to turn to the crisis itself. Obviously, in this situation, major cuts in Government expenditure were inevitable. But I am quite sure your Lordships would agree that it is essential that we should make the right cuts, and that we should not, in an endeavour to spare ourselves sacrifices which must be painful to all of us, cut expenditure which is calculated to improve our productive capacity and competitive efficiency, or take measures which will have an adverse effect upon our foreign trade. Whether we like it or not (as I think was said yesterday by a noble Lord), we have to face the fact that we cannot insulate ourselves from the world. We are fundamentally an international trading nation, and it is in this context that I should like to end by briefly saying a few words about the Persian Gulf.

As your Lordships will be aware, the Arab States in the Persian Gulf nearly all are under British protection, and we have therefore made promises to these people which I do not myself feel we can dishonour without previous agreement with them. I believe that if we do so, not only do we break our word, but probably worse, from the point of view of our reputation in the world, particularly as traders, we do great damage to our reputation in the world at large. I think that until recently the people in this part of the world trusted us and believed that our word was our bond. This trust, I am sorry to say, has already been fairly rudely shattered by devaluation since, believing in the Government's pledges, they left their money in sterling and suffered severe losses. 353 When I was out there just after devaluation, there is no doubt that there was a feeling of considerable bitterness about this.

But, my Lords, the withdrawal of our forces from this area at this moment will, in my view, be the final blow to such little confidence as still exists in our good faith. And, quite apart from this, quite apart from any moral obligation which there may be in this part of the world, I believe there are vastly important issues at stake. As your Lordships are well aware, most of these Gulf States are rich in oil, and although it may be that their political systems are still mostly mediæval, in the sense that the Ruler still has absolute power, they have been well advised, and the wealth which they derive from oil is being expended for the benefit of their people as a whole. One has only to go there to see the schools, hospitals, housing, roads and sanitation which is steadily being improved; and one can see a steadily rising standard of life. Therefore, I say to your Lordships that these people have a vested interest in stability, because they know that in stability there will be prosperity for them. Here in a troubled world is an area of peace and prosperity, and the fact that this is so is in no small measure due to our presence in that part of the world.

But we should not delude ourselves that there are not dangers; of course there are dangers. The very wealth of these Gulf States makes them an object of envy to people like Colonel Nasser and to the N.L.F., all of whom will be only too ready to start subversion in this area; and, of course, on top of that, there is the danger of disputes between the Arab States themselves. There are many outstanding territorial claims. Iraq claims part of Kuwait; Persia claims Bahrein; Saudi Arabia claims a large part of Abu Dhabi. And the fact that these dangers are at present contained by our presence in the area does not mean that, if we were to depart, there would not be a very serious risk. I am not trying to argue, by saying this, that we have to be there. What I say is that, before we go, we must ensure that there is some stable system of security and defence and of agreement between these Arab States, which will enable us to go with a clear conscience, 354 feeling that this vitally important part of the world can continue to enjoy stability.

Last night the noble Lord, Lord Chalfont, talked about an orderly withdrawal. What is now proposed is not in my view an orderly withdrawal. It is, e n the contrary, a hurried, I would almost say a panic-stricken withdrawal, and we shall leave behind us a vacuum which nobody at the moment is able to fill. Therefore, I believe it is absolutely essential that we should work for a closer integration of all these States, and particularly of the great States of Saudi Arabia and Persia. I am quite sure that until something on these lines has been arranged it would be not only dishonourable but a terrible mistake for us to get out.

Finally, I should like to draw your Lordships' attention to our own interests, and I mention these last because I thought this was the proper order in which to put them. Nevertheless, I think it is estimated that British firms and interests have assets of a capital value of something like £1,000 million in the Persian Gulf. We have an annual revenue in foreign exchange, mainly in dollars because oil is dealt with in dollars, of some £200 million per annum. As against this, my Lords, the total cost of our defence in the area is something between £12 million and £20 million at the outside; I should not like to put an exact figure on it. When one considers that in any case the cuts envisaged are not going to help our economy for, at any rate, two years; when it is considered, as the noble Earl, Lord Swinton, pointed out earlier this afternoon, that the Government without batting an eyelid turned down an arms contract of £200 million from South Africa; when it is considered, only as an insurance, that for £12 million to £15 million we could protect interests worth £200 million a year in foreign exchange, I must confess I cannot see the sense of this precipitate withdrawal. Unfortunately I was not present yesterday, but I read the speech of the noble Lord, Lord Chalfont. If he was present he would say that I was, as I think he said, "a nonsensical blimp", and what I am saying shows complete ignorance of the elementary facts of life. He may be right. All I can say in return is that from a business point of view this seems to be midsummer madness.

355 My Lords, I end as I started. I have said that I believe we are at the crossroads. I do not believe this is a moment when we can afford to make mistakes, let alone mistakes of the magnitude of this one. The mere announcement of our intended withdrawal has done immense harm in the whole of the Persian Gulf. I still do not believe it is too late to have second thoughts and, therefore, I earnestly implore the Government to give further consideration to this matter.

