Agriculture Bill [H.L.] (Hansard, 26 July 1993)

HL Deb 26 July 1993 vol 548 cc1114-64 1114

§ 9.48 p.m.

Earl Howe
My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ [The page and line refer to Bill [127] as first printed in the Commons.]

§ 1 Clause 3, page 3, line 44, leave out 'milk produced' and insert 'the occurrence'.

§ 2 Page 3, line 45. after 'year)', insert 'of any relevant matter'.

§ 3 Page 3, line 46, leave out 'the authority is satisfied that'.

§ 4 Page 3, line 47, leave out from 'is' to end of line 48 and insert 'not earlier than 31st March 1993 and not later than the vesting day under the scheme.'.

§ 5 Page 3, line 48, at end insert:

§ '(6) For the purposes of subsection (5) above, the following are relevant matters—

(a) the production of milk, and
(b) the sale of milk by the person responsible for producing it.

§ (7) For the purposes of subsection (6) (b) above, milk shall be treated as sold if it is sold in the form of milk or in the form of a product which is wholly or partly derived from milk or which includes milk as an ingredient.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 5 en bloc. One of the matters to which the Minister must have regard in deciding whether to approve a re-organisation scheme for a 1115 milk marketing board is whether that scheme makes reasonable provision for the distribution of assets to registered producers. Clause 3(5) describes a number of bases for such a distribution which should not be considered unreasonable.
As amended, the situations covered by this clause would be as follows: a distribution to producers who were registered on a specified date or at some time during a specified period; and a distribution related to registered producers' sale of milk and milk products from milk produced by their own cows over a specified period. The date or the end of the period would have to be no earlier than 31st March 1993 and no later than vesting day.
The main change is to enable 1992-93 to be used as a reference period, which should be more practicable than the year 1993-94 if vesting is to go ahead on 1st April 1994, which is the board's present objective.
For the sake of clarity and completeness I should add that a board is not constrained to propose a distribution in accordance with one of the possible ways described in Clause 3(5) to 3(7). A board could propose some other basis of distribution, which might, however, be more open to challenge on the grounds of its being unreasonable.
Moved, That the House do agree with the Commons in their Amendment No. 5.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENT

§ 6 Clause 7, page 6, line 41, leave out '21' and insert '14'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 6. With the leave of the House, I would also like to speak to Amendment No. 24.
Clause 7 provides that if Ministers require information from a milk marketing board which has submitted a reorganisation scheme, and that board fails to supply the information, then the board's application is treated as having been withdrawn. Clause 28 contains an equivalent provision in relation to a transfer scheme from the Potato Marketing Board.
The Government accepted the Opposition's suggestion in another place that a board should have only 14 days, rather than 21 days, to show that any failure to supply information was accidental. These amendments make the necessary changes.
Moved, That the House do agree with the Commons in their Amendment No. 6.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENT

§ 7 After Clause 7, insert the following new clause:

§ Publicity for determinations

§ '.—(1) As soon as reasonably practicable after granting an application under section 2 or 5 above, the authority granting the application shall make public in such manner as it thinks fit—

(a) the fact that it has granted the application, and
(b) the principles of the approved scheme or, as the case may be, of the approved variation.

1116

§ (2) As soon as reasonably practicable after deciding under section 6 above to withdraw an approved scheme's approval, the authority making the decision shall make its decision public in such manner as it thinks fit.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 7. With the leave of the House, I should like to speak also to Amendment No. 25. These amendments provide for the publication of the principles of an approved milk reorganisation scheme and any major subsequent changes including withdrawal of approval.
There is equivalent provision in respect of a potato transfer scheme except that, as Part II of the Bill makes no provision for the Potato Marketing Board to apply for approval of a transfer scheme to be withdrawn, there is no need for a requirement to publicise the fact of withdrawal.
Moved, That the House do agree with the Commons in their Amendment No. 7.—(Earl Howe.)

§ Lord Carter
My Lords, as I understand it, the amendment deals with the publication of an approved scheme after it has been agreed by the Government. I believe that we can assume that under Clause 3 the proposals will be published because obviously there will be consultation on the proposals of the various boards. Will the Minister explain what will be the procedure with regard to the publication of reorganisation schemes before they are determined by Ministers? How will they be published? Will they be published in full? Will it be a government document? How will the industry and others know the proposals of the various boards?
The amendment deals with the publication after Ministers have decided on the scheme, but perhaps the Minister will explain the procedure so that the proposals of the various boards are known.

Earl Howe
My Lords, the Bill as originally drafted would require a milk marketing board to bring the principles of its reorganisation scheme to the attention of registered producers. Following an amendment in this House, Ministers would have to consult representatives of producers, processors, retailers and consumers of milk on the scheme. Therefore, the principles of any scheme will be in the public domain at the outset.
However, under the provisions of Clause 4, a reorganisation scheme may be modified between submission and approval if Ministers cannot approve the scheme in its original form. Therefore, a scheme as approved may be different from that originally submitted for approval. Therefore, this amendment would require Ministers to make public the principles of an approved scheme.
An approved scheme may also be varied or, in the case of an MMB scheme only, withdrawn with Ministers' approval if there is a material change of circumstances. These amendments require those events to be publicised.
On Question, Motion agreed to.

1117

§ COMMONS AMENDMENTS

§ 8 Clause 10, page 8, line 19, after 'a', insert 'qualifying'.

§ 9 Page 8, line 19, leave out from 'transfer' to and' in line 21.

§ 10 Page 8, line 29, at end insert:

§ '(2A) For the purposes of subsection (1) (a) above, a transfer is a qualifying transfer if it is—

(a) a transfer of property, rights or liabilities of—
1. (i) the relevant board, or
2. (ii) a subsidiary of that board,
to a body which is a qualifying body, or
(b) a transfer of property, rights or liabilities of a subsidiary of the relevant board to that board.

§ (2B) For the purposes of subsection (2A) above, a body is a qualifying body if it is—

(a) a development council established under the Industrial Organisation and Development Act 1947,
(b) a society registered under the Industrial and Provident Societies Act 1965 which has not previously traded,
(c) a company registered under the Companies Act 1985 which has not previously traded, or
(d) a company registered under that Act which was a subsidiary of the relevant board immediately before the day on which this Act is passed.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 8 to 10 en bloc. With the leave of the House I shall speak also to Amendments Nos. 26 to 28, 53 to 55, 58 and 59, 228 to 236, 239, 245, 247, 249 to 251 and 254. This group of amendments concerns the types of body to which assets of a board, or of a subsidiary of one, could be transferred under a reorganisation scheme. They add a development council to the types of body to which assets of a milk marketing board, or of a subsidiary of one, could be transferred under a reorganisation scheme. For example, it has been suggested that national milk records should in future be operated by a development council. The amendments would keep that possibility open, but of course no decisions have yet been taken. It is up to the board to propose, and Ministers to decide, accordingly.
The other amendments in the group make drafting changes. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 8 to 10 en bloc. —(Earl Howe.)

§ Lord Carter
My Lords, the amendments refer to transfer of liabilities. Perhaps I may ask the Minister this question; I believe that it is the right time to ask it. I refer to the position affecting the Scottish Milk Marketing Board and the deduction of the capital levies from producers. The situation has been challenged. I believe that the case is now sub judice. What effect will that issue have on the calculation of the liabilities of the marketing boards? Will the matter be left to the residuary bodies which succeed the marketing boards? It would he ironic if the capital levies had to be paid back and then a levy raised under Clause 16 to meet the liabilities of the marketing boards which arose from the repayment of the capital levies. I am not sure that that position is affected by the amendment. However, it would be helpful for the 1118 industry if the Minister will spell out the situation with regard to capital levies as it affects the five milk marketing boards when they bring forward their reorganisation schemes.

Earl Howe
My Lords, I am happy to help the noble Lord in so far as I can. The Commission has pointed out in a reasoned opinion that EC regulations prohibit the MM Bs from withholding money from milk producers in order to finance their commercial operations. That mainly affects the Scottish and Northern Ireland MMBs which have outstanding financial commitments which they would intend to meet by raising a statutory levy. The Commission is primarily concerned that no new levies should be raised. That could create a problem for the MMBs concerned and possibly give rise to a liability which would fall to be met under a scheme of reorganisation.
The Bill provides the necessary mechanisms for dealing with outstanding liabilities, as the noble Lord well appreciates. As for levies raised in the past, the Commission appears to accept that, if substantial assets are returned to producers when the milk marketing schemes are ended, that should take care of the problem. Thus if it were established that Dairy Crest had at any time since 1978 benefited from a statutory levy contrary to EC regulations, the proposed distribution of Dairy Crest shares to registered producers should take care of that problem. That is obviously a sensible approach. It would clearly not be sensible to raise new money from producers in order to give them back money withheld from them at some time in the past.
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 11 After Clause 16, insert the following new clause:

§ Power to carry out preparatory work,

§ '.—(1) The functions of a milk marketing board shall be deemed always to have included the function of preparing for the enactment of this Part of this Act.

§ (2) In this section, "milk marketing board" includes the board established under the Milk Marketing Scheme (Northern Ireland) 1989; and, in the application of this section to that board, the reference to the enactment of this Part of this Act shall be construed as a reference to the making of Northern Ireland legislation corresponding to this Part.'.

§ 12 After Clause 17, insert the following new clause:

§ Functions under section 19 of the Agricultural Marketing Act 1958

§ '. The functions of a committee appointed under section 19 of the Agricultural Marketing Act 1958 (consumers' committees and committees of investigation) shall not include the consideration of anything done by a milk marketing board—

(a) by way of preparing for the enactment of this Part of this Act, or
(b) in connection with an application under this Part of this Act or the carrying out of an approved scheme.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 11 and 12. With the leave of the House, I should like also to speak to Amendments Nos. 31, 48 and 49.
1119 The milk marketing boards have already carried out a considerable amount of work on their reorganisation proposals in anticipation of the enactment of the Bill. They have relied upon existing powers in their respective milk marketing schemes. In view of the fact that the provisions of the milk marketing schemes were not drawn up with those particular circumstances in mind, the Government consider it desirable to remove any potential areas of doubt about the adequacy of the powers in question. These amendments, in particular Amendment No. 11, would do precisely that.
Secondly, the amendments clarify the positions of the committees of investigation and consumers' committees established under the Agricultural Marketing Act 1958. Those committees' purposes are, respectively, to consider complaints about the operation of the milk marketing schemes, to monitor the schemes' effect on consumers and to report to Ministers. The new clause introduced by Amendment No. 12 would make it clear that the committees' remit does not extend to the boards' activities relating to schemes of reorganisation before or after enactment of the Bill.
The approval and monitoring of the implementation of reorganisation schemes are already directly the responsibility of Ministers, as provided for in the Bill. 1120 Amendment No. 31 has an effect equivalent to Amendment No. 12 in relation to the potato marketing scheme with one difference. Unlike the milk boards, the Potato Marketing Board has not had to consider in detail what any transfer scheme might contain. There is therefore no need for Amendment No. 31 to refer to activities carried out by the board in preparation for the enactment of the relevant part of the Act.
These amendments will not affect the existing roles of the committees in any way. The Committees will remain responsible for overseeing the boards' operation of the milk marketing schemes until they are revoked.
Moved, That the House do agree with the Commons in their Amendments Nos. 11 and 12 en bloc.—(Earl Howe.)

§ Lord Carter
My Lords, when I read this it looks remarkably like retrospective legislation. It is as well for the Minister that the noble and learned Lord, Lord Simon of Glaisdale, is not in the House; otherwise, he might have some observations to make. I understand this provision deals with the ultra vires point that has been raised on various occasions. We welcome this, and we hope that it will not be subject to judicial review.
On Question, Motion agreed to.

1121

§ COMMONS AMENDMENT

§ 13 Clause 22, page 12, line 45, at end insert:

§ '(1A) Until a decision has been made by the Council of the European Communities to introduce a regulation on the establishment of a common organisation of the market in potatoes, subsection (1) above shall have effect with the substitution for "expedient" of "in the public interest".'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 13. With the leave of the House, I wish to speak also to Amendments Nos. 15 to 23, 29, 30 and 47.
In dealing with these amendments, I should like to set them in context, and in doing so make the Government's position quite clear. The Bill as now before the House provides for two possibilities, depending upon the existence or otherwise of an EC regime for potatoes. Let me deal first with the situation should there be such a regime.
I shall not go into any detail on the proposal put forward by the Commission last November, other than to remind the House that it is extremely lightweight. It does not provide for any market support measures; and if it is adopted in its present form, it will mean the end of national arrangements, both here and elsewhere. We have already made it quite clear that, in the context of this proposal, we do not intend to press for retention of our quota and support buying arrangements. No other member state wishes to adopt quotas, and it would clearly not be in the national interest, even were we allowed to do so, to limit our own growers while others could grow as many potatoes as they liked. In the context of a common organisation of the potato market, our quota system would be neither sustainable nor desirable. Noble Lords may recall that your Lordships' Select Committee on European Communities endorsed this view. Indeed, it went even further by saying that the committee believed Britain would be better able to compete in Europe without the constraints of the potato marketing scheme, whether or not there is an EC regime for potatoes.
This Bill therefore prepares us to respond to any Community regime, and most importantly, to retain the many highly constructive and desirable activities of the board, such as research and development and market promotion, if that is what growers want. The Bill allows for the establishment of a successor body for this purpose. Without the Bill, we would have no alternative but to revoke the scheme and wind up the board without any possibility of a successor.
I should now like to bring the House up to date with discussions in Brussels. The proposal was considered by the May Council, together with presidency proposals incorporating marketing standards. Agreement was not possible on the proposals as they stood, and the Special Committee for Agriculture has been asked to do further work. The proposal was not discussed at the June Council and we have no indication of when it will be brought forward again.
This brings me to what might happen in the continued absence of an EC regime. Here I should like to emphasise that the Government have not made any decision to revoke the scheme. My right honourable 1122 friend the Minister wishes to acquaint herself first hand with all the arguments, and meetings are already being arranged with the industry bodies concerned. She will then be in a position to discuss the matter in an informed way with the Secretaries of State for Scotland and Wales, who are of course also involved in making any decision. She has already made it clear that she will want to spend a considerable amount of time and effort listening to growers—and to processors and others—before she reaches any conclusions about the future of the scheme.
In this connection during Report stage in another place, my right honourable friend the Minister said that, in order to give herself time for full consultation, she was prepared for the present arrangements for the target (and quota) area arrangements to apply to the 1994 season. There is therefore no question of an immediate end to the present scheme.
Turning now to this group of amendments, I emphasise to the House that the Government have retained the full spirit of the amendments made by your Lordships during Third Reading on 2nd February. We have made some tidying up amendments, which noble Lords in moving the amendments accepted would be necessary, but the thrust of the amendments is unaffected.
Perhaps I may remind the House that the effects of the amendments were, first, to specify that any order revoking the potato marketing scheme should be subject to affirmative resolution procedure unless the scheme's continued existence became inconsistent with an EC regulation. Furthermore, in the absence of a regulation, Ministers would only be able to make such an order if they considered it necessary or in the public interest. Secondly, the amendments would require the Potato Marketing Board, if the scheme were to be revoked, to apply to Ministers for approval of a transfer scheme, unless a poll of producers was against that course of action. Thirdly, they would require the PM B to consider the desirability of certain successor arrangements when preparing its transfer scheme and insert a requirement on Ministers to consult appropriate representatives on the principles of any transfer scheme submitted to them for approval.
Amendments Nos. 13, 15, 16 and 17 make minor drafting changes and incorporate the newly inserted Clause 22(3) into a new Clause 22(2). This places the two subsections which specify the circumstances in which Ministers can make the order invoking Part II together at the beginning of the clause. The distinction between "expedient" and "in the public interest", which your Lordships considered important, has been retained, esoteric though it may be. For completeness, Amendment No. 47 inserts a reference into Clause 54 (which deals with all other order-making powers) to the fact that Clause 22 contains its own provisions relating to parliamentary procedures.
The introductory print of the Bill gave the Potato Marketing Board a discretionary power to apply to Ministers for approval of a transfer scheme. It also empowered them to withdraw such an application. The intention of your Lordships' amendment requiring the board to submit a scheme would not be 1123 met if at any time after making the application the board could withdraw it and be under no requirement to take further action. Amendments Nos. 18 and 21 therefore remove the facility for such a withdrawal.
Your Lordships' clear intention was that the PMB should be bound by the results of any poll of producers which put the question whether or not the board should make an application to Ministers for approval of a transfer scheme. Amendment No. 29 therefore makes it clear that if a poll of producers voted against the PMB making an application for approval of a transfer scheme the board would be released from its duty to submit a scheme. Similarly, if producers voted against the board on the principles of a particular transfer scheme the board could not proceed with that scheme. The new clause in Amendment No. 30 ensures that the voting procedure used in any poll would be the same as that used for polls under the potato marketing scheme.
Finally, Amendments Nos. 22 and 23 amend Clause 25 to make clear the division of responsibilities between the PMB and Ministers on the steps to be completed before Ministers could approve a transfer scheme.
In the light of that rather lengthy explanation, I hope that the House will accept that these amendments do not change the intention of the amendment passed by your Lordships during Third Reading and will agree them accordingly.
Moved, That the House do agree with the Commons in their Amendment No. 13.—(Earl Howe.)

