Commons Sitting of 19 October 1976

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  COITY WALLIA COMMONS BILL [Lords]
  Read the Third time and passed, with amendments.
  CROMARTY HARBOUR ORDER CONFIRMATION BILL
  Considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  EMPLOYMENT

    School Leavers
    Mr. Steenasked the Secretary of State for Employment if he will offer every unemployed school leaver the right to create his or her own work, and make available further opportunities for job training and learning experience.
    The Minister of State, Department of Employment (Mr. Harold Walker): The further package of measures to alleviate unemployment amongst young people announced on 23rd August includes further allocations to the Training Services Agency and an extra £15 million for the Job Creation Programme. In addition, it is hoped that the Work Experience Programme will provide a realistic introduction to working life for at least 30,000 young people aged under 19, mainly school leavers.
    Mr. Steen: Is the Minister aware that there are now about 400,000 unemployed under the age of 25 and a further 200,000 who are under 21 and who have never had a job before? What does he propose to do for those who are not catered for under these schemes, as they total about 95 per cent. of 600,000?
    Mr. Walker: Because of his interest in the subject the hon. Gentleman should know as much as any hon. Member how many of our recent measures are specifically directed at young people. I have had the benefit of reading his views, which, summed up, appear to require young people to find a job of their own or forfeit social security benefits, or to find a job and be paid supplementary benefit rates. That is a solution which is unacceptable to the Government.
    Mr. Arnold Shaw: What about the efforts made by the Government over the last 18 months for school leavers? Has the Minister an estimate of the accrued benefits of the measures that have been passed?
    Mr. Walker: Yes. We estimate that about half a million people will have been helped in employment by the range of measures introduced by the Government.
    Sir P. Bryan: What proportion of the jobs generated by the Job Creation Programme have been produced by local authorities and what proportion by private and voluntary bodies?
    Mr. Walker: I cannot give the exact figures, but the majority have come from local authorities. However, it is open to other organisations, bodies and individuals to put forward projects, and that includes private industry. I know that the people in charge of the scheme have gone to great lengths to encourage private employers to put forward projects
    Mr. Henderson: What steps are being taken to monitor what happens to people who come out of the schemes to see if the work has been of any value to them in finding a job?
    Mr. Walker: It is obviously important to do what we can in terms of follow-up, and this is being done by the agencies of the Manpower Services Commission.
    Mr. Rooker: Is my hon. Friend aware that of the 1½ million registered unemployed, 260,000-plus receive not a penny piece from the State? That is the motive behind the Question tabled by the hon. Member for Liverpool, Wavertree (Mr. Steen), who wants to increase that figure.
    Mr. Walker: I agree with my hon. Friend's last words.

    South-West England
    Mr. Hicksasked the Secretary of State for Employment how many persons are unemployed in the South-West assisted area; what was the percentage unemployment figure at the latest available date, and what are the corresponding figures for 1975.
    The Under-Secretary of State for Employment (Mr. John Golding): In September 1976, the number of people registered as unemployed in the South-West assisted area was 24,876 and the rate of unemployment was 9·1 per cent. The corresponding figures for September 1975 were 19,913 and 7·3 per cent.
    Mr. Hicks: Does the Minister agree that that is a most depressing state of affairs, particularly for the younger person? When will Ministers, both in the Department of Industry and in his Department, appreciate that the structural unem-
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    ployment difficulties in rural assisted areas can be just as great as those of the urban industrial areas?
    Mr. Golding: I agree that the situation is very depressing for all concerned, but it is brighter than we might have expected for the take-up of school leavers. The problem is mostly amongst young people who have already had a job. The Government have given great financial assistance to the South-West assisted area.
    Mr. Hannam: Is the Minister aware that the Government's present policy of switching aid to the urban stress areas is working directly against the South-West region especially in the building and construction industry? There is no basic infrastructure in that area and therefore the switching of aid is leading to unemployment in the building and construction industry, and a lack of confidence in that industry.
    Mr. Golding: The Government have no policy of discriminating against rural areas. In the last period unemployment fell in the South-West assisted area.

    Press Charter
    Mr. Aitkenasked the Secretary of State for Employment if he will make a statement on the progress of his Department in co-ordinating the draft of a Press charter as required by the Trade Union and Labour Relations (Amendment) Act.
    The Under-Secretary of State for Employment (Mr. John Grant): The Trade Union and Labour Relations (Amendment) Act 1976 does not require my Department to co-ordinate the draft of a Press charter, and it is not doing so.
    Mr. Aitken: Is not the Minister being a little complacent? If agreement is not reached, he will have to impose a charter on the industry. Is he aware that all the signs and portents are that the parties will be completely unable to reach agreement on the terms of charter, because the National Union of Journalists is insisting on a closed shop in journalism which excludes the smaller trade union from the right to work? Does he not think that he should be doing something to bring the parties together?
    Mr. Grant: The hon. Gentleman is being premature and unduly pessimistic. There is a considerable time to go,

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    although one appreciates that the discussions are very difficult and delicate. That is all the more reason for us not to interfere. To do so now could well prove counter-productive.
    Mr. Ron Thomas: Does my hon. Friend agree that many of the pontifications about a free Press that have surrounded the proceedings in trying to bring about a Press charter are completely divorced from reality, and that until we curb the power of the Press barons we shall not have a free Press? Will my hon. Friend reaffirm that members of the NUJ have every right to have a trade union membership agreement, just as any other group of workers in Britain has?
    Mr. Grant: There are certainly many considerations in addition to the closed shop, including that to which my hon. Friend referred, which need some attention. I hope that all those with some influence in the newspaper industry, direct or indirect, will try to use it to secure a satisfactory result.
    Mr. Prior: In that case, will the hon. Gentleman and the Secretary of State use their influence as well to see that, with Press freedom very much at stake action is not taken by journalists to force a closed shop in a vital industry which should not have it and does not want it?
    Mr. Grant: The Government's position on the closed shop has been made very clear on a number of occasions. Our position is neutral.

    Unemployed Persons
    Mr. Arnoldasked the Secretary of State for Employment whether he will make a statement on the current level of unemployment.
    Mr. Peter Morrisonasked the Secretary of State for Employment what are the Latest unemployment figures as compared with one and two years previously.
    Mr. Newtonasked the Secretary of State for Employment if he will make a statement on unemployment.
    Mr. Skinnerasked the Secretary of State for Employment what are the latest available figures for unemployment in the United Kingdom and by region and if he will make a statement.
    Mr. Hendersonasked the Secretary of State for Employment if he will make a statement on the current level of unemployment.
    The Secretary of State for Employment (Mr. Albert Booth): At 9th September 1976 1,395,770 people were registered as unemployed in Great Britain. The rate of unemployment was 6·1 per cent. Equivalent figures for the United Kingdom were 1,456,363–6·2 per cent.
    Comparative figures for Great Britain in September 1975 were 1,096,902, 4·8 per cent., and in September 1974, 617,810, 2·7 per cent. I will, with permission, circulate a table in the Official Report showing the figures for each region.
    I am, of course, seriously concerned at these figures, which show that the level of unemployment continues to be unacceptably high. The rate of increase, however, is lower than it was some months ago, and there are signs of an improvement in the employment situation—for example, in the numbers of vacancies and numbers on short time.
    Mr. Arnold: Will the Secretary of State now concede that recent Government measures will almost certainly lead to a further increase in unemployment? May we have an assurance that there will be no attempt to disguise this, and that he recognises that further counter-cyclical measures are unlikely to have much impact?
    Mr. Booth: I am tempted to say that that depends on which recent Government measures one is talking about. A number of them, including measures introduced by my Department and the Department of Industry, will have a considerable impact. The extent to which the counter-cyclical measures will be effective depends upon the size of the component of our unemployment that stems from cyclical considerations and how much of it is long-term, structural unemployment.
    Mr. Skinner: My right hon. Friend will learn nothing from Conservative Members, who are more concerned about more public expenditure cuts, resulting in more unemployment. He would do well to listen more closely to those of his hon. Friends—[Hors. MEMBERS: "Question."]. Do not panic.
    Mr. Speaker: Order. I am the one who is panicking. I hope that the hon. Gentleman will come to his question, because many hon. Members are anxious to have their Question called.
    Mr. Skinner: Not enough people are panicking about 1½ million on the dole.
    Does my right hon. Friend appreciate that within those growing figures 400 school leavers were turned away from the National Coal Board training scheme, when the miners are clamouring to have early retirement? Is it not high time he paid some attention to reducing the public sector borrowing requirement by getting down the £4,000 million it costs to keep l million people on the dole?
    Mr. Booth: I think that my hon. Friend knows that I listen very carefully to what he and other hon. Friends of mine say about unemployment. Many of the recent measures are directed particularly at the problem of school-leaver unemployment. One of them relates to earlier retirement as well. But within the total scope of measures we are anxious to expand further training opportunities, including those in the mining industry, for young people. In this we have had a measure of success.
    Mr. Morrison: How can the right hon. Gentleman maintain that the social contract has worked when since its inception unemployment has risen by more than 750,000?
    Mr. Booth: I maintain that it has worked because it has enabled the Government to discuss with the TUC a wide range of measures affecting levels of unemployment and has enabled this country to achieve by voluntary wages policy a restriction in internal demand far above anything that any other country has achieved.
    Mr. Madden: Does my right hon. Friend agree that the shamefully high total of unemployed would be considerably less if the Government had introduced selective import controls a long time ago? Can he point to any evidence, as opposed to opinion, to substantiate the claim often made by Ministers that the introduction of selective import controls would result in retaliation from abroad?
    Mr. Booth: The last part of my hon. Friend's question should be directed to
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    my right hon. Friend the Secretary of State for Trade. The Government have introduced and operated a number of import restrictions and are even at this stage ready to consider where restrictions might be necessary in other areas to protect employment. I believe that as a result of these measures, coupled with other factors, we have seen a turn in the position of manufacturing industry. In every month since May this year there has been an increase in the total numbers employed in manufacturing.
    Mr. Newton: Has the right hon. Gentleman's Department made a specific estimate of the additional number of unemployed that will result from a 15 per cent. minimum lending rate? Does he accept that it will mean tens of thousands of extra unemployed and will more than swamp everything else he mentioned in his first supplementary answer?
    Mr. Booth: That is principally a question for my right hon. Friend the Chancellor of the Exchequer. The high current MLR was introduced as a short-term measure to deal with a particular financial situation. I believe that it will not last for such a time as to have a considerable effect upon industrial investment.
    Mr. Heffer: Knowing how my right hon. Friend genuinely feels about unemployment, may I ask him to have a word with my right hon. Friends the Prime Minister and Chancellor of the Exchequer about the building and construction industry, where we now have 220,000 unemployed and the employers estimate that another 100.000 could be unemployed in a short time? Will he tell them that public expenditure cuts affecting the construction industry must be reversed, otherwise there will be no construction industry, no new intake of apprentices, and no skills, and the country will suffer as a result?
    Mr. Booth: If my hon. Friend had widened his question to ask whether I would discuss with my right hon. Friends the Prime Minister and the Chancellor the question of unemployment generally, as opposed to unemployment in the construction industry, I could have said that we talk of almost nothing else. But there is a particular problem, to which my hon. Friend has drawn attention very frequently. We are, within the present

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    scope of the whole series of measures, problem where Government strategy can seeking to bring some assistance to the have a useful impact.
    Mr. Henderson: There is increasing concern in Scotland at the failure of this Government, like their predecessors, to deal with deep-rooted problems of unemployment there. Does the Minister not think it would be right now to recommend to his Cabinet colleagues that the Government's devolution proposals should include control of the Scottish economy, control of the money supply and control of employment measures, so that we can take responsibility for them ourselves in Scotland?
    Mr. Booth: I did not know that it was my duty to answer questions about devolution, too. I accept, however, that many of these factors can be seen to affect unemployment. In Scotland the total number of unemployed fortunately fell by 8,697 between August and September. I am discussing with my right hon. Friend the Secretary of State for Scotland how far it is appropriate that there should be a devolution of certain powers currently exercised by the Manpower Services Commission in the interests of dealing with employment questions in Scotland.
    Mr. Prior: The Secretary of State's answers today have not differed from the totally unsatisfactory answers we have had from him and his predecessor month after month. Is it not a fact that his policies have failed? Will he listen not to his hon. Friends but to Conservative Members who for two years have put forward a consistent case which, if it had been adopted, would have reduced the level of unemployment by now?
    Mr. Booth: I think that the House is able to judge who is listening to whom. I am saying something different this month. I am glad to be able to say that last month's statistics show that total unemployment has fallen in every region in the country and that overall the number of vacancies has risen. Much of the fall has been attributable to the drop in the number of unemployed school leavers, but the figure is none the worse for that. We have also introduced measures and we are checking and verifying their effectiveness. We are prepared to turn to any aspect of the employment
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    problem where Government strategy can have a useful impact.
    Following is the information:

    NUMBERS REGISTERED AS UNEMPLOYED AT SEPTEMBER 1976

    Total

    Percentage

    South East

    343,506

    4·6

    East Anglia

    34,691

    5·0

    South West

    104,432

    6·6

    West Midlands

    145,771

    6·4

    East Midlands

    80,066

    5·2

    Yorkshire and Humberside

    122,099

    5·9

    North West

    211,250

    7·5

    North

    110,019

    8·2

    Wales

    82,473

    7·9

    Scotland

    161,403

    7·4

    Great Britain

    1,395,770

    6·1

    Northern Ireland

    60,593

    11·4

    United Kingdom

    1,456,363

    6·2

    Mr. Goodladasked the Secretary of State for Employment what new proposals he has for reducing unemployment.
    Mr. Sillarsasked the Secretary of State for Employment what further measures he is considering to reduce unemployment.
    Mr. Booth: New measures to alleviate unemployment which I announced as recently as 3rd August and 23rd September are thought likely to keep at least 140,000 people off the unemployed register over the next 12 months, bringing the total helped by our measures to approaching half a million. The Government are keeping the unemployment situation under constant review and will be ready to expand existing measures and introduce new ones if the need arises.
    Mr. Goodlad: Is the Minister aware that his reply will come as a disappointment in the North-West, where the rate of unemployment is much higher than elsewhere, and particularly to the employees of International Computers Limited, at Winsford, where a number of my constituents are employed and in which the Government have a substantial stake, but where 640 out of 1,400 employees are due to be made redundant? What proposals does he have to offer to give encouragement to those employees?
    Mr. Booth: Fortunately, the position in the North-West is improving. There has been a drop in the total unemployment figure in the last month, and in

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    regard to measures to deal with major redundancies, such as that mentioned by the hon. Gentleman, I would advise the House that there has been a considerable take-up of temporary employment subsidy, which has now succeeded in staving off 120,000 proposed redundancies. I shall see whether this form of support can assist in the case that the hon. Gentleman mentioned.
    Mr. Sillars: Is the Minister aware that none of the experience to which he referred will overcome the fact that the Achilles heel of the Government's economic strategy is lack of investment? Does he, as a Socialist, agree with me that until such time as we formulate and execute a national plan involving control and direction of the economy we shall not tackle the fundamentals that have led to the current high rate of unemployment?
    Mr. Booth: I agree to the extent that the achievement of an industrial strategy, which depends on a rate of growth in industry of 7 to 8 per cent., must over a period involve a considerable increase in the amount of industrial investment. On all present evidence, we shall need a considerable measure of Government intervention to sustain and achieve investment of that level.
    Sir J. Langford-Holt: Has the Minister within the last 24 hours received a demand for a reduction of 1 million in the unemployed level? If so, how does he propose to achieve it?
    Mr. Booth: Within the last 24 hours I have been one of a number of Ministers who have had this proposition addressed to them. Among the ways in which we seek to meet the demand is, principally, by our industrial strategy, since we take it that the measures special to my Department are a complement and supplement to mitigate the worst effects of unemployment, and are not in themselves a long-term solution. It is evident to all who study the solutions to that problem that in the long run there must be a regeneration of British industry, and that that will play the major part.
    Mr. Greville Janner: In view of the sad level of unemployment in Leicester and other areas not classed as assisted areas but where the unemployment rate is the highest in history, will my right
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    hon. Friend reconsider his policy not to extend the job release scheme to unassisted areas? Does he agree that it is just as wretched to be unemployed in those areas as it is anywhere else?
    Mr. Booth: My hon. Friend raises a serious and difficult question. The special measures that we have introduced in the last year have brought about more nation-wide support than was the case previously. We have departed from the policy of successive Governments of directing attention to development areas only. It is not beyond possibility that we can reconsider those of our schemes which currently apply solely in development areas, to see whether we may be justified in introducing them on a nation-wide basis.
    Mr. Hayhoe: Is it not clear from the way the Minister is floundering that he has no answer at all to the demand that 1 million new jobs should be created? Is it not time that the Government began to develop a strategy for the labour market that takes account of the fact that the unemployment rate of 1 per cent. or 2 per cent. experienced under a Tory Government in the 1950s and early 1960s has now gone, and that we shall have to live with an unemployment rate near the 1 million mark for many years to come?
    Mr. Booth: I do not accept that, as a Government, we could base any of our strategies or policies on the proposition that the country should live with 1 million unemployed for many years to come. Policies of support for manufacturing industry operated by the Labour Government since we came into office are beginning to bear fruit, as in the reduction in the amount of short-time working, the high level of overtime now being worked in the manufacturing sector, and the fact that in each of the last few months there has been an increase in the total number of people employed in manufacturing industry.

    Closed Shop Agreements
    Mr. Gowasked the Secretary of State for Employment how many employees in the public sector and how many in the private sector are covered by closed shop agreements or arrangements, existing or proposed: and whether he will make a statement about Government policy towards the closed shop.
    Mr. Harold Walker: Information about numbers covered by closed shop agreements is not available. The Government maintain a neutral policy towards the closed shop. It is entirely up to employers and unions to decide whether or not they wish to operate a closed shop in any particular case.
    Mr. Gow: Though the figures for those covered by a closed shop may not be available to the Government, is the Minister aware that it is perfectly clear that more and more people in this country are covered by closed shop agreements? Is he further aware that it is becoming a precondition of employment that those who wish to work must be members of a union? What advice does the Minister have for British Rail concerning its policy of a closed shop?
    Mr. Walker: As the lion. Member has been told several times, this matter is one for the employer and the union—in this case the employer being British Rail. There have been problems over some of the employees who were dismissed in respect of the payment of unemployment benefit and their disqualification from receiving it. I understand that the cases are currently subject to possible appeal and I therefore hope that the hon. Gentleman will not press me about them.
    Mr. Brittan: Does the Minister agree that however satisfactory he may find it to wash his hands of responsibility for the closed shop generally and to refuse to give advice or a view on it, he cannot do that in the public sector? There, at least, he must take responsibility to prevent individuals being deprived of their livelihoods because they do not wish to join a trade union.
    Mr. Walker: I am not sure whether the hon. Gentleman is, in effect, calling for a ban on the closed shop. Those who say that we should ban the closed shop are saying that we should sweep the problem under the carpet, if I may use words which may be familiar to the right hon. Member for Lowestoft (Mr. Prior) from his recent conference. The Opposition should make up their minds where they stand on this issue.
    Mr. Hayhoe: That sort of simple political propaganda does not constitute a satisfactory reply. Does the hon. Gentleman realise that the Government's so-
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    called neutrality on the closed shop means that they are attempting to act as a disinterested onlooker while the freedom of the Press is being increasingly threatened and while people who have worked for a long time in the public sector are having their individual liberty curtailed?
    Mr. Walker: I think I am gradually beginning to understand the Opposition's position on the closed shop. They are not against the closed shop so long as no one practises it.

    Young Persons
    Mr. Luceasked the Secretary of State for Employment how many young people between 18 and 21 years of age are unemployed.
    Mr. Golding: The precise information requested is not available. On 8th July, when the unemployed register was last analysed by age groups, the figures included 121,886 people aged 18 and 19 and 224,850 aged 20 to 24.
    Mr. Luce: In view of those very grim figures, does the Minister agree that the money invested through the Job Creation Programme must be used for long-term purposes—for example, for training young people for productive jobs? What action is the Minister planning to take to evaluate the wide variety of schemes being operated at present in order to ensure the most efficient use of people and resources?
    Mr. Golding: We constantly evaluate all these special measures. My right hon. Friend the Secretary of State announced on 24th September a wide variety of measures, which we believe will create 160,000 new jobs, training or work experience for young people in the coming 12 months.
    Mr. Blenkinsop: I welcome what the Department has done in extending training facilities for young people. However, will the Department keep up its pressure over training and particularly take account of some of the practical recommendations made by the South Shields trade union council, of which my hon. Friend has a copy?
    Mr. Golding: Of course we will at all times try to ensure that as many young people as possible receive training. We would particularly ask that the employers

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    and trade unions give as much support as they can to the work experience scheme.
    Mr. John Page: In view of the Minister's original answer, has he studied the letter in The Times this morning explaining how an employer in Croydon applied at the employment exchange for a warehouseman? The employment exchange said that four men would be coming along for the job. None came. The fifth man, a visiting Australian, got the job. In view of the unemployment among young people, will the Minister discover whether there are any suitable young people on the list at that exchange, and whether they should have taken the job?
    Mr. Golding: This is a matter for the Employment Services Agency, which I am sure will take note of the hon. Gentleman's remarks.

    Manufacturing Industry (Overtime Working)
    Mr. Rookerasked the Secretary of State for Employment if he will make a statement on the level of overtime working in manufacturing industry.
    Mr. John Grant: The level of overtime working by operatives in manufacturing industries for the week-ended 14th August was 12,931,800 hours.
    Mr. Rooker: Notwithstanding the Minister's comments, does he accept that the fact that one-third of all workers in manufacturing industry are working eight hours' overtime a week is totally immoral in the present situation?
    Mr. Grant: It is a matter of some concern that substantial amounts of overtime are being worked at a time of chronic job shortage, although some overtime is desirable and sometimes essential. Both management and unions are aware that voluntary restriction of overtime can help to prevent redundancies. The TUC at its September congress passed a resolution recognising the responsibility of the trade union movement in trying to achieve a reduction in overtime.
    Mr. Prior: Does the Minister think it right that trade unions should stop people working harder on piece-work?
    Mr. Grant: That is not a matter that arises out of this Question. If the hon. Gentleman is referring to a case that
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    received some recent publicity, he should look again at the facts of that case before he goes further.

    Health and Safety
    Mr. Greville Jannerasked the Secretary of State for Employment whether he will introduce legislation to increase the penalties which may be imposed by magistrates' courts for breach of the Health and Safety at Work &c. Act.
    Mr. John Grant: No, Sir. My right hon. Friend the Secretary of State for the Home Department is considering a general overall increase in magistrates' court penalties as proposed by the James Committee. I consider that the proper course is to await the outcome of this consideration rather than to initiate a separate Bill for health and safety legislation.
    Mr. Janner: Does the Minister agree that the present penalties imposed by magistrates' courts on those convicted of offences under the Health and Safety at Work &c. Act are pathetic? Does he also agree that it is as criminal to kill a man in a factory or on a building site as it is on a road? Will he join with the Lord Chancellor in advising courts to use their present powers to make it plain that that kind of behaviour will not be tolerated?
    Mr. Grant: Yes. I am broadly in agreement with my hon. and learned Friend and, indeed, with the remarks of the Lord Chancellor last week—remarks that he addressed to magistrates and of which I am sure they will take considerable notice.
    Mr. Geoffrey Finsberg: Will the Minister say whether magistrates' courts are imposing penalties to the limits, or is it not perhaps foolish to talk of increasing the penalties that they can impose if they are not now imposing the maxima?
    Mr. Grant: In a good many cases involving health and safety matters magistrates are imposing lenient fines, bearing in mind the gravity of the offence. As for the question of raising the level of fines, my right hon. Friend the Home Secretary is considering the matter, although not in isolation.

    Industrial Tribunals (Lay Members)
    Mr. Brittanasked the Secretary of State for Employment whether he will

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    review the composition of the panel set up by him from which lay members of industrial tribunals are chosen.
    Mr. Harold Walker: No, Sir. I am satisfied with the composition of the panel.
    Mr. Brittan: In view of the vastly increased powers of industrial tribunals and the fact that many employees who apply to them are members of unions not affiliated to the TUC, what possible justification is there for the Government's continued insistence on appointing employee representatives to industrial tribunals solely from the ranks of TUC-affiliated unions?
    Mr. Walker: In making these appointments my right hon. Friend must work within the statutory framework laid down in 1971. The Secretary of State was then required by statute to consult with organisations representing employers and employees. The TUC speaks for 90 per cent. of the trade unionists in this country—[HON. MEMBERS: "No."] Yes, the figure is 90 per cent. I do not know of any organisation that speaks for non-unionists.
    Mr. Ashton: Will my hon. Friend examine the composition of the tribunals dealing with equal pay? Is he satisfied that there are enough women sitting on the tribunals which consider equal pay for women?
    Mr. Walker: No, we are not satisfied with the number of women on the panel. We have made a special effort to increase the number, so as to have regard to the requirements of the equal pay legislation. At present, women form only 22 per cent. of the total. We should very much like to see the number increased.
    Mr. Hayhoe: Does the hon. Gentleman accept that the TUC unions represent 90 per cent. of the union representation? Is it not wholly wrong to exclude the other 10 per cent. by not accepting nominations? Would it not be reasonable to allow, for example, 10 per cent. of the places on the industrial tribunals coming from the workers' side to be nominated from other sources? Certainly the TUC should not have a monopoly.
    Mr. Walker: I am sure that we have told the hon. Gentleman on previous occasions that we do not share that view.

    Icelandic Fisheries Agreement
    Mr. Brothertonasked the Secretary of State for Employment if he will make a statement about compensation to be paid to the fishing industry following the recent agreement with Iceland.
    Mr. James Johnsonasked the Secretary of State for Employment whether he has yet made a decision regarding the amount of compensation to be given to the trawling industry consequent upon the Icelandic Agreement, following his talks with the British Trawler Federation and the Transport and General Workers' Union.
    Mr. Harold Walker: On 28th June 1976 my right hon. Friend the then Minister of Agriculture, Fisheries and Food, during the course of his statement on fisheries policy, said that we would discuss with the unions and employers the feasibility of an arrangement for compensating those fishermen whose employment was directly affected by the Oslo agreement. I put suggestions to representatives of the employers and the unions at a meeting in July, but after careful joint consideration of the issues involved they subsequently concluded, reluctantly but unanimously, that it was not practicable to devise a scheme.
    Mr. Brotherton: Is the hon. Gentleman aware that by far the best thing that he and his colleagues in the Government could do would be to recreate conditions in which our fishermen could go out again and catch fish? Will he bring this matter to the notice of his colleagues in the Government and make things easier for this presently hard-pressed industry?
    Mr. Walker: I am sure that the hon. Gentleman will recognise that that is not a question for me.
    Mr. Johnson: Notwithstanding the arrogant propaganda south of the Humber, will my hon. Friend confirm that both the vessel owners and the men find it difficult to identify those of our fishermen who may be affected by the Icelandic agreement? Would it not be

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    better if we got on as quickly as possible with decasualisation, so as to give our second-class citizens on the water the same conditions as those of workers on the shop floor?
    Mr. Walker: In the discussions to which I referred the Government made it clear that they were prepared to assist financially, but for a variety of reasons neither the unions nor the employers thought it was feasible or practicable to undertake a scheme such as the one we were suggesting. Nor could they find any alternatives. Perhaps my hon. Friend will be reassured if I tell him that I have had separate and further meetings with both sides of the industry about introducing a more stable employment pattern in the industry. The employers have expressed a willingness to embark, in their own words, on the road to decasualisation, with a number of reservations and qualifications.

    Training
    Mr. Hal Millerasked the Secretary of State for Employment what consideration he has given to making use of unemployed teachers and unused or under-utilised premises such as some colleges of education or further education for the purpose of providing training and retraining facilities, particularly for school leavers and older workers.
    Mr. Golding: I am informed by the Manpower Services Commission that considerable use is already being made of accommodation in colleges of further education for training under the Training Opportunities Scheme, and that further expansion in this field is expected. The use of such facilities is being further encouraged by the programme of grants and awards in support of additional training by industry, which is being operated jointly by the Training Services Agency and industrial training boards. The possibility of using vacant colleges of education premises will be kept under review. Suitably qualified unemployed teachers can be considered for vocational training posts within the Training Services Agency.
    Mr. Miller: I accept that use is made of colleges of education by the Manpower Services Commission, but is the hon.
    1108
    Gentleman satisfied with the co-operation between his Department and the Department of Education and Science in training matters, especially the proposal of the Training Services Agency to build a new training centre at Redditch?
    Mr. Golding: I can give the assurance that there is close co-operation between the DES and my Department. We are satisfied that it is valuable to provide the centre to which reference has been made.
    Mr. Hooson: As so many of our young people are now unemployed, and in view of the present circumstances of the country, is this not a situation calling for emergency action and much more cooperation between the hon. Gentleman's Department and the Department of Education and Science?
    Mr. Golding: There has been close co-operation between my Department and the Department of Education and Science, and, indeed, the Manpower Services Commission. We have now approved 145 job creation projects specifically for teachers, and 1,250 teachers are now employed on them, being engaged in organising play groups, educational theatres and the like.
    Mr. Robert Hughes: But do not the Question and the Answer show that current Government policy of cutting public expenditure is running counter to the idea of my hon. Friend's Department for getting full employment?
    Mr. Golding: The Government do not accept that point of view. We believe that it is in the long-term interests of employment that public expenditure growth should be cut.
    Mr. Wigley: In view of the number of teachers now unemployed, will the hon. Gentleman and his colleagues consider advising local authorities to relax the restriction on grants so that they can undergo training courses for which grants may not otherwise be available?
    Mr. Golding: The positive response of the DES to the shortage of jobs for teachers has been to discuss and to inquire into the possibility of retraining teachers for jobs in education where their skills are in short supply.