§ LORD GRANVILLE OF EYE

My Lords, it is customary to ask for the indulgence of your Lordships' House on the occasion of a maiden speech. There have been several very remarkable speeches in the debate which has ranged over the past two days. I should like to add my tribute to the noble Earl, Lord Longford, for his moving speech on his resignation, and also to his successor for his clear defence of Government policy in his first speech after his appointment as Leader of the House. I would join with those who wish him well in that very important office. It is also very encouraging to follow the maiden speech of the noble Lord, Lord Wigg, as perhaps it gives one better odds in favour of finishing the course.

I understand it is the custom of your Lordships' House that a maiden speech should not be controversial. But in a two-day debate of this character on the Motion which is on the Order Paper, that is a little difficult. However, I will do my best, but I am not very hopeful. The Government Motion asks for approval of the policy announced by the Prime Minister in his speech on January 16. The Opposition Amendment rather pinpoints defence, and has done so in most of their speeches of criticism. Of course, it has not been mentioned much in the past two days, but for many years we hoped for disarmament. Let us hope the Prime Minister puts his right hat on and may make some headway on this subject and Vietnam in his talks in Moscow. I think we should remember—as I am sure the noble Lord, Lord Chalfont, does—that the cheapest defence, to say the least, is real and effective disarmament.

The noble Earl the Deputy Leader of the Opposition said in his speech yester 356 day that it is the first duty of a Government to defend its people. It is also the duty of a Government to avoid spending more than it can afford. He was answered by the noble Lord, Lord Thorneycroft, in that remarkable speech of his, who said that all Governments have been spending more than they could afford for years. I am sure all of us who listened to Lord Thorneycroft yesterday could not have heard a more remarkable speech. In my humble view, it almost had the effect of altering the whole tone, if not the whole course, of the debate. One had to rub one's eyes a little to realise from which side of the House his speech was being made. That was a bonus for the Government. Maybe the Government's luck has changed and the imponderables are beginning to break the right way for them. In fact, so telling was the speech from the noble Lord, Lord Thorneycroft, that one wonders whether a nostalgia for a presence East of Suez will press the Opposition to vote in their full strength to-night.

The noble Lord, Lord Chalfont, made an equally strong speech to those of us who heard it last night. He spoke about the responsibilities of a Government for defence, and so on, and said that they also had the responsibility for the economic security and wellbeing of the people, without which there could be no real security in any great nation. But I think the Government, and your Lordships' House, have to face up to these realities concerning the modern cost of defence. Perhaps—as has been said in so many speeches—the East of Suez and the Gulf decision may itself be historical. Unfortunately I did not see the television broadcast by the Prime Minister of Australia, but as the noble Lord, Lord Beswick, said in his speech to-day, this country would, of course, unhesitatingly go to the aid of any of its friends in the Antipodes.

If we are going to face up to realities, I think we have to remember that Australia and Canada have for some years relied on America for their main weapons and defence. The United States of America, and a great Power like Russia, have vast production lines from which they can supply the hardware of aircraft and weapons to their allies. For years we have not been in that lead. So the Government have been forced to 357 cancel the order for the F.111. The cost of these new planes, the hardware, the delivery, the spares, has really become fantastic. Maybe this decision with regard to the F.111 will give our own aircraft industry a new start with its technical potential, which, as your Lordships know, is second to none in the world.

Reference has been made to the strain upon Ministers in modern-day Government—the tremendous strain of taking day-to-day decisions in constantly changing circumstances and under very great international pressures. In this modern form of government it is no longer the responsibility of Ministers merely to consider the annual review of these great problems; and the pressure on senior Ministers, individually and collectively, of world events has become enormous. I happen to believe that the present Minister is a good Minister of Defence. I think he has done his job well in most difficult circumstances. I think he has been subject to a campaign in the Press and on television which amounts almost to political character assassination. How can a Minister responsible for the defence of this country, and all that this entails in negotiations with other Powers, function in that kind of atmosphere? In any event, he has shown great courage and he is carrying on and doing an extremely difficult job well. I personally hope that the Press and television headliners are satisfied that they are doing a good job in a free society in this campaign. There are countries in the world where this sort of licence by a free democracy, a free society, without full responsibility has perhaps led in the end to government by a Committee of Colonels.

If I may refer again to the speech made by the noble Lord, Lord Thorneycroft, he said yesterday, "Well, we have been hare before; we have had it all before". Of course we have. I believe that one of the great changes which has taken place in the technique of modern government in parliamentary democracy is that in fact we are in an era of constant or instant government by economic regulators. We have the autumn Budgets, the Estimates; but, as the noble Lord said, they are introduced by all Governments. In a sense the Cabinet are rather like a board of directors who are in constant session. Of course they have to change