§ Lord Carter
My Lords, the House will be extremely grateful to the Minister for explaining the matter so clearly and will wish to thank the Government for accepting the amendments which were originally passed in this House. I am glad that the Minister agreed that the Government had accepted the spirit of the amendments, because I had a sneaking suspicion that that was the case when we passed them.
The Minister explained extremely clearly the order of play and exactly what happens now, whether or not there is an EC regime. He referred to the report of Sub-Committee D of this House. The noble Earl will remember that when we debated the report in this House there was not overwhelming support for some of the conclusions of that report.
We welcome the new Minister, Gillian Shephard, but when the noble Earl said that she proposed to consult all the organisations to apprise herself fully of the facts, he agreed by implication with what some of us thought—that her predecessor had consulted all the organisations, and was not fully apprised of all the facts.
There is still some confusion in the industry about exactly what will happen. Does the Minister agree that the department understands the need for speed in the matter so that the industry is not left in a state of limbo? We are grateful that it has been cleared that for the 1994 season the scheme will still apply. I do not know whether, when he replies, the Minister will be able to tell the House how long it will be before there is a final decision on the matter, one way or the other, so that we know where we stand.
1124 I was a little amused to see that the noble Earl regarded the distinction between "in the public interest" and "expedient" as esoteric. I remember that the noble Baroness, Lady Carnegy of Lour, spent many happy hours, as we did, trying to convince the Minister that the public interest was the better choice. I am glad that the Government have seen the strength of the arguments which the noble Baroness produced and of course we accept that.
A small final point on Amendment No. 15: why "Communities" instead of "Community"?

§ Lord Stanley of Alderley
My Lords, I think it is right that I should say a few words as one of the amendments was mine. Again, I wish to thank my noble friend for explaining so carefully what has happened. In welcoming the amendments, perhaps I may also speak to Amendment No. 14 which refers to the potato marketing scheme. I should like to thank noble Lords, particularly my noble friend on the Front Bench, for the way in which, during the Bill's passage through this House, they appreciated the problems facing the potato industry.
I welcome the assurance of my right honourable friend the Minister that she will spend time and effort before reaching any conclusion about the future of the potato marketing scheme.
Everyone in the industry realises that there is a need for change. I can say that the Potato Marketing Board itself is looking at the changes within the scheme which will benefit the industry as a whole. Like the noble Lord, Lord Carter, I hope that my right honourable friend will feel able, after consultation, to provide as soon as possible long-term plans, including an assurance that the scheme will continue beyond the 1994-95 season. That is, of course, in the absence of an EC scheme. I thank my noble friend and my right honourable friend for the way in which they have dealt with the matter.

§ Baroness Carnegy of Lour
My Lords, perhaps I may endorse those remarks. I think that all noble Lords will be grateful and those concerned in the industry will appreciate the sensitivity with which the matter has been handled, both by my noble friend on the Front Bench here and by my right honourable friend.

Earl Howe
My Lords, I am grateful to the noble Lord, Lord Carter, and both my noble friends for their remarks. It is helpful to the potato industry that my right honourable friend has agreed to take a long, careful look at all sides of the argument.
As to when a decision will be reached, I am afraid that I cannot be of much help, except to say that I agree that uncertainty is unhelpful. My right honourable friend will endeavour to apprise herself of all the facts in a speedy fashion and thereafter take a decision one way or the other.
The noble Lord, Lord Carter, asked why in Amendment No. 15: the Council of the European Community has been amended to: the Council of the European Communities". 1125 There is one Council covering the three Communities, that is to say: the European Economic Community, Euratom and the Coal and Steel Community. That is the reason for that amendment.
On Question, Motion agreed to.

§ COMMONS AMENDMENT

§ 14 Clause 22, page 12, line 45, at end insert:

§ '(1B) Where subsection (1A) above applies, no order shall be made under subsection (1) above unless the Ministers have consulted on a proposal to bring the Potato Marketing Scheme to an end with such persons appearing to them to be representative of the interests of producers, purchasers, retailers and consumers of potatoes as they consider appropriate.'.

§ 10.15 p.m.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 14 which would require Ministers to consult before making an order to end the potato marketing scheme in the absence of a Community regime. The Government were happy to accept this amendment in another place, and I now commend it to the House.
Moved, That the House do agree with the Commons in their Amendment No. 14.—(Earl Howe.)

§ Lord Carter
My Lords, this amendment is highly welcome. It strengthens the various discussions that we had in this House. The Government's recognition of the need to consult on any change to the scheme is to be wholly welcomed.
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 15 Clause 22, page 13, line 4, leave out 'Community' and insert 'Communities'.

§ 16 Page 13, line 5, leave out 'include' and insert 'included'.

§ 17 Page 13, line 7, leave out subsection (3).

§ 18 Clause 24, page 13, line 41, leave out 'or withdrawn'.

§ 19 Page 13, line 47, leave out 'not' and insert before the end of the period mentioned in subsection (1) above,'.

§ 20 Page 13, line 47, after first 'application', insert 'but not'.

§ 21 Page 13, line 48, leave out 'or withdrawn'.

§ 22 Clause 25, page 14, line 11, at end insert 'and'.

§ 23 Page 14, line 25, leave out '(d) that' and insert 'unless'.

§ 24 Clause 28, page 17, line 6, leave out '21' and insert '14'.

§ 25 After Clause 28, insert the following new clause:

§ Publicity for determinations

§ '. As soon as reasonably practicable after granting an application under section 24 or 27 above, the Ministers shall make public in such manner as they think fit—

(a) the fact that they have granted the application, and
(b) the principles of the approved scheme or, as the case may he, of the approved variation.'.

§ 26 Clause 31, page 18, line 8, after 'transfer', insert 'under the scheme which—

§ (a) is a transfer'.

§ 27 Page 18, line 9, after 'Board', insert:

1126

§ '(b) is a transfer to a body which is a qualifying body, and

§ (c) is a transfer'.

§ 28 Page 18, line 14, at end insert:

§ '(3) For the purposes of subsection (1) above, a body is a qualifying body if it is—

(a) a development council established under the Industrial Organisation and Development Act 1947,
(b) a society registered under the Industrial and Provident Societies Act 1965 which has not previously traded, or
(c) a company registered under the Companies Act 1985 which has not previously traded.'.

§ 29 Clause 36, page 19, line 31, leave out from 'under' to end of line 33 and insert 'subsection (1) (a) above and a majority of the votes cast are cast against the making of any application under section 24 above, the Board shall cease to be subject to the duty imposed by subsection (1) of that section.

§ (3) Where the Board carries out a poll under subsection (1) (b) above and a majority of the votes cast are cast against the making of an application under section 24 above in relation to the scheme which is the subject of the poll, no such application may be made in relation to that scheme.'.

§ 30 After Clause 36, insert the following new clause:

§ Voting in poll under section 36

§ '.—(1) A person shall only be eligible to vote in a poll under section 36 above if—

(a) he was registered as a producer under the Potato Marketing Scheme at noon on the day four weeks before the day of the poll ("the relevant time"), and
(b) he was, at the relevant time, in occupation of land which—
1. (i) was under potatoes on 1st June immediately preceding the day of the poll, or
2. (ii) was under potatoes at any time in the period beginning with 2nd June immediately preceding the day of the poll and ending with the day four weeks before the day of the poll.

§ (2) A person voting in a poll under section 36 above shall be treated as having cast his standard number of votes, which shall he determined as provided below.

§ (3) Where a person who is eligible to vote in a poll under section 36 above was, at the relevant time, in occupation of land which was under potatoes on 1st June immediately preceding the day of the poll, his standard number of votes shall be calculated as provided by paragraph 14(5) of the Potato Marketing Scheme, the appropriate area for the purposes of that provision being taken to be the area of such land of which he was in occupation at that time.

§ (4) Where a person who is eligible to vote in a poll under section 36 above was not, at the relevant time, in occupation of land which was under potatoes on 1st June immediately preceding the day of the poll, his standard number of votes shall be one.

§ (5) For the purposes of this section, a poll shall be treated as taking place on the last day for the return of voting papers.'.

§ 31 After Clause 38, insert the following new clause:

§ Functions under section 19 of the Agricultural Marketing Act 1958

1127

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 15 to 31 en bloc, which have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 15 to 31.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 32 Clause 44. page 22, line 23, leave out 'a' and insert 'the'.

§ 33 Clause 45, page 23, leave out lines 14 to 17 and insert 'knowingly or recklessly makes a statement which is false or misleading in a material respect'.

§ 34 Clause 46. page 23, line 23, leave out 'brought' and insert 'commenced'.

§ 35 Page 23, line 26, leave out 'brought' li.nd insert 'commenced'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 32 to 35 en bloc.
Moved, That the House do agree with the Commons in their Amendments Nos. 32 to 35.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 36 Clause 48, page 24, line 6, leave out 'as from 1st May 1993'.

§ 37 Page 24, line 10, leave out first 'that date' and insert 'the day on which this Act is passed'.

§ 38 Page 24, line 10, leave out second 'date' and insert 'day'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 36 to 38 en bloc. With the leave of the House, I should like to speak also to Amendment No. 263.
These amendments alter the date on which the repeal of the legal basis in primary legislation for operating a wool guarantee has effect. Clause 48 of the Bill was initially drafted so that this repeal would have effect from 1st May 1993. This was based on the assumption that the Bill would be enacted by that date. This clearly did not prove possible. Thus to avoid what would otherwise become a retrospective provision, these amendments alter the effective date from 1st May to the date of enactment of the Bill.
In addition, Amendment No. 263 includes a purely technical clarification that the repeal of Schedule 1 to the 1957 Act, which lists those products which qualify for a guarantee, does not affect the saving clauses in relation to the wool and potato guarantees.
Moved, That the House do agree with the Commons in their Amendments Nos. 36 to 38.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENT

§ 39 Before Clause 50, insert the following new clause:

§ Commercial activities of milk marketing boards: distribution of profits

1128

§ '.—(1) It shall be deemed to be an overriding requirement of a milk marketing scheme that any distribution in respect of profits attributable to any relevant commercial activities shall be made so as not to discriminate, as between persons who are registered as producers under the scheme—

(a) by reference to the identity of the person to whom milk is sold, or
(b) by reference to whether milk is sold in the form of milk or in the form of a product which is wholly or partly derived from milk or which includes milk as an ingredient.

§ (2) The powers conferred by a milk marketing scheme on the board administering the scheme shall be deemed to include whatever powers are necessary for the purpose of giving effect to the requirement under subsection (1) above.

§ (3) For the purposes of subsection (1) above, the following are relevant commercial activities, namely—

(a) the separation of milk,
(b) the heat treatment of milk,
(c) the retail packaging of milk,
(d) the manufacture of milk products, and
(e) the provision of services for reward, otherwise than under the arrangements for the sale of milk to the board.

§ (4) In that subsection, the reference to a milk marketing scheme is to a scheme having effect under—

(a) the Agricultural Marketing Act 1958, or
(b) the Agricultural Marketing (Northern Ireland) Order 1982,

for the marketing of milk.

§ (5) This section shall apply in relation to any distribution the amount of which is declared on or after the passing of this Act, irrespective of when the profits concerned were made.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 39. With the leave of the House, I would also like to speak to Amendment No. 50.
These amendments deal with the distribution of profits which the milk marketing boards make from their commercial activities as against the boards' statutory functions of buying and selling raw milk. Commercial activities include the processing of milk into products such as yoghurt, butter and cheese and the provision of on-farm services.
All registered producers have to operate within the terms set by their relevant milk marketing scheme, even where they are not bound to sell their milk to the board. For one thing, the pricing structure of the entire market is dictated by agreements reached between the board and the Dairy Trade Federation in the relevant joint committee.
Even more significantly, the Agricultural Marketing Act 1958 requires all registered producers to contribute to the debt of a board on a winding up, not just those producers who sell to the board. To discriminate between producers who sell to the board and those who do not, for the purposes of distributing commercial profits, is therefore in the Government's view not justifiable. It is also unacceptable to the EC Commission, which considers it to be contrary to the provisions of the EC regulations authorising the boards' activities, and to the principles of the Common Market. The Government have taken account of the Commission's views and the likelihood of action against us under Article 169 of the treaty if we fail to act.
1129 Moved, That the House do agree with the Commons in their Amendment No. 39.—(Earl Howe.)