    ANIMALS (ENTRY CONTROL)
    Mr. Adleyasked the Prime Minister if he is satisfied with the coordination between the Home Office, the Ministry of Agriculture, Fisheries and Food, the Treasury and the Department of Health and Social Security over the control of entry of animals into the United Kingdom in contravention of the animal quarantine regulations; and if he will make a statement.
    The Prime Minister (Mr. James Callaghan): Yes. I understand that the anti-rabies defences are judged so far to have been successful, but the Government are ready to strengthen them if this is found necessary.
    Mr. Adley: Is the Prime Minister aware that the overwhelming majority of cases in England and Wales that come before the courts are heard by magistrates' courts, and that those courts do not have the power to imprison people? As the maximum fine of £400 represents a chance considered worth taking, especially by foreigners paying in devalued pounds, will the right hon. Gentleman accept the suggestion for another addition to his Queen's Speech, namely, a short enabling Bill to give magistrates the power to imprison people who commit this selfish crime?
    The Prime Minister: I know that the hon. Gentleman's constituency is in the forefront on this matter. If he does not mind my saying so, I think that he is performing a public service by keeping this matter in front of the House from time to time by means of his Questions.
    Mr. Marten: Make him a PPS.
    The Prime Minister: No, thank you. There are far more people of quality behind me for that purpose. It is important that we should continually bring these matters to the attention of people in this country and overseas. As for the hon. Gentleman's specific suggestions, he may or may not have seen the consultation paper issued on 11th October. In addition to that, allow me to inform the House that the Home Office has just completed a review of penalties and matters of that sort. The hon. Gentleman would not expect me to anticipate the Queen's Speech, but that matter will come under
    1110
    consideration by the Government in due course. As for imprisonment and the other suggestions that have been made, they can all be taken into account in any conclusions finally reached.
    Mr. Powell: Is the right hon. Gentleman aware that apart from rabies there is the gross disparity between the Irish and British green pounds? At present that is one of the major causes of entry of animals into this country in breach of the regulations and endangering animal health. A statement on this subject is urgently awaited in Northern Ireland.
    The Prime Minister: I was under the impression that one of the consequences of the green pound was that animals that might have been slaughtered in Northern Ireland were being sent to the South. I hope that they are not getting any contamination from us. Maybe there is a two-way traffic with some gentlemen who are very concerned with private enterprise and who, having drawn the money in the South, find it not a bad idea to send it back to the North. I think that this matter would be better directed to my right hon. Friend the Minister of Agriculture, Fisheries and Food.

    WHITBY
    Mr. Brittanasked the Prime Minister whether he will pay an official visit to Whitby.
    The Prime Minister: I have at present no plans to do so.
    Mr. Brittan: Does the Prime Minister realise that if he were to visit Whitby many people there would tell him that if the Government wanted to show their determination to face economic realities they would not threaten the livelihoods of small ports such as Whitby by increasing costs and reducing flexibility of operation, but would, as a gesture of national unity and common sense, drop their ill-conceived, monstrously begotten, widely unpopular and grotesque Dock Work Regulation Bill?
    The Prime Minister: I congratulate the hon. Gentleman on his well thought-out supplementary question. It bears little relation to the state of public opinion in Whitby or anywhere else.
    Mr. Ron Thomas: Before my right hon. Friend makes any arrangement to go to Whitby, will he be good enough to deal with the serious situation at the other end of the corridor, where a group of non-elected people are doing their best to smash the legislation that has been passed by this Chamber?
    The Prime Minister: I have noticed that demonstration of national unity. I have no doubt that the other place will continue with its self-appointed task of mutilating Bills that have passed through this House. No doubt in due course the House of Commons will want to reconsider this matter.

    ECONOMIC POLICIES
    Mr. Skinnerasked the Prime Minister whether he remains satisfied with the effectiveness of the Government's economic policies.
    The Prime Minister: I refer my hon. Friend to the reply which I gave to the hon. Member for Christchurch and Lymington (Mr. Adley) on 12th October.
    Mr. Skinner: Does my right hon. Friend appreciate that one of the reasons why the Government are taking the wrong course of action, in my view, has to do with the constant over-selling of the public sector borrowing requirement? Does he accept that if the Government deficit were calculated in the way it is calculated in many of our competitor countries the percentage, as expressed in terms of gross domestic product, would be down to about 5 per cent. or 6 per cent.? On that basis, would it not be a sensible idea to abandon the public spending cuts and thereby reduce that £4,000 million which it is calculated is the cost to this country of 1½ million unemployed?
    The Prime Minister: I am aware that there are different conventions for calculating these matters. My hon. Friend is correct in saying that if we were to adopt what is called in some other countries, but not universally, a general Government deficit, the figures would look much better than they do now. We calculate them on the basis of the public sector borrowing requirement. This is to a large extent because we include in
    1112
    our public sector borrowing requirement the capital needs of nationalised industries and other public concerns which are genuine investments. Of course, these must come from savings in one form or another, or from borrowings. It is to that central point that the Government are having to direct their attention. That is why the public sector borrowing requirement is now under such close scrutiny.
    Mr. Pardoe: Would the Prime Minister care to confirm that the Government's policy is still to increase the money supply by only 12 per cent. this year, bearing in mind that it has already increased by 10 per cent.? Is it the Government's policy to increase it by only 2 per cent. for the rest of the financial year? Would the right hon. Gentleman spell out in clear and precise detail exactly what the consequences for the British people in terms of employment and living standards would be if the money supply rose by only 2 per cent. over the next six months?
    The Prime Minister: I am not absolutely sure that the hon. Gentleman has got the figure right. Perhaps it would be better if he were to table a Question to the Chancellor. It is not my impression that the money supply has gone up by 10 per cent. this year so far overall. That figure can be corrected if the hon. Gentleman will table a Question. As to the general guidelines, the answer is "Yes, it is the Government's view that 12 per cent. is the appropriate figure for the rise in the money supply during the course of the current year". It has increased rather more than that during the first six or seven months of the year. Success achieved in controlling this will have an impact on the sales of Government stock to finance the public sector borrowing requirement, among other matters. I hat, in turn, will have an impact, in due course. I hope, on interest rates.
    Mr. MacFarquhar: In view of my right hon. Friend's clear interest in the role of education and its connection with the furtherance of the Government's economic policies, will he expand on the statement in his speech yesterday that there should be an improvement in relations between industry and education?
    The Prime Minister: I have drawn the attention of hon. Members to this problem on many occasions. I am gratified to see

    1113
    that it is being taken up by both sides. I am not saying that the responsibility rests wholly on one side. There are certainly employers who feel that the education system is not producing people with the basic knowledge that they need when they are recruited. On the other hand, some parts of the education service feel that employers could do more to bring their requirements to the notice of the education service. I think I have succeeded in my objective of starting a debate—indeed, it started before I ever said a word, thanks, I think, to some infighting that went on somewhere, which I do not know much about. I hope that the discussions will continue. I am now considering ways in which we can focus them on some of these issues.
    Mrs. Thatcher: As the Question refers to the whole range of economic policies, will the Prime Minister give one of the key forecasts which he has so far withheld but to which he must have addressed his mind, namely, what is the peak level of unemployment that we are likely to face if he pursues the present policies of this Government?
    The Prime Minister: The right hon. Lady knows full well that from the days of lain Macleod onwards no Minister of Labour or his successor has ever given a forecast of that sort. I do not propose to depart from that now.
    Mrs. Thatcher: Is the Prime Minister aware that the Leader of the House, when he was Secretary of State for Employment, gave such a forecast and said that unemployment would not exceed 1¼ million? I am afraid that the Prime Minister is out of date. Has he not addressed his mind to this question, or will he not give us the answer?
    The Prime Minister: If the right hon. Lady is right—and of course I take it that she is—I certainly am out of date on that score. [Interruption.] And maybe many more matters. I do not deny any of these things. Unlike Tory Members, I do not claim to he absolutely perfect on everything. There are always estimates of unemployment, as the right hon. Lady knows. Frequently, as with so many other forecasts, they are totally incorrect.
    Mr. Kilroy-Silk: Does my right hon. Friend accept that one sure way to in-
    1114
    crease the level of unemployment would be to adopt the policies proffered by the Opposition? Does he realise that the level of national unemployment is disturbing, particularly in regions like Merseyside, and especially among school leavers? Will he say what specific measures will be taken in relation to the regions and in relation to school leavers in those areas?
    The Prime Minister: I have no doubt —and I think that the Opposition have no doubt—that the adoption of Opposition policies would lead to substantially increased unemployment. If that is the case, the Opposition should be a little chary about some of their proposals. On the general question of unemployment, it is our view—I see no reason to depart from this—that if we are to secure the growth of new jobs our major task over the next three years is to overcome inflation—to reduce it below its present level despite the great difficulties arising from the depreciation of sterling and from increased costs of raw materials and commodities and problems of this sort. If we get inflation down we are on the way to overcoming the unemployment problem. As for school leavers, my right hon. Friends have announced a number of schemes to help them. We shall go on considering what more can be done.
    Mr. Tapsell: Is the right hon. Gentleman aware that almost everyone in this country and overseas who has considered the matter believes that this nation of ours is drifting, day by day, steadily towards an economic disaster? When will the Government bring forward the comprehensive package of measures necessary to avert this?
    The Prime Minister: I do not believe anything of the sort. When I visit factories and workshops throughout the country, as I do continually, and see the products emerging from them I realise that that sort of alarmist and scare talk totally misrepresents not only the truth but the spirit of the British people. We are faced with difficult and deep-seated problems that have arisen over a period of 30 years and the Government are now overcoming them, thanks to the full co-operation of the trade union movement, and I am glad to see that at last that remark does not arouse the jeers

    1115
    that it used to arouse from the Opposition. Provided we stand by the industrial strategy, provided we work as we must to overcome inflation, this country has a very good future. But we must stick by the policy that we are following.
    Mr. Christopher Price: Reverting to my right hon. Friend's speech yesterday, when he suggested that our education system provided part of the cure for our economic ills, is he aware that some Government supporters have considerable concern and apprehension that we load on to our schools too much of an exclusively economic rÔle? Does he not agree that it would be a pity if, in the debate that he has initiated, we started a movement which made the teachers in our schools, who are doing a very good job, the scapegoat for the nation's economic ills?
    The Prime Minister: Nothing that I have said so far should lead to that conclusion. I have pointed out some worrying factors, namely, the large number of vacancies—I am told, 30,000 or so—for scientific and technical students in our universities and polytechnics. This is a very serious matter, which the nation should consider. I have pointed out the lack of co-ordination that seems to exist between industry and education. I have asked that there should be better linkage between the two, and I shall work to that. But I do not put anyone in the dock on this. We, as a nation, are too fond of trying to find scapegoats and of putting people in the dock. We have to discover what is wrong and to work towards putting it right.
    Mr. Prior: How can the Prime Minister justify his remarks at a time when unemployment since the present Government came to office has gone from 2·7 per cent. to 6·1 per cent., when the pound has fallen from $2.40 to $1·65, and when inflation is rising faster than when he and his right hon. and hon. Friends first took office in 1974? Would it not be better for the Government, if they admit their failures, to change their economic policies or get out of office?
    The Prime Minister: Any change to the Opposition's policies would raise unemployment, increase confrontation, and return us to the three-day working week. The interesting feature is that
    1116
    the Opposition know in their hearts that the policies that we are following are the only ones likely to save the country, and they know perfectly well that if some of their proposals were adopted the large increase in unemployment that would follow would result in serious confrontation and would increase social tension, perhaps beyond limits that are endurable.
    Mr. Prior: What the House knows in its heart is that these levels of unemployment are not good enough for the British nation—[Interruption.] Furthermore, the House and the country know—[Interruption.]
    Mr. Speaker: Order. I cannot hear what the right hon. Member for Lowestoft (Mr. Prior) is saying.
    Mr. Prior: The House and the country also know that if the policies of cutting public expenditure had been taken at the right time, unemployment would not have risen to its present level.
    The Prime Minister: I note that the right hon. Gentleman says that the level of unemployment is unacceptable, and I agree with him. However, I do not understand how he and his party can go on advocating policies designed to have the effect of increasing unemployment. If I may give just one example of this, if the Opposition's votes on the motor car industry had been carried, the industry would now be in a state of total disruption.

    EARLY-DAY MOTIONS
    Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker. There are two categories of error which appear on the Notice Paper. One is where, through carelessness, the printer omits words or, indeed, complete lines, as has happened in the case of a motion tabled yesterday by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton). There are also cases where, apparently, the printer believes himself to be at liberty to doctor motions which have been accepted by the Table Office before printing them.
    I must ask you to issue definite instructions to the printer that he is not to doctor or alter motions which have been accepted by the Table Office and, where

    1117
    this has been done, to reprint them in the form in which they were tabled and accepted by the Table Office.
    I brought into your office this morning a photostat of a motion which I tabled last night and which was accepted. It has been altered by the printer, I am informed by the Table Office, so that it is now nonsense. I must ask that it be reprinted in the form in which I tabled it on my behalf and that of six of my colleagues, in which form it read, under the heading "South West Water Authority as follows:
    "That this House, recognising that neither the consumers nor many of their elected representatives in Parliament or in local authorities retain any confidence in the ability of the South West Water Authority to discharge its proper functions in an efficient, understanding and acceptable manner while its existing Chairman remains in office, calls upon the Secretary of State to replace the present Chair man before 1st January 1977 with somebody who can restore public confidence."
    Sir David Renton: Further to that point of order, Mr. Speaker. Although I accept that one Renton is as good as another, may I point out that the motion referred to in my hon. Friend's first example was tabled by my hon. Friend the Member for Mid-Sussex (Mr. Renton)?
    Mr. Tim Renton: Further to that point of order, Mr. Speaker. I wish to support what my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said. The motion relating to his first complaint was tabled by me and its purpose was to call for the instant dismissal of the Chancellor of the Exchequer. As it reads from the printer, it appears to suggest that the Chancellor of the Exchequer should last
    1118
    for only a few weeks. That was not our intention.
    Mr. Heffer: May we assume that the motion is now a hybrid?
    Mr. Speaker: The hon. Member for Tiverton (Mr. Maxwell-Hyslop) gave me notice of this intention to raise this matter. There was a mistake in the printing. It will be put right. I am quite sure that the whole House may have confidence that the printers would not seek to doctor or alter any motion. What the hon. Member for Tiverton said will he read, and I give the assurance that the necessary correction will be made.

    STATUTORY INSTRUMENTS &C.
    Mr. Speaker: In order to save the time of the House, unless there is any objection I propose to put one Question on the four motions relating to Statutory Instruments.
    Ordered,
    That the Firearms (Variation of Fees) Order 1976 (S.I. 1976, No. 1400), be referred to a Standing Committee on Statutory Instruments, &c.
    That the Firearms (Variation of Fees) (Scotland) Order (S.I. 1976, No. 1446), be referred to a Standing Committee on Statutory Instruments. &c.
    That the Public Health (Infectious Diseases) (Amendment) Regulations 1976 be referred to a Standing Committee on Statutory Instruments, &c.
    That the Public Health (Infectious Diseases) (Scotland) (Amendment) Regulations 1976 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Michael Cocks.]

NATIONAL SERVICE
3.40 p.m.
Mr. Anthony Steen (Liverpool, Wavertree): I beg to move,
That leave be given to bring in a Bill to require local authorities to prepare schemes for encouraging young people to create their own jobs for community betterment; to provide for national publicity of the need for employers to make available on-the-job training opportunities; to authorise the provision of assistance for residential placements in public and voluntary establishments; and for connected purposes.
I am deeply concerned about the stark facts which emerge from the monthly unemployment statistics for young people. I know that every hon. Member, whatever his political affiliation, shares my concern and wants to see an end to this situation. That is the aim of my Bill, and I hope that I shall receive the wholehearted support of the House.
The first point to emphasise is that the level of unemployment among school leavers is not transient or short term. It is a long-term problem.
In 1968, there were 28,000 young people out of work. Today there are 200,000 school leavers who have never had a job. We must add to that figure the 416,000 young people under 25 who are out of work, making a tragic total of 616,000 young people under 25 without work. More significant is the proportionally severe increase in the number of young unemployed workers within the total of just under 1½ million unemployed.
Another way to grasp what has happened is to compare the unemployment figures for this year with those of July 1972—an equivalent point in the previous trade cycle. They have doubled for the under-25s, trebled for school leavers and risen by 42 per cent. among those over 25.
Another deeply worrying aspect of the current mass unemployment is the number of young people out of work for long periods. Grave personal and social damage lies behind the July 1976 data which show that more than 190,000 young people under 25 have been unemployed for more than three months.
Without the Government's job-creation scheme, work experience programme and other measures, the figures would be higher. The Government have spent £400
1120
million doing something for the young unemployed, and this is welcomed by hon. Members on this side of the House. However, more than 500,000 young people under 25 are without work, and this is also gravely worrying to us. These are the dimensions of the crisis at which the Bill is aimed.
As long as the Government say that the unemployment situation is short-term, the problem will get worse as the short-term jobs created by Government schemes end and the young people come back to the employment market.
What are we to say to these young people? Are we to pretend that they are not there and banish them into a kind of Dante's Inferno, letting them drift round and round our heavily-populated urban areas?
Before hon. Members decide how to vote, I am sure that they will have careful regard to the consequences. What are the alternatives and how real a possibility are they?
My Bill recognises that every young person has a contribution to make to society, even if he has not attained academic distinction, and that there are endless opportunities for the young to earn their keep and to help sustain the work ethic. When they find paid work, these young people, who have not been at work before, do not know how to go about it. A response to the boredom and sense of frustration of the young lies at the root of my Bill. It will give every young unemployed person a chance to do something.
First, it gives every school leaver the automatic right to create his own work. The aim here will be to develop a sense of initiative by suggesting that he looks around his own neighbourhood to see what service of a personal nature he could give for community betterment. Instead of decisions being made by bureaucrats, the opportunity would be given to the young people themselves to do something positive to build a better society. Local authorities, instead of dreaming up schemes and using the young for their own purposes, would be told to provide a framework in which the young could develop their own schemes. The Government Job Shops would also help by locating voluntary organisations who were in need of extra help.

1121
Secondly, the Government and local authorities would make a national appeal to every citizen asking whether he could include a young person in his work. This would be a challenge to the whole community by direct advertisement to make available job training opportunities.
Thirdly, there would be up to a year's placement in Britain—a Voluntary Service Overseas in reverse. It would include residential placements in national and local institutions, children's homes, community centres and homes for the elderly and disabled where young people could play a part in making life happier for someone else.
Each job experience will bring young people into contact with a range of other people, adding to their education and training. Training such as this, unlike that for specific jobs, would help young people to turn into society rather than on society.
The unions need not take fright. The work created will not be at the expense of the regular work force, since they will be jobs which the employer was not carrying out and had no intention of carrying out because neither the hands to do it nor the money to pay for it were available.
How shall we pay these young people? We cannot do what the job creation programme does and pay up to £45 a week to 22-year-olds. Making available further sums of money is impracticable and inflationary. We must face reality and say that cash benefits will be paid only when there is no work to be done.
School leavers who have never had a job have never paid National Insurance stamps either. How can we justify paying them £12 a week for doing nothing? They think we are crazy, and perhaps they are right.
Many already think that it is their right to draw unemployment pay for doing nothing. Then they want more money and do not want to do anything in return. If a young person without enough stamps for benefits can get work either through the hydra-headed Government schemes or under the three provisions of this Bill, but decides that he does not want to work, we should say that he is free not to work, but that the State is then equally free not to pay him. Of course, if a young person were ill or
1122
handicapped, he would get provision from the State, but surely no provision should be made if there is work to be done and the young person concerned is physically and mentally fit. This is one of the most serious points in our history and we should surely re-assess the way in which we hand out unemployment pay.
An active work force of young people dedicated to comunity betterment could have a tremendous effect and help to restore confidence at home and abroad.
My Bill will positively help the 500,000 young people who are crying out for a chance to contribute to our society.
3.48 p.m.
Mr. Robert Kilroy-Silk: The hon. Member for Liverpool, Waver-tree (Mr. Steen) said that this was a time for facing reality. He is right and the reality is that we shall not see any more of this Bill after today—just as we shall see no more of his three previous phantom Bills, none of which has been printed.
It is surprising that the hon. Member for Wavertree should be expressing this great concern about unemployment, particularly in the area which he and I represent and yet at the same time be responsible, with his right hon. and hon. Friends, for having voted for increases in unemployment in British Leyland, Chrysler, Alfred Herbert—
Mr. Speaker: Order. This is not the time for a debate. The hon. Member for Ormskirk (Mr. Kilroy-Silk) must oppose the Ten-Minute Rule Bill, if that is what he is seeking to do, and not broaden it into a debate on the whole economic situation.
Mr. Kilroy-Silk: I am opposing the Bill and I am questioning the motives and intentions that lie behind it.
I do not believe that it will be a contribution to solving the unemployment problem. If the hon. Member for Waver-tree is concerned to do that, he should have acted with his feet and his votes in the past. Not only is he not concerned in reducing the level of unemployment but he and his hon. Friends want cuts in public expenditure which would increase unemployment.
Coming specifically to the Bill, we have been given a series of nebulous ideas with no concrete specifics about them. The hon.

1123
Gentleman's attitude is patronising and condescending towards those who are unemployed through no fault of their own. The intention behind the Bill, although we have not heard it today, is to set up a series of what the hon. Gentleman on a previous occasion referred to as dolls' hospitals to which we can shunt the unemployed school leavers to learn to mend dolls. The hon. Gentleman has also suggested that they could collect waste paper and clear derelict beaches.
Is that the way in which we want to solve the unemployment problem among young people? Are these the kind of skills that we are expecting them to accumulate through this work experience?
The Hon. Gentleman, not content with being patronising and condescending by setting the young unemployed menial and degrading tasks, is also saying that he will compel them to undertake these tasks.
Here we have the typical ethos of the Conservative Party faced with the problem of unemployment. If we give approval to the Bill, we shall be back to the ethos and ethics of the poor law and the workhouse: "You will work at the kind of things that the hon. Member for Liverpool, Wavertree wants you to do or you will not receive unemployment pay you will clear up the waste paper and the beaches or you will not get any means-tested benefit."
That is what we are being asked to support. We are not asked to support any means of giving young people proper skills and training or to extend apprenticeships so that young people can make a valuable contribution to industry, to society and to themselves.
The Bill goes even further and suggests the setting up of work camps. The hon. Gentleman did not talk about the barbed wire to be put round them or the sections of the country to be set

Division No. 328.]

AYES

[3.54 p.m.

Adley, Robert

Berry, Hon Anthony

Churchill, W. S.

Alison, Michael

Blaker, Peter

Clegg, Walter

Arnold, Tom

Boscawen, Hon Robert

Cooke, Robert (Bristol W)

Atkins, Rt Hon H. (Spelthorne)

Braine, Sir Bernard

Corrle, John

Awdry, Daniel

Brown, Sir Edward (Bath)

Costain, A. P.

Baker, Kenneth

Bryan, Sir Paul

Douglas-Hamilton, Lord James

Beith, A. J.

Budgen, Nick

Drayson, Burnaby

Bennett, Sir Frederic (Torbay)

Burden, F. A.

Durant, Tony

Bennett, Dr Reginald (Fareham)

Butler, Adam (Bosworth)

Eden, Rt Hon Sir John

Benyon, W.

Carlisle, Mark

Edwards, Nicholas (Pembroke)

aside for the recalcitrant youths who do not want to go on his jamboree of collecting waste paper. Again, we have the whole ethos of the Conservative Party set out in the Bill.
I deliberately disputed the hon. Gentleman's motives at the beginning of my speech. I suggest that he is not concerned about unemployment or the many thousands of unemployed school leavers on Merseyside. The policies in the Bill and of the Opposition Front Bench, which the hon. Gentleman supports, would result in more nurses, teachers, social workers and school leavers on Merseyside being unemployed today than in the past.
I hope that the House will treat the Bill with the distaste and disdain that it deserves and not give leave for it to be introduced.
Mr. Michael English: On a point of order, Mr. Speaker—before you put the Question. The whole procedure of the House is in the end based on trust. The hon. Member for Liverpool, Wavertree (Mr. Steen), whom I thank for his courtesy in telling me that he proposed to introduce the Bill today, has on three previous occasions used this procedure of the House and, the House having given him leave, has not produced a Bill. Therefore, I suggest that you should not put the Question unless the hon. Gentleman assures the House that he will on this occasion produce a Bill.
Mr. Speaker: That is not a point of order, because the House gives permission, not me.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
The House divided: Ayes 138, Noes 144.

Elliott, Sir William

Lamont, Norman

Rhys Williams, Sir Brandon

Eyre, Reginald

Langford-Holt, Sir John

Ridsdale, Julian

Fairbalrn, Nicholas

Latham, Michael (Melton)

Rifkind, Malcolm

Farr, John

Lawrence, Ivan

Roberts, Michael (Cardiff NW)

Finsberg, Geoffrey

Le Marchant, Spencer

Roberts, Wyn (Conway)

Forman, Nigel

Loverldge, John

Rodgers, Sir John (Sevenoaks)

Fowler, Norman (Sutton C'f'd)

Luce, Richard

Ross, Stephen (Isle of Wight)

Freud, Clement

McAdden, Sir Stephen

Rossi, Hugh (Hornsey)

Gilmour, Rt Hon Ian (Chesham)

MacCormick, Iain

Rost, Peter (SE Derbyshire)

Goodhew, Victor

Macfarlane, Neil

Shaw, Giles (Pudsey)

Goodlad, Alastair

MacGregor, John

Shepherd, Colin

Gow, Ian (Eastbourne)

Madel, David

Silvester, Fred

Gower, Sir Raymond (Barry)

Marshall, Michael (Arundel)

Sims, Roger

Grant, Anthony (Harrow C)

Marten, Neil

Skeet, T. H. H.

Gray, Hamish

Mather, Carol

Smith, Cyril (Rochdale)

Griffiths, Eldon

Meyer, Sir Anthony

Speed, Keith

Grylls, Michael

Miller, Hal (Bromsgrove)

Spence, John

Hall, Sir John

Mitchell, David (Basingstoke)

Spicer, Michael (S Worcester)

Hall-Davis, A. G. F.

More, Jasper (Ludlow)

Sproat, fain

Hamilton, Michael (Salisbury)

Morgan, Geraint

Stainton, Keith

Hannam, John

Morrison, Charles (Devizes)

Stanley, John

Havers, Sir Michael

Morrison, Hon Peter (Chester)

Steel, David (Roxburgh)

Hayhoe, Barney

Nelson, Anthony

Stradling Thomas, J.

Hicks, Robert

Neubert, Michael

Thatcher, Rt Hon Margaret

Higgins, Terence L.

Newton, Tony

Trotter, Neville

Hooson, Emlyn

Nott, John

Wainwright, Richard (Colne V)

Howell, Ralph (North Norfolk)

Page, John (Harrow West)

Wall, Patrick

Howells, Geraint (Cardigan)

Page, Rt Hon R. Graham (Crosby)

Walters, Dennis

Hunt, David (Wirral)

Pardoe, John

Warren, Kenneth

Jessel, Toby

Pattie, Geoffrey

Weatherill, Bernard

Jones, Arthur (Daventry)

Penhaligon, David

Whitelaw, Rt Hon William

Jopling, Michael

Price, David (Eastleigh)

Wiggin, Jerry

Kaberry, Sir Donald

Prior, Rt Hon James

Winterton, Nicholas

Kershaw, Anthony

Pym, Rt Hon Francis

King, Evelyn (South Dorset)

Raison, Timothy

TELLERS FOR THE AYES:

King, Tom (Bridgwater)

Renton, Rt Hon Sir D. (Hunts)

Mr. Anthony Steen and

Kitson, Sir Timothy

Renton, Tim (Mid Sussex)

Mr. Jonathan Aitken.

Knight, Mrs Jill

NOES

Archer, Peter

Forrester, John

Maynard, Miss Joan

Ashton, Joe

Garrett, John (Norwich S)

Mendelson, John

Atkins Ronald (Presto? N)

Garrett, W. E. (Wallsend)

Mikardo, Ian

Atkinson, Norman

George, Bruce

Miller, Dr M. S. (E Kilbride)

Bates, All

Golding, John

Moonman, Eric

Bean, R. E.

Graham, Ted

Morris, Charles R. (Openshaw)

Bennett, And'ew (Stockport N)

Grant, George (Morpeth)

Murray, Rt Hon Ronald King

Bidwell, Sydney

Grocott, Bruce

Nowens, Stanley

Bishop, E. S.

Hamilton, James (Bothwell)

Noble, Mike

Booth, Rt Hon Albert

Harper, Joseph

Ogden, Eric

Bottomiey, Rt Hor Arthur

Harrison, Walter (Wakefield)

Pendry, Tom

Boyden, James (Blsh Auck)

Hatton, Frank

Price, C. (Lewisham W)

Brown, Hugh D. (Provan)

Heffer, Eric S.

Price, William (Rugby)

Buchan, Norman

Henderson, Douglas

Reid, George

Buchanan, Richard

Hoyle, Doug (Nelson)

Richardson, Miss Jo

Callaghan, Jim (Middleton & P)

Huckfield, Les

Roberts, Albert (Normanton)

Campbell, Ian

Hughes, Mark (Durham)

Robinson, Geoffrey

Cant, R. B.

Hughes, Robert (Aberdeen N)

Roderick, Caerwyn

Carmichael, Nell

Hughes, Roy (Newport)

Rodgers, George (Chorley)

Carter-Jones, Lewis

Irvine, Rt Hon Sir A. (Edge Hill)

Ross, Rt Hon W. (Kilmarnock)

Cartwright, John

Jackson, Miss Margaret (Lincoln)

Rowlands, Ted

Clarke, Kenneth (Rushcliffe)

Jenkins, Hugh (Putney)

Ryman, John

Clemltson, Ivor

Johnson, James (Hull West)

Sandelson, Neville

Cocks, Rt Hon Michael (Bristol S)

Kaufman, Gerald

Sedgemore, Brian

Cohen, Stanley

Kelley, Richard

Shaw, Arnold (Ilford South)

Colquhoun, Ms Maureen

Kilroy-Silk, Robert

Skinner, Dennis

Conlan, Bernard

Klnnock, Nell

Small, William

Corbett, Robin

Lamble, David

Spriggs, Leslie

Crawford, Douglas

Lamborn, Harry

Stewart, Rt Hon M. (Fulham)

Crowther, Stan (Rotherham)

Lamond, James

Stoddart, David

Davidson, Arthur

Latham, Arthur (Paddington)

Stott, Roger

Deakins, Eric

Lewis, Ron (Carlisle)

Strang, Gavin

Dempsey, James

Lipton, Marcus

Taylor, Mrs Ann (Bolton W)

Dormand, J. D.

Litterick, Tom

Thomas, Ron (Bristol NW)

Edge, Geoff

Loyden, Eddie

Thompson, George

Edwards, Robert (Wolv SE)

McCartney, Hugh

Tinn, James

English, Michael

McDonald, Dr Oonagh

Tomney, Frank

Evans, Fred (Caerphilly)

MacFarquhar, Roderick

Wainwright, Edwin (Dearne V)

Evans, Gwynfor (Carmarthen)

MacKenzie, Gregor

Walker, Harold (Doncaster)

Evans, loan (Aberdare)

McNamara, Kevin

Walker, Terry (Kingswood)

Ewing, Harry (Stirling)

Madden, Max

Ward, Michael

Fernyhough, Rt Hon E.

Mallalleu, J. P. W.

Watkins, David

Fletcher, L. R. (Ilkeston)

Marks, Kenneth

Watt, Hamish

Fletcher, Ted (Darlington)

Marshall, Dr Edmund (Goole)

Weetch, Ken

Weitzman, David

Willey, Rt Hon Frederick

Young. Sir G. (Ealing, Acton)

White, Frank R. (Bury)

Wilson, Gordon (Dundee E)

White, James (Pollok)

Woodall, Alec

TELLERS FOR THE NOES:

Whitehead, Phillip

Wrigglesworth, Ian

Mr. Stan Thorne and

Whitlock, William

Young, David (Bolton E)

Mr. J. W. Rooker.

Wigley, Datydd

Question accordingly negatived.

ORDERS OF THE DAY

  AGRICULTURE (MISCELLANEOUS PROVISIONS) BILL
  Order read for consideration of Lords amendments.
  Mr. Michael Jopling: On a point of order, Mr. Speaker. It seems to some of us that there is an anomaly in the Lords amendments to this Bill. While I realise that it is not for us to tell the other place how to conduct its affairs, the difficulty which has arisen is that if we examine the amendments which were made to the Bill in another place we find that they are all recorded in the list of amendments which have come down to us with the exception of one.
  In column 964 of the debates on the Bill in another place that amendment was moved and agreed by the House but it is not included in the list which has come to us. This gives rise to some confusion because that amendment is crucially important and if it is to remain in the Bill some of us will heartily welcome it.
  Since I discovered this situation a short while ago I have had the greatest assistance from the Table Office which has been extremely helpful. I understand that this is normal procedure and that this amendment is treated as a printing amendment. However, some of us might argue that it is a great deal more fundamental than that. Perhaps there could be some discussions between you Mr. Speaker, and the authorities in another place so that we do not find ourselves in such a situation again.
  Mr. Robin Maxwell-Hyslop: Further to that point of order, Mr. Speaker. When, in the past, there has been doubt in any one House about the decisions taken in another, it has been said that there are precedents for appointing a Committee to examine the Journals of the other place. May I move "That Mr. Jopling, Mr. Watt and Mr. English constitute such a Committee of this House"?
  Mr. Speaker: Order. I do not think that the hon. Gentleman can move that. It is a question whether I accept it in any case. His hon. Friend the Member for Westmorland (Mr. Jopling has a quick eye which has caught a discrepancy from the way in which we normally function, but I understand that the usual practice in relation to Lords amendments coming down to this House has been followed.
  I willingly undertake to follow up his suggestion that I should communicate with another place to ensure that there will be no further difficulties. However, I do not think there is any real difficulty today. Reference can be made to the amendment if hon. Members wish.

  New Clause A

    AQUACULTURE DEEMED TO BE AGRICULTURE
    Lords amendment: No. 1, in page 5, line 25, after Clause 4, insert New Clause A:
    "A.—(1) Aquaculture shall, for all purposes, be deemed to be a part of agriculture and all enactments applying to agriculture shall, as appropriate, apply to aquaculture.
    (2) Aquaculture is the culture and the harvesting of animals and plants in water."
    4.10 p.m.
    The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop): I beg to move, That this House doth disagree with the Lords in the said amendment.
    As the House will be aware, this clause was inserted during the Committee stage of the Bill in another place, being moved and supported by certain Members who are well known for their strong concern for the fish farming industry and their faith in its future. The Government recognise and respect their feelings but remain of the opinion that the insertion of the clause is not the best, or even an appropriate way to assist fish farmers. As a Front Bench Opposition spokesman commented during the debate in another place, it could produce legal complications and difficulties if it reached the statute book.
    I should like to refute the suggestion that the Government have been uncertain in their handling of this matter. We are well aware that existing laws are to a degree uncertain, and perhaps in some cases unsatisfactory, in their application

    1131
    to fish farming. That is understandable, given the very recent development of the industry. Over the past year the Departments concerned—that is the Ministry of Agriculture, Fisheries and Food and the Department of Agriculture and Fisheries for Scotland—have been discussing these and other questions with representatives of the industry to identify points of difficulty and consider how to deal with them. In Scotland, the opportunity has already been taken to use the recently enacted Freshwater and Salmon Fisheries (Scotland) Act 1976 to remove from Scottish fish farmers many of the constraints arising from the application to their activities of legislation designed to protect wild stocks. I expect these discussions to be resumed in the near future. The problems are diverse and I am satisfied that they need to be dealt with individually. A panacea such as the clause purports to be is not available.
    Thus, we do not consider that the clause would meet the needs of the fish farming industry. An even more cogent objection in our view is that the clause could be expected to entail additional Government expenditure. Clearly, this could not be accepted at the present time unless overwhelmingly strong arguments were advanced for it. But that is far from being the case. We must remember that this expenditure would be for the benefit of an activity which seems to be doing well and is rapidly expanding. Commercial interests arc participating with large resources at their disposal. Whatever the initial cost of the clause—a point on which its sponsors were unfortunately silent—it represents an open-ended commitment. That is a very important point.
    I find it strange that the arguments put forward by those speaking in favour of the clause rest upon drawing a simple analogy between aquaculture and agriculture. Both activities cover a wide field, and it is not clear which analogies are in mind. A substantial part of fish farming is related to restocking of water for angling and is not even primarily for the production of food. Quite apart from this, however, we consider that it is wholly wrong to legislate in this way even if the analogy were apt. What is required, and what has been lacking in the case advanced by fish farming interests, is a substantive economic
    1132
    case for subventions, and open-ended ones at that, to be made by the taxpayer.
    Our own economic analysis, based upon the limited data available, suggests that the forecast of production of farmed fish over the next decade or so have been optimistic, to put it mildly. The likelihood is that production even by the mid-1980s is extremely unlikely to provide more than a very small proportion of our total fish supplies. It should be remembered that such supplies as are likely to be available from fish farming are of fish at the top end of the market—salmon, rainbow trout, Dover sole and turbot—which are hardly realistic substitutes for the traditional species.
    I should like to stress that we are already assisting the industry in what I believe to be the most appropriate way, by providing a substantial programme of research and development work. In 1975–76 the Ministry of Agriculture, Fisheries and Food spent £500,000, and the Department of Agriculture and Fisheries in Scotland and the White Fish Authority spent nearly £250,000 each, and a smaller amount of relevant work was also done by the National Environment Research Council. The main aspects were related to the cultivation of marine fin fish—particularly turbot and Dover sole—and salmon; the control of disease, which is a major hazard of fish farming; and work on shellfish cultivation.
    The overall cost, at over £1 million, is a significant part of the total spent on fisheries research and development and a respectable proportion of the grand total of Government support for fisheries having regard to the scale of the industry.
    4.15 p.m.
    Mr. Maxwell-Hyslop: Before the Minister leaves his passing reference to the type of fish, may I ask whether he is saying that salmon, trout, Dover sole and turbot are not good fish, or is putting the proposition that because, when caught in the sea and rivers, they are expensive they would not be a good food if they could be produced cheaply by fish farms? I suspect that he is confused in his own mind about which proposition he is putting. Why is it meritorious to produce cod and not salmon in a fish farm? Has not the Minister lost the whole point—that we are talking about foods and not about a patrician diet or a proletarian diet?
    Mr. Bishop: I suggest that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) should not ascribe to me comments which I did not make. I claimed that salmon, rainbow trout, Dover sole and turbot were hardly realistic substitutes for traditional species. That is not a comment on whether one species of fish is better than another. If those who want the clause ask for help on the ground that it would increase the production of the fish we need, the other aspect I mentioned must be drawn to the attention of the House. I am not demeaning the species of fish I mentioned. I am saying that they are not the traditional species to which many people are accustomed.
    Mr. Charles Morrison: The Minister keeps referring to traditional species. Is he not aware that a century or so ago salmon was a traditional species in the sense that contracts for employment used to include a clause which stated that employees in certain types of employment should not be expected to eat salmon too often, because salmon was so common and cheap to provide? With fish farming, that might happen again.
    Mr. Bishop: There is no discrimination by the Government on the ground to which reference has been made. The claim that fish farming can supply a substantial amount of food in the near future is not sustained. It will take a considerable time for the research and development to proceed before the species I mentioned and the more traditional species become available.
    The Government are convinced that the clause is unsatisfactory in its wording and uncertain in its consequences. Moreover, it would give rise to expenditure from central Government funds. I am sure that in the present economic situation hardly any hon. Member would wish that to happen, apart from the fact that no one seems to have costed the effect of the clause. For these reasons, the Government must ask the House to remove the clause from the Bill.
    Mr. Deputy Speaker (Mr. Oscar Murton): I call attention to the fact that privilege is involved in this amendment.
    Mr. Francis Pym: I find that a disappointing reply which does not measure up to the needs of the situ-
    1134
    ation or of the industry. We had an interchange about traditional species and the fact that fish farming on the whole was not breeding traditional species. But everyone accepts that in view of the events in the seas and what is happening to the fish industry it would be a positive advantage to take steps to develop species which are not traditional, and I think that we shall have to do that. The House is indebted to the other place for inserting the clause and for compelling us thereby to address our minds to an a11 too little discussed topic.
    The Minister said that the industry has grown rather rapidly recently and is emerging. The reason why the other place insisted upon carrying the amendment was despair that the Government did not appear to be taking any action to help and to encourage this new method of providing food. We could be fairly accused of paying too little attention to fish farming, as yet a very small industry but one with a great potential. With the world in the throes of a population explosion, there is no aspect of food production that we can afford to ignore, and I agree with what my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said in his intervention.
    In the United Kingdom, we have not ignored fish farming altogether, but our efforts could and should be increased. I cannot give an exact estimate of the expenditure involved, and the Minister did not attempt to do so. But those who have tried to do so have shown that it is a modest amount and one which could be more than repaid by saving on imports. The cost of our research effort alone is about £1 million a year altogether, which is far from being a negligible sum. Yet there are far too many constraints and discouragements on investment in commercial production, and clearly the commercial production of fish is the object of the exercise. In the end, it is the volume and the value of the commodity produced that counts.
    The new clause is designed to remove some at least of these constraints, and consequentily to give a boost to this at present under-used source of protein supply. As legislation exists, there is discrimination that is unfavourable to fish farming as compared with agriculture, and there seems to be no good reason for that. It has happened by accident, by

    1135
    default, as it were, because there is no legislation on fish farming. We think that there should be.
    In view of the Government's commitment to extending the production of food from our own resources—the principle of which the Opposition entirely endorse—this would seem to be the appropriate moment to lift the handicaps suffered by fish farmers and to give them positive encouragement and support. The new clause would by no means meet the full requirements of the industry, but at least it would help. What is required is a separate Bill to establish a proper legal framework for fish farming and to put it on a sound footing with good prospects. But in the absence of a separate Bill, the new clause would clear up some of the difficulties now faced by the industry.
    First, there is the doubt about rating. It is true that the Lands Tribunal has found in favour of fish farming, but the Inland Revenue continues to make assessments and to oppose appeals. Obviously, that is a costly business in time and money both to the private person and to business as well as to the taxpayers. If aquaculture is treated as agriculture, as the new clause proposes, that argument will be resolved—subject, of course, to the frightening possibility that the Government might toe the line of the Labour Party National Executive and decide to rerate all agricultural land and buildings. We hope that they will do no such thing and that they will shortly announce that they have no intention of doing so.
    Secondly, there is the matter of capital grants. The position today is that assistance is available to the industry under the farm and horticulture development scheme, but in practice fish farmers have found it almost impossible to meet the requirements laid down in the scheme, and therefore little advantage has been taken of it. In other words, in practice there is little to take advantage of because the tests applied are too difficult for fish farmers to meet. The new clause would have the effect of bringing fish farming into the scope of the farm capital grants scheme, and that would be helpful and is certainly an urgently needed change.
    Thirdly—a small point—there is the confusion about the difference in treat-
    1136
    ment in obtaining goods vehicle licences. What is the case for treating fish and other farming differently in this respect? I do not believe that there is such a case. The trouble is that the Government have not yet got round to smoothing out this minor complication. The new clause would achieve it, however.
    Fourthly, would not the new clause overcome the disparity of treatment in compensation when stock has to be destroyed as a result of disease? As things stand, the position is, I believe, that an agriculturist is entitled to claim compensation when this type of disease afflicts him, whereas the fish farmer is not. It would be fair, reasonable and sensible treatment to look after them both on the same basis.
    There are many other problems faced by fish farmers with which the new clause does not and cannot deal. For example, there are the planning and procedural complications in setting up in the business the precise legal rights of an owner to protect his fish, and the definition of ownership and the definition of pollution. I do not think that anyone is sure how the Control of Pollution Act 1974 will be interpreted and implemented, and that is highly relevant to the fish farming business.
    For all these matters, and no doubt for many others, a separate Bill dealing specifically with fish farming will be necessary. I cannot think that such a Bill would be contentious, nor that it would contain any party political complications of any significance. What are the Government going to do? I appreciate the point the Minister made about the legislative difficulties of accepting the new clause, but I do not think that we should allow this potentially very significant new food producing industry to continue to struggle on its present unsatisfactory and meagre basis without firmer assurances by the Government that they intend to bring forward a Bill to deal with its difficulties.
    I quote some figures to put the industry into perspective. Our total production is a meagre 4,000 tons a year out of a world production of 6 million tons a year. Obviously, we have the capability, if we set our minds to it, of becoming top at least of the European league table. Our European partners treat agriculture and aquaculture on the same basis, and

    1137
    so our own fish farmers are suffering disadvantage compared with those in Europe, and it would be well to put that right. What is more, we have coastal sites which are ideally suited to the purpose of fish farming—one of our few natural resources, perhaps, which we should develop. If we could achieve this while remaining free of fish diseases which have become a serious problem in other countries, there is great scope for increasing food production in this way, and also for providing jobs in the more remote areas.
    Whilst I recognise the legal complications to which the new clause could lead, and accept that it has its limitations and would not meet all the needs, I believe that it would go some way towards meeting the needs. I do not think that we should simply accept what the Minister has said without obtaining from the Government a much clearer, much more definite assurance that it is their intention, as a result of any discussions they are having with the industry and others, to bring forward quickly a separate Bill, which I do not think could be politically contentious, so that we can pay much more attention to a potentially very useful source of protein supply.
    Mr. Anthony Kershaw: I do not mean this in a personal sense, but I regret the somewhat offhand reply with which the Minister has been provided by his Department on this very important matter. He seems to think that this is a matter of no importance, that the difficulty is too great and that in any case the Department has not had enough time to think about it. No one denies, however, that we are lagging behind in fish farming. Spain produces 180,000 tons from fish farming every year, France produces 100,000 tons and Japan—where, as we know, there are special reasons—produces over l million tons. We produce only 4,000 tons a year, yet this country has possibly greater opportunity than any of those other three countries.
    I was therefore amazed to hear the Minister say that not enough is known about fish farming and that an enormous input into research and development will be necessary before we know whether it will be possible to farm fish successfully in this country. Every other country does it without the slightest diffi-
    1138
    culty under far more difficult conditions than we have here. It has to be very expertly done, but there are no overwhelming difficulties which people in other countries have not managed to overcome. All that the Ministry can do this afternoon, however, is to say "It is all very difficult, and the research and development will be too much for us." We spend £80 million a year on importing fish into this country. It would be very easy to save that amount by farming fish here.
    4.30 p.m.
    The Minister said that we would be asking for very large handouts at a time of public restraint. It is, indeed, a time of public restraint, but that is not the fault of the fish farmers, and we are not asking for very large handouts. We are asking only that the fish farmers should be treated in the same way as other primary producers of food—for example, land farmers—are treated. I do not see why this cannot be done. I do not see how it can be denied that fish farmers could, with the right sort of assistance, produce food that we very badly need.
    I, like my hon. Friend, the hon. Member for Devizes (Mr. Morrison), regret that the Minister appears to be unaware that in Elizabethan times it was common for deeds of apprenticeship to lay down that the apprentices in London should not be fed more than three times a week on salmon taken from the Thames. It should be perfectly possible in the future for this fish, which is now so highly priced and is a luxury commodity, to take the place of cod, which is highly priced and is becoming a luxury commodity to some extent because of the policies of the Government.
    I believe that the reason why the Minister came to the House with such a skimpy little speech about this important matter is that the Ministry of Agriculture is far too occupied in thinking about the 200-mile limit, about cod and about the sea fishing which goes on all round us, and that it has not concentrated at all on this important matter which is right under its nose and ought to be exploited.
    Mr. Norman Buchan: I had not intended to speak in the debate. I seem to open most of my speeches by saying that. But I hope that we shall not have a vote on this amendment today, for the simple reason that

    1139
    most of us recognise that from a legislative point of view the clause in its present form cannot be implemented.
    The right hon. Member for Cambridgeshire (Mr. Pym) raised a number of important problems that would arise, apart from the great difficulty of adjusting the various kinds of legislation. I accept what he said about the importance of the subject, and it is for that reason that I hope that we shall not divide. I hope that the Government's viewpoint will be accepted, for on both sides of the House great stress has been put on this very important subject.
    We have to face the fact that the world population will double in the next 25 years and that, far from "Food from our own resources" being a far-sighted document, if anything it is too limited in relation to the kind of food procurement policy that we shall require for the remainder of the century in this country. A great deal of money will have to be put into carrying out this policy.
    There are those who say that we do not need to devote resources on any sort of scale to research and development. That argument is not correct. The right hon. Gentleman referred to the problems of disease and seemed to indicate that in this respect we should be better off by having fish farming. But, unfortunately, as soon as fish are brought together in large quantities in restricted areas, the problem of disease is magnified and not minimised.
    This is precisely one of the problems which we have encountered in experimentation in Scotland. The difficulties with salmon in fish farming can be imagined when we consider such diseases as ulcerated dermal necrosis, affecting salmon even in our free-moving rivers. The position is quite the reverse of what the right hon. Gentleman appeared to indicate.
    Another major problem is that so far an enormous amount of protein food has been required in order to get a proportionately small return. In the experiment at Hunterston we have plaice growing and maturing earlier because of the use of the waste warm water from the atomic power station. The problem is that although the fish are matured in two years
    1140
    instead of three, it takes 8 lb of protein feed to get 1 lb of fish in return.
    We have to remember that an important element in the drive to secure food for the population of this country and the world is the more efficient use of protein—for example, soya—in all sorts of ways. A great deal of research and development is necessary on these aspects before we try to equate or adjust all their agricultural legislation.
    On the west coast of Scotland a whole fish farm of plaice was wiped out as a result of the incidence of crabs. I believe that this happened in the constituency of the hon. Member for Argyll (Mr. MacCormick).
    The twin problems of sea water and fresh water fish farms both require a good deal of thought. It is not sufficient to say that we have a long coast line and that therefore it is easy to find sites.
    It was not the London apprentices, incidentally, who complained about the large amounts of salmon. It was the Glasgow apprentices in the eighteenth century. It was written into their articles that they would not be fed on salmon more than twice a week.
    I hope that from both sides of the House emphasis will be placed on the importance of putting money into fish farming, and into all the efforts which can be made to increase food production from our own resources in this country.
    One measure we could take in this respect would be to alter the balance in the Ministry of Agriculture, Fisheries and Food by calling it the Ministry of Food and Agriculture. That would indicate the proper balance that we require. It would not demote the position of British agriculture. On the contrary, it would enhance its importance. It would show that food production is recognised as one of the major questions that we shall face over the next half century in this country.
    I hope that the Opposition will not press the amendment to a vote, and that they will recognise that something must be done urgently about the problem of food production. I hope that we shall at least be united on that issue.
    Mr. Iain MacCormick: It must be most unusual to hear the hon. Member for Renfrewshire, West (Mr. Buchan) behaving in such a constructive

    1141
    manner and pouring oil over troubled waters.
    Mr. Buchan: It is quite usual. However, I forgot to attack the Scottish National Party.
    Mr. MacCormick: The hon. Member for Tiverton (Mr. Maxwell-Hyslop) was, I believe, quite correct in drawing attention to the Minister's throw-away remark, when he talked about fish being at the top end of the scale—to use a ridiculous pun in the circumstances. It betrayed the fact that the Minister has approached the whole problem from within his usual doctrinaire straitjacket.
    We have been reminded that apprentices used to grow tired of being fed on salmon. The Minister spoke of the traditional species as if they were something apart from other types of fish. If the Government continue with their present polices, we shall not have any of the traditional species left. There will not be any herring, cod or haddock. For this reason, we may well find ourselves forced in the next 50 years to produce exactly the kinds of fish normally eaten by rich people in restaurants in London. Surely if the Minister were true to his principles he would want his fellow workers to enjoy eating salmon, salmon trout, and so on. There were great paradoxes in virtually everything he said.
    Last Friday, together with members of all parties, and Members from another place, I attended a meeting of the Highlands and Islands Development Board in Inverness. One of the most important topics discussed was fish farming. It cannot have escaped the Minister's attention that, for simple geographical and physical reasons, much of the fish farming activity takes place on the West coast of Scotland. Indeed, as the hon. Member for Renfrewshire, West said, much of this activity takes place in my constituency of Argyll.
    I can foresee a time when virtually every inlet will be involved to some extent with some kind of fish farming. This must happen. It is odd that the Government are not playing a more active part in ensuring that it happens.
    I was interested in what the right hon. Member for Cambridgeshire (Mr. Pym) said about the rating problem. He must have been speaking from a purely English
    1142
    point of view, because in Scotland the rating problem certainly has not been solved.
    Fish farmers in Scotland suffer severe problems in respect of activities in the agricultural sector. In the absence of an absolute Government commitment to remove that disadvantage from Scottish fish farmers, I hope that the House will divide on this issue and ensure that something is done about it.
    Mr. Pym: May I explain to the hon. Gentleman that the Bill does not deal with Scotland. That is why I did not deal with the Scottish aspect of rating.
    Mr. MacCormick: I accept what the right hon. Gentleman says. He may also appreciate that at present the Bill gives us the only possible springboard that we have for talking about this subject. We want to give it as good an airing as possible. Every fish farmer in my constituency has written to me about this debate. They want to see something happen, and they want to hear that the Government will be prepared to do something about it.
    It has always been disappointing to me that, even when the whole country is tottering as near as possible to bankruptcy, time and again all hon. Members find it difficulty to get the go-ahead in relation to planning matters, and so on. That applies in rural areas to fish farming, which could help the whole country in the future and give employment to the people now. We want the Government to give a clear commitment to help fish farming, which would help not only the small communities in my constituency but the whole nation in days to come.
    Mr. Buchan rose—
    Mr. Deputy Speaker: I think the hon. Gentleman has missed his chance. The hon. Member for Argyll (Mr. MacCormick) has sat down.
    Mr. Buchan: On a point of order, Mr. Deputy Speaker. Perhaps there is a printing error in the Bill, because it clearly states—
    "this Act does not extend to Northern Ireland".
    In view of the statement that the measure does not apply to Scotland, perhaps that can be cleared up.
    Mr. Deputy Speaker: I understand that parts of the Bill exclude Scotland and that other parts of the Bill include Scotland.
    Mr. Maxwell-Hyslop: We are dealing with a serious matter in a context in which we as a nation import large quantities of food for which we simply have not the foreign currency available. That is one of the principal reasons that we are in the financial crisis in which we find ourselves.
    The Minister has made the sort of unimaginative and reactionary speech that one has come to expect from Socialists and from this Government in particular. It was the sort of speech which would have been produced to explain why we should still walk rather than travel in motor cars or why no technological industry in this country should be established and that we should continue as we were. It was the sort of speech to explain why we should weave by hand, or why we should cultivate the land by hand rather than using draught animals, or eventually, tractors.
    Even the Minister must be ashamed of his contribution to this debate. He will probably feel ashamed too late—perhaps when he looks back, rather than in the course of the debate. As to his comments about fishing, I detected, no perspicacity of thought, with just a little jealousy. Perhaps the hon. Gentleman associates salmon with something that he cannot afford. If salmon is mass produced in fish farms, it is likely that a large spectrum of people will be able to afford it. The Minister's resentment against turbot, and against trout, is not rational. It is just resentment, and nothing more than that. He has not criticised these fish on the basis of their value as an ancillary part of our diet. He has just presented it as if it is self-evident that these are types of fish which may not seriously be considered as offering potential for the diet of this country.
    If the hon. Gentleman wants to put forward the argument that there is a deficiency in protein or fat, or the other attributes of the food, he is perfectly at liberty to advance that argument. But he has not done so. I suspect that they are in his category of "jealous" fish—fish which must not be produced because
    1144
    someone could enjoy eating them, which would be unforgiveable.
    4.45 p.m.
    Many of the traditional fish will not be available within the next 20 years, as herring and cod are fished out. If we are doomed to live with traditional fish, we shall be living without fish. It did not seem to occur to the Minister that unless he takes urgent action, mackerel will be in the same class, too. We may well be facing a situation, not in 15 years' time, or 10 years' time, but in five years' time, where if our fish is not produced in fish farms, we shall have no fish to eat. That is why there are two Select Committees considering this subject at the present time—the Expenditure Committee's Trade and Industry Sub-Committee and the Sub-Committee of the European Communities Secondary Legislation Select Committee, which my hon. Friend the Member for Devon, West (Mr. Mills) has been chairing.
    I hope that the Minister, when he gets back to his Department, will express himself very strongly to whoever it was who produced the ludicrous brief for him today and will use his time during this debate to slip a note to his Chief Whip stating "I have been led up the garden path. I realise it now. I certainly realise that this is not just an acceptable amendment—it is an essential one. I should have picked this up long ago".
    The House of Commons still has a function, part of which is to educate Ministers should they neglect important topics. I hope that in the course of this debate the education of the Minister, begun about 25 minutes ago, will continue to a useful fruition.
    Mr. Mark Hughes: I should like to follow the usual temperate tone of the hon. Member for Tiverton (Mr. Maxwell-Hyslop), for it is quite clear that no one on our side of the House underestimates the contribution that fish farming, both freshwater and marine, can make to the wellbeing of the country.
    What I would like to draw to the attention of my hon. Friend, and of hon. Members opposite, is the particular problem associated with our membership of the Community and certain recent proposals in terms both of international fishing and of freshwater agriculture, which have come from Europe. There are already, or

    1145
    there will be shortly, grants available for research and development if, and only if, this country gets its legislation right to enable our fish farmers to apply for them. The real difficulty has been the reluctance of successive Ministries in this country to grapple with the extremely complex series of problems associated with fishing over both the whole area of the tideland, where one gets into brackish water, as well as fresh water.
    I speak as an old-fashioned anti-Marketeer. It is clear that the Community will force reluctant Governments, independent of their political persuasions, to come to the right answer on fish farming. We have to abandon man the hunter, whether he is hunting fish in streams or in the oceans.
    We have to get that right. What is absolutely clear is that the amendment from the other place would set back that process rather than bring it nearer. It would create more problems particularly when seen in the terms of the Community instrument, to which our own fish farmers are being denied access. I hope that, under the pressure which has come from all sides of the House during this debate, my hon. Friend and the Ministry of Agriculture will take the opportunity to to give a firm undertaking to look closely at how far we are disadvantaged in utilising the opportunities provided under FEOGA's term under the present arrangements.
    Mr. Nicholas Winterton: I very much endorse what the hon. Gentleman has just said. Can he tell the House why, in the course of this Bill, he has not pressed his hon. Friend to attach an appropriate amendment so that we could deal with this matter now? The hon. Gentleman has expressed urgency.
    Mr. Hughes: The answer is, first, that I acted as rapporteur for the Agricultural Committee of the European Parliament and the Bill had left this place to go to the other place. Secondly, it was only after I had ceased to do that piece of work in Europe that I was able to devote my energies and attention to researching the complexities. Clearly, a single, simple clause would do far more damage than good in setting up the legal framework for fish farming in Britain.
    Mr. Geraint Howells: I listened with interest to the Minister. I
    1146
    cannot accept his reasoning in opposing the amendment. The view of the National Farmers' Union is that we should support the amendment, and I believe that we should.
    Although I cannot accept the Minister's reasoning, I accepted some of his conclusions when he said that the fishing industry is a thriving industry. When we have a thriving industry in Britain, I believe that that is the time to give that industry a boost.
    We need for fish farming a similar policy to that which we need for agriculture—a long-term policy. We need a 10-year programme, especially for fish farming and the fish industry. There is a great future for fish farming in Britain, especially in the rural areas where we have high unemployment rates.
    I have read with interest what the NFU has said. I acknowledge that the Minister himself has read it. I do not know whether he agrees with the NFU's view. The NFU has said:
    "Greater United Kingdom production of farmed fish would mean a net import saving through direct replacement, export opportunities and product substitution."
    There is one point that the NFU has made with which I entirely agree. The NFU says:
    "The British are good stock farmers. Farming has avoided the socially divisive attitudes which now plague much of the nation's industrial activity."
    The next paragraph is even more important:
    "There are literally thousands of young people including hundreds of qualified biologists seeking opportunities in British fish farming."
    Therefore, I believe that we should give the same opportunities to fish farming aquaculture, as we give to agriculture in Britain by having a long-term programme. We should accept the amendment and thus be able to give the necessary boost to the aquaculture industry.
    Mr. Walter Clegg: I join my right hon. and hon. Friends in their criticisms of the content of the Minister's speech. It verged on the trivial. We were reaching class consciousness about fish.
    The Minister also disregarded, in relation to this particular species alone, the good that we can obtain from exporting. The fact that we can export fish of this