§ Lord Carter
My Lords, the only point that I wish to make is a drafting point. I was surprised to see that the Government had introduced a new clause under Part IV, under the "other miscellanous provisions", and not under Part I, which has to do with milk marketing. I am not sure whether that is covered by this amendment. Would this be the right stage to ask whether the details of the allocation for Dairy Crest, which is part of the commercial activities of the milk boards, will have to be in the reorganisation schemes which are presented to the Minister and made known to the industry? I presume that they will. I do not think that it has been confirmed that the details of the formula to be used in the allocation will be in the reorganisation schemes that the Minister has to consider.

Earl Howe
My Lords, Ministers will have to consider whether a scheme put forward by the milk marketing board is reasonable, taking account of the views of all the interested parties. Dairy Crest, according to the MMB, represents approximately four-fifths of the MMB's assets, which is a very significant proportion. Ministers will have to look extremely carefully at those assertions in conjunction with their accountants and those of the board. The valuation of Dairy Crest will in part be dependent upon the market. Obviously it is of substantial value but, as I say, it must be properly assessed.
As to the detail of the distribution of shares, clearly the boards will be expected to submit their proposals on that score also and Ministers will have to look to see whether the basis of distribution is fair to producers.
On Question, Motion agreed to.

§ COMMONS AMENDMENT

§ 40 Before Clause 50, insert the following new clause:

§ British Wool Marketing Board: power to grant relief

§ '. For the purposes of section 727 of the Companies Act 1985 and Article 675 of the Companies (Northern Ireland) Order 1986 (power of court to grant relief in certain cases), the British Wool Marketing Board shall be treated as a company and its members shall he treated as officers of it.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 40. With the leave of the House I should like to speak also to Amendment No. 51.
The provision arises from the British Wool Marketing Board's concern that—in terms of legal liability—members and officers of the board do not currently enjoy a degree of protection equivalent to that ordinarily available to directors of limited companies. The Government are sympathetic to the board's desire—given the ending of the wool guarantee—to take steps to address the usual risks associated with operating within a more commercial business environment. The new clause therefore places board members and executives on an equal footing 1130 with company directors as regards the scope for relief from liability. I commend the amendment to the House.
Moved, That the House do agree with the Commons in their Amendment No. 40.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 41 Clause 51, page 26, line 9, at end insert:

§ '() In any proceedings of the Joint Consultative Committee for the purposes of this section, decisions shall he made by a majority of the members present, with the Chairman voting only in the event of a tie.'.

§ 42 Page 26, line 17, leave out 'Advisory'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 41 and 42.
Amendment No. 41 is necessary in order to establish the voting procedure to be used by the joint consultative committee of the potato marketing board in deciding upon the target area. The procedure is slightly different from that currently in the potato marketing scheme, where the JCC puts recommendations to Ministers or the board, and the chairman is given some flexibility in order to ensure that a recommendation does come forward.
Under Clause 51, the JCC is given the duty of reaching its own decisions on target area, and simple majority voting, with the chairman having the casting vote in the event of a tie, is more appropriate.
The deletion of "Advisory" in Amendment No. 42 is simply an acknowledgement of the new executive functions of the committee. I commend these amendments to the House.
Moved, That the House do agree with the Commons in their Amendments Nos. 41 and 42.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 43 Clause 52, page 26, line 23, leave out from '(1)' to end of line 25 and insert:

§ '(a) after the words "made on" there shall be inserted "such persons as may be specified in the order, being", and

§ (b) the words "on persons", in the second place where they occur, shall be omitted.'.

§ 44 Page 26, line 45, at end insert:

§ '(4A) For the purposes of subsection (1) above, a development council order shall be taken to relate to agriculture if any of the activities that are to be treated as constituting the industry to which the order relates is an agricultural activity.'.

§ 45 Page 26, line 46, leave out 'subsection (1) above' and insert 'this section'.

§ 46 Page 26, line 47, after '1947', insert ', and "agricultural" shall be construed accordingly'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 43 to 46 en bloc.
Clause 52 would modify Section 4 of the Industrial Organisation and Development Act 1947 to allow an agricultural development council to collect its levies through intermediaries rather than direct from those on whom they are raised. The intention is to facilitate 1131 the collection of a levy in a fragmented industry. The effect of the amendments is to apply Clause 52 to a development council which included processors as well as primary producers. I should make it clear that they do not prejudge the question of whether a development council should in any particular case include the processors. It is for the industry itself to make proposals in each case. I commend the amendments to the House.
Moved, That the House do agree with the Commons in their Amendments Nos. 43 to 46.—(Earl Howe.)

§ Lord Carter
My Lords, since this group of amendments deals with the proposed milk development council, it would be helpful if the Government could confirm the welcome that I am sure they will give to proposals for a milk development council as they come forward. I hope that they will also agree with the point that was made when we debated the matter in this House with regard to the timetable. It is extremely important that the milk development council, should it be set up, is up and running from 1st April 1994 if that is the vesting date of the new arrangements. It is extremely important, if there is to be a deduction from producers' returns of a statutory levy, that it should operate at the same time, from the beginning of the new regime, as it were, and that there is not a gap between the vesting day and the deduction of statutory levies if it can possibly be avoided.
Can the Minister say whether the Government are expecting representations from the industry in the fairly near future? If so, what sort of timetable are they anticipating? If the representations are to come forward—whether or not they include the processors —can we look forward to a quick response from the Government to the proposals? It is perhaps unfair to ask at this stage, but perhaps the Minister could say whether or not the Government have been able to form a view on the question of central testing and national milk records.
In a previous group of amendments the Minister referred to the possibility of national milk records being a function of a milk development council, which is an idea I have not heard before. There is general agreement that there are certain functions about which there is no argument—for instance, research and development is now conducted by the milk marketing board; the Animal Data Centre functions and generic promotion will be carried on by the dairy council. Those are natural functions for a milk development council. However, there is still a difference of view over central testing and perhaps national milk records.
If the Minister could give the Government's views on the ideas, the possible functions and timetable for a milk development council, it will be extremely helpful to the industry.

Earl Howe
My Lords, the Government have always said that they stand ready to consider proposals from the milk industry for a development council. Clearly the procedures in the 1947 Act would have to be followed. We have now received a proposal 1132 from the NFU to consider the establishment of a milk development council. We are looking at the proposal with due expedition and care. But Ministers will have to be satisfied that such a council is desired by a substantial number of those in the industry. That is laid down in the 1947 Act. We shall need to look carefully at the evidence provided by the NFU to that effect.
With regard to central testing and national milk records, I have said, as the noble Lord reminded the House, that we are open to the suggestion that national milk records should be a function performed by a future development council. We cannot go further than that at this stage until we receive a formal proposal from the board. The same comment can be made in regard to central testing. Clearly we shall need to take a long, cold look at what is reasonable and what makes sense for the industry as a whole. Our thinking has moved a little way since we were last in debate in your Lordships' House on these issues, as may be discerned from the amendments.

§ Lord Carter
My Lords, with the leave of the House, can the Minister say whether it is likely that the response of the Government to the proposals for a development council will be made known to the industry at about the same time as they will advise the industry of their response to the reorganisation scheme? It will be helpful if that were the case.

Earl Howe
My Lords, we shall endeavour to do that. I agree with the noble Lord's earlier remarks, that it is desirable for there to be some simultaneity between the establishment of a development council and vesting day. The timetable for both is extremely tight. We are aware of that, and I know that the industry is also. We shall need to keep that in mind as we look through the proposals presented to us.

§ Lord Monk Bretton
My Lords, I rather start from the premise, in regard to national milk records, that those who pay for recording their cows should have the copyright in that. I hope that at some stage the matter will be in their hands to decide. They have more right to decide about it than anyone else.

Earl Howe
My Lords, the right to decide on these matters, as my noble friend is aware, rests with Ministers. But Ministers have to take account of the interests of the whole sector, from producers to consumers, in the industry. I am sure that the views of those sectors will not be slow in coming forward. However, I take the point that my noble friend made.

§ Lord Monk Bretton
My Lords, I apologise for perhaps overstating the case. I am sure that my noble friend knows what I meant.
On Question, Motion agreed to.

§ 10.30 p.m.

§ COMMONS AMENDMENTS

§ 47 Clause 54, page 27, line 31, at end insert:

§ '(4A) Section 22 above contains its own provisions about parliamentary procedure in relation to an order under that section.'

1133

§ 48 Clause 55, page 27, line 38, after 'I', insert '(except section 11 (so far as relating to Part I of Schedule 2) and section [Power to carry out preparatory work ])'.

§ 49 Clause 57, page 28, line 19, at end insert 'section [Power to carry out preparatory work],'.

§ 50 Page 28, line 20, at end insert 'section [Commercial activities of milk marketing boards: distribution of profits],'.

§ 51 Page 28, line 20, at end insert 'section [British Wool Marketing Board: power to grant relief],'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 47 to 51. They have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 47 to 51.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENT

§ 52 Clause 57, page 28, line 24, leave out subsection (6).

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 52. This amendment removes the Privilege amendment.
Moved, That the House do agree with the Commons in their Amendment No. 52.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 53 Schedule 1, page 30, line 4, leave out 'paragraph 11(2) (a), (b) or (c) below' and insert 'section I0(2B) (a), (b), (c) or (d) above'.

§ 54 Page 30, line 7, leave out 'paragraph 11(2) (a) or (b) below' and insert 'section 10(2B) (a), (b) or (c) above'.

§ 55 Page 30, line 24, leave out 'to one or more qualifying successor bodies'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 53 to 55. These amendments have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 53 to 55.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 56 Schedule 1, page 30, line 29, leave out 'and'.

§ 57 Page 30, line 32, at end insert, and

§ (d) any property or rights whose transfer would involve a breach by the board of the restriction imposed by section 47(2) of the Agricultural Marketing Act 1958 (restriction on disclosure of information obtained under the Act).'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 56 and 57. With the leave of the House, I should like to speak also to Amendments Nos. 60, 185, 237, 238, 242 and 253.
Amendments Nos. 56 and 57, 60 and 185 tighten up the rules concerning the disclosure of confidential information by the milk marketing boards as part of the implementation of an approved reorganisation 1134 scheme. Any category of information which is to be disclosed to a third party by a milk marketing board will, as a result, have to be specified in a reorganisation scheme. In addition, any information relating to an individual purchaser may be disclosed only with that purchaser's written consent. I am sure your Lordships will agree that these additional safeguards are highly desirable. Amendments Nos. 237 and 238, 242 and 253 make equivalent changes in respect of potatoes except that there is no requirement to obtain the written consent of purchasers. That is because the Potato Marketing Board, unlike the MMBs, is not essentially a trading body. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 56 and 57.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 58 Schedule I, page 30, line 33, leave out subparagraph (2).

§ 59 Page 30, line 43, leave out `paragraph 11 (2) (a) or (b)' and insert 'section 10(2B) (b) or (c)'.

§ 60 Page 31, line 12, at end insert:

§ .—(1) The scheme must specify what information to which this sub-paragraph applies is to be disclosed by the board for the purposes of the scheme and to whom.

§ (2) Sub-paragraph (1) above applies to information the disclosure of which is (apart from paragraph 19 of Schedule 2 to this Act) restricted by section 47(2) of the Agricultural Marketing Act 1958.

§ (3) Where information specified under subparagraph (1) above identifies a person as a purchaser of milk from the hoard, the scheme must provide for the information to be disclosed only with his written consent.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 58 to 60. The amendments have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 58 to 60.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 61 Schedule 2, page 31, line 35, leave out 'successor'.

§ 62 Page 31, line 37, leave out 'the successor' and insert 'that'.

§ 63 Page 31, line 39, leave out 'the trade carried on by a qualifying successor body' and insert 'where any trade, or part of a trade, carried on by a milk marketing board is transferred under section 10 above to a qualifying body, the trade carried on by that body'.

§ 64 Page 31, line 40, after 'under', insert 'that'.

§ 65 Page 31, line 40, leave out '10 above'.

§ 66 Page 31, line 43, leave out 'all' and insert 'any'.

§ 67 Page 31, line 43, leave out 'and' and insert 'or'.

§ 68 Page 31, line 44, leave out 'successor'.

§ 69 Page 31, line 46, leave out second 'and' and insert 'or'.

§ 70 Page 31, line 47, leave out 'the qualifying successor' and insert 'that'.

§ 71 Page 32, line 2, leave out 'and' and insert 'or'.

1135

§ 72 Page 32, line 3, leave out 'successor'.

§ 73 Page 32, line 5, leave out sub-paragraph (2) and insert:

§ '(2) In its application to this paragraph, paragraph 17D(1) below (definition of "qualifying body") shall have effect with the omission of paragraph (b).'.

§ 74 Page 32, line 21, leave out 'successor'.

§ 75 Page 32, line 23, leave out 'the successor' and insert 'that'.

§ 76 Page 32, line 24, leave out 'the trade carried on by a qualifying successor body' and insert 'where any trade, or part of a trade, carried on by a subsidiary of a milk marketing board is transferred under section 10 above to a qualifying body, the trade carried on by that body'.

§ 77 Page 32, line 25, after 'under', insert 'that'.

§ 78 Page 32, line 25, leave out '10 above'.

§ 79 Page 32, line 28, leave out 'all' and insert 'any'.

§ 80 Page 32, line 28, leave out 'and' and insert 'or'.

§ 81 Page 32, line 30, leave out 'successor'.

§ 82 Page 32, line 32, leave out 'and' and insert 'or'.

§ 83 Page 32, line 32, leave out 'the qualifying successor' and insert 'that'.

§ 84 Page 32, line 34, leave out 'and' and insert 'or'.

§ 85 Page 32, line 35, leave out 'successor'

§ 86 Page 32, line 37, leave out sub-paragraph (2) and insert:

§ '(2) In its application to this paragraph, paragraph 17D(1) below (definition of "qualifying body") shall have effect with the omission of paragraph (b).'.

§ 87 Page 32, line 48, at end insert:

§ '2A—(1) This paragraph applies where—

(a) in accordance with an approved scheme, shares in a subsidiary of the board to which the scheme relates are transferred otherwise than under section 10 above to a qualifying body ("the successor"), and
(b) the scheme provides—
1. (i) for free shares in the successor to be issued or transferred to persons by virtue of their being, or having been, registered producers, and
2. (ii) for the taking of steps with a view to securing the quotation of the successor on the Stock Exchange.