    1147
    kind and shell fish is very much proved already. For example, the first dish that I was asked to sample at the Mandarin Hotel in Hong Kong was of Morecambe Bay shrimps—and I had just come from Morecambe Bay. The possibilities for exports are immense. I am certain that many of the lobsters caught around Scotland go not to the Scottish market but straight to the Continent. The Minister did not refer at all to the potential for exports. That must be taken into account.
    What disturbs me most is the lack of urgency. The hour is much later than the Minister's brief indicated, because next month our agreement with Iceland runs out, and if nothing replaces it we shall lose 200,000 tons of white fish caught off Iceland. That may come here in another form, but it will not be coming here in British vessels. We shall have to pay for it in foreign exchange, which we do not have to do at present.
    Moreover, all around our coasts the fisheries are either fished out or are under attack. The hake fishery off North-West Scotland was fished out within the last decade. The herring fishery in the North Sea is nothing like what it was. As my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) has said, the mackerel fishery off the South-West coast is equally under attack.
    We cannot afford to delay measures to encourage fish farming. As has been said, it may well be that in the next few years we shall have to rely far more on this source of food for our people. Truly, 4,000 tons compared with the 1·2 million tons at which Japan is aiming is a very small amount indeed. This shows the possibilities. If Japan can do it, there is no reason why we should not do the same.
    If the fish stocks around our shores were unchallenged, it would probably be uneconomical for fish farming to take the place of the fish that are caught there However, that is no longer so. Our fishing fleet is restricted as to the grounds on which it can fish. If it has to retreat into home waters, this will exert increasing pressure on the stocks around our shores. I beg the Minister to reconsider this matter.
    Mr. David Price: I draw attention to the very important remarks
    1148
    of the hon. Member for Durham (Mr. Hughes). This involves the same problem as exists in regard to slaughterhouses. Because they are not recognised for grant by our Government, they are therefore denied the FEOGA grants which are received in all of our partner nations within the Nine.
    In asking the House to reject the amendment, the Minister used exactly the same argument as his colleague in the House of Lords. It ran roughly as follows: "Fishing does not belong in an agriculture Bill. Therefore, however desirable it may be to deal with aquaculture, we should not put it in this Bill."
    The error in that argument is the assumption that we are talking about traditional fishing. I suggest that as long as we entertain that error we shall not give the necessary boost to fish farming in Britain.
    I draw attention to the definition of "aquaculture" in the amendment. It reads as follows:
    "the culture and the harvesting of animals and plants in water."
    In other words, this activity is quite different from traditional fishing. Indeed, as was said by the hon. Member for Durham, fishing is the last of the great hunting industries. Aquaculture is the farming of fish on a settled basis. It is the piscine equivalent of the domestication of animals. It is not the hunting of fish.
    Indeed, aquaculture is doing with fish today, at the end of the twentieth century, what the farmers of the Fertile Crescent in the Near East did with sheep some 10,000 to 12,000 years ago and what they did with pigs in the eighth millennium. My researches tell me that cattle were not domesticated until about the sixth millennium BC. Farmers are now doing with fish what they have done with domestic farm animals.
    I believe that bringing the settled ways of agriculture to the breeding and growing of fish is extremely important, for reasons that have already been deployed. Already a variety of husbandry systems in fish farming have been developed. With all of them, the expertise involved is similar to, if not exactly the same as, that involved in other types of livestock farming. Let me mention four: breeding and hatching techniques, stock selection and genetic improvement, disease

    1149
    control through husbandry disciplines and medication, and, above all, controlled nutrition.
    I suggest that the breeding and husbandry of domesticated fish is an entirely different matter from the hunting of what I might call wild fish in their natural state. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and others have drawn the attention of the House to the extent to which stocks of wild fish, not only in our home waters but in the world at large, are at risk. There is no doubt that due to over-fishing, inadequate conservation and pollution, stocks of wild fish are at risk. I draw attention to an admirable paper read recently by Commander Ranken, a great marine engineer who is well known to hon. Members who follow these topics. He said:
    "Modern technology makes possible gross over-exploitation of fish stocks, through efficient fish-finding and catching methods in conjunction with an excessive number of catchers putting too high a pressure on each major fish stock and all of these are now said to be affected to a greater or lesser extent."
    That simple statement illustrates the danger which worries all of us concerned with these topics.
    5.0 p.m.
    We have seen recently off the coasts of Cornwall and of Southern Ireland the modern Attila the Hun in the form of the Russian trawlers coming in, vast vessels complete with radar and sonar equipment to find the smallest fish in our home waters, and scooping up the bottom of our seas.
    There have been references to expensive fish. I believe that the time may well be coming when we shall have no herring at all—the traditional cheap fish for most of us. It will not be a question of price. There will be no herring. This is not a matter to be taken gently. It is urgent. We have the support of the Cameron Report. I shall not detain the House by quoting it at this stage, though I commend it to all who are interested in studying the case for a bigger national effort in fish farming. The case is there admirably deployed.
    My hon. Friends have already pointed out that at this point in the world's development nearly 10 per cent. of world fish consumption comes from fish farming. Various figures have been given showing what other advanced industrial
    1150
    nations are doing. We as a nation have made quite a good effort on the research side—I have paid tribute in the past to the Torry research establishment—but we have been very slow to exploit that knowledge into the production of fish by fish farming techniques.
    It is the old story that we have heard so often. We take the lead in research and in new methods, but we do not carry it through to the exploitation of our research. That is my great concern, so my plea to the House today is that we must get on and exploit our present knowledge.
    The Minister of State suggested that this is the wrong place to put such a clause and that it should be in a separate Bill. As my right hon. Friend the Member for Cambridgeshire (Mr. Pym) asked, if we are to accept the Minister's advice today, he must give an undertaking that he will introduce a Bill to deal with these problems in the next Session.
    We are told that the next Session—God and another place being willing—will start on 17th November. Let the Minister give an undertaking that, along with all the things which the National Executive Committee of his party asks to have put into the Queen's Speech, there will be just one line saying that the Government will introduce a Bill on aquaculture. I am sure that if he did that we should all be happy. As my right hon. Friend said, it is unlikely to be politically contentious, although I think that it would have a rigorous examination in Committee because there would be many detailed matters which hon. Members on both sides would wish to get right. If, on the other hand, the Minister denies us that, we are in a difficult position, because I do not see that we can wait much longer to get these things right in law and in purpose.
    Finally, I remind the House that under Clause 4(5) agriculture includes horticulture and forestry. If forestry is included in agriculture, there is no reason why aquaculture should not be. The proposal which has come to us from the other place is both reasonable and necessary. If the Government reject it and do not offer us the promise of a new Bill, they will be both unreasonable and wrong. Above all, they will have failed to understand that fish hunting will have to give way to fish farming.

    1151
    It would be an odd state of affairs if the Labour Party became the party which stood for the preservation of the hunting rather than the domestication of animals.
    Mr. John Farr: I begin by declaring an interest in a shell fish company—not very prolific, but none the less an interest. I join in the almost universal condemnation of the Minister of State's speech, not so much for what he said as for his attitude. I think that it can best be summed by the description "extremely apathetic". It was not that he failed to appreciate the problem. He did not seem to care that the problem existed. He seemed merely to present a ministerial brief and did not really think that the matter was any concern of his.
    Mr. Bishop: I hesitate to intervene, but this complaint has been made several times, with references to my "brief". The speech I made was my own. If I may say so, with due respect to hon. Members, I may have overestimated the amount of their background knowledge. If I did, perhaps the House will give me an opportunity later to make amends and to refer to some of the points which have been made. This is a matter on which I have been deeply engaged behind the scenes. The speech I made was my own, and I hope to have an opportunity to expand on these matters later.
    Mr. Farr: I am grateful for what the hon. Gentleman has said. I apologise for any suggestion which I may have made to the contrary, but the impression I received was that it was a ministerial brief, and I am glad to know that I was wrong.
    The significance or character of what the Minister said, however, can be summed up in a couple of sentences. First, he said that now was not the time. The national cost of promoting aquaculture could not possibly be contemplated now. He sheltered behind the question of cost and used the present economically difficult time as a reason for not displaying further interest. Then—I thought this very damning—he said that in any even his advisers had told him that our national production of farmed fish will be only a very small percentage of our total fish consumption in the years ahead. If he checks
    1152
    Hansard, I think that he will find that that is what he said.
    The truth is that we are not likely to have an increased percentage of farmed fish consumed nationally when there is no policy. We are about the only country in Western Europe which does not have a fish farming policy. Hon. Members have already pointed out that our partners in the EEC have a fish farming policy. Aquaculture is included in grants, assistance and schemes of the nature which the amendment from the other place proposes. In my view, those of our constituents and others who are concerned with fish farming are losing because of the Government's lack of interest.
    The Minister forecast that our consumption of fish from farmed sources would be very small in the years ahead. It is pathetically small now—about 4,000 tons out of the 6 million tons farmed annually in the world. Since Britain has just about the largest coastline in the EEC, it is a crying shame that the Government are not paying more attention to this matter.
    I am not convinced that it is absolutely right to accept the amendment—it may not be in the right place, perhaps—but I hope that the Minister will give the sort of assurance for which my hon. Friend the Member for Eastleigh (Mr. Price) asked. If the Minister asks the House not to accept the Lords amendment to this Bill, let him at least give an undertaking that he will recommend the inclusion in the Queen's Speech of a Bill to put this matter right.
    I may be wrong, but I believe that the purport of the amendment could well remain in the Bill and go forward for Royal Assent. I am sure that the cost would not be greatly significant compared to the sums already spent on agriculture, horticulture and forestry. The green light would be given to those who are struggling, in the face of Government indifference, with fish farming, shell fish farming and all the other associated problems.
    It would be a great message of hope if the Minister could say that he is at least interested in the matter and that the Government are aware that in years to come we shall have to rely more and

    1153
    more on farmed fish because the wild creature will cease to exist.
    Mr. Peter Mills: I, too, must declare an interest although it is small. In front of my house I have a lake in which we normally stock 200 to 300 rainbow trout. It is not only a very profitable sideline but my deep freezer is full of pleasant rainbow trout. That sort of thing could be done by many people if there were greater encouragement of fish farming.
    I support the remarks of my right hon. Friend the Member for Cambridgeshire (Mr. Pym). The matter should be considered and taken seriously. It cannot be dismissed by the Government. Many people are trying hard to move ahead and to realise the potential but further official encouragement from the Government is required and the amendment seeks to achieve that. Some people are trying hard with no encouragement or help. They should be given the confidence that one day at least the Government will take the subject seriously.
    In my constituency, there is an oyster farmer. Before hon. Members opposite howl in protest they should know that producing oysters is an extremely profitable thing to do. There is an oyster farm at Steer Point near Plymouth and I understand that the potential of that farm is great but that it is expensive in terms of the capital and research required. My constituent has made it clear that the export potential is enormous.
    Large numbers of shell fish and other similar fish are exported to the Community from the South-West of England. Two aeroplanes a week fly from Cornwall to Paris markets with shell fish. My constituent says that we should be exporting more oysters, and that is right because although we may not all want to eat them here, they have great export potential. In the Common Market countries, large quantities of shell fish and oysters are consumed. It is important that while we are importing large quantities of produce from those countries—such as cheese and butter—there should be a return load of fish going back to the Community.
    Mr. Jopling: Is it not strange that the Department of Agriculture should have an experimental station on the Menai Straits which I visited by chance during
    1154
    the summer? I attempted to buy some oysters from the station where they are being bred, but I was told that they were not allowed to sell them but had to let them die. Is it not a pity that the Department does not go about that experiment in a more commercial manner?
    Mr. Mills: I am grateful to my hon. Friend. I have always known that he has a vast knowledge. He has put me right. Before the end of the debate, it would be helpful to hear the facts from the Minister because the situation described by my hon. Friend appears to reveal a terrible waste. I shall consult my hon. Friend to see whether I can dig up any tips to pass on to my constituent.
    Mr. David Price: Is my hon. Friend aware that in Paris oysters are a normal proletarian dish? I could take him to Les Halles, the Covent Garden of Paris, where he could see porters consuming oysters with extremely good wine during their break.
    Mr. Mills: That proves my point. I cannot wait to go with my hon. Friend to taste these delicacies at his expense.
    My memory is not always good, but when I had the privilege of being a Minister in Northern Ireland, fish farmers were given much encouragement and help, particularly towards the production of eels, which are exported in great quantities. I should have thought that anything Northern Ireland could do, the rest of the United Kingdom could also do.
    My son has just returned from a kibbutz in Israel where fish farming is encouraged. In that country they realise how important protein is to their nation and they take the matter very seriously indeed. Why cannot we follow that pattern? The Minister talked of cost. It may be difficult in our present economic state to divert much money to the encouragement of fish farming and to put it on the same plain as agriculture, but at least the Minister could give a commitment to do something in the future. That would have a real effect on those who are struggling without any help. I hope that the Minister will treat the matter seriously. Although I am not a prophet, I am sure that a Tory Government will be in power before long and that they will take this business seriously because, whether Conservative or Socialist, any Government will be forced to do that in

    1155
    the future. At least the Minister could now start to sow the seeds of confidence by supporting the amendment.
    5.15 p.m.
    Mr. George Reid: The trouble with aquaculture in the United Kingdom is that the fish farmer is nobody's child. He is neither fisherman nor farmer. He has none of the advantages of those professions and he suffers from the disadvantages of both. The Minister said that the proposal would lead to legal complications and difficulties, but these already exist for the fish farmer today. He is currently bandied about from Ministry to Ministry with the Inland Revenue, Department of Industry and the Scots and English Departments of Agriculture taking divergent views on his status and legal rights. He suffers from bureaucratic bumble and the lack of will by successive Governments to make his enterprise succeed.
    My hon. Friends and I are delighted that the amendment was passed in another place because it shows an appreciation of the current frustrations felt by the fish farmer, especially those who know the potential for development which exists north of the Border. Even if the Treasury Benches trundle in their heavy battalions to vote the proposal down, the amendment gives the House the opportunity to debate the potential of fish farming in the United Kingdom's battle for food. Nowhere is that more important than in Scotland. North of the Border we have enormous potential to produce protein for human consumption on a scale comparable to that of EEC countries, Japan, the United States, the Soviet Union and Israel.
    We have 2,300 miles of coastline in Scotland—almost as much as England and Wales together and comparable with the Eastern seaboard of the United States. We have a plethora of sea lochs and 610 square miles of inland water, much of which is ideal for aquaculture. The Highlands and Islands Development Board has done much excellent work here. It has recognised both the worldwide implications of food shortage and the importance of crofter participation.
    In a letter a fish farmer told me:—
    "We must develop this industry in Scotland, since I am sure that when Scottish indepen-
    1156
    dence eventually arrives it is one industry which is very much in tune with the maintenance 01 our traditional Scottish way of life in remote areas."
    Scotland's 200 fish farms currently produce about 1,200 tons of fish a year, 1,000 tons of rainbow trout and 200 tons of salmon. That may seem a drop in the ocean to English hon. Members, but I caution them against that view since the United Kingdom currently has to import 50 per cent. of its foodstuffs, whereas Scotland—in terms of food exports and imports—balances out. The United Kingdom currently imports 80 million pounds of fish a year and when the Minister talks of the cost of this amendment he should welcome any move which would reduce that figure.
    The projected output for 1986 from fish farming in Scotland, as agreed between the Scottish Fishfarmers Association and the Scottish Office, is, despite the Minister's doubts, 15,000 tons of rainbow trout and 3,000 tons of salmon, not to mention crustaceans and flatfish. The potential North of the border could be much higher if only the industry had a centralised back-up from the Government.
    It is not as though the opportunities are unknown. Nine years ago no less a person than a Senator of the College of Justice, Lord Cameron, was appointed to investigate the future of the industry. In 1970 he reported:
    "Of all the developments and impending developments in fisheries, the one which promises to bring about … the most radical change is fish cultivation or farming."
    Lord Cameron foreshadowed much of what has happened in the fishing industry since then, particularly the disgraceful lack of purpose of successive Governments in their negotiations with the EEC and other fishing nations to do something about the slow destruction of our sea fisheries. He said:
    "It seems certain that the demand for fish must ultimately exceed the reproductive capacity of the wild stocks."
    So it is proving.
    Meanwhile, nearer our home shores, the Government have continued to make enthusiastic noises about aquaculture, but they have done precious little. They have boasted, as the Minister did today, about the £1 million spent on research and development, but have never explained what sort of aquaculture

    1157
    research the money is going into. There are deep suspicions in the industry North of the border that, as one fish farmer put it to me, the research is being carried out by redundant trawler experts, fishery biologists and administrators, and that there is little understanding of the specific problems of aquaculture. Whatever the reason, the net result has certainly been to stifle initiative and investment.
    I have a twofold interest in the matter. First like any Scot who travels around his country, I have been much impressed by what is happening in Lochailort, the Uists, Ardrishaig, Galloway and Crook of Devon, and by the potential of the industry. Secondly, I have a constituency interest, as researchers from Clackmannan and East Stirlingshire work at the Unit of Aquatic Pathobiology in Stirling University. An academic staff of about six headed by Dr. Ron Roberts and 30 postgraduates are doing much valuable work on fish farming—the practical business of fish farming, economic viability, techniques, disease problems, parasitology and so on.
    I can best illustrate the difficulties facing the unit by recounting the story of what happened to one fish farmer last Christmas when he found that his stocks had what he thought was a notifiable disease. He telephoned the Directorate of Fisheries Research at Aberdeen, but it was closed for the Christmas period and it was not possible to get in touch with anybody for two or three days. He called the Stirling University unit and scientists from there gave up their Christmas Day holiday to carry out the necessary diagnostic tests.
    I am glad to see the junior Minister from the Ministry of Agriculture, who also represents a Scottish seat—the hon. Member for Edinburgh, East (Mr. Strang) —on the Government Front Bench. He will know that the unit, the academic unit doing most for fish farming in the United Kingdom, is threatened with closure. It exists, hand to mouth, on a Nuffield grant and receives nothing from the University Grants Committee, except indirectly through the building in which it is housed.
    Because aquaculture is not agriculture, Stirling's Department of Aquatic Pathobiology does not qualify for grants from the Agricultural Research Council or the Agricultural Training Board for its short courses, and the postgraduate students do
    1158
    not receive grants from the BAFS agricultural training schemes. If nothing else is achieved by this debate, I hope that we may at least receive assurances from the Government Front Bench that the position at the University will be looked into in the near future.
    The Minister touched on the £1 million being spent on research and development. I can only report what fish farmers have told me in recent weeks—that much of the money is going into wild salmon research, which will be productive in 20 to 25 years' time, and on marine flatfish, the very sector that has failed to expand. They say that most of the research problems concerning rainbow trout and salmon which the Ministry is to cover have been tackled and solved by the industry itself, and the Government are now trailing behind, failing to tackle the outstanding problems of fish farming: first, a disease diagnostic service; second, the best use of water—for example, recycling; third, water parameters for optimum production; fourth, nutrition and nutritional diseases; and, fifth, artisanal courses for people who wish to work in the industry.
    I now turn to the simple proposition that aquaculture is agriculture. I shall give four reasons. First, to all intents and purposes, aquaculture is an integral part of livestock farming. Fish are bred, enclosed, fed, treated for disease and managed in a way very similar to conventional livestock. The way of life and disciplines of the employees are essentially agricultural. Breeding and hatching techniques, stock selection, genetic improvements and so on are agricultural. Just as a farmer fertilises his land for dairy cattle, so the fish farmer fertilises his enclosure for plant growth. It is an anomaly that aquaculture is not treated as a branch of agriculture, as distinct from majority EEC practice. The business calls for long-term investment of capital and constant management of stock through varying seasons and through nature's hazards, and it requires the same framework in law and administration.
    Secondly, the EEC recently called for expansion in fish farming, through various directives. It is already getting on with the job, leaving the United Kingdom sadly lagging behind, with 100,000 tons of fish from fish farms in France, 50,000 from Italy, 40,000 from West Germany, and a

    1159
    meagre 4,000 tons from the United Kingdom. In most of the EEC countries aquaculture is agriculture. Why should that not be the case here? The Minister should also look at Japan, where production is 950,000 tons, rising over the next five years to a projected 1·2 million tons. Aquaculture is agriculture there, too. Similar legislation is before the United States Congress.
    There is already provision for EEC grants. Under the Commission's Directive R/2988/75, marine fish farmers can obtain a grant provided they qualify for a grant from the national Government. They cannot do so in the United Kingdom outside the area of the Highlands and Island Development Board, until the Government take the same view as their European colleagues.
    Thirdly, is it not true that Ministry vets have already made a tentative start on the matter, since they are already being asked by the Ministries both in Scotland and England to inspect fish farms where notifiable diseases have occurred? It is not true also that private vets are being encouraged to service the day-to-day needs of the fish farming industry?
    Fourthly, despite the Minister's doubts, the NFU in both Scotland and England, accepts aquaculture as agriculture.
    The practical advantages of the amendment have already been listed from the Opposition Front Bench, and therefore I shall go through them very quickly. First, the industry would benefit through eligibility for building and equipment grants. That is particularly relevant to Scotland, where, unlike England and Wales, derating along the lines of rating concessions for farm buildings and land would be granted. The next advantage would be the introduction of legal rights for fish farmers, who are not at present technically owners of their fish stocks until the stocks have been harvested. Most of the removal of stocks is done not by otters or birds but by two-legged predators.
    Mr. Mark Hughes: I accept the desirability of giving protection to fish stocks, but, regrettably, the wording would not give that protection.
    Mr. Reid: I understand from fish farmers in Scotland that the breadth of
    1160
    the clause is such that the amendment would provide protection, but I am open to correction on this matter.
    Why has there not been a Government commitment to fish farming in the United Kingdom, given that the Cameron Committee reported about seven years ago? As so often at present, there seems to be a sad lack of initiative in this House. The Scots Assembly or Scottish Parliament would not be so slow, because the industry is obviously important in Scotland. Already members of the fish farming fraternity north of the border have made approaches—certainly to me and my colleagues—to push for a Scottish aquaculture authority on along the lines of the Japanese organisation.
    We have been hearing goodwill noises from the Treasury Bench for too long. The industry has been kept waiting for far too long. I believe that only a lack of bureaucratic will has kept the industry within its present economic and legal constraints. It is time to take aquaculture out of its present limbo land. The clause would serve as a holding operation until a fresh Bill could be introduced, either here or in Scotand.
    I will leave the Minister with one simple thought. Fifty per cent. of the fish consumed in Israel are produced currently from fish farms in the barren Negev desert. If the Israelis can do it there, why can we not do it here?
    5.30 p.m.
    Mr. George Thompson: In commending the amendment I wish to urge the Minister and his Department to take a leaf out of the book of the Leader of the Opposition. She is visiting my constituency this weekend in order to take a farm walk. I hope that the sun will shine upon her in the meteorological sense, although I have other hopes in the political sense, of course. Her example, however, should be commended. The Ministry could send its civil servants on a fish farm walk. I wish, too, that the Treasury would send its civil servants on a forest walk. Such walks would improve their health and broaden their outlook.
    In supporting the amendment we are asking the Government to do three things. First we are asking them to recognise that fish farming is an important industry in its own right. Some people may

    1161
    ask how important can it be when in 1974, according to the latest report on Scottish fisheries, production was 900 metric tons of rainbow trout plus other lesser products. But the answer is obvious.
    The increasing world population will demand increasing food production. As the demand for food production grows in other parts of the world we are bound to produce much more food from our own resources. It is rather shocking that in their document of that name the Government did not mention fish farming at all. When the seas have been over-fished we shall need to farm fish for our own needs. To do that we must build up expertise now. Certainly we have led the way in research and development, although I must confess that I had to visit a lobster fishery in Ireland many years ago to discover how much research had been done in Scotland. It was a revelation to me. I thought then that we might have been better educated in Scotland on this aspect of what we were doing.
    But unless fish farming builds up, research and development will not be able to continue as they should because there must be an interaction between the fish farmer and the research scientist. It might be said that the industry is not important because the numbers employed are small. In my local fish farm between 10 and 15 people are employed in the course of the year. In the summer it takes on university students. Our largest village has only 400 inhabitants and the nearest village to the fish farm has only just over 300 in population. In that context 10 or 15 jobs are very important. We must not neglect fish farming on the grounds that the numbers employed are very small.
    The second thing we are asking is that the Government should give fish farming the status it merits as one of the food producing industries and as the husbandry of livestock. To get some examples about the confusion surrounding the status of fish farming we need to go no further than the report of the working group entitled "Issues Considered by a Working Group Convened to Identify and Examine Legislative and Administrative Matters Affecting Fish Farmers" and issued on 13th January this year. It points out that the position
    1162
    on the rating of fish farms varies as between England and Scotland, although it is difficult to see that there can be a particularly logical reason for that.
    The report then says, quite rightly, that capital allowances could be set against tax for expenditure on farm buildings and other capital investment. But the Inland Revenue says that fish farming is not husbandry and therefore allowances are not available. However, extra-statutory concessions take husbandry to include the intensive rearing of livestock on a commercial basis for food for human consumption. The Inland Revenue says that this could include fish farming. I like the tentative nature of the word "could".
    The report then looks at the question of capital transfer tax relief for fish farming, and a reply is still awaited from the Inland Revenue on that. Perhaps the Minister will say whether that reply is now available, because it seems that from January until now is sufficiently long for even the mills of the Inland Revenue to have ground out a reply.
    I was tempted to say that this situation was a Lancashire hotch-potch, but in the present circumstances one would feel compelled to describe it as a grand old dish of legal bouillabaisse, although no Provençale housewife could have included more bits and pieces than the working group managed to get in their report.
    The Government must classify fish farming in some category or other. If they do not do so, the industry will fall not between two stools but between many stools, and that would be an extremely uncomfortable position for any fish farmer. In any case, do we not owe it to the civil servants who have well-educated, tidy minds, and who may well have studied Aristotle in the past, as I did, although not to any great advantage in my case? We should put fish farming into a particular class so that the civil servants can get to work on the industry's real problems. We are asking the Government positively to encourage fish farming in the way in which it has been encouraged in places such as Norway, Israel and Japan.
    The question of grants involves the most extraordinary anomalies. Grants are available in Northern Ireland. The Highlands and Islands Development Board gives grants. We do not get them in the

    1163
    South of Scotland, and I take it that the same situation applies an England and Wales. Where is the logic in that? We must encourage people to eat more fish. I had to travel to Brittany in order to have my palate educated to consume shellfish. The first time I was offered oysters for lunch I sent them back. The proprietress of the restaurant in Kemper —or to abandon the Breton spelling and use the French, Quimper—was aghast and said she could offer instead only a slice of boiled ham. She was even more surprised when I accepted that with alacrity.
    A month later I was invited to dinner, and to honour the Breton lady who had taught me, by correspondence, the intricacies of the Breton language I thought I had better try to eat oysters. I enjoyed the experience very much and I pay tribute to Miss Marc'harid Gourlaouen for having awakened in me a devotion to both the Breton language and the oyster, a devotion which has never diminished over the years. Because of that great devotion to Brittany I have never yet been able to convince myself, although I like Guinness, that Guinness is the true accompaniment to the oyster. I prefer a nice glass of Muscadet.
    That proves conclusively that the Government and others should educate people with conservative tastes—I stress that it is a small "c", because I would not swallow anything that came out of Smith Square—to enjoy shellfish. I hope that prices will become sufficiently low to enable us to do so more frequently.
    How can these three aims be achieved? They can be achieved either by accepting the amendment, or by bringing in a Bill designed specifically to deal with fish farming. To take the latter alternative. What likelihood is there of a Bill? On 9th April 1975 in another place Lord Hughes gave an assurance that the Government were anxious to deal with legal anomalies because they believed the legal position to be unsatisfactory. Needless to say, the Government did not allow themselves to be stampeded by this consideration into hasty legislation. The noble Lord gave no guarantee of the likelihood of immedate legislation. However, he guaranteed early action on its consideration. That at least is moving slowly some way along the road.
    1164
    If the Government do not want to see this amendment pressed to a vote, the Minister will have to make a definite statement that next Session we can expect a Bill to deal with this matter. It is not a politically contentious subject, and if the Government produce a measure I am sure that we shall all lend it support. At the moment we are no further forward.
    There was a debate on this Bill in another place on 9th April this year when the Government—this time through Lord Strabolgi—said that they were still awaiting a reply from the fish farmers, about the working group report, and that until that happened nothing could be done. I suppose that the fish farmers were so busy that they did not wish to spend time answering queries to which they had already given their considered opinions. If it is objected that fish farming should not be legislated for in this Bill, which we would in Scotland describe as a gather-up measure, I would agree, but it is better to be legislated for in this way than not at all. Therefore, unless we are given a firm assurance by the Minister, I believe that we should press the matter to a vote. That at least will separate the friends of the rainbow trout from the purveyors and consumers of Civil Service red herrings on the Treasury Bench.
    Mr. Bishop: I am very pleased that the House has shown such a great interest in this subject. Perhaps in opening the debate I unduly restricted my remarks to the Lords Amendment and the complications and difficulties that could arise if that amendment were accepted. However, I say sincerely that this has been a useful debate. It will enable me to convey to the House the Government's concern on this matter and also to explain how greatly my hon. Friends and I have been involved in this matter.
    Many hon. Members will know that I have a great interest in the industry. I have undertaken visits to 30 ports and fishing areas, including Brighton, ports in the South West, the North East and the North West. I have also visited the Torry Research Station at Aberdeen, which is a great asset to that area, and more recently I visited the Lowestoft area. Therefore, a considerable amount of work is being carried out in this sphere by the Ministry. I know that my right hon. Friend and other colleagues in the

    1165
    Ministry have also played their part in this process. Therefore, I can contend with some certainty that the fishing industry has occupied a fair amount of our time in the last few years—and rightly so in view of the great changes that are taking place in all aspects of the industry. We have always been available for consultations with fishing interests—not only the deep sea and inshore sectors, but fish farming areas, too.
    5.45 p.m.
    I should like to deal briefly with some of the points raised in the debate, and I hope to emphasise the Government's interest in and anxiety over these matters in our attempts to make greater progress.
    I should like to thank the hon. Member for Galloway (Mr. Thompson) for drawing attention to the document "Issues considered by a working group convened to identity and examine legislative and administrative matters affecting fish farmers" because I believe that that document has been accorded too little attention. It draws attention to certain discrepancies arising from the treatment of different activities in the agricultural sector and those undertaken by fish farmers. The document continues:
    "It was argued that this was unfair and detrimental to the fish farming interestֵ particularly where they were engaged directly in producing fish for food. One of the difficulties in focussing discussion of these matters was the lack of any national body to speak for the fish farming interests."
    I believe that the House should bear that matter in mind.
    The document to which I have referred then says:
    "However, with establishment by those engaged in this industry of the Fish Farmers' Union within the NFU of England and Wales it became practicable for such discussions to be held. This report, which deals with the situation in England and Wales, summarises the outcome of meetings of the working group which have recently taken place between organisations and the officials of the Ministry."
    The document then sets out a list of organisations so represented. They included the NFU Fish Farming Section, the Salmon and Trout Association, the Fisheries Organisation Society, the British Trout Farmers' Association, and the Shellfish Association of Great Britain.
    I understand that in another place it was said that this document was the basis of consultation between the Ministry and
    1166
    those organisations and others and that it was said that we were awaiting a reply. That reply has now emerged and the matter will have to be studied.
    I wish to convince the House of the genuine concern by the Government to maximise production of food from this sector, small though it may be. I hope that I did not give the impression in my earlier remarks that this sector of the economy did not matter, because it most certainly does. However, it must be said that many difficulties still remain in sorting out some of the problems and that the Lords Amendment, if accepted, would make it impossible for us to undertake that task.
    Let me mention some of the subjects considered by the group. Its work covered legal protection for stock; offences; exemption of fish from minimal size and seasonal restrictions; disease control; registration and inspection of fish farms; codes of practice; and definition of fish farms—which is somewhat more limited than hon. Members suggest. The group also considered the question of rating, development control, planning permission capital allowances, vehicle and fuel licence duties, grant aid, capital transfer tax, training and apprenticeship schemes, the Community Land Act, water authorities, and fish farming activities.
    I do not apologise to the House for having set out those matters, because they only underline my argument that this subject is one of great complexity and cannot be dealt with overnight. My colleagues and I in the Ministry have been involved in discussions with the industry for some considerable time. I hope that the House will appreciate that a great deal of work has taken place behind the scenes in seeking to make progress.
    I should like to administer a slight reprimand to some hon. Members and point out that over the years this subject has not been fully ventilated. There have been few Questions on the subject and few debates. I am not critical of the Opposition, because the opportunity for such debates is open to other hon. Members, too. On Second Reading and in 25 Standing Committee sittings I cannot recall—I apologise if I have overlooked anything—any mention of fish farming. At least we should be grateful to the other place for having drawn attention to

    1167
    this matter and giving us the chance to debate the clause. Had I realised the hidden interest of the House in the matter, I might have dealt more fully with the various aspects that have been raised at the beginning of my speech. I shall refer to one or two of the points that have been raised so as to stress the complexity of the matter.
    Fish farming is an expression used to cover a number of activities. Broadly speaking, it can be divided into four main sectors. One sector is the rearing of rainbow trout in fresh and salt water. I believe that that activity produces between 1,500 tonnes and 2,200 tonnes per year. A proportion of that production goes direct for food. The second category is the rearing of salmon in fresh and salt water. Several companies in Scotland are now producing small quantities of salmon. About 200 tonnes were produced in 1975. The third sector is shell fish rearing. There are a number of hatcheries producing seed oysters for the industry. Marine fin fish farming is still at the developmental stage. A small number of turbot have been produced for marketing trials.
    Several hon. Members upbraided me—I hope not too seriously—for appearing to suggest that the species of fish involved in fish farming, such as turbot, Dover sole and salmon, are what might be called non-traditional varieties. I was not in any way under-estimating the value of those fish. I think that the hon. Member for Eastleigh (Mr. Price) helped me, perhaps unwittingly, when he said that fish farming is involved with species rather different from deep sea fishing. I was merely referring to the species involved in fish farming and not pooh-poohing the value of the particular species.
    The aim of the clause and of fish farmers is to obtain subsidies from central funds. No explicit justification has been given for such a commitment beyond the argument that aquaculture is to be equated with agriculture. In effect we are being asked to enter into an open-ended commitment by the drawing of a rather doubtful comparison. I stress that the Government are sensitive to the needs of the industry and to the development of new ventures within it. However, we consider that the use of central funds can best be directed at this stage
    1168
    into basic research, and that is what we are doing. As I have said, the benefits will be felt by the whole industry.
    The clause represents a continuation of the efforts that have been made to equate the two industries. I believe that its simple approach is unacceptable. That is because we cannot accept legislation by analogy. Moreover, the proposition would create many problems. It would be difficult to trace all the effects through extent legislation to determine that aqua-culture, by being equated with agriculture, qualified under the relevant grant provisions, and still more difficult to suggest that such a course was justified at this time.
    The right hon. Member for Cambridgeshire (Mr. Pym) referred to rating. As the right hon. Gentleman knows, fish farmers' installations are ratable, whereas in agriculture the farmer is free from paying rates on land and buildings. Fish farmers quote instances where they own agricultural building and fish farming buildings on the same site. They point to the absurdity of being rated on one and not on the other. We have taken up these issues with the Department of the Environment.
    However, as the House will know, rating has been under review by the Lay-field Committee. The Government are considering the report. I think that it is now being considered by members of all parties. It is a valuable report. It would be unrealistic at this stage to press for any change until the conclusions on the committee's report have been reached.
    The right hon. Gentleman also referred to planning and to the need for exemption under the General Development Order. That is a part of the discussion programme that has been undertaken between the Ministry and the industry.
    Reference has been made to the value of import savings. I should not like the House to think that I wished to indicate in my opening remarks that such savings did not matter. All food is very important, and food production should be encouraged as much as possible.
    Some fish farmers argued that Government support should be given to their industry to produce import savings or to promote exports. In fact, much of the rainbow trout eaten in this country

    1169
    is imported from Denmark and elsewhere. The claim that an increase in domestic fish farming would save imports to any significant scale appears to be rather exaggerated.
    A number of other factors have been raised, and I shall refer to some of the aspects that are involved in legislation besides the consequences of passing the amendment. Fish farmers complain that the Bill is not appropriate to their needs. I refer to the legal framework. Perhaps the fish farmers are not being unrealistic when they say that the legislation is designed to deal with the catching industry. That is the point that has been made by the hon. Member for Eastleigh. It is also designed to deal with the conservation of wild stocks.
    We have undertaken to provide in legislation, when it proves possible, a remedy for a number of difficulties. I shall spell out a number of them. We shall seek to make it possible for immature farm fish to be sold legally, to permit fish farmers to sell their produce in the close season for wild fish, to up-date penalties for offences against the rights of owners of shell fisheries and to make it clear that the area allocated by a Several Order includes the column of water over the sea bed. The ownership of fish within sealed-off bays or lochs also requires clarification.
    Steps have already by been taken in Scotland to exempt fish farming activities from measures intended to conserve wild stocks. I refer to close seasons, close times and minimum sizes. As regards grant aid, farmers of fresh water fish for food may be eligible for grant aid at 10 per cent. of the approved cost of a development plan under the provisions of the Farm and Horticultural Development Scheme. The scheme is designed to help the farmer reach a level of income comparable with the average in other industries. The scheme implements a general EEC Directive—namely, No. 72/159/EEC. Under Section 7 of the Industry Act 1972 fish farmers in designated assisted areas may also be eligible for financial aid if they are not assisted in other ways.
    Grant may be obtained from FEOGA funds for individual projects that promote the common agricultural policy. That aid
    1170
    is available only for large-scale projects costing over £75,000. Member States must approve and contribute to the financing.
    I believe that those are the main points that I should mention. I have some figures referring to the production of trout and salmon. In 1975, 2,000 tonnes of trout and 100 tonnes of salmon were farmed. In the same year 250 tonnes of trout and about 360 tonnes of salmon—that is in Great Britain only—were taken by rod and line. The other figures are available if hon. Members wish the information to be given.
    The Department is well apprised of the importance of fish farming. Indeed, the Ministry has been leading the way and pressing on the industry the need to enter into consultations to resolve some of the problems which will have to be faced and which will be the basis of legislation as and when time becomes available. Discussions have been taking place with the interests concerned on a range of legal and administrative points. I have referred to some of those matters today. I know that the right hon. Member for Cambridgeshire and his hon. Friends have done so as well as some of my hon. Friends.
    The Government will do whatever is reasonable to meet the industry's point, short of increasing expenditure at this stage. The main objection to the passing of the amendment is that there is no indication from Members of the other place, or from anyone in this place, about the effect that the passing of the amendment would have in six months' time. It would not only be an open-ended commitment at a time when money is not available in unlimited amounts. It would also mean that the House would have to face the fact that money budgeted for this purpose would be taken from other grants given in the farming sector. We are pressing on with this matter.
    I hope that the House will continue to press the Government, because we want to show that the fish farming sector is of importance. I would appreciate more opportunities of saying what we are doing as well as the opportunity for consultations with hon. Members about this. I am prepared to send copies of the memorandum to which I have referred to those who need it.
    Mr. Geraint Howells: Is the hon. Gentleman in a position to give us an assurance that the Government will introduce a Bill in the immediate future?
    6.0 p.m.
    Mr. Bishop: The House will not expect me to anticipate the Gracious Speech. I have given an assurance and have made reference to the aspects of this subject which will require legislation. It would be unwise of me to give the assurance the hon. Gentleman seeks, although I appreciate the demand for it. There is much consultation which must continue before this matter is resolved. The basis of legislation cannot be anticipated. We cannot anticipate the timetable. I hope that the House will accept my assurance that we shall do our utmost to press on with the consultations and to reach conclusions which may form the basis for legislation which will be brought before the House at the earliest opportunity.
    Mr. Pym: I agree that this has been a useful debate but I regret that the Minister's second speech, which was longer than his first speech, did not allay the anxieties expressed in all parts of the House. The background to this debate is the plight of our fishing industry, the need to use and develop to the best of our ability all new sources of food production, the significance of this small, emerging new industry and the reluctance of the Government to put it on a foundation which will aid its development.
    Everyone has expressed his great concern. We all know that a great deal of discussion has been going on. In my opening remarks I listed those limited areas where I thought that the clause would be of assistance and set out a whole range of areas in which it could not assist. I said that what we required was a Bill specifically dealing with fish farming, to set this industry up properly. I asked for an assurance that action would be taken by the Government. I regret to say that I did not detect that assurance in sufficient degree.
    The Minister said that in due course, when the consultations were over, something would happen. That is rather vague. The other place debated this at the beginning of June. Nothing seems to have happened since. Many of us had hoped and expected that, as a result of
    1172
    the clause, the Government would have had the time to take this matter further. The Minister said that the Government were available for consultation. We would hope so. He said that the Government were genuinely concerned about the industry, as we would expect. The Government, he told us, are sensitive to the needs of the industry. Of course they are. It is all discussion, all talk of concern, and no action.
    I would have thought that the Government would have been absolutely clear that we want action. If they do not understand that all of our principal traditional fish stocks are now threatened, certainly everyone else has shown that they are concerned about this. Others have spoken of the steps which are being taken by countries in Europe and elsewhere to replace traditional supplies of fish by the development of fish farming techniques.
    When the debate started I did not want to have a vote on this clause. I asked for a firm assurance that, if we were not to get some assistance by way of the Government accepting the clause, other steps would be taken which would do a thorough and better job. Labour Members who have spoken said that they did not want to vote, for reasons I entirely understand. We were expressing the same views. The hon. Member for Durham (Mr. Hughes) wanted an assurance concerning Government intentions which is basically what I was saying. Frankly I do not believe that we have had that assurance except on terms which speak of some action some time in the future, which is too vague for the reality of the situation.
    I am afraid that in interrupting the hon. Member for Argyll (Mr. MacCormick) earlier I made a mistake. The clause inserted in another place was inserted in that part of the Bill which does apply to Scotland. Therefore, this rating matter would be covered by the Bill. The Minister must know that the Layfield Committee has reported and that the Government are reviewing the matter, as are the Opposition. The point is that, regardless of the outcome of that review, fish farming ought to be treated on the same basis as agriculture, as it is in essence the same type of activity. There is nothing to wait for. Both these types of food production ought to be treated on the same basis.

    1173
    I recognise the limitations of the clause and the fact that it does not do the job required of it. The House is not satisfied with the Government's attitude. Although I accept that, strictly speaking, the clause is of limited value, I believe that my right hon. and hon. Friends would like to register the importance they attach to this subject and their objection to what appears to be a vague, lackadaisical approach, however intense the discussions. Time is being lost which ought

    Division No. 329.]

    AYES

    [6.7 p.m.

    Abse, Leo

    Gould, Bryan

    Orbach, Maurice

    Allaun, Frank

    Graham, Ted

    Orme, Rt Hon Stanley

    Anderson, Donald

    Grant, George (Morpeth)

    Park, George

    Archer, Peter

    Grant, John (Islington C)

    Pavitt, Laurie

    Ashton, Joe

    Grocott, Bruce

    Phipps, Dr Colin

    Alkins, Ronald (Preston N)

    Hamilton, James (Bothwell)

    Price, William (Rugby)

    Atkinson, Norman

    Harper, Joseph

    Radice, Giles

    Barnett, Guy (Greenwich)

    Harrison, Walter (Wakefield)

    Rees, Rt Hon Merlyn (Leeds S)

    Bates, Alf

    Hatton, Frank

    Richardson, Miss Jo

    Bennett, Andrew (Stockport N)

    Heffer, Eric S.

    Roberts, Albert (Normanton)

    Bidwell Sydney

    Howell, Rt Hon Denis (B'ham, Sm H)

    Robinson, Geoffrey

    Bishop, E. S.

    Hoyle, Doug (Nelson)

    Roderick, Caerwyn

    Blenkinsop, Arthur

    Hughes, Rt Hon C. (Anglesey)

    Rodgers, Rt Hon William (Stockton)

    Boardman, H.

    Hughes, Mark (Durham)

    Rooker, J. W.

    Booth, Rt Hon Albert

    Hughes, Robert (Aberdeen N)

    Rose, Paul B.

    Bottomley, Rt Hon Arthur

    Hughes, Roy (Newport)

    Ross, Rt Hon W. (Kilmarnock)

    Boyden, James (Bish Auck)

    Irvine, Rt Hon Sir A. (Edge Hill)

    Ross, William (Londonderry)

    Bray, Dr Jeremy

    Irving, Rt Hon S. (Dartford)

    Rowlands, Ted

    Brown, Hugh D. (Provan)

    Jackson, Miss Margaret (Lincoln)

    Ryman, John

    Buchan, Norman

    Jay, Rt Hon Douglas

    Sandelson, Neville

    Callaghan, Jim (Middleton & P)

    Jenkins, Hugh (Putney)

    Sedgemore, Brian

    Campbell, Ian

    John, Brynmor

    Shaw, Arnold (Ilford South)

    Cant, R. B.

    Johnson, James (Hull West)

    Short, Mrs Renée (Wolv NE)

    Carmichael, Neil

    Jones, Alec (Rhondda)

    Silkin, Rt Hon John (Deptford)

    Cartwright, John

    Jones, Barry (East Flint)

    Silkin, Rt Hon S. C. (Dulwich)

    Clemitson, Ivor

    Judd, Frank

    Silverman, Julius

    Cocks, Rt Hon Michael (Bristol S)

    Kaufman, Gerald

    Skinner, Dennis

    Cohen, Stanley

    Kerr, Russell

    Small, William

    Colquhoun, Ms Maureen

    Kilroy-Silk, Robert

    Smith, John (N Lanarkshire)

    Conlan, Bernard

    Lambie, David

    Spriggs, Leslie

    Cook, Robin F. (Edin C)

    Lamborn, Harry

    Stallard, A. W.

    Corbett, Robin

    Lamond, James

    Stott, Roger

    Crawshaw, Richard

    Latham, Arthur (Paddington)

    Strang, Gavin

    Crowther, Stan (Rotherham)

    Leadbitter, Ted

    Summerskill, Hon Dr Shirley

    Davidson, Arthur

    Lewis, Ron (Carlisle)

    Taylor, Mrs Ann (Bolton W)

    Davis, Clinton (Hackney C)

    Lipton, Marcus

    Thomas, Ron (Bristol NW)

    Deakins, Eric

    Litterick, Tom

    Tomney, Frank

    Dell, Rt Hon Edmund

    Loyden, Eddie

    Torney, Tom

    Dempsey, James

    McCartney, Hugh

    Wainwright, Edwin (Dearne V)

    Doig, Peter

    McDonald, Dr Oonagh

    Walker, Harold (Doncaster)

    Dormand, J. D.

    McElhone, Frank

    Walker, Terry (Kingswood)

    Douglas-Mann, Bruce

    McGuire, Michael (Ince)

    Ward, Michael

    Duffy, A. E. P.

    MacKenzle, Gregor

    Walking, David

    Edge, Geoff

    Mackintosh, John P.

    Weitzman, David

    Ellis, Tom (Wrexham)

    Mallalieu, J. P. W.

    Whitehead, Phillip

    Evans, Fred (Caerphilly)

    Marks, Kenneth

    Willey, Rt Hon Frederick

    Evans, loan (Aberdare)

    Marquand, David

    Williams, Alan (Swansea W)

    Ewing, Harry (Stirling)

    Marshall, Dr Edmund (Goole)

    Williams, Sir Thomas (Warrington)

    Faulds, Andrew

    Marshall, Jim (Leicester S)

    Wilson( Alexander (Hamilton)

    Fernyhough, Rt Hon E.

    Maynard, Miss Joan

    Wilson, Rt Hon Sir Harold (Huyton)

    Fletcher, Ted (Darlington)

    Mendelson, John

    Wilson, William (Coventry SE)

    Ford, Ben

    Mikardo, Ian

    Wise, Mrs Audrey

    Forrester, John

    Miller, Dr M. S. (E Kilbride)

    Woodall, Alec

    Fowler, Gerald (The Wrekin)

    Molyneaux, James

    Woof, Robert

    Garrett, John (Norwich S)

    Morris, Charles R. (Openshaw)

    Wrigglesworth, Ian

    Garrett, W. E. (Wallsend)

    Murray, Rt Hon Ronald King

    George, Bruce

    Newens, Stanley

    TELLERS FOR THE AYES:

    Gilbert, Dr John

    Noble, Mike

    Mr. David Stoddart and

    Ginsburg, David

    Oakes, Gordon

    Mr. James Tinn.

    Golding, John

    Ogden, Eric

    NOES

    Adley, Robert

    Beith, A. J.

    Bennett, Dr Reginald (Fareham)

    Arnold, Tom

    Bell, Ronald

    Biffen, John

    Atkins, Rt Hon H. (Spelthorne)

    Bennett, Sir Frederic (Torbay)

    Boscawen, Hon Robert

    not to be lost. For that reason, I ask my right hon. and hon. Friends to register their disapproval of the Government's slowness in dealing with something so important.
    Question put, That this House doth disagree with the Lords in the said amendment:—
    The House divided: Ayes 175, Noes 160.

    Braine, Sir Bernard

    Kaberry, Sir Donald

    Renton, Rt Hon Sir D. (Hunts)

    Brocklebank-Fowler, C.

    Kimball, Marcus

    Renton, Tim (Mid-Sussex)

    Brown, Sir Edward (Bath)

    King, Evelyn (South Dorset)

    Rhys Williams, Sir Brandon

    Bryan, Sir Paul

    King, Tom (Bridgwater)

    Ridley, Hon Nicholas

    Budgen, Nick

    Kitson, Sir Timothy

    Roberts, Wyn (Conway)

    Bulmer, Esmond

    Knight, Mrs Jill

    Ross, Stephen (Isle of Wight)

    Butler, Adam (Bosworth)

    Knox, David

    Rossi, Hugh (Hornsey)

    Chalker, Mrs Lynda

    Lane, David

    Rost, Peter (SE Derbyshire)

    Clark, Alan (Plymouth, Sutton)

    Langford-Holt, Sir John

    Salnsbury, Tim

    Clarke, Kenneth (Rushcliffe)

    Latham, Michael (Melton)

    Scott, Nicholas

    Clegg, Walter

    Lawrence, Ivan

    Shaw, Giles (Pudsey)

    Cooke, Robert (Bristol W)

    Lester, Jim (Beeston)

    Shepherd, Colin

    Crawford, Douglas

    Lloyd, Ian

    Shersby, Michael

    Dean, Paul (N Somerset)

    Loveridge, John

    Sillars, James

    Douglas-Hamilton, Lord James

    Luce, Richard

    Silvester, Fred

    Drayson, Burnaby

    McAdden, Sir Stephen

    Sims, Roger

    Durant, Tony

    MacCormick, Iain

    Skeet, T. H. H.

    Elliott, Sir William

    Macfarlane, Neil

    Smith, Cyril (Rochdale)

    Evans, Gwynfor (Carmarthen)

    Madel, David

    Speed, Keith

    Eyre, Reginald

    Marshall, Michael (Arundel)

    Spicer, Michael (S Worcester)

    Fairbairn, Nicholas

    Marten, Neil

    Sproat, Iain

    Farr, John

    Mather, Carol

    Stainton, Keith

    Finsberg, Geoffrey

    Mawby, Ray

    Stanbrook, Ivor

    Fisher, Sir Nigel

    Maxwell-Hyslop, Robin

    Stanley, John

    Fletcher-Cooke, Charles

    Mayhew, Patrick

    Steel, David (Roxburgh)

    Fookes, Miss Janet

    Miller, Hal (Bromsgrove)

    Stewart, Donald (Western Isles)

    Forman, Nigel

    Mills, Peter

    Stewart, Ian (Hitchin)

    Freud, Clement

    Miscampbell, Norman

    Stradling Thomas, J.

    Gilmour, Rt Hon Ian (Chesham)

    Mitchell, David (Basingstoke)

    Temple-Morris, Peter

    Goodlad, Alastair

    More, Jasper (Ludlow)

    Thatcher, Rt Hon Margaret

    Gow, Ian (Eastbourne)

    Morgan, Geraint

    Thompson, George

    Gower, Sir Raymond (Barry)

    Morris, Michael (Northampton S)

    Thorpe, Rt Hon Jeremy (N Devon)

    Griffiths, Eldon

    Morrison, Charles (Devizes)

    Townsend, Cyril D.

    Grist, Ian

    Morrison, Hon Peter (Chester)

    Trotter, Neville

    Grylls, Michael

    Neave, Airey

    Viggers, Peter

    Hall, Sir John

    Nelson, Anthony

    Wainwright, Richard (Colne V)

    Hall-Davis, A. G. F.

    Neubert, Michael

    Wall, Patrick

    Hamilton, Michael (Salisbury)

    Newton, Tony

    Walters, Dennis

    Hampson, Dr Keith

    Onslow, Cranley

    Warren, Kenneth

    Hannam, John

    Oppenheim, Mrs Sally

    Watt, Hamish

    Higgins, Terence L.

    Osborn, John

    Weatherill, Bernard

    Hooson, Emlyn

    Page, John (Harrow West)

    Welsh, Andrew

    Hordern, Peter

    Page, Rt Hon R. Graham (Crosby)

    Whitelaw, Rt Hon William

    Howe, Rt Hon Sir Geoffrey

    Pardoe, John

    Wiggin, Jerry

    Howell, Ralph (North Norfolk)

    Parkinson, Cecil

    Wigley, Dafydd

    Howells, Geraint (Cardigan)

    Pattie, Geoffrey

    Wilson, Gordon (Dundee E)

    Hunt, David (Wirral)

    Penhaligon, David

    Young, Sir G. (Ealing, Acton)

    Hunt, John (Bromley)

    Peyton, Rt Hon John

    James, David

    Price, David (Eastleigh)

    TELLERS FOR THE NOES:

    Johnston, Russell (Inverness)

    Prior, Rt Hon James

    Mr. Spencer Le Marchant and

    Jones, Arthur (Daventry)

    Pym, Rt Hon Francis

    Mr. W. Benyon.

    Jopling, Michael

    Reid, George

    Question accordingly agreed to.

  New Clause "B"

    COVENANT AGAINST ASSIGNMENT
    Lords amendment: No. 2, in page 2, line 4, at end insert new Clause B:
    "B. In Schedule 1 to the Agricultural Holdings Act 1948 (matters for which provision is to be made in written tenancy agreements), after paragraph 9 there shall be added—
    "10. A covenant by the tenant not to assign, sub-let or part with possession of the holding or any part thereof without the landlord's consent in writing."."
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): I beg to move, that this House doth agree with the Lords in the said amendment.
    1176
    The purpose of this new clause is to correct an inadvertent anomaly in the Bill which was raised during the Committee stage in another place and by the Agricultural Law Association. The anomaly would arise in certain cases as a result of Clause 16 which makes the notice to quit on death apply on the death of the occupier who may be an assignee. It would be possible in some circumstances for a series of judiciously-timed assignments to go on indefinitely so that no tenant ever died in possession of the holding. In these circumstances, no notice to quit on death could be served and the family succession provisions would be by-passed.
    This is an unintended and undesirable side effect which we had not previously recognised. The amendment which was tabled by the Government at a later stage

    1177
    to meet the situation enables a landlord to go to arbitration to prevent a tenancy being assigned without his written consent.
    I should add that we have consulted the CLA and the NFU over this amendment and they have not raised any objections. It is a fairly straightforward and technical matter. I presume that the House will not wish to dwell upon it.
    Mr. Jopling: We are happy to accept the amendment, which I understand was moved by the Government on Report in another place following an amendment moved by a Conservative Peer. We are glad to accept it and to have heard what the Minister said.
    Question put and agreed to.

  Clause 17

    APPLICATION OF FOLLOWING SECTIONS OF PART II
    Lords amendment: No. 3, in page 21, line 6, after second "the" insert "sole (or sole surviving)".
    Mr. Deputy Speaker: With this, we may take the consequential Government amendment, in page 22, line 36, leave out paragraph (a).
    Mr. Strang: I beg to move, That this House doth agree with the Lords in the said amendment.
    Amendment No. 3 is a drafting amendment which has been put in the Bill by the Lords at the request of the landowners' representatives. They felt that the original drafting was obscure, might cause confusion and have unforeseen consequences. The amendment does not alter the intentions of the Bill in any way and I am happy to accept the revised drafting which they find preferable.
    As a consequence, it will be necessary —by Government amendment—to delete subsection 5(a) of Clause 17 since it covers the same ground as Amendment No. 3. Clearly it is unnecessary and confusing for the same point to be covered twice in the same manner.
    Mr. Jopling: We welcome what the Minister has said, though he did not say that there was a Division in another place
    1178
    on this matter when the Government were defeated by 101 votes to 48. We very much welcome their change of heart and what the Minister has said.
    Question put and agreed to.
    Amendment made: In page 22, line 36, leave out paragraph (a).—[Mr. Strang.]
    Lords amendment: No. 4, in page 21, line 12, leave out paragraph (d).
    Mr. Strang: I beg to move, That this House doth disagree with the Lords in the said amendment.
    This is a scheme for family inheritance designed to avoid hardship when a tenant farmer dies by giving his close relatives the right to apply for the tenancy.
    The paragraph which is deleted by the Lords amendment covers an important category of near relative namely the "treated child" which it is appropriate should be included in the scheme and is worded in accordance with the precedent contained in the Inheritance (Provision for Family and Dependants) Act 1975. The treated child may well have been treated by the tenant as his own child and it would be grossly unfair to deny him the same rights as any other person within the close family circle. To do so would make him a second-class citizen in relation to the scheme and would be quite unjustified. Moreover it would be out of line with the recent precedent set by Parliament in this respect.
    We went over this matter in detail in Committee and on Report. Rather than detain the House by going over the Government's arguments in more detail, I shall leave it there.
    Mr. Jopling: As the Minister has said, this is familiar ground to many of us. We discussed this matter at some length in Committee and on Report and we welcome the fact that another place decided that the arguments used by some of us in this House were correct. We very much welcome this opportunity to try to persuade the Government to change their mind. This amendment had the biggest majority in all the votes on this Bill in another place.
    Before discussing the amendment, I should like to take up the opportunity which Mr. Speaker made available at the beginning of our consideration of this

    1179
    Bill today. I raised with him the difficulty of our interpretation of the way in which another place hands down its decisions to us.
    I told Mr. Speaker that during the Committee stage in another place an amendment was moved to leave out the letter (d) in line 41 of page 21 and to replace it with the letter (c). This is a substantial amendment and it would be possible to argue that it was restricting the definition of an eligible person.
    In Clause 17(1), there is no suggestion that the four categories mentioned there are eligible persons. Our argument is that this amendment, which has not been handed down to us, is very important.
    I understand from the Table Office that the opinion in another place is that this is a drafting amendment, but I believe that we are entitled to ask the Government why, if it is a drafting amendment, it was called in another place. In fact, Hansard shows that the amendment was moved and carried. It is a pity that such confusion is allowed to arise on these matters. Earlier, Mr. Speaker said that he will look at the whole affair. I hone that better arrangements can be sorted out between this House and another place.
    6.30 p.m.
    Mr. Deputy Speaker: This might be an appropriate moment for me to make a statement in this connection. This House can deal only with such amendments made by the Lords as are formally communicated to it in a message from the Lords. It is clear that no amendment in page 21, line 41, has been communicated to this House. It is therefore equally clear that we cannot consider this amendment.
    Since this matter was originally raised by the hon. Member for Westmorland (Mr. Jopling), the Clerk's Department, from greater caution, has been in touch informally with the Lords authorities, who confirm that the amendment in page 21, line 41, was omitted advisedly from the amendments communicated to this House, as it was regarded by the Lords as more properly a printing amendment. However that may be, this House cannot deal with or consider an amendment which has not been communicated to it.
    The only course that I can suggest is that the hon. Gentleman should ask his
    1180
    noble Friend who moved this amendment in the Lords to raise the matter with the authorities there.
    Mr. Jopling: We are obliged to you, Mr. Deputy Speaker, for the trouble that you have taken to acquaint us with that view and to the Clerk's Department for the trouble which I know the officials have taken.
    I should like to make only one comment before moving on. I find it strange to hear this described as a printing amendment. In fact, the noble Lord described it as a consequential amendment. I should have thought that there was a considerable difference between a consequential amendment and a printing amendment. No doubt this matter can be discussed with the authorities. I am grateful, Mr. Deputy Speaker, for the advice that you have given to me.
    Mr. Mark Hughes: Further to the ruling that you have just given, Mr. Deputy Speaker. Do I understand that, if we pass the Bill, it will exclude paragraph (c) in line 41 and will say "(a) to (c)"? If we have no power to alter what another place has done, and the Bill leaves this Chamber reading, in line 41,
    "he falls within paragraphs (a) to (c) of subsection (1) above",
    that would place me in an unacceptably difficult position. I should be grateful for your clarification on that matter.
    Mr. Buchan: It is the other way round.
    Mr. Mark Hughes: No. It has been amended in the Lords and we are not allowed to make any change.
    Mr. Deputy Speaker: I understand that this situation would not arise if the House were discussing a motion to
    "agree with the Lords in the said amendment".
    However, the House is discussing a motion to
    "disagree with the Lords in the said amendment".
    Mr. Mark Hughes: I am not certain whether I made myself clear. We are at the moment discussing Lords Amendment No. 4 which seeks to leave out paragraph (d). However, among other amendments which have not been committed to us is this one which would leave out the reference to paragraph (d) in page 21, line 41.