§ (2) For the purposes of the Corporation Tax Acts—

(a) the shares transferred to the successor shall be treated as having been, at the time when they became vested in the transferor and at all times since that time, vested in the successor; and
(b) anything done by the transferor in relation to the shares transferred to the successor shall be deemed to have been done by the successor.

§ (3) For the purposes of sub-paragraph (1) (b) (i) above, shares are free if they are issued or transferred without any consideration being provided by the persons acquiring them, there being disregarded for this purpose any depreciatory effect of transfers under the scheme on the value of a right to participate in the winding up of the board to which the scheme relates.

§ (4) This paragraph shall have effect in relation to accounting periods beginning after the last complete accounting period of the transferor ending before the date of the transfer to the successor.'.

§ 88 Page 32, line 48, at end insert:

§ '2B.—(1) Where— 1136

(a) in accordance with an approved scheme, shares in a subsidiary of the relevant board ("the transferred company") are transferred otherwise than under section 10 above to a qualifying body ("the successor"),
(b) immediately after the transfer, the successor is a member of a group of which the relevant board is a member, and
(c) the scheme provides as mentioned in paragraph 2B(1) (b) above,

sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 shall not apply on the transferred company ceasing to be a member of a group of which the relevant board is a member if, immediately after doing so, it is a member of a group of which the successor is a member.

§ (2) Where by virtue of sub-paragraph (1) above sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 do not apply, then, on the transferred company ceasing to be a member of a group of which the successor is a member, those sections shall apply—

(a) as if any assets acquired by the transferred company, at any time when it was a member of a group of which the relevant board was a member, from any member of that group had been acquired by it at that time from the successor, and
(b) as if the transferred company and the successor had at all material times been associated companies for the purposes of those sections.

§ (3) In this paragraph—

§ "group" has the meaning given by section 170 of the Taxation of Chargeable Gains Act 1992; and

§ "relevant board" means the board to which the scheme relates.'.

§ 89 Page 33, line 3, after first 'a', insert 'qualifying'.

§ 90 Page 33, line 3, leave out from 'transfer' to 'a' in line 4.

§ 91 Page 33, line 5, leave out 'or 2' and insert ', 2 or 2A'.

§ 92 Page 33, line 9, leave out 'or 2' and insert ', 2 or 2A'.

§ 93 Page 33, line 10, at end insert 'and which, both immediately before and immediately after the transfer, is a member of the same group as that company.'.

§ 94 Page 33, line II, leave out 'transferee' and insert 'body to which the qualifying transfer is made'.

§ 95 Page 33, line 14, leave out 'the transferee' and insert 'that body'.

§ 96 Page 33, line 16, at end insert '; and

§ "qualifying transfer" means a transfer under an approved scheme to a qualifying body of shares in a subsidiary of the board to which the scheme relates, being a transfer which takes place under section 10 above or in circumstances in which paragraph 2A above applies.'.

§ 97 Page 33, line 22, leave out 'successor' and insert 'qualifying'.

§ 98 Page 33, line 25, leave out 'successor' and insert 'qualifying'.

§ 99 Page 33, line 27, leave out paragraph 5.

§ 100 Page 33, line 41, leave out sub-paragraphs (1) and (2) and insert:

§ '(1) This paragraph applies where under an approved scheme there are one or more relevant successors in relation to the relevant board.

§ (2) Where there is one relevant successor in relation to the relevant board, any unallowed capital losses of the relevant board shall—

(a) be apportioned between the relevant board and the relevant successor in accordance with the scheme, and
(b) so far as apportioned to the relevant successor, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.

§ (2A) Where there is more than one relevant successor in relation to the relevant board, any unallowed capital losses of the relevant board shall—

(a) be apportioned amongst the relevant board and the relevant successors in accordance with the scheme, and
(b) in the case of each relevant successor to which such losses are so apportioned, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.'.

§ 101 Page 33, line 47, at end insert:

§ '() In this paragraph, references to relevant successor, in relation to the relevant board, include a body to which shares held by that hoard in a subsidiary of its are transferred in circumstances in which paragraph 2A above applies.'.

§ 102 Page 33, line 48, leave out sub-paragraph (3) and insert:

§ '(3) In this paragraph—

§ "allowable capital losses" means losses which are allowable losses for the purposes of corporation tax on chargeable gains;

§ "relevant board" means the board to which the scheme relates; and

§ "unallowed capital losses" means any allowable capital losses which have accrued to the relevant hoard before the vesting day under the scheme, in so far as they have not been allowed as deductions from chargeable gains.'.

§ 103 Page 33, line 49, at end insert:

§ '6A.—(1) This paragraph applies where an approved scheme provides for the transfer of all the property, rights and liabilities to which a subsidiary of the relevant board is entitled or subject on the vesting day under the scheme.

§ (2) Where there is one relevant successor in relation to the subsidiary, any unallowed capital losses of the subsidiary shall be treated as allowable capital losses accruing to the relevant successor on the disposal of an asset on the vesting day under the scheme.

§ (3) Where there is more than one relevant successor in relation to the subsidiary, any unallowed capital losses of the subsidiary shall—

(a) be apportioned between the relevant successors in accordance with the scheme, and
(b) in the case of each relevant successor to which such losses are so apportioned, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.

§ (4) In this paragraph—

§ "allowable capital losses" means losses which are allowable losses for the purposes of corporation tax on chargeable gains;

§ "relevant hoard" means the milk marketing board to which the scheme relates; and

§ "unallowed capital losses" means any allowable capital losses which have accrued to the subsidiary before the vesting day under the scheme, in so far as they have not been allowed as deductions from chargeable gains.

§ 6B.—(1) This paragraph applies where an approved scheme provides for the transfer of some, but not all, of the property, rights and liabilities to which a subsidiary of the relevant board is entitled or subject on the vesting day under the scheme.

§ (2) Where there is one relevant successor in relation to the subsidiary, any unallowed capital losses of the subsidiary shall—

(a) be apportioned between the subsidiary and the relevant successor in accordance with the scheme, and
(b) so far as apportioned to the relevant successor, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.

§ (3) Where there is more than one relevant successor in relation to the subsidiary, any unallowed capital losses of the subsidiary shall—

(a) be apportioned amongst the subsidiary and the relevant successors in accordance with the scheme, and
(b) in the case of each relevant successor to which such losses are so apportioned, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.

§ (4) Sub-paragraph (4) of paragraph 6A above shall apply for the purposes of this paragraph as it applies for the purposes of that.'.

§ 104 Page 33, line 49, at end insert:

§ '6C. Where by virtue of paragraph 6A or 6B above losses of one body are treated as accruing to another body, they shall not be allowed as deductions from chargeable gains accruing to that other body on a disposal of shares in, or securities of, the first-mentioned body.'.

§ 105 Page 34, line 3, leave out 'successor' and insert 'qualifying'.

§ 106 Page 34, line 3, at end insert '("the successor bodies")'.

§ 107 Page 34, line 15, leave out sub-paragraphs (4) and (5).

§ 108 Page 34, line 32, leave out sub-paragraph (6).

§ 109 Page 34, line 34, at end insert:

§ '() In this paragraph, "unallowed tax losses" means—

(a) any losses which, as at the end of the last complete accounting period of the board ending before the date of the transfer under section 10 above, are losses which under section 393(1) of the Income and Corporation Taxes Act 1988 are or, if a claim had been made under that subsection, would be available for relief against the hoard's trading income for the next accounting period, and
(b) any allowances which, as at the end of the last complete accounting period of the board ending before that date, are allowances which, under section 145(2) of the Capital Allowances Act 1990, are available for carry forward to the next accounting period.'.

§ 110 Page 34, line 34, at end insert:

§ '7A.—(1) This paragraph applies where a trade carried on by a subsidiary of a milk marketing board is transferred under section 10 above to more than one qualifying body ("the successor bodies").

§ (2) There shall be apportioned between the successor bodies—

(a) the unallowed tax losses of the subsidiary, and
(b) any expenditure incurred by the subsidiary before the date of the transfer and by reference to which capital allowances may be made.

§ (3) The apportionment under sub-paragraph (2) above shall be made in such manner as is just and reasonable having regard—

(a) to the extent to which the losses and expenditure mentioned in that sub-paragraph are attributable to the different parts of the trade transferred, and
(b) as respects the apportionment of such expenditure, to the division of the subsidiary's assets between the successor bodies.

§ (4) In this paragraph, "unallowed tax losses" means— 1139

(a) any losses which, as at the end of the last complete accounting period of the subsidiary ending before the date of the transfer under section 10 above, are losses which under section 393(1) of the Income and Corporation Taxes Act 1988 are or, if a claim had been made under that subsection, would be available for relief against the subsidiary's trading income for the next accounting period, and
(b) any allowances which, as at the end of the last accounting period of the subsidiary ending before that date, are allowances which, under section 145(2) of the Capital Allowances Act 1990, are available for carry forward to the next accounting period.

§ 7B.—(1) This paragraph applies where part of a trade carried on by a subsidiary of a milk marketing board is transferred under section 10 above to one qualifying body ("the successor body") and the remainder is retained by the subsidiary.

§ (2) There shall be apportioned between the subsidiary and the successor body—

(a) the unallowed tax losses of the subsidiary, and
(b) any expenditure incurred by the subsidiary before the date of the transfer and by reference to which capital allowances may be made.

§ (3) The apportionment under sub-paragraph (2) above shall be made in such manner as is just and reasonable having regard—

(a) to the extent to which the losses and expenditure mentioned in that sub-paragraph are attributable to the different parts of the trade, and
(b) as respects the apportionment of such expenditure, to the division of the subsidiary's assets between itself and the successor body.

§ (4) In this paragraph, "unallowed tax losses" has the same meaning as in paragraph 7A above.

§ 7C.—(1) This paragraph applies where part of a trade carried on by a subsidiary of a milk marketing hoard is transferred under section 10 above to more than one qualifying body ("the successor bodies") and the remainder is retained by the subsidiary.

§ (2) There shall be apportioned amongst the subsidiary and the successor bodies—

(a) the unallowed tax losses of the subsidiary, and
(b) any expenditure incurred by the subsidiary before the date of the transfer and by reference to which capital allowances may be made.

§ (3) The apportionment under sub-paragraph (2) above shall be made in such manner as is just and reasonable having regard—

(a) to the extent to which the losses and expenditure mentioned in that sub-paragraph are attributable to the different parts of the trade, and
(b) as respects the apportionment of such expenditure, to the division of the subsidiary's assets amongst itself and the successor bodies.

§ (4) in this paragraph, "unallowed tax losses" has the same meaning as in paragraph 7A above.

§ 7D.—(1) Any question which arises as to the manner in which the apportionment under any of paragraphs 7 to 7C above is to he made shall be determined, for the purposes of the tax of the parties concerned—

(a) in a case where one body of General Commissioners have jurisdiction with respect to all the parties concerned, by those Commissioners, unless the parties concerned agree that it shall be determined by the Special Commissioners;
(b) in a case where more than one body of General Commissioners have jurisdiction with respect to the parties concerned, by such of those bodies of General Commissioners as the Commissioners of Inland Revenue may direct, unless the parties concerned agree that it shall be determined by the Special Commissioners; and
(c) in any other case, by the Special Commissioners.

§ (2) The Commissioners by whom the question falls to be determined shall make the determination in like manner as if it were an appeal except that the parties concerned shall be entitled to appear and be heard by the Commissioners or to make representations to them in writing.

§ (3) In this paragraph, references to the parties concerned are to the persons between or amongst whom the apportionment in question falls to be made.'.

§ 111 Page 34, leave out lines 36 and 37 and insert:

§ '8.—(1) This paragraph applies to the following events—'.

§ 112 Page 34. line 38, after 'scheme', insert 'on or'.

§ 113 Page 34, line 39, at end insert:

§ '(aa) the issue or transfer under an approved scheme to trustees of any shares in, or securities of, a company on terms which provide for the transfer of those shares or securities to persons by virtue of their being, or having been, registered producers:'.

§ 114 Page 34. line 42, at end insert:

§ '(bb) the conferring under an approved scheme on or before the vesting day under the scheme of any such right as is mentioned in paragraph (a), (b) or (c) of paragraph 15(1) below:'.

§ 115 Page 34, line 44, leave out 'a subsidiary of'.

§ 116 Page 34, line 45, after first 'board', insert ', or of a subsidiary of such a board,'.

§ 117 Page 34, line 45, leave out first 'successor' and insert 'qualifying'.

§ 118 Page 34, line 45, leave out from first 'body' to 'and' in line 46.

§ 119 Page 35, line 1, leave out sub-paragraph (2).

§ 120 Page 35, line 7, at end insert:

§ '(2A) None of the events to which this paragraph applies, and no combination of the events mentioned in paragraphs (a) (so far as relating to the issue or transfer of shares) and (c) of sub-paragraph (1) above, shall be regarded as—

(a) a distribution for the purposes of the Corporation Tax Acts, or
(b) a capital distribution for the purposes of section 122 of the Taxation of Chargeable Gains Act 1992.'.

§ 121 Page 35, line 9, at beginning insert '(a)'.

§ 122 Page 35, line 10, after 'production', insert 'or storage'.

§ 123 Page 35, line 12, at beginning insert '(b)'.

§ 124 Page 35, line 13, after first 'a', insert 'relevant'.

§ 125 Page 35, line 13, leave out 'body'.

§ 126 Page 35, line 15, after first 'a', insert 'relevant'.

§ 127 Page 35, line 15, leave out 'body'.

§ 128 Page 35, line 15, at end insert ', and

§ (c) references to relevant successor—

(i) in relation to a milk marketing board, include a body to which shares held by the board in a subsidiary of its are transferred in circumstances in which paragraph 2A above applies, and
(ii) in relation to a subsidiary of such a board, include a body to which shares held by the subsidiary in a subsidiary of its are transferred in circumstances in which that paragraph applies.'

§ 129 Page 35, leave out lines 16 to 21.

§ 130 Page 35, line 22, leave out paragraph 9.

§ 131 Page 35, line 25, at end insert:

§ 'Disapplication of section 22 of the Taxation of Chargeable Gains Act 1992

§ 9A. Section 22 of the Taxation of Chargeable Gains Act 1992 (disposal where capital sums derived from assets) shall not apply in relation to any of the events to which paragraph 8 above applies.'.