    1181
    As I understand your ruling, Mr. Deputy Speaker, because we may not discuss a matter which has not been referred to us we are not empowered to make the alteration which would restore the reference to paragraph (d) in line 41. It we are not permitted to restore the reference to paragraph (d), although we may debate restoring it in line 12, we are in the ridiculous position that we can put it back in one place and have it excluded in another and not even be able to debate it.
    I may have got the wrong end of a lot of sticks, but that is as I read it at the moment.
    Mr. Deputy Speaker: The motion that we are discussing, if agreed to, would have the effect of restoring that paragraph.
    Mr. Mark Hughes: Thank you, Mr. Deputy Speaker.
    Mr. Jopling: Regarding what the hon. Member for Durham (Mr. Hughes) said, I was nurturing secret hopes that precisely what he said might happen and that in line 41 we should see the Bill referring to paragraphs (a) to (c). That would have suited me extremely well.
    I shall proceed with the motion that we had begun to discuss.
    This amendment was agreed by what I think was the biggest majority in any of the votes on the Bill. I was interested to see that the mover of the amendment in another place had the support of most other parties. I noticed Labour names. In fact, the Liberal Party in another place came out almost unanimously in support of the amendment. That caused me to smile a little, because in this House the hon. Member for Cardigan (Mr. Howells) did not feel able to support it and did not vote on it in Committee. In another place I understand that there were nine Liberal names supporting the amendment. Therefore, I hope that today we shall hear that the hon. Member for Cardigan will be leading his colleagues into the Lobby behind us. We were disappointed that he was unable to be present in Committee, but better late than never.
    The definition of those who are likely to be eligible to succeed to a tenancy on the death of the tenant has become
    1182
    something of a moveable feast since these matters were first discussed at the end of November last year. When this affair was first brought to the attention of the House, just before Second Reading on 1st December, we were all talking about whether the son of the landlord should be able to succeed.
    As we talked more and more about sons succeeding, knowing that we live in the days of female equality, most of us understood that that would be taken to include a daughter of the tenant as well. A little later it grew again and we started to include the spouse of the deceased tenant, the brother or the sister. These matters did not cause us too much difficulty.
    I am trying to show that, when these proposals were first mooted, the categories of close relatives of the deceased tenant who could apply for the tenancy were more confined than they have become. Indeed, on 3rd February, when the Minister announced that the Government were proposing to introduce new clauses covering these succession matters, he said:
    "It will enable a close relative of a deceased tenant who has the requisite agricultural experience, health and financial standing to run the farm efficiently, and who has worked on the farm for a significant period of years, to apply to the Agricultural Land Tribunal for consent to succeed to the tenancy."—[Official Report, Standing Committee C, 3rd February 1976; c. 420.]
    That seemed fairly confined. When we had a debate on the Floor of the House on 8th March 1976, the Secretary of State for Wales, who came in the absence of the Minister, said:
    "First, it seems to me that in social or human terms a claim to succeed to a tenancy, if the main purpose is to avoid possible hardship, is likely to have real strength only in the case of a near relative, such as a wife or husband, son or daughter, in which I would include adopted or step-son or step-daughter or brother or sister. After all, we do not in normal daily life regard the kinship of a nephew or cousin on the same plane of proximity as that of the really close relatives that I have mentioned, and this seems to me to be a relevant distinction in the present context."—[Official Report, 8th March 1976; Vol. 907, c. 47–8.]
    That again was an extension. We thought at the time that we knew where we were, but, when the new clauses were laid before us, we found that they contained an even wider description of the category. It appears in Clause 17(1)(d), whereby a "treated child" can also he included among those who can apply for the

    1183
    tenancy. That seemed to us to be a strange extension.
    We made it clear in Committee that we thought that this definition went very much wider. Subsection (1)(d) says:
    "Any person (not within (b) or (c) above)"—
    that is, a brother or sister or child of the deceased—
    "who, in the case of any marriage to which the deceased was at any time a party, was treated by the deceased as a child of the family in relation to that marriage".
    We thought that it went very much wider indeed, and repeatedly expressed our concern about the implications.
    When the Parliamentary Secretary replied, he said:
    "… but also a child who has been treated as a member of the family, should be similarly classified for the purpose of this legislation."—[Official Report, Standing Committee C, 18th March 1976; c. 868.]
    That went infinitely wider still, and it was because we were opposed to this tremendous extension that we voted at the time against the inclusion of the "treated child". We still feel strongly that many abuses could arise under the definition in paragraph (d).
    We were again alarmed on Report, when the Minister of State said:
    "A treated child can include a stepchild, foster child or a child taken in without formal adoption, provided the child was treated by the deceased for any length of time as a child of the family in relation to any marriage of the deceased."
    It seems that there is opportunity of abuse here, and I base my argument largely on the Minister's own definition in that quotation. He said that it would include
    "… a child taken in without formal adoption, provided the child was treated by the deceased for any length of time as a child of the family …"—[Official Report, 5th May 1976; Vol. 910, c. 1424.]
    We believe that this would be an opportunity for a young person to buy into the tenancy of a farm.
    Nowadays, most young people wanting to start farming only have the opportunity to do so through a tenancy. The price of land has risen to such a height that relatively few people are able to start farming by buying land. Therefore, a tenancy is almost their only way in. I
    1184
    can well envisage that this definition could give rise to the abuses we have referred to.
    A father who wanted to get a farm for his son could well go to an elderly tenant and offer him a premium to take in that son, before the son was 18 years old, to work on the farm, with the tenant and his wife treating him as "one of the family"—a phrase which Ministers have constantly used. I can well see that this would be an open door for an older tenant without children, whereby he and his wife could, for a cash consideration, take in a child before that child was 18 years old. It could cause tremendous abuse and provide a very profitable sideline for tenants who wish to make use of it—[Interruption.] The Minister of State is saying something that I cannot hear. If he does not agree, perhaps he will say so. He should certainly say so, because it is his definition which will cause the trouble.
    6.45 p.m.
    I have referred before to another instance in which this clause could act in a way which is not intended. I refer once more to the situation which I believe exists on a good many farms. During the war, young girls who were members of the Women's Land Army went on to farms. Some of them have lived as family with the tenant and his wife ever since. It seems to me that such a girl, who is, in effect, employed on the farm but is living in as family, could, under this definition, provided that she went on the farm before she was 18 years old, claim the tenancy on the death of the tenant. I am sure that that is not what was intended and it would be quite wrong. I hope that the Government will change their minds even at this late stage. They changed their minds on the last amendment and I hope that they will do so again.
    Mr. Buchan: I hope that the Government will not change their minds. Throughout the proceedings on the Bill, the Opposition have tried to whittle down the number of people who could inherit a tenancy under these provisions. They tried again in the House of Lords, by trying to remove the term "treated child". I applaud the Government, not only for keeping it in the Bill, but for their humanity in including it in the

    1185
    first place. The attempt by the Opposition to distinguish between legality and humanity is nauseating.
    In the debate in another place, the Duke of Atholl said:
    "It seems to me that this subsection goes much too far."—[Official Report, House of Lords, 14th June 1976; Vol. 371, c. 945.]
    One might point out that half the dukedoms of England would not exist but for the illegitimate children of King Charles II, every one of whom would have been cut out from inheritance if the attitude of the present Opposition had prevailed then. Why should they now try to cut off the inheritance of a child who has grown up on a farm as a member of the family? I cast no aspersions on the Duke of Atholl—I do not know his origins—but what I have said is true of half the dukedoms of England.
    Mr. Jopling: Surely the case of illegitimate children comes under paragraph (c). It does not arise under paragraph (d).
    Mr. Buchan: This is becoming a matter of English. The provision says:
    "… who, in the case of any marriage to which the deceased was at any time a party …".
    I remind the hon. Gentleman that two people are involved in a marriage. There is not only the tenant but the person he marries. I come back to the dukedom analogy. It was from the women that these dukedoms were inherited. The hon. Gentleman should read up his history.
    The Government should be supported in retaining this provision and complimented on introducing it. I cannot understand the hon. Gentleman's argument that there could be a profitable sideline here. We have just been discussing fish farming, and now the Opposition are trying to draw an analogy with child farming. In putting the Government's case in another place, my noble Friend Lord Melchett was right except for one thing, and that was when he said:
    "I am sorry if I did not make myself clear. I am quite certain that the tenant would have to be married and treat the child as a child of that marriage before the child would be eligible."
    As I understand it, even in the case in which it was not necessarily a child of the marriage but was treated in the family as being one of the children of the family, it would be so considered. My noble
    1186
    Friend Lord Paget, made precisely this point when he said:
    "It seems to me quite outrageous that, for instance, in a case where there is a tenant who is living with his mother or his sister, or indeed his deceased wife's sister, and there is a child who is brought up in that farming family"—
    it has nothing to do with the situation postulated in earlier discussions but just living there on the farm and treated as a child—
    "and works on the farm, running it with the father, one should say, 'Oh no, he doesn't count because there isn't a marriage to relate him to.'".
    My noble Friend is talking there of this precise business of descending from a marriage.
    The wording of the Bill,
    "treated by the deceased as a child of the family in relation to that marriage"
    does not necessarily mean only in the case of an offspring of that marriage, but however it came into the family group, whether by adoption or without the formality of adoption. It can be so treated.
    My noble Friend, having said that the child cannot be said not to count because there is not a marriage to relate him to asks:
    "Why the hell should there be a marriage to relate to? Why on earth should this clause not read:'…any person who was treated by the deceased as a child of the family'?"—[Official Report, House of Lords, 14th June 1976; Vol. 371, c. 949–53.]
    I agree with Lord Paget. He approached it from the opposite point of view because he wished to widen it.
    Mr. Jopling: No.
    Mr. Buchan: I wish the hon. Member would read the debate. It seems to me that that is the interpretation that we must come up with on the Bill, because
    "treated by the deceased as a child of the family in relation to that marriage"
    does not necessarily mean the direct offspring of that marriage.
    It is interesting to hear the Tory Party on the question of legality, considering their origin. I think that the Government must be supported and applauded on this measure. It would be monstrous if a child brought up on a farm, treated as a member of the family and working on the farm, could be excluded because there was no technicality of adoption, or no

    1187
    technicality of legality concerning his birth.
    The hon. Member for Westmorland (Mr. Jopling), in stressing the importance of entry to farming, said that for many people tenancy was the only way in. Apparently he feels that this should be left open as the only way in, except for the child who has been working on the farm. I wish that he would listen to other advisers than members of the Young Farmers' Club.
    I hope that the Government will stand by the clause, and that the Conservatives will get a whacking in the Division. I hope that we shall have more emphasis on humanity in the future, and fewer attempts to cut down a progressive measure.
    Mr. Charles Morrison: The hon. Member for Renfrewshire, West (Mr. Buchan) seems to be attracted by the wideness of the provision, but it leaves uncertainty in my mind. It seems to me that the Government have set out to widen the provision for the succession of tenancies to the maximum possible extent, but that, having set out with that objective, they were not certain where to stop. What they have done, therefore, is to draft a most imprecise subsection, almost with the intention of leaving it to the tribunal or to the courts to make the decision as to what is meant.
    Obviously, one can understand the argument in favour of Clause 17(1)(a), (b) and (c). Indeed, very often the type of succession set out in these paragraphs is precisely what happens. The provisions were voted against because, when put into legislative form, they have the effect of reducing the discretion of the landowner. Although these paragraphs are very often normal practice, paragraph (d) creates tremendous uncertainty about the potential successor, and in consequence will give rise to enormous scope for litigation.
    The worst aspect of all—touched upon by my hon. Friend the Member for Westmorland (Mr. Jopling)—is that it will act as a disincentive to new lettings. The earlier paragraphs leave the landowner in a position in which he knows where he stands, but paragraph (d) does not leave him in that position.
    Mr. Mark Hughes: Is the hon. Gentleman suggesting that there are landowners in this country whose knowledge of their tenants is so scanty that they would not recognise that a child is being treated as a member of the family?
    Mr. Morrison: But the landlord is not in a position to make the decision. The decision will be made by the Agricultural Land Tribunal. It is because of this uncertainty that I am so opposed to the Bill on this point.
    My concern in opposition has been increased by the comments made by Lord Melchett in another place, when he was endeavouring to reply to the debate. As I read it, he did not really know what was meant by a treated child. It was at column 947 that he mentioned that a treated child could include not only a step-child and a foster child but also a child taken in without formal adoption. Later, he referred at column 949 to the point made by the hon. Member for Renfrewshire, West, and again, at column 953, he spoke in reference to a treated child.
    I do not think that Lord Melchett, when replying to the debate, therefore, added any certainty to the intentions of the provision. Indeed, he increased the fog very considerably. I believe that, in consequence of this, as I have already said, there is immense potential for litigation—although it seems unlikely that litigation will take place, simply because landlords in future will be much less inclined to let land than they have been in the past.
    If there is one subsection in the Bill which sounds the death knell of the landlord-tenant system, it is this one. Some people say that the system is virtually dead now. I do not accept that.
    Mr. Buchan: The hon. Gentleman spoke of the death knell of the landlord-tenant system, and earlier he referred to the dearth of new tenancies. He is saying, in effect, that he would prefer the choice of the landlord, rather than the treated child which might be the choice of the Agricultural Land Tribunal, but it might still be a new tenant farmer.
    Mr. Morrison: It would be a new tenant farmer, as a result of the Bill, but it would be a tenant farmer who would

    1189
    not necessarily be the choice of the landowner. That is what the hon. Gentleman wants, and that is what I do not want. I accept that there is a simple difference between us on this point. What I am emphasising, or endeavouring to emphasise, is that, because of the provisions in the Bill, particularly this provision and the uncertainty that it produces, it is certain that in future when a landlord has an option—he will not have that option very often—he will decide not to relet his land but will take it in hand himself. That may be no bad thing, but undoubtedly it will have the effect of reducing the number of farms available for letting and, therefore, of reducing the number of opportunities for young farmers. The hon. Member for Renfrewshire, West may think that is a good thing, but I do not.
    I do not think that the landlord tenant system is dead yet. Indeed, if it is dying it is because of the actions of this Government. In spite of that, I am certain that the Bill as it stands, and if it continues to exist in this form, will indeed hasten the end of a system which has stood the agricultural industry in very good stead for many years.
    7 p.m.
    Mr. Caerwyn E. Roderick: I merely want to make a couple of brief remarks. It was quite atrocious for the hon. Member for Westmorland (Mr. Jopling) to suggest that, in a way, there should be a form of slave trade in human beings whereby they would buy into succession rights. The hon. Gentleman talked of abuses of this kind. The people with whom I associate in farming do not normally get involved in such activities. The hon. Gentleman must be living in a very different world if he thinks that that kind of thing would be tolerated. He totally ignores the fact that the Agricultural Land Tribunal will be the last judge of the situation and that it will be in a position to see whether a person had the right of succession. If a person is a member of a family, and has been recognised as a member of a family, he surely has the same rights to succession as anyone else.
    The hon. Member for Westmorland aimed some remarks at my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) and indicated that the noble
    1190
    Lord, Lord Paget, was in support of the amendment. If the hon. Member for Westmorland will read column 953 of the debate on 14th June in the House of Lords he will note that the Lord Paget was advocating rights of succession outside marriage which went way beyond what the Conservative Party is prepared to support.
    Mr. Jopling: If the hon. Gentleman looks at column 956 of the report from another place he will see that the Lord Paget of Northampton voted in favour of this amendment. That is all that I have said. If the hon. Gentleman is trying to put another construction on that, then that is a matter for him. All I have said is that this amendment was supported by the Lord Paget.
    Mr. Roderick: I am afraid that the hon. Member for Westmorland has turned over a few pages and ignored column 953. What is relevant is what Lord Paget said. He said quite specifically that this amendment did not go far enough, that it was not wide enough and that he was opposing it on those grounds. At least he was against what we were intending to do and wanted to delete that paragraph because he wanted to go much further.
    May I simply comment on what the hon. Member for Devizes (Mr. Morrison) said. He was quite clearly opposed to any succession protection. He ought to come clean. He is not simply opposed to rights under this paragraph. He feels that the landlord-tenant regime is ended under the Bill. The hon. Member for Devizes, like his hon. Friend the Member for Westmorland, must be living in a different world from mine because we feel that this will be a new dawn for the landlord-tenant system—certainly in my own area. The hon. Member for Devizes refuses to recognise that an adopted child, which is what this paragraph is mainly about, is a member of a family. I am glad to see that we on this side of the House will retain this paragraph, at least I hope that we do.
    Mr. Jopling: Before the hon. Gentleman sits down—I hope the Parliamentary Secretary will take his point up—I think I am right in saying that paragraph (d) does not include adopted children. It was made perfectly clear in Committee

    1191
    that adopted children are already included in paragraph (c). I think I am right about that.
    Mr. Strang Mr. Strang indicated assent.
    Mr. Jopling: I detect the Parliamentary Secretary nodding. The remarks of the hon. Member for Brecon and Radnor were inadvertent and actually wrong because we are not talking about adopted children in this amendment at all.
    Mr. Roderick: I think it would be best if my hon. Friend could clarify
    "legally adopted" and "recognised as a member of a family".
    That is the important category. The argument earlier was that someone could join a family—"buy in" was what was said. Any Agricultural Land Tribunal which could not recognise such a situation does not deserve the name of being a tribunal.
    Mr. Strang: The central purpose of this clause is to remove the hardship which arises from time to time when a landlord serves an incontestable notice to quit on a deceased tenant, and to remove the hardship which affects a new relative. Throughout our discussions the Opposition have consistently sought to narrow the range of that benefit and to exclude as many relatives as possible from this provision. That seems to be basically their central opposition to this measure.
    I must respond briefly to some of the points made by the hon. Member for Westmorland (Mr. Jopling). It is not the case that there was some great advance to the proceedings on this legislation by the range of relatives covered. It is worth pointing out that the original new clause tabled by my hon. Friend the Member for Durham (Mr. Hughes) referred to spouses and sons and, indeed, grandchildren. Furthermore, it is also worth pointing out that the original new clause as tabled by the Government included "treated child".
    Let us be quite clear what this argument is about. If the Opposition have their way in supporting their Lordships on this point, that will mean that foster children, step-children, or any child taken into the family who was not
    1192
    formally adopted—the hon. Member for Westmorland is correct on this narrow point—but treated as a member of the family will be excluded from these provisions. In other words, when it comes to legal status the son's status will be very different, if he is a step-child, than if he is a normal full child of both parents of the marriage. Take, for example, someone such as myself who happens to have a stepson and a son of his own. I do not happen to be a farmer and it does not affect me. Is the hon. Member for Westmorland trying to sustain a case on the basis that we should implement legislation which meant that, no matter how much more interested in the farm the stepson was, the stepson should be excluded from the provisions but the full son should be covered? It would be monstrously unjust to introduce that discrimination between these two members of one family.
    I would say in conclusion that this is not some new principle that we are introducing in relation to this legislation. This has been taken out of the Inheritance (Provision for Family and Dependants) Act 1975. I hope that the hon. Member for Westmorland (Mr. Jopling) will understand what the argument is about. We are beginning to get into the realms of fantasy when we talk about a profitable sideline for tenant farmers without children if we bring back the phrase "a treated child".
    Mr. W. Benyon: The Parliamentary Secretary will accept that in the case of a second marriage and a stepson, this could result in a new succession to a tenancy after only five years.
    Mr. Strang: The hon. Gentleman's point is valid, but I think that he will agree that that observation is a criticism of the central scheme rather than the offensive drawing of a line between a son and a stepson.
    Mr. Charles Morrison: The Parliamentary Secretary has laid great stress on the point about stepsons. At the beginning of my remarks, as he may recall, I said that this subsection was very imprecise. He is making my point. If he means a stepson or any other category of relation, why is it not spelled out in more detail in the Bill? As it is drawn, this subsection is bound to lead

    1193
    to a great deal of uncertainty. The Parliamentary Secretary is putting his interpretation on it, but there is no guarantee that anyone else will apply the same interpretation.
    Mr. Strang: Let me try to be helpful. We are intending that this should cover —this is what it means—a step-child, a foster child or a child taken in without formal adoption, who is treated by the tenant for any length of time as a child of the family in relation to any marriage to which he was at the time a party.
    I emphasise that the deceased must have been married at the relevant time for the treated child qualification to apply. For someone to argue that he was a treated child, it is necessary for him to have been a member of the family, and during that period it is necessary for the tenant to have been married.
    Perhaps I may briefly develop this matter further. The hon. Member for Devizes (Mr. Morrison) has a fair point in the sense that not everyone outside this House may be familiar with this legal phrase—I use those words advisedly. It is not something new, and I must keep repeating that. Therefore, we intend to prepare a note on this matter for the tribunal secretaries to issue to anyone who enquires.
    I have tried to be helpful and to explain to the Opposition why it would be a great mistake if they were to support their Lordships in this matter.
    Mr. Jopling: I am sorry that after all this time of listening to the arguments from the Opposition side of the House, the Government have still not appreciated that the way in which these clauses are drafted is far too wide. Therefore, I can do no more than invite my right hon. and hon. Friends to vote on this matter.
    Question put, That this House doth disagree with the Lords in the said amendment:—
    The House divided: Ayes 178, Noes 126.
    [For Division List No. 330 see col. 1401]
    Question accordingly agreed to.
    Lords amendment: No. 5, in page 21, line 16, after "Act" insert
    "(except sections 19(14) and 22(8), which are of general application)".
    Mr. Strang: I beg to move, That this House doth agree with the Lords in the said amendment.
    This is a drafting amendment tabled by the Government in another place. The Lord Chancellor's Order-making powers under these subsections are of general application, and the reference to them in Clause 17(1) is therefore not appropriate.
    Question put and agreed to.
    Lords amendment: No. 6, in page 21, line 21, leave out subsection (2).
    Mr. Strang: I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Deputy Speaker (Sir Myer Galpern): It will be convenient to consider at the same time Lords Amendment No. 14, in Clause 19, page 27, line 9 at the end insert—
    "(14) Provision shall be made by order under section 73(3) of the Agriculture Act 1947 (procedure of Agricultural Land Tribunals) for requiring any person making an application to such a tribunal under this or the following section to give notice of the application to the landlord of the agricultural holding to which the application relates and to take such steps as the order may require for bringing the application to the notice of other persons interested in the outcome of the application."
    Mr. Strang: These are purely drafting amendments. Subsection (2) deals with the making of an application to the Agricultural Land Tribunal under Clause 19 or Clause 20. These are procedural matters, and the subsection is therefore better placed in Clause 19 than in Clause 17. The purpose of the amendments is to transfer it accordingly, without alteration.
    Question put and agreed to.
    Lords amendment: No. 7, in page 21, line 38, leave out
    "and without prejudice to section 20 of this Act)".
    Mr. Strang: I beg to move, That this House doth disagree with the Lords in the said amendment.
    Mr. Deputy Speaker: It will be convenient to consider at the same time Lords Amendment No. 15, to leave out Clause 20.
    Mr. Strang: I remind the House that Clause 20 was inserted in the Bill on

    1195
    Report in this House to meet certain criticisms of the eligibility tests in Clause 17. These criticisms were voiced strongly in Committee by a number of my hon. Friends, including my hon. Friend the Member for Brecon and Radnor (Mr. Roderick), as well as by the hon. Member for Cardigan (Mr. Howells) on behalf of the Liberal Party.
    The criticisms were to the effect that the eligibility tests would be applied rigidly by the Agricultural Land Tribunal. The hon. Member for Cardigan pointed out that in some parts of Wales, including his own constituency, there were many small farms which would not be able to provide the principal source of livelihood for the tenant and his son.
    Admittedly, small farms ought to be amalgamated whenever appropriate, but the possibility of amalgamation would be raised by the landlord under the provisions of Clause 21—that is, much later in the proceedings than the consideration of eligibility. Close relatives who have worked on these farms at evenings and weekends, when they could well put in a great many hours of work in a year, ought to be able to apply for the tenancy.
    My hon. Friend the Member for Dudley, West (Dr. Phipps) pointed out the other near miss, if I may call it that—the son who was working on the holding when his father died unexpectedly and who had not had time to complete the full five years' qualifying period. It was to meet these circumstances that we decided to introduce Clause 20.
    The clause came under attack in the other place and has been criticised by both the Country Landowners' Association and the National Farmers' Union, mainly because the phrase "to some extent" goes rather wide. This phrase is intended to deal with the applicant who is a near miss on eligibility, but it will also cover the applicant who barely starts to be eligible. This was not our intention. In a somewhat surprising move, which fitted the old adage about throwing out the baby with the bath water, the Opposition in another place threw out the whole clause because they did not like the phrase "to some extent" and one other subsection.
    Let me make clear to the House, and to those concerned in another place, that
    1196
    Clause 20 fulfils an important function. It avoids undue rigidity in an area where rigidity is not required, anyway. If a certain amount of sensible discretion is to be given to the Agricultural Land Tribunal, Clause 20 provides the way it ought to be done. The Government are determined, therefore, that it will be in the Bill. On the other hand, we have tried to meet the criticisms of the phrase "to some extent" and of subsection (4). This is covered by the consequential amendments.
    7.30 p.m.
    The first consequential amendment provides that, instead of the principal source of livelihood test being met "to some extent", it should be satisfied "to a material extent". This tightened wording would exclude from the scheme the applicant who barely starts to qualify as eligible in this respect. It would, however, include the two categories of applicant for whom the clause was designed, namely, the applicant who would have worked on the holding for the full five years but who narrowly missed completing the qualifying period because the tenant died before the five years were up, and the applicant who had established a close link with the working of the holding but who could not get his main livelihood from it because the farm was too small. The applicants in either case would of course have to satisfy the other eligibility tests in Clause 17.
    We thought very carefully before deciding on the wording of the amendment, and I believe that the expression we have chosen will meet the criticisms which have been made of the clause as originally drafted without detracting from its purpose. I hope that the House will agree.
    I turn to the second amendment, in page 27, line 35, leave out from "person" to end of line 41.
    The drafting of subsection (4) was criticised in another place and I admit that it is not readily understandable to the layman. The words from "person" in line 3 of the subsection provide that someone who was deemed by the tribunal to be eligible under Clause 20 could not claim, when his suitability as a tenant was being assessed, to have had more experience on the holding than was actually the case. This is an unlikely contingency which the tribunal could in any event deal with. I must agree that its meaning is obscure

    1197
    and it is better, therefore, for the provision to be left out. The basic effects of the clause will not be changed.
    Mr. Pym: Amendment No. 7 is a paving amendment for Amendment No. 15 which in the Lords left out Clause 20 altogether. The other place was entirely right in that decision and I hope that it will be supported in this House. That decision was supported in the Lords by the principal Liberal Peers and I hope that the hon. Member for Cardigan (Mr. Howells) will take the same line tonight, unlike that which he took on the vote on the matter which we have just decided.
    I have disliked new Clause 20 all along. As I said on Report, at least the principle behind it should be carefully considered. I do not like it, not only because of what it seeks to do, but because of how it seeks to do it. It is a bad way of legislating.
    Clause 17 sets out the circumstances and conditions in which certain relatives of a deceased tenant can seek to obtain succession of the tenancy. There is no general agreement on either the principle or the details of Clause 17. There are many opinions on the matter. We think that it is in any case too wide and that no regard is paid to the landlord or the landlord's son.
    There is a definition of "eligible person" in Clause 17 and, whether one agrees with it or not, it is a clear definition. But, a few clauses later, Clause 20 deals with applicants who are "not fully eligible". That makes a legislative nonsense. Clause 17 refers to an applicant being required to have worked
    "a continuous period of not less than five years, or two or more discontinuous periods together amounting to not less than five years, derived from his agricultural work on the holding or on an agricultural unit of which the holding forms part"
    Clause 20 alters and weakens that definition on the basis of saying that if someone is not able to fulfil the definition of eligibility he should be considered on a more lenient basis. That is not wise and means that an ineligible person is to he treated in some circumstances as an eligible person.
    There is another definition in Clause 20(6). Clause 17 refers to an applicant's "principal source of livelihood" being derived from his agricultural work on
    1198
    the holding or on an agricultural unit of which the holding forms part. But Clause 20(6) enables people who do not fulfil that condition to be released from it and considered as though they had fulfilled it. Surely it is unsatisfactory to have a definition in one clause which is then weakened in vague terms in another clause.
    Even without Clause 20 the changes implied in Part II are major and will have far-reaching effects. But Clause 20 makes it worse. It formed no part of the discussion that the Minister and the Parliamentary Secretary had with outside organisations and interested parties before Part II was published. Interested parties in agriculture think that Clause 20 is a mistake.
    The Government are going too far even without Clause 20 because the eligibility test is wide enough already. I know that the NFU supports the clause, but that support is mistaken.
    This part of the Bill and this clause in particular, together with confiscatory rates of taxation on income and capital, have delivered a body blow to the landlord and tenant system—one of the most successful and enduring arrangements enjoyed by agriculture in any country and which is a direct cause of the real success of the industry in the United Kingdom. That body blow looks like being the most enduring achievement of the last Minister of Agriculture.
    I have no objection to the Government's own amendments to Clause 20. I suppose that to a lawyer the alteration of "to some extent" to "a material extent" makes a significant difference but it is still vague and unsatisfactory. I do not like it any more than the existing amendment, but I suppose that it is an improvement in that it is different. The Parliamentary Secretary admitted that the second amendment amounted to jibberish but nothing is lost by omitting those words.
    My right hon. and hon. Friends believe that Clause 20 departs from the original intention of this part of the Bill. That cannot be denied and it will give rise to further anomalies and hardships. The original intention of this part of the Bill was to remove the few cases of hardship which occur. But this part of the Bill will increase hardships on individuals

    1199
    and families and Clause 20 will make its own contribution to those hardships and anomalies. We shall therefore press that the amendment be upheld and that Clause 20 should not be part of the Bill.
    Mr. Benyon: I support my right hon. Friend. Clause 20 puts the final nail in the coffin of the law of contract. It involves confiscation. I listened with wry amusement during proceedings on the Aircraft and Shipbuilding Industries Bill to why the Government could not proceed in the case of the Marathon company. They said it was because of the state of the contract. This is confiscation in a sense because it is taking the property of one person and giving it to another. There is no getting round that. There is no getting away from the fact that the clause is the last nail in the coffin. We began with fixed categories of people who could have succession but the definition has been widened out of all recognition. Their Lordships were utterly right to get rid of the clause—they voted in large numbers—and the House should support them.
    Mr. Keith Stainton: The Parliamentary Secretary remarked that rigidity was not required, that we must look after the marginal cases, and hence the safeguards, the fallback, of Clause 20.
    I subscribe to what my right hon. Friend the Member for Cambridgeshire (Mr. Pym) said. We need certainty, not rigidity, in this matter. All that we end up with in Clause 20 is obscurity, which the Government recognise, however faintly, by seeking to leave out "some" and insert "a material". Heaven knows precisely what the difference is. I suppose that it is a question of degree, but it remains to be seen what degree.
    I plead not for rigidity but for certainty, and therefore I find myself opposed to Clause 20. I intend to vote against the Government motion disagreeing with the Lords and against the Government amendment.
    Mr. Strang: We take the view that there is a case for flexibility here. We have explained the categories which we should like to be covered by the clause. Furthermore, we believe that we can entrust this element of discretion to the Agricultural Land Tribunal.
    1200
    If one describes this legislation as confiscation, one is saying that all legislation which strengthens the legal rights of the tenant relative to the landlord is confiscation. Any legislation which makes it harder for the landlord to secure vacant possession of his property is—in the vocabulary of the hon. Member for Buckingham (Mr. Benyon)—confiscation.
    Mr. Benyon Mr. Benyon indicated assent.
    Mr. Strang: I suppose that the hon. Gentleman is entitled to use the word to convey any meaning that he desires. But—if we may degenerate to the language which I regret is often used in the Press these days to discriminate between extremists and moderates—I think that even some of our great, traditional newspapers might agree with me that that is a somewhat politically extremist use of the word.
    Question put, That this House doth disagree with the Lords in the said amendment:—
    The House divided: Ayes 173, Noes 120.
    [For Division List No. 331 see col. 1403]
    Question accordingly agreed to.
    Lords amendment: No. 8, in page 22, line 28, after "course" insert:
    "in agriculture or in a subject which would improve his qualification for farming".
    Mr. Strang: I beg to move, That this House doth disagree with the Lords in the said amendment.
    The educational concession has caused much discussion both on the Floor of the House and in Committee. I do not intend to go over again the arguments deployed at length in Committee, but I recognise that the amendment is a genuine effort by the other place to find an acceptable compromise between the narrow restriction and no restriction at all. However, I do not believe that the halfway house represented by the amendment is desirable because of the differing standards of subjective judgment that the agricultural land tribunals will apply. How can there possibly be any uniformity in the application of the words
    "or in a subject which would improve his qualification for farming"?