§ 132 Page 35, line 25, at end insert:

§ 'Depreciatory transactions,

§ 9B.—(1) This paragraph applies where—

(a) by virtue of the occurrence of any of the events to which paragraph 8 above applies ("the relevant event"), one company ("the first company") would, apart from the provisions of this Part of this Schedule, be treated for the purposes of the taxation of chargeable gains as disposing of, or of an interest in, any shares in, or securities of, another company ("the second company"), and
(b) as a result of the occurrence of that event the value of those shares or securities ("the shares or securities concerned") is materially reduced.

§ (2) Section 176 of the Taxation of Chargeable Gains Act 1992 shall apply to any disposal to which sub-paragraph (3), (4) or (5) below applies—

(a) as if the relevant event were a depreciatory transaction, and
(b) if the first company and the second company and, if different, the company which makes the disposal are not, throughout the period beginning with the occurrence of the relevant event and ending with the disposal, members of a group of companies (within the meaning of that section), as if they were.

§ (3) This sub-paragraph applies to any disposal by the first company which—

(a) is a disposal of the asset of which the shares or securities concerned are deemed for the purposes of the Taxation of Chargeable Gains Act 1992 to consist at the time of the event, and
(b) is not a disposal which by virtue of any enactment is treated as one on which neither a gain nor a loss accrues to the person making the disposal.

§ (4) This sub-paragraph applies to any disposal, by a company to which shares or securities comprised in the asset mentioned in sub-paragraph (3) above are transferred under section 10 above, or in circumstances in which paragraph 2A above applies, which—

(a) is a disposal of the asset which those shares or securities are deemed for the purposes of the Taxation of Chargeable Gains Act 1992 to consist of, or to be included in, immediately after the transfer, and
(b) is not a disposal which by virtue of any enactment is treated as one on which neither a gain nor a loss accrues to the person making the disposal.

§ (5) This sub-paragraph applies to any disposal, by a company which acquires shares or securities on an excepted disposal, which—

(a) is a disposal of the asset which those shares or securities are deemed for the purposes of the Taxation of Chargeable Gains Act 1992 to consist of, or to be included in, immediately after the acquisition, and
(b) is not a disposal which by virtue of any enactment is treated as one on which neither a gain nor a loss accrues to the person making the disposal.

1142

§ (6) In sub-paragraph (5) above, the reference to an excepted disposal is to a disposal to which sub-paragraph (3), (4) or (5) above would have applied but for paragraph (b) of that sub-paragraph.

§ (7) In this paragraph, "company" has the same meaning as in the Taxation of Chargeable Gains Act 1992.'.

§ 133 Page 35, line 29, at end insert:

§ '(1A) The acquisition of the asset shall not be taken into account as a receipt in computing, under Case I or VI of the Schedule set out in section 18 of the Income and Corporation Taxes Act 1988 (Schedule D), the profits of the person acquiring it.'.

§ 134 Page 35, line 32 at end insert 'and without making a disposal.'.

§ 135 Page 35, leave out lines 33 to 37.

§ 136 Page 35, line 37, at end insert:

§ '(2A) No allowance in respect of the asset shall be made under the Capital Allowances Act 1990 to the person acquiring it.'.

§ 137 Page 35, line 46, after 'production', insert 'or storage'.

§ 138 Page 36, line 3, after third 'a', insert 'relevant'.

§ 139 Page 36, line 6, after 'in', insert ',or security of,'.

§ 140 Page 36, line 7, after third 'a', insert 'relevant'.

§ 141 Page 36, line 10, at end insert:

§ 142 Page 36, line 13, at end insert 'and without making a disposal.'.

§ 143 Page 36, leave out lines 14 to 18.

§ 144 Page 36, line 22, at end insert:

§ '(3A) For the purposes of this paragraph, a person shall not be regarded as providing consideration by virtue only of the fact that transfers under the scheme reduce the value of his right to participate in a winding up of the relevant board.'.

§ 145 Page 36, line 24, leave out 'approved'.

§ 146 Page 36, line 25, leave out from 'relates' to end of line 29.

§ 147 Page 36, line 29, at end insert ', and

§ (c) references to relevant successor—

(i) in relation to the relevant board, include a body to which shares held by that board in a subsidiary of its are transferred in circumstances in which paragraph 2A above applies, and
(ii) in relation to a subsidiary of that board, include a body to which shares held by the subsidiary in a subsidiary of its are transferred in circumstances in which that paragraph applies.'

§ 148 Page 36, line 29, at end insert:

§ 'Trusts for registered producers

§ 11 A.—(1) This paragraph applies where—

(a) under an approved scheme, shares in, or securities of, a company are issued or transferred to trustees on terms which provide for the transfer of those shares or securities to persons by virtue of their being, or having been, registered producers, and
(b) the circumstances are such that in the hands of the trustees the shares or securities constitute settled property within the meaning of the Taxation of Chargeable Gains Act 1992.

§ (2) For the purposes of tax on chargeable gains— 1143

(a) where the trustees acquire the shares or securities on a disposal, the person making the disposal shall be treated as if the consideration for the disposal were of such amount as would secure that on the disposal neither a gain nor a loss accrues to him,
(b) the shares or securities shall be treated as acquired by the trustees for no consideration,
(c) the interest of any beneficiary in the settled property constituted by the shares or securities shall be treated as acquired by him for no consideration and as having no value at the time of its acquisition,
(d) where a beneficiary becomes absolutely entitled as against the trustees to any of the settled property, both the trustees and the beneficiary shall be treated as if, on his becoming so entitled, the shares or securities in question had been disposed of and immediately reacquired by the trustees, in their capacity as trustees within section 60(1) of the Taxation of Chargeable Gains Act 1992, for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the trustees (and accordingly section 71 of that Act shall not apply in relation to that occasion), and
(e) on the disposal by a beneficiary of an interest in the settled property, other than the disposal treated as occurring for the purposes of paragraph (d) above, any gain accruing shall be a chargeable gain (and accordingly section 76(1) of the Taxation of Chargeable Gains Act 1992 shall not apply in relation to the disposal).

§ 11B.—(1) This paragraph applies where, under an approved scheme, shares in, or securities of, a company are issued or transferred to trustees on terms which provide for the transfer of those shares or securities to persons by virtue of their being, or having been, registered producers.

§ (2) The trust shall not be treated as a unit trust scheme for the purposes of section 469 of the Income and Corporation Taxes Act 1988 or section 99 of the Taxation of Chargeable Gains Act 1992 if it would not fall to be so treated were there disregarded—

(a) any depreciatory effect of transfers under the approved scheme on a right to participate in a winding up of the board to which that scheme relates, and
(b) any management of the trust property as a whole by or on behalf of the trustees.'.

§ 149 Page 36, line 42, leave out 'share is' and insert 'shares are'.

§ 150 Page 36, line 42, at end insert 'allotted, or'.

§ 151 Page 36, line 43, leave out from 'issued' to `to' in line 44 and insert 'without prior allotment—(a)'.

§ 152 Page 36, line 45, at end insert 'and without any consideration being provided by him,

§ (b) to trustees on terms which provide for the transfer of the shares to persons by virtue of their being, or having been, registered producers,'.

§ 153 Page 36, line 45, at end insert, ' or

§ (c) to the relevant board, by a body to which sub-paragraph (1A) below applies.

§ (1A) This sub-paragraph applies to a body which—

(a) is a relevant successor of the relevant board, or of a subsidiary of that board, and
(b) is not a body in relation to which the scheme makes provision for the transfer to it of anything other than shares in a subsidiary of the relevant board.'.

§ 154 Page 36, line 46, leave out 'share' and insert 'shares'.

§ 155 Page 36, line 47, leave out 'it' and insert 'they'.

1144

§ 156 Page 36, line 48, after 'the', insert 'relevant'.

§ 157 Page 36, line 48, leave out 'body'.

§ 158 Page 36, line 49, leave out 'nominal' and insert 'market'.

§ 159 Page 36, line 49, leave out 'share' and insert 'shares'.

§ 160 Page 36, . line 49, at end insert 'at the time of allotment or, if issued without prior allotment, at the time of issue.

§ (2A) In sub-paragraph (2) above, the reference to the market value of the shares is to the price which they might reasonably be expected to fetch on a sale in the open market.

§ (2B) Section 272(2) to (4) of the Taxation of Chargeable Gains Act 1992 (general principles for determining market value of shares) shall apply for the purposes of this paragraph.

§ (2C) Where, as at the time at which the market value of any shares falls to be determined for the purposes of this paragraph, the shares are not quoted on a recognised stock exchange, subsection (3) of section 273 of that Act (assumption with respect to information available to prospective purchaser) shall apply for the purposes of the determination as it applies for the purposes of a determination falling within subsection (1) of that section.

§ (2D) In sub-paragraph (2C) above, "recognised stock exchange" has the meaning given by section 841 of the Income and Corporation Taxes Act 1988.'.

§ 161 Page 37, line 1. leave out 'Sub-paragraph' and insert 'Sub-paragraphs (3A) and'.

§ 162 Page 37, line 2, leave out 'it applies' and insert 'they apply'.

§ 163 Page 37, line 4, after 'debenture', insert '(a)'.

§ 164 Page 37, line 4, after second 'a', insert 'relevant'.

§ 165 Page 37, line 5, after 'board,', insert 'and

§ (b) is either—

§ (i) issued'.

§ 166 Page 37, line 6, at end insert 'and without any consideration being provided by him.'.

§ 167 Page 37, line 6, at end insert or

§ (ii) included in an issue of debentures to trustees on terms which provide for the debentures to be transferred to persons by virtue of their being, or having been, registered producers.'.

§ 168 Page 37, line 8, after 'to', insert 'the taxation of company distributions, or to'.

§ 169 Page 37, line 9, leave out 'that company' and insert 'the relevant successor'.

§ 170 Page 37, line II, leave out 'that company' and insert 'the relevant successor'.

§ 171 Page 37, line 12, at end insert:

§ '(2A) For the purposes of section 117(1) of the Taxation of Chargeable Gains Act 1992 (meaning of "qualifying corporate bond"), the indebtedness acknowledged by the debenture shall be treated as representing a normal commercial loan at any time after the debenture has been acquired by a person as a result of a disposal which is not excluded for the purposes of section 117(7) of that Act.

§ (2B) Except as provided by sub-paragraph (2A) above, the indebtedness acknowledged by the debenture shall not be treated for those purposes as representing a normal commercial loan.'.

§ 172 Page 37, line 13, leave out 'Sub-paragraph' and insert `Sub-paragraphs (3A) and'.

§ 173 Page 37, line 14, leave out 'it applies' and insert 'they apply'.

§ 174 Page 37, line 18. after second 'a', insert 'relevant'.

§ 175 Page 37. line 18, leave out second 'body'.

§ 176 Page 37, line 19, at end insert ', in priority to other persons'.

1145

§ 177 Page 37, line 26, at end insert:

§ '(2A) For the purposes of sub-paragraph (1) (c) above, shares are free if they are issued or transferred without any consideration being provided by the person acquiring them, there being disregarded for this purpose any depreciatory effect of transfers under the scheme on the value of a right to participate in a winding up of the relevant board

§ 178 Page 37, leave out lines 29 to 46.

§ 179 Page 38, line 4, at end insert:

§ 'Stamp duty

§ 17A.—(1) No transfer effected under section 10 above shall give rise to any liability to stamp duty.

§ (2) Stamp duty shall not be chargeable—

(a) on an approved scheme, or
(b) on an instrument which is certified to the Commissioners of Inland Revenue by the relevant authority—
1. (i) to be an instrument made in pursuance of such a scheme, and
2. (ii) to be an instrument in respect of which no disqualifying consideration has been given.

§ (3) For the purposes of sub-paragraph (2) (b) (ii) above, consideration given in respect of an instrument made in pursuance of an approved scheme shall be treated as disqualifying consideration unless—

(a) it is given by the milk marketing board to which the scheme relates ("the relevant hoard"),
(b) it is given by a person to whom property, rights or liabilities of the relevant board, or of a subsidiary of that hoard, are transferred under the scheme, other than a person who is, or has been, a registered producer, or
(c) it is given by a person who is, or has been, a registered producer and takes the form of a surrender in whole or part of a right to participate in the winding up of the relevant board.

§ (4) For the purposes of sub-paragraph (3) (b) above, a person to whom property is leased shall be treated as a person to whom property is transferred if the scheme could, without breaching the requirement in paragraph 7(2) of Schedule 1 to this Act, have provided for the property concerned to be transferred to him.

§ (5) No instrument which is certified as mentioned in paragraph (b) of sub-paragraph (2) above shall be taken to be duly stamped unless—

(a) it is stamped with the duty to which it would, but for that sub-paragraph, be liable, or
(b) it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty or that it is duly stamped.

§ (6) In sub-paragraph (2) (b) above, "relevant authority" means—

(a) in the case of a certificate with respect to a scheme relating to the England and Wales Milk Marketing Board, the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly,
(b) in the case of a certificate with respect to a scheme relating to the board established under the Milk Marketing Scheme (Northern Ireland) 1989, the Department of Agriculture for Northern Ireland, and
(c) in the case of a certificate with respect to any other scheme, the Secretary of State.

§ Stamp duty reserve tax

§ 17B. No agreement made in pursuance of an approved scheme shall give rise to a charge to stamp duty reserve tax.'.

§ 180 Page 38, line 4, at end insert:

§ 'Interpretation

1146

§ 17C.—(1) In this Part of this Schedule, references to relevant successor, in relation to a milk marketing board, are to a body—

(a) to which property, rights or liabilities of the board are transferred under section 10 above, and
(b) which is a qualifying body in relation to the transfer.

§ (2) In this Part of this Schedule, references to relevant successor, in relation to a subsidiary of a milk marketing board, are to a body—

(a) to which property, rights or liabilities of the subsidiary are transferred under section 10 above, and
(b) which, by virtue of paragraph 17D(1) (a), (c), (d) or (e) below, is a qualifying body in relation to the transfer.

§ 17D.—(1) For the purposes of this Part of this Schedule, a body is a qualifying body, in relation to a transfer under an approved scheme, if it is—

(a) a development council established under the Industrial Organisation and Development Act 1947,
(b) a company registered under the Companies Act 1985 which was, immediately before the day on which this Act is passed, a 100 per cent. subsidiary of the board to which the scheme relates,
(c) a company registered under the Companies Act 1985 in relation to which either or both of the first and second conditions are met and in relation to which the third condition is met,
(d) a society registered under the Industrial and Provident Societies Act 1965 in relation to which either or both of the fourth and fifth conditions are met, or
(e) a company registered under the Companies Act 1985 in relation to which the sixth condition is met.

§ (2) The first condition is that—

(a) the scheme makes provision for the issue or transfer of shares in the company to members of the relevant class without any consideration, or with only a nominal consideration, being provided by the members acquiring them, and
(b) the members of that class who fall within the provision represent at least 90 per cent. of the total number of members of that class.