    1201
    During our debate there was reference to esoteric subjects such as archaeology, and it was suggested by Conservative Members that it was inappropriate that that should be seen as a qualification for agriculture. However, when we come to such subjects as engineering, pure science or economics there is much greater scope for arguing that such training is legitimate and appropriate in farming.
    What I am saying in no way conflicts with the important speech yesterday by my right hon. Friend the Prime Minister. I have a liberal view on education. I believe that many of the people who may have been trained in some of the subjects to which I have referred have gained an experience which could be valuable to them in farming. That is why I and my hon. Friends have held strongly to the view that we should not seek to restrict this educational qualification.
    It would not be in the national interest, or in the interest of agriculture, that the son who hopes to succeed to the tenancy in the fullness of time should be discouraged from pursuing his chosen subject for fear that his father might die before he has time to complete the qualifying period of actual work on the holding.
    The amendment is unacceptable in principle and because of the practical problems which would arise from it.
    Mr. Benyon: When I joined the Navy there was an unwritten rule that the galley never served up twice-cooked meat. I only wish that the same thing applied to legislation. At least their Lordships have tried to get round this problem, and they have taken to heart some of the remarks made during our Committee discussions.
    Let me take the Under-Secretary back to March when he said:
    "for example, where the son might want to take a course in business management, or take some of the basic agricultural sciences. Is it really the case that we want to exclude someone who has, perhaps, done a degree in agricultural science but who, having had that experience, wants to live and farm with his father? After all, he will have had to work two years full-time on the holding, in addition to training at university."—[Official Report, Standing Committee C, 25th March 1976; c. 970.]
    1202
    It was for that reason that their Lordships inserted the words in the amendment. That is the answer to the Minister's point. We accept that we are talking about eligibility rather than suitability. The question of suitability will be dealt with by the Agricultural Land Tribunal. We are saying that the degree of uncertainty inherent in the existing wording of the Bill will be greatly reduced if these words are inserted in their stead.
    8.0 p.m.
    Let me recapitulate the situation. Normally to be eligible an applicant must have five years on the farm, of which three could be at an establishment of higher education. In the worst case there could be a period of two years, when he could be studying Sanskrit or whatever it may be, on which his suitability as a tenant to farm could be assessed. If this happens after a full period of education, it could be anything up to a period of three years earlier to which that experience was related. Therefore, the situation is vague and uncertain.
    I have used my experience on occasions, both as an individual and also as a member of a smallholdings committee, in the selection of tenants. There is only one way in which a person can judge, and that is on personal knowledge and judgment of the individual who is applying. That will have to be done by the Agricultural Land Tribunal and the assessment is made on the applicant's professional ability.
    Those outside the industry do not realise what damage can be done by a bad or inexperienced farmer, whether he be tenant or owner. The owner entrusts to that person lands and buildings to farm for a long period of time. That person can wreak the most appalling damage, and it may require a great deal of money and time to put it right. The landlord faced with the presence of such a person, is powerless. I know that under the Agricultural Holdings Act an appeal can be made on the grounds of bad farming, but those appeals are rarely made, and if they are they are hardly ever upheld.
    Mr. Geraint Howells: Does the hon. Gentleman not agree that if a young farmer has two years' practical work experience on a farm, and if he carries out that work well and takes a course at a college for a period of three years, he

    1203
    will be a mature person at the end of that period to take over the holding?
    Mr. Benyon: That is the whole point of the Lords amendment. It depends on what the person in question was doing. If he has done something outside farming, the only instance in which the tribunal can judge his suitability for the tenancy is where he has carried out practical farming. Farming is a highly technical industry and the standards now required of anybody seeking to enter the industry are great. Unless these words are included, there will be unfairness to the landlord because he will suffer as a result of what happens to the holding, there will be unfairness to the Agricultural Land Tribunal because of the uncertainty and difficulty it will suffer in reaching a judgment, and finally and most important, there will be uncertainty for the applicant. It is much better to tighten the provision and their Lordships' wording should be supported.
    Mr. Buchan: This is a matter of "cauld kail re-het". We have gone over all this ground before, and their Lordships are only giving the House a further opportunity to rehearse that discussion.
    Lord Ferrers in moving the amendment in the House of Lords said:
    "If a young man had got fed up with farming and decided to go and do a course on interior decoration and then had gone around London doing up people's flats he would still be eligible for claiming a tenancy … I believe this is an absurdity."—[Official Report, House of Lords, 14th June 1976; Vol. 371, c. 965.]
    Absurd examples are always used, but the noble Lord gave the game away because the person concerned would still be eligible to claim the tenancy.
    The word "eligible" is important in this context The person still has to satisfy other criteria, and that is the first crucial point. The second point is that we are confining the necessity of an agricultural qualification to this one profession. It does not apply to other professions, or even the House of Lords. There needs to be no test or course of any kind to become a Member of the House of Lords. The fact of birth is sufficient. It is a test that we do not apply to other human beings. For that reason the amendment should be rejected.
    Incidentally, it is not a test applied to ourselves as Members of the House of
    1204
    Commons. The last Member who entered the House of Commons was a philosopher, and he should make a good Member of Parliament.
    Furthermore, we are told that this matter is vague and subjective and will create uncertainty. However, there is no more uncertainty in relation to the person qualifying under the educational aspects than in respect of other qualifications. It is still a matter of eligibility, not an absolute right—in other words, there is no more uncertainty than exists elsewhere. To remove this uncertainty we should have to get rid of the whole proposition in the Bill.
    The truth is that the Tory Party is willing to wound but is afraid to strike at the heart of the proposition. On Second Reading debate, in Committee, and even today, Conservatives have still not said directly whether they support or oppose the amendment. This is the seventeenth time I have asked them to say whether they support or oppose the principle. I am willing to be given an answer even at this late stage. But they still will not give that answer and we know why. They will not give it because they represent the landowners and the landlords but still want the farmers' votes. They know that the NFU supports the proposition. Therefore, they have begun, bit by bit, to whittle down these provisions under the guise of sweet reason because they are afraid even now to declare themselves.
    Perhaps when the Opposition Front Bench spokesman replies he will say whether he opposes or accepts the principle. That will be an interesting innovation in these debates. Incidentally, the landlords do not pass such a test as they demand of tenant farmers. They do not say that before a landlord's son inherits his estates he must take an agricultural course.
    Mr. Benyon: It is his own property, not somebody else's.
    Mr. Buchan: The hon. Gentleman is saying that this has nothing to do with educational qualification or anything else but with the sanctity of property. That is what they are concerned about. At least that is a more honest comment than the remarks that have been made tonight from the Opposition Front Bench. The hon. Gentleman is a Daniel come to judgment.
    Mr. Jopling: It is the landowners' land.
    Mr. Bruce Grocott (Lichfield and Tam-worth): It is the people's land.
    Mr. Jopling: It is a red herring.
    Mr. Deputy Speaker: Order.
    Mr. Buchan: Thank you, Mr. Deputy Speaker. I wondered whether I should be allowed to continue. It is clear that I have touched on a sensitive issue.
    The Opposition are attempting to dodge the main question. I support the Government in their rejection of the amendment. We should not demand only one form of training. It is good that we should seek to introduce a broad and enlightened view into farming circles. It is clear that that is what is needed for the farming representatives of the Tory Party if those who are present are typical examples. I find myself in the unusual position of having supported the Government on almost all occasions over the past year or so. I am astonished at my own moderation.
    Sir Timothy Kitson: On 8th March the hon. Member for Renfrewshire, West (Mr. Buchan) was extremely polite when referring to me. I suppose that one should refer to what another Member says about oneself. The hon. Gentleman congratulated me on my speech and suggested that I was the only honest man representing the Opposition in Committee. Apparently I shine out from the murkiness that the hon. Gentleman says is created by my hon. Friends. I thought at the time that it was the kiss of death.
    In this place and in another place we have been trying to improve the clause. We are trying to ensure that the efficiency of the industry continues. We believe that, if the clause remains as it stands, it will create inefficiency. Farming in my part of the country is a hard existence. It is not possible for someone to have a year's farming, to decide that he does not like it, to go to university and read something else because he has decided not to stay in farming, and then suddenly, out of the blue, to find that he has a farm available and to return to it, a farm that he had not intended to have anything to do with when he went to university, and take on the running of the farm in an efficient manner.
    1206
    The young man who goes to university might be a failure at reading languages or at undertaking some other course. However, he might suddenly find that he has a right to go back and farm. We argue that such a situation is not fair on the person who owns the property. Is the best chap taking over the farm? Will the Bill create efficiency for the industry? We say that it will not. That is the argument that we have been putting forward, and surely the Government must recognise it.
    Farming is a difficult industry to pursue in any circumstances, and if a person makes up his mind to do something else it is not easy to go back into it. I wish that the Government would recognise that. If I suddenly inherited a boat, I should not go to sea immediately. I should not go down a mine because I had suddenly found that there was a great opportunity under the ground. The same argument applies to agriculture. It is time that the Government recognised that and appreciated that there is much sense in the amendment. I hope that the House will support it.
    8.15 p.m.
    Mr. Pym: Despite all that the Parliamentary Secretary said, I hope that even at this late hour he will reconsider his position. The hon. Gentleman was wise enough and generous enough to say that the amendment is a genuine attempt on the part of another place to accept the weakness of the original proposals that were identified in the House in Committee and on Report and to go some way towards meeting them by putting in the words contained in the amendment.
    The case of my hon. Friend the Member for Buckingham (Mr. Benyon) is extremely powerful. If words are not added to the Bill such as are contained in the amendment, it means that someone will be eligible who has had only two years' practical experience. We know from Clause 2 that that may be of a rather limited and part-time nature. From the point of view of education and training, he may have undertaken a course in a subject that has no remote connection with agriculture.
    I totally agree with the Minister that someone who studies a separate subject is a better person in all senses of the word and a person who is more fit to

    1207
    take part in any activity of life. However, in the context of the Bill, the result is that the qualification is reduced from being what many people thought to be fair and reasonable—namely, five years basically devoted to agriculture—to two years' practical experience. That is the weakness.
    I was interested to recognise that the hon. Gentleman was sensitive about the fact that what he was saying could conceivably be construed as being in conflict with what the Prime Minister said yesterday in Oxford. The right hon. Gentleman said some sensible things about education. He spoke about training people to become useful citizens. He made the point—I daresay it is in the hon. Gentleman's mind—that they must be trained and taught in a particular subject or area in which they can make a useful contribution in their working lives. I was interested to observe that the hon. Gentleman was a bit sensitive about that. Perhaps he will explain further what he means. I do not think that he gave an adequate account in his opening speech.
    I disagree with almost everything that was said by the hon. Member for Renfrewshire, West (Mr. Buchan).
    Mr. Strang: It was natural that I should refer to the Prime Minister's speech, as it must be in the minds of many hon. Members today. My right hon. Friend's speech is highly topical. There was nothing in what he said to suggest that those who take degrees in pure subjects should not go into industry. On the contrary, my right hon. Friend the Prime Minister was arguing among other things that we want more people in industry.
    Mr. Pym: I quite agree. We also want people in agriculture with other areas of knowledge and expertise. However, by rejecting the amendment the House would be limiting the eligibility stakes to only two years in agriculture.
    I disagree with almost everything that was said by the hon. Member for Renfrewshire, West. He indicated that he is not thinking about the well-being of agriculture or its future prosperity. The hon. Gentleman is concerned with Socialism and the other place. He said that it is quite unnecessary for this place to have another opportunity to discuss the mat-
    1208
    ter. He wants a uni-cameral Parliament, no doubt carrying through measures on a majority vote, even if only 38 per cent. of the electorate voted for the Government. That is the sort of Parliament that he would like. The hon. Gentleman's speech excited the PPS—the hon. Member for Lichfield and Tamworth (Mr. Grocott)—to refer to the land as the people's land. That is the good old principle "What's mine is mine, and what's yours is mine, too". I do not think that is a good basis if we are contemplating a prosperous and progressive agricultural industry. That should be the only purpose of agricultural legislation.
    I believe that the Parliamentary Secretary was entirely genuine when he indicated that the amendment is, in his opinion, a genuine attempt to get much nearer to what is required without being so restrictive in the course that has to be followed. I hope that on a fair and reasonable basis, bearing in mind the implications of the clause and the whole Bill, that he will have second thoughts.
    Mr. Nicholas Winterton: Will my right hon. Friend direct his attention to the difference between education and training? I direct his attention to remarks made by a person who is responsible for training in agriculture, to the effect that education is learning how to learn and training is learning how to put into practice what has been learnt. Is not that vital when tenancies are concerned if we are to get the maximum out of the agricultural industry? Is it not for that reason that we have been supporting the amendment that was correctly accepted in another place?
    Mr. Pym: I go along with what my hon. Friend has said. I confess that I can imagine cases where someone would be eligible to be considered for succession to a tenancy when he has had only two years' practical experience and has studied a course in some other subject. That is likely to happen. However, there will be other cases where people who have gone through exactly the same process will prove not to be adequate tenants and will not do the job required for agriculture reasonably well and adequately, or not as well as they would have done if they had had proper training in agriculture. There may be some cases where it will be quite suitable and other cases where it will not be suitable.

    1209
    That is why it is reasonable for the House to support the other place because to some minor extent the words that have been inserted narrow the definition of eligibility. That is why I hope that the Parliamentary Secretary will advise the House that, in all the circumstances, this is a reasonable concession to make.
    Question put, That this House doth disagree with the Lords in the said amendment:—
    The House divided: Ayes 178, Noes 120.
    [For Division List No. 332 see col. 1405]
    Question accordingly agreed to.
    Lords amendment: No. 9, in page 23, line 36, after "if" insert "either (a)".
    8.30 p.m.
    Mr. Strang: I beg to move, That this House doth disagree with the Lords in the said amendment.
    Mr. Deputy Speaker: With this we may take Lords Amendment No. 10, in page 24, line 5, at end insert
    "or
    (b) on the last occasion when there died a sole (or sole surviving) tenant (within the meaning of subsection (1) above) of the holding or of such an agricultural holding as is described above a direction as mention in (i) above or a grant as mentioned in (ii) above was made in favour of any person mentioned in paragraphs (c) or (d) of subsection (1) above."
    Mr. Strang: The House will recall my right hon. and learned Friend the Secretary of State for Wales in the debate on 8th March setting out the reasons why the Government decided on a limit of two successions for the family succession scheme. This was subsequently debated at length in the later stages of the Bill in this House and also in another place. I need not detain the House with a lengthy explanation, therefore, because the Government's views are already on record.
    I said earlier that we were dealing with a piece of legislation altering the balance between the respective rights of the tenant farmer and the landlord. This is simply another amendment which will restrict the benefit to tenant farmers and have the effect of tilting the balance
    1210
    further towards landlords at the expense of their tenants.
    It is for this basic reason, and for all the detailed reasons that I have explained on other occasions, that the Government find the amendment unacceptable. We consider that the two successions already provided for in Print No. 184 strike a balance which is fair to all the interests and that they are based on an up-to-date precedent.
    Mr. Jopling: As the lion. Gentleman said, we are again on somewhat familiar ground. For that reason, therefore, a very long exposition of the Opposition's views will not be necessary. However, on this occasion we again welcome the suggestions which the other place has put to us in this amendment.
    This is a point which we in this House have debated during the previous stages of the Bill, and I make no apology for saying again that in our view it goes too far. I am very sorry that the hon. Member for Renfrewshire, West (Mr. Buchan) has not returned to the Chamber following the last Division. He was right when he said earlier that the view of the Opposition was that the Bill went too far. We believe that many of the motivations for it come principally from political prejudice and not from a feeling of what is good for agriculture.
    The comments that we have heard during our debates today strengthen that argument. Without doubt, the one remark which will cause the greatest excitement in the Press is the interjection that we had from the Parliamentary Private Secretary. As one who spent a year and a half in his seat, I know that I should have had the sack very quickly if I had made such a remark. However, we have a new Minister here, and I am a little diffident about referring to what the hon. Gentleman said, because I know that a PPS is in a very difficult position when it comes to defending himself since he is, as it were, part in and part out of the Government. I know that Parliamentary Private Secretaries should never interject in a debate for which their lord and master is responsible.
    We are in the strange position of having a new Minister whose views on the sort of matters we have been debating have not yet been ascertained. We are anxious to hear his views on, for example, the

    1211
    nationalisation of land. The Parliamentary Secretary has done us the great honour of saying that he believes that agricultural land is the people's land—with the implication that the private rights of landlords are to be cast aside. He seemed to be reflecting exactly the views of the Labour Party National Executive Committee and his remarks will be seized upon with great interest by the agricultural Press. Farmers are bursting to know the attitude of the new Minister to the nationalisation of land. Perhaps we have heard an interesting clue as to what that attitude will be.
    I am pleased to see that the hon. Member for Renfrewshire, West has returned. I said earlier that he was right to suggest that we think that the Bill goes too far. We have been looking at the possibility of a number of amendments to try to blunt its cutting edge. This pair of amendments go a considerable way towards doing that.
    Without the amendments, the Bill could have a variable effect. A tenancy granted to a farmer could be handed on to his son and his grandson. Three generations could enjoy the tenancy of that farm.
    We discussed this matter in Committee and it was generally agreed that in some cases that period could extend to 100 years. If the succession went from the original tenant to his brother and then to the brother's son, it might last 60 years and would be passed on to only one generation.
    There is no reason in the Bill why a tenancy should not be passed from the original tenant to his brother and on to another brother. Such a tenancy would last for an average of, say, 40 years and would not have jumped a generation. Although a case might be made for a limited succession in terms of time, it is difficult to make a case for a tenancy spanning three generations.
    We seek to remove the provision which allows a tenancy to pass to more than one generation. We regard that as fair. However one looks at the Bill, there will be someone at the end of the chain who will not succeed. Indeed, as the Bill stands, the great-grandson could not succeed because only two generations are involved. We think that when faced with
    1212
    uncertainty it is right to confine ourselves to the single generation. That is reasonable.
    I am disappointed that the Government have not taken up this matter before. This proposal would be widely welcomed. It would mean that many more farms might be available for letting than will be available under the Bill as it stands.
    I am sorry that the Government appear to be persevering with their stated attitude. I hope that, even at this late stage, they might be persuaded to change their mind. If not, I shall feel obliged to ask my right hon. and hon. Friends to divide on this amendment.
    Mr. Roderick: After weeks of arguing, we have become accustomed to the red herrings which the hon. Member for Westmorland (Mr. Jopling) keeps bringing into the debate. The hon. Gentleman continues to go outside the matter under consideration and to produce sterile and irrelevant arguments.
    The hon. Gentleman referred to motivations coming from Labour Members which might be political. I suggest that he should dwell a little on his own motivations in opposing some of these measures. We have not been motivated on political grounds in trying to seek this protection. I would willingly conduct him to some of the people in my constituency who have been asking me to support these proposals. Those people are not known to be politically motivated in their outlook. Indeed, I am prepared to show the hon. Gentleman some of the correspondence which has come from tenant farmers' widows who are under notice to quit and will not be covered by this legislation. Let him argue with them that they are being political in their desire for this legislation and for it to be retrospective.
    The hon. Gentleman surprises me in that he is prepared to support this measure. We know from Committee that he seems to be prepared to support succession to his widow but not to his son. Therefore, he is prepared to cut down succession to one. It is a sad reflection that he has no confidence in his family and is prepared to limit the Bill in this way.
    Mr. Jopling: It is understandable.
    Mr. Roderick: No. It is for the hon. Gentleman to consider his family. It is not for me to comment on this matter.
    We were sad to learn that the Government were to limit this provision to two successions. Therefore, we shall not support the idea that it should be reduced to one succession.
    In Committee there was much talk about succession from one generation to another. It is nothing of the sort. We are talking about a transfer. Certain hon. Members, who have tried to illustrate this transfer, have been erroneous, because the time span can be as little as two or three years.
    I should welcome comments by the hon. Member for Westmorland on the briefing given by the National Farmers Union. At all stages in Committee the hon. Gentleman was fond of producing the views of various organisations. However, we have heard little tonight about the NFU's comments on this amendment. Perhaps the hon. Gentleman would care to tell us what he thinks of those comments at this stage. I believe that the NFU has done a service to tenant farmers by producing a clear and lucid view on this matter. I welcome the proposal to restore the Bill to its original form.
    Mr. Clegg: I want to make a brief contribution to the debate. This is the first occasion on which I have taken part in this particular argument, but it seems to be treading familiar ground with both sides of the House saying that this is a political matter. One thing I am certain about. If one gets up in this House and defends the landlords' point of view, one will surely incur a great deal of abuse from Labour Members. The last time I spoke in defence of landlords, I was called a reactionary Fascist thug. However, I accept such abuse with some pride as a kind of battle scar.
    8.45 p.m.
    The hon. Member for Brecon and Radnor (Mr. Roderick) quite fairly made the point that the NFU supports the point of view he has expressed. But I must differ from the NFU and its attitude towards this matter generally. My objection to its point of view is coloured by my experience of what protection has done to other types of property. When Parliament imposes protection on pro-
    1214
    perty, it immediately diminishes the value of the landlord's holdings and the landlord gets no compensation. Parliament abrogates the right of people without compensation. The value of a landlord's holdings before the passing of this Bill and afterwards will be entirely different.
    Our most recent experience has been the extension of Rent Act protection to furnished houses. The hon. Gentleman said that this provision is a good thing for tenants who are to be protected and of course it is. The people who will suffer from this are not perhaps the tenants, because they will gain certain advantages. The landlords will suffer. But the people who will suffer even more are those who are neither landlords nor tenants—the people who are waiting to get tenancies. They are the people I am worried most about.
    I believe that the effect of this clause as it stands will be to dry up the supply of holdings. There will be a tendency when tenancies finally come to an end for the land to be included in the owner's own holding or to be sold off. Yet there is a great queue of people who want lettings.
    In my constituency, there is a fine agricultural college. What worries me is not that the graduates are not able enough but that it will be very much more difficult for them to get tenancies to start farming, because at the end of the day the landlords will not re-let their farms. That is precisely what has happened to housing under the Rent Act protection. Thousands of young people are now without housing because Rent Act protection has resulted in landlords no longer letting houses.
    This is perhaps an unpopular view. Protection is always acceptable to those who benefit. But the people I am most worried about are not so much the landlords, although they will suffer, as those who want to become tenants of farms. They are the people who will be deprived of the opportunity of working farms which would otherwise be available.
    Mr. Roderick: Does the hon. Gentleman have any evidence that a large supply of farms is coming on to the market for letting at present and that that supply will dry up? My evidence is that the supply almost dried up years ago. The

    1215
    hon. Gentleman has raised the question of protection, but all we seek here is that the successor of the tenant should have the right to argue his case. He will not necessarily get the protection automatically but simply will have the right to argue for the succession.
    Mr. Clegg: With regard to the latter point, the incoming tenant, if he is to succeed to his father, or whatever the relationship might be, must satisfy the criteria laid down in the Bill. That I understand.
    As to letting generally, in my own constituency there have been lettings by landlords in the past 10 or 15 years, and not all the farms that have come to hand have been kept in hand. Some of them have been let out again. This is widespread throughout the country. I am fearful, because of the comparison with other Acts which restrict the rights of landlords to possession, that the stream will dry up.
    This is conjecture as to what the future holds, but every instinct I have tells me that this provision will make the landlord and tenant system very rigid. There is a rigid system with the Land Act. People are afraid to leave, or to move from one part of the country to another. The same rigid system will come about in this case, and I do not believe that that is good.
    For these reasons I support the amendment, but I regret that it does not go far enough for me.
    Mr. A. J. Beith: I entirely disagree with the line taken by the Conservative Front Bench on the measure, and with this part of it in particular. I welcome the Government's commitment to do something for tenant farmers. I see the amendment as the Minister saw it—as part of an attempt to narrow the provisions by those who cannot quite bring themselves to oppose it. If they disagree with the principle involved—and there is a principle here—I wish they would oppose it outright.
    The hon. Member for Westmorland (Mr. Jopling) thought that he would meet with a ready response when he first reacted in a very hostile way to the Government's introduction of the clauses, and there are those—particularly among the Country Landowners' Association—who would be pleased with his reaction.
    1216
    From then onwards it has been a matter of back-pedalling, rather than opposing the measure, as the hon. Member for North Fylde (Mr. Clegg) has done straightforwardly with honest arguments. Simply to seek to confine the extent of the succession provisions is to try to have it both ways, and I do not think that is of benefit either to the tenant farmers or to those potential tenants for whom the hon. Member for North Fylde was concerned.
    The Government's proposals require landlords to do what most of the best landlords do and are proud to do now. The best landlords in my constituency—I am not talking about people who vote for me, and in any case some of the landlords are Members of the other place and do not have votes at all—give succession as a matter of course to tenants and near relatives of tenant farmers who are competent farmers. I can understand that they do not like being forced to do what they would do anyway, but they forget that not all landlords are as they are. There are some bad landlords, and there are some who, for a curious variety of reasons, are not prepared to do the obvious thing.
    Some of the bad landlords in this respect are not individuals at all but institutions and organisations. They are among the most reputable and proper institutions. I came across one charitable body which considered that it was obliged, since it was a charity, to put out all tenancies to sealed tender whenever they fell vacant. The unfortunate potential successor, the son, had only one opportunity to bid for the holding. He had to put on a piece of paper a rent at which he could only guess, place it in a sealed envelope and submit it for consideration by the trustees of the charity.
    This charitable body was not trying to behave badly. It was trying to behave properly. In the absence of any clear legal provision it acted in a way which was severely detrimental to tenant farmers. That is one kind of bad landlord—not a vicious human being but an institution which would benefit from the kind of control and guidance that the Act will give. But there are bad landlords who ought to be brought into line, and this legislation will do that.
    Some of those who oppose the new provisions have not the faintest idea of

    1217
    the insecurity, unhappiness and worry which are the lot of the tenant farmer who wonders whether his son will be able to take over the farm. I can give plenty of illustrations from my experience of the way that permeates their life. It can lead to their saying "For heaven's sake, don't offend the landlord, or our son will not get the farm". It may be an unjustified feeling, but the feeling is most certainly there and it permeates much of the life of the tenant farmer. Those who seek to oppose the measure in a variety of ways have not recognised the extent of that feeling and the shadow that it casts over the life of many tenant farmers and their families.
    Mr. Jopling: A few months ago the hon. Gentleman said, probably inadvertently, that when these new clauses were proposed I had greeted their announcement with instant hostility. I think that is perhaps unfair. If he would be kind enough to look at the Committee report of 3rd February he will see that I said:
    "We shall want carefully to look at what is proposed and to consider it in the light of the Minister's statement that he wishes to strengthen the landlord-tenant system."—[Official Report, Standing Committee C, 3rd February 1976; c. 423.]
    I do not regard that as instant hostility. I am sure the hon. Gentleman would perhaps wish to phrase his words rather differently.
    Mr. Beith: Indeed, I would not. I would regard that as the most mealy-mouthed comment on the proposals that could possibly be constructed. I have, however, also had the privilege of reading the hon. Gentleman's speeches in the country which have found their way to being printed in my local papers. Perhaps he cannot control the headlines put on those stories, but they give a very different impression from the meaningless passage he has just quoted.
    I greatly regretted the Government's decision to impose the two succession limit. I think they have put the limitations in the wrong place. The fears and reservations of landlords could have been met in other ways by looking more carefully at the competence test in this provision of the Bill and not limiting the succession in this way. The hon. Member for North Fylde (Mr. Clegg) indica-
    1218
    ted that one of the difficulties, since there is an eventual limit, is that landlords are open to the prospect—I think they will be encouraged by their estate agents—to take their farms out of the system when that limit expires and to take them in hand. I am sad that the Government should have chosen this way of restricting the Bill. I think that to go further and reduce it to one succession limit, as the amendment seeks to secure, would be to destroy the proposal almost entirely and to make a nonsense of it.
    In many cases the first beneficiaries of the new security of tenure will not be young men at all. They will be old men because I know of many cases—I am sure hon. Members who represent farming constituencies know of cases—where old men have stayed as the tenant long after their natural time of retirement precisely because they knew there was no other way they could keep their son on the farm. The son wanted to carry on fanning, but there was no guarantee that they would take over the tenancy. Therefore, the father aged 80 is still farming and the son is still living in the cottage, aged 55 or 60 and it is that son who will take over. It will not be very long before that son wans to retire and the whole scheme will have expired. The grandson, aged 30, who may be well trained and competent in farming, will enjoy no benefit from this scheme at all. We shall find ourselves back in the situation that men who wanted to retire, who would have retired years ago, and who would have handed over management of the farm instead are hanging on to the control, because that is the only way to keep the farm for their sons.
    Mr. Buchan: Does the hon. Gentleman agree that a twin method of dealing with this is to be able to relinquish the farm by resignation, rather than by death, and not to have specified two successions but just succession?
    Mr. Beith: I entirely agree with the hon. Gentleman. He and I were both involved in pressing a provision of that kind before the new clause was introduced. The Government's own new clause did not go as far as I would have liked, but we would be making a very foolish mistake if we were to allow only one succession. That would be a very great mistake.