§ (3) The second condition is that—

(a) the company is one of a number of companies registered under the Companies Act 1985 in relation to each of which the scheme provides as mentioned in sub-paragraph (2) (a) above, and
(b) the members of the relevant class who fall within the provision relating to the company, when taken together with the members of that class who fall within the provision, or provisions, relating to the other company, or companies, represent at least 90 per cent. of the total number of members of that class.

§ (4) The third condition is that, immediately after the transfer, at least 90 per cent. of the ordinary share capital of the company consists of shares which—

(a) are owned directly or indirectly by the board to which the scheme relates,
(b) have been issued or transferred under the scheme to members of the relevant class without any consideration, or with only a nominal consideration, being provided by the members acquiring them,
(c) have been issued or transferred under the scheme to persons who are, or have been, registered producers in settlement of claims against the board to which the scheme relates, being claims arising out of the supply or production of milk,
(d) have been issued or transferred under the scheme to trustees on terms which provide for their transfer to members of the relevant class, or
(e) are held by persons to whom they have been issued or transferred under the scheme in connection with securing the quotation of the company on the Stock Exchange.

§ (5) The fourth condition is that—

(a) the scheme provides for membership of the society to be open to members of the relevant class, and
(b) the members of that class who fall within the provision represent at least 90 per cent. of the total number of members of that class who are engaged in milk production on the day of the transfer.

§ (6) The fifth condition is that—

(a) the society is one of a number of societies registered under the Industrial and Provident Societies Act 1965 in relation to each of which the scheme provides as mentioned in subparagraph (5) (a) above, and
(b) the members of the relevant class who fall within the provision relating to the society, when taken together with the members of that class who fall within the provision, or provisions, relating to the other society, or societies, represent at least 90 per cent. of the total number of members of that class who are engaged in milk production on the day of the transfer.

§ (7) The sixth condition is that the company is a 100 per cent. subsidiary of a company falling within paragraph (c) of sub-paragraph (I) above or of a society falling within paragraph (d) of that sub-paragraph.

§ (8) For the purposes of this paragraph, a body corporate shall be deemed to be a 100 per cent. subsidiary of another body corporate if and so long as the whole of its ordinary share capital is owned directly or indirectly by that other body corporate.

§ (9) In determining for the purposes of this paragraph whether under an approved scheme shares are issued or transferred without any consideration, or with only a nominal consideration, being provided by the persons acquiring them, there shall be disregarded any depreciatory effect of transfers under the scheme on the value of a right to participate in the winding up of the board to which the scheme relates.

§ (10) For the purposes of this paragraph, the relevant class, in relation to an approved scheme, consists of those to whom property or rights are to be distributed under the scheme by virtue of their being, or having been, registered producers.

§ (11) Subsections (4) to (10) of section 838 of the Income and Corporation Taxes Act 1988 (rules for determining amount of share capital owned) shall apply for the purposes of this paragraph as they apply for the purposes of that section.

§ (12) In this paragraph—

(a) "ordinary share capital" has the same meaning as in the Income and Corporation Taxes Act 1988,
(b) "owned directly or indirectly", in relation to a body corporate, means owned directly or through another body corporate or other bodies corporate or partly directly and partly through another body corporate or other bodies corporate, and
(c) references to ownership shall be construed as references to beneficial ownership.'.

§ 181 Page 38, line 6, after 'Schedule', insert:

1148

§ '(a) "approved scheme" includes a scheme of reorganisation approved under any provision in Northern Ireland legislation corresponding to section 3 above (with any variation approved under any provision in such legislation corresponding to section 5 above) and in relation to which approval has not been withdrawn under any provision in such legislation corresponding to section 6 above, and

§ (b)'.

§ 182 Page 38, line 8, leave out from 'Schedule' to end of line 9 and insert `by virtue of sub-paragraph (1) above—'.

§ 183 Page 38, line 17, leave out paragraph (d) and insert:

§ '(d) "registered producers", in relation to the board established under the Milk Marketing Scheme (Northern Ireland) 1989, means persons registered as producers under the marketing scheme administered by the board;'.

§ 184 Page 38. line 24. at end insert:

§ '(3) In paragraph 17 above, the reference to section 16 above shall be construed as including a reference to any corresponding provision in Northern Ireland legislation.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 61 to 184. With the leave of the House, I should like also to speak to Amendments Nos. 243, 244, 246, 248 and 252.
Our objective in considering the tax consequences of a reorganisation scheme has been to avoid tax charges arising solely as a result of the reorganisation. Part I of Schedule 2 therefore contains a number of tax provisions which are intended to make the implementation of a scheme broadly tax neutral and to provide even-handed treatment of the parties concerned. They effectively defer the payment of charges until the next time they would otherwise have arisen.
The taxation provisions were considerably expanded in another place. Although numerous, these amendments do not represent a change in policy. Many were merely clarificatory and drafting changes. Their main effect was to extend the areas to which the provisions applied to cover further possibilities which a board might wish to include in its reorganisation scheme. For example, most of the tax provisions apply only to statutory transfers on vesting day. The England and Wales board, however, would like to be able to float Dairy Crest before vesting day. That would involve a transfer of the board's assets to its producers. We consider that the final transfers necessary for the flotation of a milk marketing board's subsidiary should be treated for tax purposes in broadly the same way as those transfers which occur on vesting day. The amendments would achieve this.
The other significant effect of the amendments to the schedule was to insert safeguards ensuring that special tax treatment should only be available to bodies which genuinely represented the collective interest of producers. We would not wish tax benefits to pass to those who did not represent the interests of a board's members. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 61 to 184.—(Earl Howe.)

1149

§ Lord Carter
My Lords, I presume that this is entirely to do with taxation as it affects the boards and their successor bodies and not with the likely taxation treatment in the hands of producers when the board comes to distribute its assets to producers by way of shares or however it is done. This is entirely to do with the taxation as it affects the boards themselves and is nothing to do with the taxation in the hands of producers, whatever may happen with the transfer documents, cash or whatever they receive.

Earl Howe
My Lords, that is my understanding. However, if I am incorrect in that assumption I shall write to the noble Lord. I believe that he has expressed the matter very well.
On Question, Motion agreed to.

§ COMMONS AMENDMENT

§ 185 Schedule 2, page 38, line 30, leave out 'for the purposes of carrying out' and insert 'in accordance with the provisions of'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 185. I have already spoken to it.
Moved, That the House do agree with the Commons in their Amendment No. 185.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 186 Schedule 2, page 39, line 2, leave out 'This paragraph' and insert 'Sub-paragraph (2) below'.

§ 187 Page 39, line 4, after third 'the', insert 'principal'.

§ 188 Page 39, line 4, leave out 'whose employees may belong to the scheme'.

§ 189 Page 39, line 6, after 'existing', insert 'principal'.

§ 190 Page 39, line 7, after 'body', insert—

§ (a) which already participates in the scheme, or

§ (b)'.

§ 191 Page 39, line 7, after 'existing', insert 'principal'.

§ 192 Page 39, line 8, at end insert:

§ '(3) Sub-paragraph (2) above shall not apply if the substitution is made otherwise than in connection with the carrying out of an approved scheme.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 186 to 192 en bloc. As my right honourable friends have explained in another place, the rearrangement of the milk marketing boards' pension schemes to take account of the changes envisaged by this Bill will he the responsibility of the boards as employers and the trustees of their pension schemes. They will be subject to the principles of trust law and must act in accordance with the comprehensive legislation governing occupational pension schemes. The Bill therefore does not deal with pensions in any great detail, although this is, of course, one of the matters Ministers will have in the front of their minds when considering a board's reorganisation scheme.
Paragraph 22 of Schedule 2 is the only provision relating directly to pensions in the Bill. It puts beyond doubt the propriety of the trustees of a pension 1150 scheme operated by a milk marketing board, or a subsidiary of one, using any power under their pension scheme to change the identity of the principal employer for that scheme when this is used to substitute a successor body under a reorganisation scheme for the existing employer. This would ensure, for example, that the trustees of the England and Wales Board pension schemes could, if they wished, substitute Milk Marque for the board as the principal employer for the schemes.
These amendments make a few technical changes to paragraph 22 because, as presently drafted, it does not apply to all the reasonable changes the trustees may wish to make. In particular it might not cover the replacement of the England and Wales Board by Dairy Crest. That is because, if the board were not to propose that any of its property, rights or liabilities should be transferred to Dairy Crest, then Dairy Crest would not, in formal terms, be a successor body.
This group of amendments therefore extends paragraph 22 to cover substitution of a board, or of a subsidiary of one, as principal employer by an employer which already participates in the particular pension scheme concerned. The amendments also clarify the intention of the provision by inserting a specific reference to the term "principal employer" and restrict use of paragraph 22 to changes made in connection with the carrying out of an approved scheme.
Moved, That the House do agree with the Commons in their Amendments Nos. 186 to 192 en bloc.—(Earl Howe.)

§ Lord Carter
My Lords, these are important amendments and we should spend a few moments discussing them. The Minister will know that a number of the pensioners of the milk marketing boards have expressed some concern and this is a good chance to allay those anxieties. For example, I believe that the valuation of the fund at 31st March this year, 1993, is not yet available to pensioners. Has the department seen it and can the Minister confirm that there is a surplus on the fund? The most recent figures I have seen are to March 1990. It will be helpful to know whether the Government are satisfied that there is a surplus on the fund.
It is fair to point out that, after all, it is the Government which have wound up the milk marketing boards and it is therefore not unreasonable to say that they should now be prepared to fulfil their responsibilities and ensure that pensioners who are left as a result of that winding up are properly looked after. The Minister used an interesting phrase that they would have in the front of their minds the fortunes of the pension fund. Does that mean that they will consider the pension funds when considering the reorganisation schemes that are presented to them or will their minds be compartmentalised so that they look at the reorganisation scheme and at the pension arrangements separately? How exactly will they ascertain that they have all the information that they need to ensure that the pensioners will be properly looked after in the reorganisation? For example, will the pensioners have the right of consultation'?
1151 Presumably, like anybody else the pensioners can make known their views about the reorganisation schemes. But if those schemes do not include what is supposed to happen to the pension schemes, it is a little hard to know how the pensioners can be consulted. Perhaps the Minister can tell us how the Ministry proposes to deal with that. Indeed, an assurance from the Minister that she will not agree to the final distribution of the assets and the demise of the board without first satisfying herself that the pension arrangements are satisfactory, with the consultation and participation of the pensioners, would be helpful.
I have had an extremely helpful brief from the Milk Marketing Board. I am sure that the trustees are trying hard to ensure that the schemes are handed over properly and looked after. The brief states: The employers also propose (without legally binding themselves) that subject to the availability of funds they will continue the practice that has existed with the MMB Group Pension Fund of awarding higher discretionary pension increases where the increase in the retail prices index exceeds the minimum guaranteed pension increase". Obviously, that is extremely welcome and I understand why they are not able legally to bind themselves. However, as a potential member of Milk Marque I am a little concerned—perhaps the Minister can put all our minds at rest—about whether Milk Marque is, as a result, likely to end up with a moral obligation that would affect its overheads if there were a deficiency in the funds which its commercial competitors do not have. This point has been put to me by a number of producers. Obviously, it is extremely welcome that Milk Marque is taking over the group fund but what would be the position if, for any reason, the fund had any problems? Under the existing arrangements with the Milk Marketing Board the MMB is obviously able to make up any deficit. Perhaps the Minister could spell out the position.
There is absolutely no doubt at all of the good intentions of all those concerned. I know that they are working hard to ensure that the pensioners' concerns are properly allayed. As I have said, the Government are winding up the MMB, so they cannot simply walk away from this problem which results from that winding-up. I hope that the Minster will be able to give us a little more information than has been available so far. It has been made clear—this is extremely welcome—that there is no way in which any surplus on the funds can be used in the reorganisation schemes or to pay any of the reorganisation costs.

Earl Howe
My Lords, we have received a considerable number of representations from and on behalf of pensioners of the England and Wales board over the past year. The central theme in all these letters has been uncertainty and concern for the future. I am sure we all understand and sympathise with these concerns which are quite natural in a period of such change. The Government have sought to address them by urging the board and the trustees to keep the pension scheme members in touch with their progress. They have responded by writing several times to all pensioners, particularly over the past few months as their proposals for the future have developed.
1152 The reorganisation scheme which a board submits to Ministers will have to specify to whom any property, rights or liabilities of the board which it still owns on vesting day will be transferred. A board will also be free, but not obliged, to provide in its scheme for the transfer of property, rights and liabilities before vesting day.
Ministers will therefore only have a formal role under the Bill in relation to changes to a milk marketing board's pension arrangements in two possible respects. These are, first, to the extent that the liability to pay pensions and the assets necessary to generate them rest with the boards rather than the scheme trustees and, secondly, if any fund surpluses have to be considered property or rights of the board and thus fall to be dealt with in a reorganisation scheme.
When considering any reorganisation scheme of the England and Wales board, the Minister and the Secretary of State for Wales shall wish to be satisfied that its coverage is complete. We have appointed independent consultants, KPMG Peat Marwick, to advise us when we consider the England and Wales board's reorganisation scheme. This is one point on which we may well seek the consultants' advice.
The Secretary of State for Scotland will need to take a view in relation to reorganisation schemes submitted by the three Scottish boards.
The position with respect to the England and Wales board is that it has at present two main pension funds of which it is the principal employer. Those are the MMB Group Pension Fund which has both board and Dairy Crest members, and the 'C' fund which has Dairy Crest members only.
The Milk Marketing Board and the Dairy Crest Board have agreed in principle to proposals for changes to those arrangements. I understand that the trustees also approved the proposals in principle at a meeting on 1st July and will be writing shortly to all scheme members with more details. Scheme members will be given the opportunity to comment in a series of meetings planned for August and September before a final decision is taken.
The board's proposals would maintain board scheme members' entitlements to benefit. In the case of the scheme 'C' fund, they would involve the replacement of the board by Dairy Crest as the principal employer for that scheme. Dairy Crest would thus take over the board's obligations in respect of that scheme.
The proposals envisage the division of the MMB Group Pension Fund scheme between Dairy Crest and the board. Those members, both employees and pensioners, associated with Dairy Crest would be transferred to a replacement scheme operated by Dairy Crest. A proportionate share of the fund, including the relevant proportion of any surplus, would also be transferred. The proposals aim to ensure that both the ongoing group fund and the new Dairy Crest scheme would have a similar membership profile, thus avoiding, for example, one scheme having a particularly large proportion of members in receipt of pensions. It is also hoped to give pensioners the option of exchanging their pension for a fixed rate 1153 insurance policy, should they wish to do so. I understand that the trustees will be writing very shortly to all pensioners to explain those proposals in more detail.
The advantages and disadvantages of a particular route must of course be for the trustees and the employers concerned to decide. I understand, however, that the MMB group fund has sufficient funds to meet its liabilities on an ongoing basis and can therefore see no reason in principle why it should be unreasonably expensive to maintain.
The noble Lord asked me whether any of the English, Welsh or Scottish schemes were in surplus. An actuarial valuation of the England and Wales MMB group fund at 31st March 1993 is being finalised and is likely to show a small surplus of about 5 per cent. on an ongoing basis and no surplus using assumptions prescribed by the Government Actuary for the purposes required by the Inland Revenue for checking surplus in a scheme.
The most recent actuarial valuation of the board's 'C' scheme has revealed a small surplus on a winding-up basis and a small deficit on an ongoing basis. There is a small surplus in the 'part-timers' fund. The Scottish boards have advised us that it is almost certain that there will be no surplus in their pension plan.
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 193 Page 39, line 11, leave out from 'say,' to end of line 13 and insert 'a body to which property, rights or liabilities of a milk marketing board are transferred under section 10 above.'.

§ 194 Page 40, leave out lines 14 and 15 and insert: '"statutory accounts", in relation to a successor body, means any accounts prepared for the purpose of any provision of the legislation under which the body is registered.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their ' Amendments Nos. 193 and 194.
Paragraph 23 of Schedule 2 and paragraph 5 of Schedule 4 specify which values are to be entered for accounting purposes into the books of successor bodies in respect of assets and liabilities transferred to them under an approved scheme.
The two paragraphs are worded differently but that does not reflect a significant difference in their effect. The two amendments would make the provisions for milk marketing boards in Schedule 2 follow the pattern of those in Schedule 4 relating to the Potato Marketing Board. That will avoid anyone looking for a significant difference between the two provisions which does not exist.
With the leave of the House, perhaps I may take the opportunity to clarify a point that I made earlier to the noble Lord, Lord Carter, on tax provisions. The Bill also affects the tax treatment of shares and so forth which are distributed to producers. It specifies that they will not be liable to income tax on those shares when they are in receipt of them. But if the noble Lord would like me to write to him, I should be delighted to do so.
1154 Moved, That the House do agree with the Commons in their Amendments Nos. 193 and 194.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 195 Schedule 2, page 40, line 19, leave out from first 'of' to end of line and insert 'the making of any application under section 2 or 5 above'.

§ 196 Page 40, line 20, leave out 'thing done' and insert 'making of such an application'.

§ 197 Page 40, line 23, leave out from 'which' to first 'of' in line 24 and insert 'imposes a prohibition (whether absolute or qualified) on the transfer'.

§ 198 Page 40, line 31, leave out 'penalises' and insert 'has the effect of penalising'.

§ 199 Page 40, line 32, leave out or a transfer without consent,'.

§ 200 Page 40, line 33, leave out from 'which' to 'of' and insert 'imposes a prohibition (whether absolute or qualified) on the transfer'.

§ 201 Page 40, line 35, leave out 'if' and insert 'unless'.

§ 202 Page 40, line 35, leave out 'private' and insert 'public'.

§ 203 Page 40, line 42, leave out 'penalises' and insert 'has the effect of penalising'.

§ 204 Page 40, line 43, leave out 'without consent'.

§ 205 Page 40, line 44, leave out 'prohibits the effecting without consent' and insert 'imposes a qualified prohibition on the effecting'.

§ 206 Page 41, line 2, leave out 'private' and insert 'purposes other than public'.

§ 207 Page 41, line 9, leave out 'penalises' and insert 'has the effect of penalising'.

§ 208 Page 41, line 10, leave out 'without consent'.

§ 209 Page 41, line 12, leave out from 'If' to 'such' in line 14 and insert 'any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 26 or 27 above or, where sub-paragraph (IA) below applies, paragraph 25 above,'

§ 210 Page 41, line 16, at end insert:

§ '(1A) This sub-paragraph applies where the effect of the transfer is to sever the ownership of the property or rights to which the provision concerned relates.'.

§ 211 Page 41, line 18, leave out 'to or'.

§ 212 Page 41, line 28, leave out 'prohibits' and insert 'imposes an absolute prohibition on'.

§ 213 Page 41, line 31, leave out paragraph (b).

§ 214 Page 41, line 32, leave out 'private' and insert 'purposes other than public'.

§ 215 Page 41, line 37, after 'below', insert 'in relation to the identified provision'.

§ 216 Page 41, line 38, leave out 'the' and insert 'that'.

§ 217 Page 42, line 14, leave out 'penalises' and insert 'has the effect of penalising'.

§ 218 Page 42, line 17, after 'above', insert in relation to any provision'.

§ 219 Page 42, line 30, after 'paragraph', insert ', in relation to the provision concerned,'.

§ 220 Page 42, line 30, at end insert:

§ 'Restrictions on change of location

§ 30A.—(1) For the purposes of this paragraph, a provision is a qualifying provision if—

(a) it is contained in a qualifying agreement,
(b) it imposes an absolute or qualified prohibition on the movement outside a specified area of property to which the agreement relates, and
(c) the prohibition which it imposes is imposed for purposes other than public purposes.

§ (2) For the purposes of sub-paragraph (1) above, an agreement is a qualifying agreement if—

(a) it is an agreement under which moveable property is leased to a milk marketing board or to a subsidiary of such a board, and
(b) an approved scheme makes provision for the transfer of rights and liabilities of the lessee under the agreement.

§ (3) Where an approved [...]—

(a) identifies a qualifying provision as one to which this paragraph applies,
(b) specifies a relevant modification in relation to that provision,
(c) specifies a commencement date in relation to the modification, and
(d) specifies one of the relevant bodies as the body against which any claim under paragraph 30B below, in relation to that provision, is to be made,

then, subject to any provision of regulations under sub-paragraph (4) (c) below, that provision shall have effect subject to the specified modification on and after the commencement date specified in relation to it.

§ (4) The appropriate authority may make regulations—

(a) with respect to the giving of notice of a provision of an approved scheme which does any of the things mentioned in paragraphs (a) to (c) of sub-paragraph (3) above,
(b) with respect to the giving by the authority of a certificate of compliance in relation to the giving of notice under paragraph (a) above, and
(c) excluding sub-paragraph (3) above where no certificate of compliance under paragraph (b) above has been given before such date as may be specified in the regulations.

§ (5) Where by virtue of sub-paragraph (3) above a qualifying provision is modified in its application to any property, the fact that, at any time in the week beginning with the date on which the modification first has effect, that property is outside the permitted area shall not be treated as constituting a breach of the provision if the property—

(a) is in the area which was the permitted area before the modification had effect, or
(b) is in transit from that area to the permitted area.

§ (6) In sub-paragraph (3) (b) above, "relevant modification", in relation to a qualifying provision, means a change, in relation to any of the property to which the provision applies, in the area by reference to which the qualifying provision has effect.

§ (7) In sub-paragraph (3) (d) above, the reference to the relevant bodies is to—

(a) the milk marketing board to which the scheme relates, and
(b) the body or bodies to which property, rights or liabilities of that board are, under the scheme, to be transferred under section 10 above.

§ (8) In sub-paragraph (4) above, "appropriate authority" means—

(a) in the case of an approved scheme relating to the England and Wales Milk Marketing Board, the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
(b) in any other case, the Secretary of State.

§ (9) For the purposes of this paragraph, any provision which has the effect of penalising the movement of property outside a specified area shall be treated as prohibiting it.

1156

§ 30B. Paragraph 30 above shall apply in relation to a person who suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 30A above as it applies in relation to a person who suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 29 above.'.

§ 221 Page 42, line 30, at end insert:

§ 'Transfers relevant to flotation

§ 30C.—(1) Where an approved scheme provides for rights and liabilities of a lessee under a qualifying agreement to be transferred to a company on a day earlier than the vesting day under the scheme, the provision shall have effect by virtue of this paragraph if, immediately before the day of the transfer, the company is a qualifying transferee.

§ (2) In sub-paragraph (1) above, "qualifying agreement" means an agreement under which moveable property is leased to the board to which the scheme relates or to a subsidiary of that board.

§ (3) For the purposes of sub-paragraph (I) above, a company is a qualifying transferee if it is—

(a) a company in relation to which the scheme provides for the taking of steps with a view to securing its quotation on the Stock Exchange,
(b) a subsidiary of a company falling within paragraph (a) above, or
(c) a company which, if the scheme is carried out, will become a subsidiary of a company falling within paragraph (a) above before that company is quoted on the Stock Exchange.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 195 to 221 en bloc. With the leave of the House I should also like to speak to Amendments Nos. 223 to 227 and 255 to 262.
The main purpose of the property provisions in Schedules 2 and 4 is to ensure that third party rights cannot be exercised in such a way as to delay or disrupt the implementation of an approved MMB reorganisation scheme or a transfer scheme of the Potato Marketing Board. Compensation would be available where the overriding of third party rights resulted in a material reduction in the value of that third party's interest. The provisions also ensure that there will be documentary proof of transfers effected under a transfer scheme and provide for a successor body to stand in the shoes of its predecessor board in respect of agreements or transactions relating to property, rights or liabilities transferred to it.
Since we last considered Schedule 2 in this House a number of points came to light, both as a result of our own reflection and in discussions with the boards, which persuaded us of the need to make a number of amendments. Many of the changes simply clarify the intention behind the provision concerned or make drafting improvements. Others, such as Amendments Nos. 209 and 210, extend the compensation provisions to cover additional circumstances in which a third party might suffer a reduction in the value of his interest in property transferred under an approved scheme. In addition the Commons amendments insert equivalent provisions, adjusted when necessary, in respect of transfers of the Potato Marketing Board's property.
Finally, Amendments Nos. 220, 221, 226 and 227 facilitate the transfer of finance leases under an approved scheme. For example, they would enable certain provisions of the leases to be overridden by an 1157 approved scheme and enable the transfers to be completed before the vesting day for the scheme concerned.
Moved, That the House do agree with the Commons in their Amendments Nos. 195 to 221 en bloc.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENT

§ 222 Schedule 2, page 42, line 30, at end insert:

§ '30D.—(1) Where—

(a) an approved scheme provides for the taking of steps with a view to securing the quotation of a company on the Stock Exchange, and
(b) the board to which the scheme relates makes under the scheme a qualifying transfer of shares in a subsidiary of its,

then, if the shares transferred were subject in the hands of that board to a resulting or constructive trust, they shall by virtue of the transfer cease to be subject to that trust.

§ (2) For the purposes of sub-paragraph (1) above, a transfer is a qualifying transfer if—

(a) it takes place in connection with the carrying out of the provision mentioned in paragraph (a) of that sub-paragraph, or
(b) the transferee is a qualifying person and the shares transferred are of the same class as other shares in the subsidiary which fall to be transferred as mentioned in that paragraph.

§ (3) For the purposes of sub-paragraph (2) above, the transferee is a qualifying person if the shares are transferred to him—

(a) by virtue of his being, or having been, a registered producer, or
(b) as trustee for persons who are entitled to participate in the trust by virtue of their being, or having been, registered producers.

§ (4) For the purposes of this paragraph, shares of a company shall not be treated as being of the same class unless they are so treated by the practice of the Stock Exchange or would be so treated if dealt with on the Stock Exchange.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 222. The point of this amendment is to ensure that if a flotation is proposed as part of a reorganisation scheme it will not be jeopardised by a potential claim by former producers to the title of shares in the company concerned. Leaving open the merest possibility of such a claim, which would have to be publicly disclosed, could be more than enough to stop a flotation from going ahead.
This amendment therefore removes a potentially serious source of delay to the reorganisation timetable, on the assumption that the England and Wales board will, as anticipated, propose the flotation of Dairy Crest as part of its reorganisation scheme. The Government consider that the sort of claim which this amendment is intended to deal with would have no more than a remote chance of succeeding. Action is no less necessary for that. The amendment deals with the matter in a manner which does not prejudice the right of potential complainants to challenge approval of a reorganisation scheme or their right to compensation if their arguments are in the event upheld. If a court were to find that former producers who had not received shares in a company did have a 1158 valid claim, they would be entitled to financial compensation and their claim would be directed against the residuary body.
Moved, That the House do agree with the Commons in their Amemdment No. 222.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 223 Schedule 2, page 42, line 35, leave out 'that'.

§ 224 Page 42, line 35, after 'section', insert '10 above'.

§ 225 Page 44, line 44, leave out 'The' and insert 'A'.

§ 226 Page 45, line 44, after 'above', insert 'or paragraph 30C above'.

§ 227 Page 45, line 46, leave out 'vesting day' and insert 'day of the transfer'.

§ 228 Page 46, line 35, leave out 'corporate'.

§ 229 Page 46, line 44, leave out `corporate'.

§ 230 Page 47, line 3, leave out `to a body corporate'.

§ 231 Page 47, line 4, leave out 'that body corporate' and insert `the body to which it is so transferred'.

§ 232 Page 47, line 5, leave out 'corporate'.

§ 233 Page 47, line 7, leave out 'corporate'.

§ 234 Page 47, line 12, leave out 'corporate'.

§ 235 Schedule 3, page 48, line 9, leave out 'to one or more qualifying successor bodies'.

§ 236 Page 48, line 11, leave out 'the successor body or bodies' and insert 'a body to which property, rights or liabilities of the Board are to be transferred under that section'.

§ 237 Page 48, line 11, leave out 'and'.

§ 238 Page 48, line 13, at end insert and

§ (c) any property or rights whose transfer would involve a breach by the Board of the restriction imposed by section 47(2) of the Agricultural Marketing Act 1958 (restriction on disclosure of information obtained under the Act).'.

§ 239 Page 48, line 14, leave out sub-paragraph (2).

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 223 to 239 en bloc.
Moved, That the House do agree with the Commons in their Amendments Nos. 223 to 239 en bloc.—(Earl Howe.)
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 240 Schedule 3, page 48, line 28, after `(2)', insert 'Sub-paragraph (1) above shall not apply'.

§ 241 Page 48, line 29, leave out from '1947' to end of line 35 and insert `(development council).'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 240 and 241.
Under the Industrial Organisation and Development Act 1947 it is for Ministers to specify in the order establishing a development council its name and the functions to be assigned to it and for Parliament to approve the order. The original draft of the Bill required the Potato Marketing Board to specify in its transfer scheme the name and functions of any successor body that was to be a development council. While Ministers will obviously wish to have the PMB's views on what a development council 1159 should do, it is not the board's place to specify them. This group therefore removes the requirement on the board and, in so doing, brings the potatoes provisions into line with those on milk.
Moved, That the House do agree with the Commons in their Amendments Nos. 240 and 241. —(Earl Howe.)

§ Lord Carter
My Lords, I believe that this is the last group to which the Minister will speak. Perhaps I could move a little outside our rules. It is the last opportunity to wish the Bill well and to thank the Minister for explaining the amendments so clearly.

Earl Howe
My Lords, I am most grateful to the noble Lord, and for the constructive way in which he has addressed the amendments we have been discussing.
On Question, Motion agreed to.

§ COMMONS AMENDMENTS

§ 242 Schedule 3, page 48, line 35, at end insert:

§ 'Disclosure of information,

§ .—(1) The scheme must specify what information to which this sub-paragraph applies is to be disclosed by the Board for the purposes of the scheme and to whom.

§ (2) Sub-paragraph (1) above applies to information the disclosure of which is (apart from paragraph 3 of Schedule 4 to this Act) restricted by section 47(2) of the Agricultural Marketing Act 1958.'.

§ 243 Schedule 4, page 49, line 6, leave out 'all' and insert 'any'.

§ 244 Page 49, line 6, leave out 'and' and insert 'or'.

§ 245 Page 49, line 7, leave out 'to a qualifying successor body'.

§ 246 Page 49, line 9, leave out 'and' and insert 'or'.

§ 247 Page 49, line 9, leave out 'qualifying successor body' and insert 'transferee'.

§ 248 Page 49, line II, leave out 'and' and insert 'or'.

§ 249 Page 49, line 12, leave out 'to a qualifying successor body'.

§ 250 Page 49, line 13, leave out 'that body' and insert 'the transferee'.

§ 251 Page 49, line 14, leave out sub-paragraph (2).

§ 252 Page 49, line 16, at end insert:

§ '() This paragraph shall have effect in relation to accounting periods beginning after the last complete accounting period of the Board ending before the date of the transfer under section 31 above.'.

§ 253 Page 49, line 30, leave out 'for the purposes of carrying out' and insert 'in accordance with the provisions of.

§ 254 Page 49, leave out lines 44 and 45.

§ 255 Page 50, line 40, at end insert:

§ 'Restraints on alienation etc.,

§ 6.—(1) Any provision which imposes a prohibition (whether absolute or qualified) on the transfer of any property or rights of the Board shall be treated as not applying in the case of a transfer under section 31 above.

§ (2) Sub-paragraph (1) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of the Board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.

1160

§ (3) For the purposes of this paragraph, any provision which has the effect of penalising a transfer shall be treated as prohibiting it.'.

§ 256 Page 50, line 40, at end insert:

§ '7.—(1) This paragraph applies to any provision which imposes a qualified prohibition on the effecting of any description of transaction, other than a transfer, with respect to any property or rights of the Board.

§ (2) Where the prohibition imposed by a provision to which this paragraph applies is imposed for purposes other than public purposes, it shall, subject to sub-paragraph (3) below, be treated as not applying in the case of a transaction effected under an approved scheme.

§ (3) Sub-paragraph (2) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of the Board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.

§ (4) For the purposes of this paragraph, any provision which has the effect of penalising the effecting of any description of transaction shall be treated as prohibiting it.

§ 8.—(1) If any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 7 above or, where sub-paragraph (2) below applies, paragraph 6 above, such compensation as may be just shall be paid to that person by one or more of the parties to the transfer or other transaction.

§ (2) This sub-paragraph applies where the effect of the transfer is to sever the ownership of the property or rights to which the provision concerned relates.

§ (3) Any dispute as to whether, and, if so, how much, compensation is payable under this paragraph, or as to the person by whom it shall be paid, shall be referred to and determined by an arbitrator appointed by the Ministers.'.

§ 257 Page 50, line 40, at end insert:

§ '9.—(1) For the purposes of this paragraph, a provision is a qualifying provision if—

(a) it imposes an absolute prohibition on the effecting of any description of transaction, other than a transfer, with respect to any property or rights of the Board, and
(b) the prohibition which it imposes is imposed for purposes other than public purposes.

§ (2) Where an approved scheme—

(a) identifies a qualifying provision as one to which this paragraph applies, and
(b) if the scheme provides for there to be more than one transferee under section 31 above, specifies one of them as the body against which any claim under paragraph 10 below in relation to the identified provision is to be made,

that provision shall, subject to any provision of regulations under sub-paragraph (3) (c) below, be treated as not applying in the case of a transaction effected under the scheme.

§ (3) The Ministers may make regulations—

(a) with respect to the giving of notice of a provision of an approved scheme which identifies a qualifying provision as one to which this paragraph applies,
(b) with respect to the giving by the Ministers of a certificate of compliance in relation to the giving of notice under paragraph (a) above, and
(c) excluding sub-paragraph (2) above where no certificate of compliance under paragraph (b) above has been given at the time that a transaction is effected.

§ (4) Sub-paragraph (2) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of the Board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.

1161

§ (5) For the purposes of this paragraph, any provision which has the effect of penalising the effecting of a description of transaction shall be treated as prohibiting it.

§ 10.—(1) If any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 9 above in relation to any provision, such compensation as may be just shall be paid to him—

(a) where the approved scheme provides for there to be one transferee under section 31 above, by that body, and
(b) where the scheme provides for there to be more than one transferee under that section, by the body which the approved scheme specifies as the body against which any claim for compensation under this paragraph, in relation to the provision concerned, is to be made.

§ (2) Any dispute as to whether, and, if so, how much compensation is payable under this paragraph, or as to the person to whom it shall be paid, shall be referred to and determined by an arbitrator appointed by the Ministers.'.

§ 258 Page 50, line 40, at end insert:

§ 'Certificates of vesting,

§ 11.—(1) Where section 31 (1) above applies on the vesting day under an approved scheme, the Ministers shall give to each person identified by the scheme as a person to whom any property, right or liability of the Board is to be transferred under section 31 above ("a relevant transferee") a certificate ("qualification certificate") stating—

(a) that he is identified by the scheme as a relevant transferee,
(b) whether the concurrence of any person is required to the issue by him of a certificate of vesting in relation to the Board, and
(c) if it is, whose concurrence is required.

§ (2) For the purposes of sub-paragraph (1) above, a person's concurrence is required to the issue of a certificate of vesting in relation to the Board if he is identified by the scheme as a relevant transferee.

§ (3) Where a person to whom a qualification certificate is given issues a certificate of vesting in relation to the Board, then, subject to subparagraphs (4) to (6) below, it shall be conclusive evidence for all purposes of any fact stated in it with respect to the effect of section 31 above in relation to any property, right or liability of the Board.

§ (4) Where a qualification certificate states that the concurrence of one or more persons is required to the issue of a certificate of vesting in relation to the Board, sub-paragraph (3) above shall not apply in relation to such a certificate issued by the person to whom the qualification certificate is given unless it is issued with the concurrence of the person, or each of the persons, identified by the qualification certificate as a person whose concurrence is required.

§ (5) Sub-paragraph (3) above shall not apply to a certificate of vesting in relation to the Board to the extent that the certificate relates to land which is registered land at the time the certificate is issued if a person has, at that time, been registered as the proprietor of the land in reliance on the operation of section 31 above in relation to it.

§ (6) Sub-paragraph (3) above shall cease to apply to a certificate of vesting in relation to the Board—

(a) to the extent that the certificate relates to land which is not registered land at the time the certificate is issued, on the land becoming registered land, and
(b) to the extent that the certificate relates to land which is registered land at the time the certificate is issued, on a person being registered as the proprietor of the land in reliance on the operation of section 31 above.

§ (7) In this paragraph— 1162

(a) references to a certificate of vesting in relation to the Board are to a certificate with respect to the effect of section 31 above in relation to any property, right or liability of the Board, and
(b) references to registered land are to registered land within the meaning of the Land Registration Act 1925.'.

§ 259 Page 50, line 40, at end insert:

§ 'Land registration

§ 12.—(1) Where section 31(1) above applies on the vesting day under an approved scheme, the Ministers shall—

(a) give a copy of the order under section 23(5) above to each person from or to whom property, rights or liabilities are transferred under section 31 above in accordance with the scheme, and
(b) annex to the copy order a copy of the scheme certified by them to be a true copy.

§ (2) A copy of the scheme given under sub-paragraph (1) above shall he treated for land registration purposes in England and Wales as conclusive evidence of the terms of the scheme.

§ 13.—(1) This paragraph applies where any registered land in England and Wales is transferred under section 31 above.

§ (2) The transferee shall be entitled to be registered as proprietor in place of the transferor on an application in that behalf made to the Chief Land Registrar.

§ (3) On an application under sub-paragraph (2) above, the transferee shall supply to the Chief Land Registrar such information and produce to him such documents as he may require for the purpose of enabling him to deal with the application.

§ (4) Section 43 of the Land Registration Act 1925 (effect of transmissions) shall apply in relation to any person registered in place of the transferor as it applies in relation to any person registered in place of a deceased or bankrupt proprietor, but with the omission of the words from "upon the trusts" to "applicable by law, and".

§ (5) In this paragraph, "registered land" has the same meaning as in the Land Registration Act 1925.

§ 14.—(1) This paragraph applies where any land in England and Wales which is not registered land is transferred by virtue of section 31 above.

§ (2) Unless the transferee, or his successor in title or assign, has before the end of six months from the date of the transfer applied to be registered as proprietor of the land, section 31 above shall he deemed never to have had effect to transfer the legal estate in the land.

§ (3) The power conferred by the proviso to section 123(1) of the Land Registration Act 1925 (power of Chief Land Registrar, or court on appeal from him, to extend the period within which an application for first registration must be made) shall also apply in relation to the period mentioned in sub-paragraph (2) above.

§ (4) Any rules made by virtue of section 123(2) of the Land Registration Act 1925 shall—

(a) apply to dealings with the land which may take place between the date of the transfer and the date of the application to register as if the land had been the subject of a conveyance or assignment on the date of the transfer, and
(b) apply in relation to an application for registration under this paragraph as they apply in relation to an application for registration under section 123 of that Act.

§ (5) On an application for first registration under this paragraph, the applicant shall supply to the Chief Land Registrar such information and produce to him such documents as he may require for the purpose of enabling him to deal with the application.

§ (6) In this paragraph, "registered land" has the same meaning as in the Land Registration Act 1925.

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§ 15. In relation to Scotland, any transfer under an approved scheme shall have effect subject to the provisions of any enactment which provides for transactions of that description to be given effect to by registration in any statutory register.'.

§ 260 Page 50, line 40, at end insert:

§ 'Transfers under section 31: transition

§ 16.—(1) Any agreement, transaction or other thing which—

(a) is made, effected or done with respect to anything transferred under section 31 above in accordance with an approved scheme,
(b) is made, effected or done by, to or in relation to the transferor, and
(c) is in force or effective immediately before the vesting day under the scheme,

shall, on and after that day, have effect as if made, effected or done by, to or in relation to the transferee in all respects as if the transferee were the same person in law as the transferor.

§ (2) Sub-paragraph (1) above shall not affect the construction of any provision which is formulated specifically with reference to the possibility of the undertaking of the Board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.'.

§ 261 Page 50, line 40, at end insert:

§ 'Provisions of scheme effective on statutory vesting

§ 17.—(1) Where section 31(1) above applies on the vesting day under an approved scheme, the provisions of the scheme shall, to the extent that they fall within sub-paragraph (2) below, have effect by virtue of this paragraph.

§ (2) The provisions of an approved scheme fall within this sub-paragraph to the extent that they purport—

(a) to impose on one relevant body an obligation on or after the vesting day under the scheme to enter into a written agreement with, or execute an instrument in favour of, another relevant body;
(b) to create for one relevant body, on the vesting day under the scheme, an interest in or right over property transferred under section 31 above to another relevant body; or
(c) to adapt, with effect from the vesting day under the scheme, references to members or officers of the Board in a document or oral agreement relating to anything transferred under section 31 above.

§ (3) The provisions of an approved scheme only fall within sub-paragraph (2) above by virtue of paragraph (c) of that sub-paragraph to the extent that their purpose is to prevent, so far as reasonably possible, the effect of the provisions in which the references concerned occur being materially altered as a result of the transfer.

§ (4) For the purposes of sub-paragraph (2) above, the following are relevant bodies in relation to an approved scheme—

(a) the Board, and
(b) any body to which property, rights or liabilities of the Board are transferred under section 31 above.'.

§ 262 Page 50, line 40, at end insert:

§ 18.—(1) Where section 31(1) above applies on the vesting day under an approved scheme, the provisions of the scheme shall, to the extent that they fall within sub-paragraph (2) below, have effect by virtue of this paragraph

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§ (2) The provisions of an approved scheme fall within this sub-paragraph to the extent that they purport—

(a) to impose on the Board, or on any body to which property, rights or liabilities are transferred under section 31 above, duties to take, on or after the vesting day under the scheme, such steps as may be requisite to secure that the vesting under that section of any foreign property, right or liability of the Board is effective under the relevant foreign law;
(b) to impose on the Board a duty, in relation to any foreign property, right or liability of its which is transferred under section 31 above, to hold that property or right for the benefit of, or discharge that liability on behalf of, the body to which it is so transferred, until the vesting of that property, right or liability in that body is effective under the relevant foreign law;
(c) to require a body to which any foreign property, right or liability of the Board is transferred under section 31 above to act on behalf of the Board (so far as possible) for the purposes of, or in connection with, the performance of any duty of the Board under the scheme in relation to any foreign property, right or liability of its so transferred to that body; or
(d) to require any body to which property, rights or liabilities of the Board are transferred under section 31 above to meet expenses incurred by the Board in consequence of provisions of the scheme which fall within this sub-paragraph by virtue of paragraph (a) or (b) above.

§ (3) Nothing in any provision which has effect by virtue of this paragraph shall be taken as prejudicing the effect, under the law of any part of the United Kingdom, of the vesting under section 31 above of any foreign property, right or liability.

§ (4) Where provisions of an approved scheme have effect by virtue of this paragraph, the Board shall have all such powers as may be requisite for the performance of any duty to which it is subject as a result.

§ (5) In this paragraph, references to any foreign property, right or liability are to any property, right or liability as respects which any issue arising in any proceedings would have to be determined (in accordance with the rules of private international law) by reference to the law of a country or territory outside the United Kingdom.'.

§ 263 Schedule 5, page 51, leave out line 26 and insert:

§ '1. The repeals in the Agriculture Act 1957 are without prejudice to sections 48(2) and 49(2) above.'.

Earl Howe
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 242 to 263 en bloc. The amendments have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 242 to 263.—(Earl Howe.)
On Question, Motion agreed to.