    1219
    Hon. Members on the Conservative Benches argued strongly, when we were discussing the taxation of agriculture, and capital transfer tax, that farming, if it was to be good farming, must be farming for the future. It must be farming with a recognition that one's interests and one's family's interests rest in keeping up the quality of the farm and not getting the quickest profit with the least recognition of the future.
    I was critical of the Government's earlier proposals and I welcome their change of mind on some aspects of agricultural taxation. However, one cannot play this matter both ways. Farming in the future is very much involved in this issue. It is for the good of farming that the competent tenant farmer should have the assurance that, if his son shares that competence, his son can carry on that family business. No landlord stands to lose by that. If the tribunal's test is adequate, no landlord stands to lose by having a good farming son take over from a good farming father. We should be far too restrictive if we confined it to one generation.
    9.0 p.m.
    Mr. Jopling: Perhaps the hon. Gentleman will allow me, before he sits down—[HON. MEMBERS: "He has sat down."] The hon. Gentleman has made a slashing attack on the amendment. I should be interested to know whether he will explain why four Liberals in the other place voted for it. [Interruption.]
    Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Member for Berwick-upon-Tweed (Mr. Beith) appears to be indicating that he had sat down.
    Mr. Mark Hughes: Perhaps I may follow the points made by the hon. Member for Berwick-upon-Tweed (Mr. Beith). My one private regret is that we have chosen to put a number of transfers as a limitation and that this should be sine die. It does not matter how many transfers take place—there should still be a right of appeal to the tribunal. I regret that in their wisdom my right hon. and hon. Friends did not come to the same conclusion.
    We were told by the Opposition Front Bench that there must be a balance that keeps it down to one. I have rarely heard
    1220
    such nonsense. The one succession, as proposed in the amendment, is de facto a wrecking amendment that destroys the whole purpose of this measure, and it should be recognised as such.
    The landlord and tenant provisions in British agriculture have been at risk and under pressure from capital and income taxation provisions and from a whole range of other things long before we reached this matter and started dealing with it. It was precisely because the whole landlord and tenant relationship had been historically changed by successive Governments' taxation processes—largely those of my own party when in Government—that the need to do other things to correct the increasing imbalance arose.
    The position was that very few institutional landlords or, even more, private landlords, when they had the opportunity to take farms into hand, could not see that there was a considerable tax advantage by taking them into hand. Therefore, the supply of tenancies was being dried up for totally different reasons. When the Opposition Front Bench say that it is this measure that will dry up this supply, their humbug is apparent to anyone who considers agricultural matters for more than a few moments.
    The proposal in the amendment is that the transfer should be restricted to one generation. However, with a passing from a father tenant to a brother, what then happens if that brother is 75 years old and it then goes to another brother who is 76? As my hon. Friend the Member for Brecon and Radnor (Mr. Roderick) has pointed out, the whole process can be dead and finished and the landlord given free access—which, in the end, is where we differ.
    Again echoing the words of the hon. Member for Berwick-upon-Tweed, I wish that the Tory Party had had the guts to say "We are on the side of the landlords having exclusive power to choose their tenants." Conservative Members should have said that, instead of carping along. In fairness, I must say that when the hon. Member for Westmorland (Mr. Jopling) debated the matter on television with me, he was honest enough to say precisely that, and that that was where the Conservatives stood when they first responded to my putting down the original new

    1221
    clauses, which have now been withdrawn. Ever since then, they have lacked the courage of their own convictions. This paltry amendment that they are trying to get the House to accept is the absolute abnegation of their own convictions.
    Mr. Nicholas Winterton: It is always a great pleasure to follow the hon. Member for Durham (Mr. Hughes) because, more often than not, his contributions to our debates are constructive and responsible. I regret that in the speech he has just made he did not maintain his usual standard. He unnecessarily attacked my hon. Friend the Member for Westmorland (Mr. Jopling), who has endeavoured to deal with this Government proposal from the start in a constructive and responsible way. My hon. Friend has endeavoured to reflect the interests of both land owners—not landlords, but those who own land—and tenant farmers. We on this side have certainly received many representations from both parties. I leave it to the House to decide whether the hon. Gentleman's argument held water or not.
    I come now to the speech of a Member who does not seem to know whether his party is coming or going. I refer to the hon. Member for Berwick-upon-Tweed (Mr. Beith). The fact is that four of his noble Friends in the other place voted for the Lords amendment now before us. Perhaps the hon. Gentleman should make clear in this House that on an issue such as this the Liberal Party is thoroughly divided and does not know whether it is coming or going, which is only typical of so many of the stands which it takes on many important issues today.
    Mr. Beith rose—
    Mr. Winterton: No, I will not give way at this stage. So often in the House we see the Liberal Party trying to make political capital in order to capture a few votes. The truth is that many of us on the Conservative Benches have clearly stated that we believe this Government proposal to be very damaging to the landlord-tenant relationship, and several of us have stated that view consistently in the Chamber and in Committee.
    The hon. Member for Berwick-upon-Tweed talked about the importance of the tenant farmer in the life of this country
    1222
    and in the production of food from our own land resources. I agree with him to that extent, but perhaps he will direct his attention also to the tremendous problems facing the ordinary business man, let alone the tenant farmer, in trying to pass some sort of business on to his son after all the penal and pernicious legislation passed by this Socialist Government, whether in capital taxation or the additional burden of form filling which has again and again been piled upon our business men.
    The hallmark of the present Government and, to a lesser extent, of the last Conservative Government, is, perhaps, that they have tried to legislate for every eventuality. In my view, there are certain things which cannot be legislated for, and this is one of them. All hon. Members on both sides have emphasised that it is only a minority of cases, a tiny number of cases, which are creating a problem and that, basically, the landlord-tenant relationship has been excellent. Even the hon. Member for Berwick-upon-Tweed said that the vast majority of landlords have readily agreed to succession of tenancy on their property or farms.
    Why, therefore, by forcing this piece of misguided legislation upon the farming community and land owners, are the Government trying to upset what has been a very satisfactory and profitable relationship?
    I fully support the honest statement made by my hon. Friend the Member for North Fylde (Mr. Clegg). He put the case in a nutshell, and I endorse every word he said. My hon. Friend the Member for Westmorland made the same case though in different words, and reached the same conclusion. We do not like what the Government are doing, and we have said so. We appreciate that in this Parliament we are in a minority, and it is therefore our duty to try to improve the proposals which the Government force upon an unwilling nation. That is why we are supporting the amendment that was passed in another place.
    In future the Government will have a lot to answer for by spoiling the unique relationship between landowner and tenant. My hon. Friend the Member for North Fylde said that the Rent Act dried up the availability of private rented

    1223
    property. Many people are today suffering because of that Act which was put on to the statute book by the Government party. Are they now going to do the same with farming? I agree with the hon. Member for Brecon and Radnor (Mr. Roderick), supported as he was by the hon. Member for Durham, that in recent years the number of farms becoming available for rent has dried up dramatically because of capital taxation and security of tenure legislation. This legislation we are now debating will dry up the availability even more—and that view is supported by the National Federation of Young Farmers' Clubs. [Interruption.] That laughter is interesting and I hope that it will be taken up by the farming Press which is glaringly absent at present. The hon. Members for the Isle of Ely (Mr. Freud) and for Renfrewshire, West (Mr. Buchan) are laughing about the objectives of the young farmers' clubs and the way in which they operate.
    Mr. Roderick: In response to the directive from the National Federation of Young Farmers' Clubs I inquired of my local branch and its members applauded me for disagreeing with the National Federation.
    Mr. Winterton: I can only say that the Celts always choose to be different. I remind the hon. Member for Brecon and Radnor that the branch of his young farmers' club is part of the national body which came to a different conclusion. I am glad that he has the support of the local branch, but it is a national organisation, the members of which are our future farmers, and vital to future food production in this country, and I attach importance to their views.
    I wish to associate myself with the view expressed by my hon. Friend the Member for Westmorland, and I repeat that I endorse the comments of my hon. Friend the Member for North Fylde. We are not trying to be popular. I have never set myself out to do that. I consider an issue and reach a conclusion on the evidence presented to me. A lot of evidence has been presented to hon. Members on both sides and I have reached the conclusion that, overall, the proposal relating to the succession of tenancies will be damaging to the tenant-landlord situation. We are here to try
    1224
    and improve matters and I therefore fully support the amendment limiting succession to one.
    Mr. Buchan: I plead guilty to a certain personal interest in the Bill and particularly in the amendment. My interest is paternal in that if it is not my own child it is my treated child. I introduced the same principle for Scotland in 1968. That is relevant because the hon. Member for North Fylde (Mr. Clegg) and others based their arguments on the proposal resulting in a drying-up of tenancies. In Scotland we are in the fortunate position of having some evidence. There has been a tendency towards a slow drying up of the availability of tenanted farms, quite apart from any legislation. It is now extremely difficult for anyone to find a tenanted farm.
    9.15 p.m.
    I want to give the figures for Scotland for the period since I introduced this measure there. In 1967 the proportion of full-time farms let to tenants was 46 per cent. Four years later it was 44 per cent. In 1973 it was 43·5 per cent. and in 1974 and 1975 it was 43·6 per cent. There was a negligible shift over the 10 years, certainly nothing as alarming as the general drying up of tenanted farms in England. Therefore, it is utter nonsense to say that this legislation has a drying-up effect.
    However, we are told that it will make matters difficult for those outside, those who are not on a farm, to obtain a tenancy. If the farm is let to somebody on it, somebody outside clearly does not get it. By the same token, if it is let to somebody outside, somebody inside does not get it. There is a greater balance of interest in favour of the man who has been working on the farm. The argument is demonstrably illogical rubbish.
    Why is the argument advanced? Are the Opposition in favour of the principle or are they using the amendments as yet another way to try to gut the Bill or to kill it without putting themselves in the position of having to say whether they are in favour of the principle of the Bill?
    There have been one or two impassioned speeches. I admired the passion with which the hon. Member for Macclesfield (Mr. Winterton) said that he admired the balanced judgment of his hon. Friend

    1225
    the Member for Westmorland (Mr. Jopling). Never before have I heard balanced judgment praised with so much passion. We heard passionate speeches from Conservative Back Benchers, but there was total silence from their Front Bench. We did not hear from the official Tory spokesman where they stood, at any rate in the House, though the hon. Member for Westmorland went to an agricultural symposium in Oxford at about Easter and made a devastating attack on the Bill. According to my hon. Friend the Member for Durham (Mr. Hughes), he did the same on television, but he has not done it on the Floor of the House. Here the Opposition have presented a balanced judgment which consists of supporting amendments designed to wreck the principle of the Bill.
    Does the right hon. Member for Cambridgeshire (Mr. Pym) accept or reject the principle of succession to tenancies, as is enunciated in the Bill? I shall gladly give way to him, to the hon. Member for Westmorland or the chairman of the Tory Party's agricultural group if they will give me the answer. None of them rises. They have avoided saying where they stand because they want to please the landlords and obtain the farmers vote. They cannot do both because there is no balanced judgment on this matter. There is no compromise between saying that the landlord has the right to decide the tenancy and the Bill, which says that a tribunal should have the right to do so on the basis of the association of the person concerned with the farm. It is one or the other, and the passion of the hon. Member for Macclesfield for a balanced judgment is so much wasted wind.
    My first reason for speaking was to present the figures and to establish the principle. The second matter to bring out is the attitude of the NFU. Conservative Members have quoted the Young Farmers' Clubs, but they have been careful not to quote speeches made in the other place. I am not surprised, in view of the argument there. There are other interests, the most important being those of the farmers. Their organisation, the NFU, says in its brief:
    "Moreover, at the Committee stage in the House of Lords when this amendment was moved and carried, the suggestion was made that the NFU agreed that it might be desirable to provide that succession should not
    1226
    extend over one generation. It is therefore necessary to emphasise that this is not a correct statement of the NFU's view, as was indeed made quite clear earlier this year."
    The brief goes on to quote that statement and continues:
    "The Union therefore accepts that limitation, since it will still overcome existing hardship cases, and give ample opportunity to study how the scheme operates in practice."
    The NFU rejects the concept of limitation but is willing to accept it in order to see how its works in practice. However, the union does not agree with the suggestion that only one transfer should be possible under this scheme.
    Mr. Nicholas Winterton: Will the hon. Member direct his remarks to the intervention by the hon. Member for Brecon and Radnor (Mr. Roderick) during my speech clearly indicating that his branch of the National Federation of Young Farmers Clubs actually sided with him? Does he not accept that certain NFU branches take a different view from the national body in a similar way?
    Mr. Buchan: Yes.
    Mr. Dafydd Wigley: Having heard the hon. Member for Macclesfield (Mr. Winterton) coming from somewhere in the middle of the last century, I feel obliged to explain why so many of us from the Celtic lands find ourselves in a different position from other hon. Members. There are few Welsh Members who do not have relatives from the last generation or two who have suffered because of the lack of the sort of provision being built into the Bill.
    The hon. Member for Durham (Mr. Hughes) brought forward an amendment about 12 months ago. He is no doubt aware of the suffering which has taken place in rural Wales because of the lack of succession of tenancy for tenant farmers. Although the problem today is not of the magnitude it was years ago, it still remains.
    The Conservative Front Bench acknowledges that it remains in a minority of instances, and says that because it is only a minority the provision is unnecessary. If the principle is acceptable for the majority of good landlords, by what token should it not be applied to the bad landlords?
    It is interesting to note the argument about the effect the Bill will have on the

    1227
    number of tenancies, but that argument cannot hold water because the tenancies will continue. The only possibility of a reduction is when the tenancy is withdrawn and the farm is sold, and the chance of that happening is reduced by this provision.
    The most regrettable aspect of this part of the Bill is that the provision does not go on in perpetuity. It is strange that while the Conservatives believe in the retention of inherited wealth they do not believe in passing on the benefits of hard work put into farms by tenant farmers to their sons.
    The hon. Member for Macclesfield was out of step in his criticisms of the Liberal Party when he said that there were three or four Peers in the other place who voted in favour of the amendment. If his party is so united on this issue, why are there only 120 Conservative Members voting in the Divisions? Where are the other 150 or so?
    The truth is that the Conservative Party is tied to the landowners who have dictated to Conservative Members what they must do—
    Mr. Nicholas Winterton: Rubbish!
    Mr. Wigley: They cannot escape that and therefore they are going through this mock battle, taking up the time of the House, when everyone knows that this provision must go through if tenants are to have a better life.
    If the hon. Member for Macclesfield were not from a part of the country from which so many of the absentee landlords who have devastated my part of the world came he would be more familiar with the situation which is facing the tenants in my area.
    Mr. Nicholas Winterton: Will the hon. Member give way?
    Mr. Wigley: No. The tenant farmers in my part of the world are waiting for this Bill because they know that their futures depend upon it. It is a pity that the hon. Member for Macclesfield does not know the circumstances in real life of people in this situation.
    Question put, That this House doth disagree with the Lords in the said amendment:—
    The House divided: Ayes 171, Noes 128.
    [For Division List No. 333 see col. 1407]
    Question accordingly agreed to.
    Subsequent Lords amendment disagreed to.
    Lords amendment: No. 11, in page 24, line 35, leave out from first "Act" to first "a" in line 36.
    Mr. Strang: I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Speaker: With this we may take the following Lords amendments:
    No. 16, in Clause 21, page 28, line 15, leave out:
    "Subject to subsection (3) below".
    No. 17, in page 28, line 23, leave out subsection (3).
    Mr. Strang: May I remind the House of the debates on the same amendment which took place in Committee and at a later stage in this House.
    As the House will remember, subsection (3) was intended by the Government to provide a balancing provision for the landlord, by enabling him to put forward a specific proposal to the Agricultural Land Tribunal that, because the holding is below commercial size, he intends to amalgamate it with other land within two years of the end of the deceased's tenancy to form a commercial holding. This is a more positive and stronger ground than the one in Section 25(1)(b) of the Agricultural Holdings Act 1948, under which a landlord can serve a notice to quit in the interests of sound estate management, one purpose of which would be the reorganisation of the holdings.
    However, the landlord's representatives believe that the purpose of the new ground (f) in subsection (3) is liable to be misunderstood by Agricultural Land Tribunals to the exclusion of the wider provision in Section 25(1)(b) and could prove counter-productive as a result. We have discussed the matter with them in considerable detail but they remain firm in their desire to see it removed from the Bill. We accepted this amendment in another place because if there is any possibility of confusion arising as to the

    1229
    purpose of paragraph (f) it is best removed from the Bill, as they have requested.
    Amendments No. 11 and 16 are the necessary drafting amendments which follow from Amendment No. 17.
    Question put and agreed to.

  Clause 19

    APPLICATIONS FOR TENANCY OF THE HOLDING
    Lords amendment: No. 12, in page 25, line 44, leave out from "below," to end of line 3 on page 26 and insert:
    "give a direction granting the tenancy of the holding to the applicant whom the landlord may choose from amongst those applicants who are deemed to be suitable by the Tribunal."
    Mr. Strang: I beg to move, That this House doth disagree with the Lords in the said amendment.
    Mr. Speaker: With this we may take Lords Amendment No. 13, in page 26, line 9, leave out from "applicant" to "the" in line 10.
    Mr. Strang: When a tenant farmer dies any of his close relatives as defined in subsection (1) that is spouse, brother or sister, child or treated child, will be eligible close relatives for the purposes of the family succession scheme provided they fulfil two conditions. The first is that they have derived their principal source of livelihood on the deceased tenant's farm for at least five years in the past seven years. This would establish a close link with the holding. The second condition is that they are not already the occupiers of a commercial holding elsewhere whether as owner or tenant.
    If an eligible close relative applies to the Tribunal under Clause 19(1) for a direction entitling him to a tenancy of the holding the tribunal will first satisfy itself as to his eligibility and then consider his suitability as a tenant using the tests set out in Clause 19(8). It is at this stage that the landlord is permitted to give his comments as to the suitability of an applicant to be the tenant of the holding. This is provided for in subsection (7). The evidence will be given in open court, normally on oath or affirmation, and the landlord may be cross-
    1230
    examined as in normal courtroom procedure. If there are several applicants the landlord can give his comments on each one in turn. Clearly, if he has any preference for one of them as his future tenant or has a decided objection to one or more of them there is nothing to stop him giving evidence in such a way as to indicate it. Finally, if more than one applicant is adjudged to be a suitable applicant the tribunal will have to choose between them unless the landlord is willing to accept joint tenants.
    What is at issue here is whether the landlord should have the ultimate right to choose between two or more sons, for example, who are competent to succeed the deceased tenant farmer or whether the final decision should rest with the Agricultural Land Tribunal. I believe strongly that it is important that this should rest with the tribunal.
    The hon. Member for Berwick-upon-Tweed (Mr. Beith) is not in his place at the moment, but he referred to a delicate point which always has to be put with care. The fact is that landlords are human, just like farmers and farm workers. There are some landlords—probably very few in number—who are capable of making a distinction between two sons on grounds which would not be agricultural and which I am sure most hon. Members would regard as unacceptable and unfair. As the hon. Gentleman indicated, there might be a situation under the present set-up in which the son of a tenant farmer was inhibited in the role that he played in the community and in his relationship with the landlord because he did not wish to offend him. Equally there might be a situation, if we accepted the Lords amendment, in which a son with a number of brothers all interested in taking over the farm could be inhibited for this very reason.
    I do not make too much of this, but it is a point which fairly should be placed on record. There are other considerations and we have discussed this matter in Committee. But I hope that the House will agree on reflection that it is right and appropriate, since the Agricultural Land Tribunal will have gone through all the steps and since the landlord will have been able to make clear his preference, that the ultimate decision should rest with the tribunal rather than with the landlord.
    Mr. Jerry Wiggin: It has been said already this evening that frequently the Opposition have to contend with political dogma from Government supporters. All the time in the arguments about this Bill, we find being pushed through the same philosophy that the tenant is always right and that the landlord is always wrong. Although the Government make nominal concessions to the personal relationship which exists in the country side between landlords and tenants, when it comes to passing legislation they do all that they can to divide up that relationship.
    Here, surely, is a classic example of the Government's inhumanity to landlords. My hon. Friend the Member for Buckingham (Mr. Benyon) described the effect of the Bill as "confiscation", which upset the Parliamentary Secretary. But how else can one describe the deprivation of a man's property for perhaps 70 or even 100 years than "confiscation"? It seems to be that in all reasonable argument.
    The Pooh-Bah of the Government in the other place, Lord Melchett, said:
    "We have already made a major concession to the landlord's interest by allowing him to give his views on the suitability of each applicant."
    Later in his remarks, the noble Lord said:
    "The whole concept of the scheme is one of social justice or equity."—[Official Report, House of Lords, 24th June 1976; Vol. 372, cc.—487–88.]
    We have here a potential situation, which I accept is unlikely to arise very frequently, where one, two or three suitable applicants having passed all the tests about which we have heard so much, may be accepted by the tribunal. Then one would have thought that the Government would allow the landlord to decide which of them he might decide to have as his tenant. But, apparently, the tribunal is to be blessed with some power that is greater and better than that personal relationship, which presumably will have existed for a number of years, between the landlord or his agent and the tenant concerned.
    I hate to think of the great trials of the past with the baby brought before Solomon, with Portia pleading the case in "The Merchant of Venice" and with
    1232
    Fred, Edward and Elizabeth Bloggins arguing before the Agricultural Land Tribunal which of them should have the tenancy of the farm not just for their lifetime but for the lives of their children and grandchildren as well. To me, this is wrong in terms of the ordinary human considerations about which we have heard so much in these debates.
    I leave the House with one thought. I wish to cast no aspersions on any of my colleagues or on any other hon. Member who may be present. But surely in the minds of all of us the question occasionally arises how a colleague might have been selected for the onerous task of representing his party in some constituency. Does it ever occur to us that, in the half-hour or three-quarters of an hour interview which the selection committee gave to that hon. Member, it may have made a mistake?
    9.45 p.m.
    Might it not have been better, with the wisdom of hindsight, if a different decision had been made? I do not wish to press this matter too far, but I ask the Minister to think about it again and when legislation to amend this Bill becomes necessary—as it undoubtedly will—I hope this matter will be put right. Great unhappiness is going to be caused by it.
    Question put and agreed to.
    Subsequent Lords amendment disagreed to.
    Subsequent Lords amendment agreed to.

  Clause 20

    APPLICATION BY NOT FULLY ELIGIBLE PERSON TO BE TREATED AS ELIGIBLE
    Lords amendment: No. 15, in page 27, line 10 leave out Clause 20.
    Lords amendment disagreed to.
    Amendments made to the words so restored to the Bill: In page 27, line 18, leave out 'some' and insert 'a material'.
    In page 27, line 35, leave out from 'person' to end of line 41.—[Mr. Strang.]
    Subsequent Lords amendments agreed to.

  Clause 23

    ARBITRATION ON TERMS OF NEW TENANCY
    Lords amendment: No. 18, in page 31, line 1, leave out from beginning to end of line 14 and insert:
    "(4) On a reference under subsection (3) above the arbitrator—

    (a) where question (a) is so referred (with or without question (b))—

    (i) shall determine what variations, if any, in the terms mentioned in that question are justifiable as there mentioned; and

    (ii) without prejudice to the preceding sub-paragraph, shall include in his award such provisions, if any, as are necessary for entitling the landlord to recover from the tenant under those terms a sum equal to so much as is in all the circumstances fair and reasonable of the aggregate amount of the compensation mentioned in subsection (4A) (a) below, and for entitling the tenant to recover from the landlord under those terms a sum equal to so much as is in all the circumstances fair and reasonable of the aggregate amount of the compensation mentioned in subsection (4A)(b) below,

    and shall accordingly, with effect from the relevant time, vary those terms in accordance with his determination, or direct that they are to remain unchanged;

    (b) if, where question (a) but not question (b) is so referred, it appears to him that by reason of any provision included in his award under paragraph (a) above (not being a provision of a kind mentioned in sub-paragraph (ii) of that paragraph) it is equitable that the rent of the holding should he varied, may vary the rent accordingly with effect from the relevant time;

    (c) where question (b) is so referred (with or without question (a)),"

    Mr. Strang: I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Speaker: With this, we may discuss Lords Amendment No. 19, in page 31, line 23, at end insert—
    "(4A) The compensation referred to in subsection (4)(a)(ii) above is—

    (a) the compensation paid or payable by the landlord, whether under the 1948 Act or under agreement or custom, on the termination of the deceased's tenancy of the holding;

    (b) the compensation paid or payable to the landlord, whether under the 1948 Act or under agreement, on that termination in respect of any such dilapidation or deterioration of, or damage to, any part of the holding or anything in or on the holding as the tenant is or will be liable
    1234
    to make good under the terms of his tenancy."

    Mr. Strang: These Government amendments were made in response to strong pressure at the Committee stage in another place and after consultation with the Country Landowners' Association and the National Farmers' Union.
    I should explain that at the end of a tenancy of an agricultural holding the tenant can claim compensation from his landlord for various matters as laid down in the Agricultural Holdings Act. The claim will include such matters as tenant's improvements, for example buildings, cultivations and unexhausted manurial values. Offset against this is the landlord's claim for dilapidations, for example, for breaches of the tenancy agreement. Examples under this heading would be uncleaned ditches, interior decorations to buildings and foul land. This is the outgoing valuation.
    At present, when a new tenant enters into occupation of the holding he pays to his landlord, as ingoing, the compensation for tenant right matters which has been paid by the landlord to the out-goer. This obligation is by contract though and not by statute, and can no longer apply when the family succession scheme comes into effect.
    It was never our intention that the family succession provisions should interfere with this normal flow of in-going and outgoing payments between landlords and tenants and we had not previously realised that problems might arise.
    I do not think that it is necessary to explain the amendments in detail. I do not expect that they will arouse much passion.
    Question put and agreed to.
    Subsequent Lords amendment agreed to.

  New Clause C

    NOTICE TO QUIT OVER TWENTY-FIVE YEARS
    Lords amendment: No. 20, in page 31, line 43, after Clause 23 insert new Clause C—
    "C.—(1) Save for section 16, this Part of this Act shall not apply where—

    1235

    (a) on or before the commencement of the tenancy, the landlord gave notice in writing to the tenant that possession might be recovered under this section; and

    (b) the tenancy commenced on or after 29th September 1976.

    (2) Section 24(1) of the Agricultural Holdings Act 1948 (which provides for the challenging of notices to quit by counter-notices) shall not apply where notice to quit is served in respect of a tenancy to which this Part of this Act (save for section 16) does not apply by reason of subsection (1) above and at the date of the giving of the notice to quit at least twenty-five years had expired since the commencement of the tenancy, and it is stated in the notice to quit that it is given by reason of the matter aforesaid."
    Mr. Strang: I beg to move, That this House doth disagree with the Lords in the said amendment.
    Fixed-term tenancies, other than those of a short duration which are approved by the Minister, are not permitted under the agricultural holdings legislation. This new clause, which seeks to introduce fixed-term tenancies for a period of at least 25 years, therefore represents a major policy change which is to apply to England and Wales only.
    A new clause in identical terms was discussed in Committee and defeated on a Division. The reasons for this, quite simply, were, firstly, that the clause would seriously limit a tenant's security of tenure, which cannot be in the best interests of agricultural efficiency, and, secondly, that it would defeat the whole purpose of the family succession scheme. No doubt hon. Members opposite will claim that the amendment has been made with the best of intentions so that the need for fixed-term tenancies can be considered. But the fact remains that the effect of the amendment would be to wreck the Government's family succession scheme.
    I hope that hon. Members will not wish to dwell on this matter at length. However, they may wish to push the idea that fixed-term tenancies should be seriously considered by the Government if such a proposal can be introduced in a way which does not conflict with the family succession scheme.
    In an attempt to shorten the debate, it might be helpful if I refer to a letter written on 19th August by my right hon. Friend, now the Lord Privy Seal to the secretary of the Country Landowners' Association. My right hon. Friend said:
    1236
    "You will of course know from the discussions at the Committee stage of the Bill in the House of Lords, the reasons why we are opposed to the inclusion of the new clause. As Lord Melchett—the Government spokesman—explained at the time, fixed-term tenancies must be examined with considerable care before any decision is taken for or against their re-introduction; and he agreed with Lord Stanley of Alderley that this was something which would be better considered in the context of an overall review of the agricultural holdings legislation. With this possibility in mind I should be happy to look at any formula which you can suggest for allowing fixed term tenancies without undermining the family succession scheme."
    The main body advocating fixed-term tenancies is the Country Landowners' Association. That letter makes it clear that the Government are prepared to consider any proposals which do not undermine the family succession scheme. I hope that, by making this information available, hon. Members will agree that it is inappropriate at this stage in the passage of this legislation to make such a drastic change.
    Mr. Wiggin: The Royal Institution of Chartered Surveyors has made clear on a number of occasions that it is not satisfied with the present arrangements for landlord and tenant legislation. Therefore, it has added its considerable and impartial voice to the request for a complete review of landlord and tenant legislation.
    We have made clear from the outset—I certainly made it clear from this Dispatch Box on Second Reading last year—that we did not see this Bill as a suitable vehicle for reforming the law on landlord and tenant. The Government have introduced a substantial change. This is a major alteration to all that has gone before and it will completely alter the operation of the law on landlord and tenant in the countryside.
    It would appear that perhaps some small measure of agreement is beginning to come about on this matter. Judging by the Minister's letter and other statements by the Government, it would seem that the Government are moving towards the idea of a review. My right hon. Friend the Member for Cambridgeshire (Mr. Pym) said on 8th March:
    "Our position on the Opposition Benches has been and still is that a review of the working of the agricultural holdings legislation is necessary and, indeed, overdue."—[Official Report, 8th March 1976; Vol. 907, c. 58.]

    1237
    I think I can set the Parliamentary Secretary's mind at rest by saying that we do not intend to divide the House on this amendment for just that reason. We do not wish to anticipate any review which may take place.
    But we should be clear about what has happened in the last few years. Even the NFU, in its Blue Paper sent round today, admits that there has been a drying up of the market in farms to let in recent years, and it blames taxation, as many of us have done. I am in no doubt that taxation is a substantial cause of the difficulties. Equally, of course, another cause is the security of tenure given by the 1948 and 1958 Acts to tenant farmers, which makes landlords reluctant to relet farms when they become free. It was for this reason that the 25-year tenancy was proposed. The objective was to see that more farms came on to the market.
    The hon. Member for Renfrewshire, West (Mr. Buchan) quoted figures from Scotland. I do not believe that they are relevant. If he were to study week by week, as I did over many years, the number of farms coming on to the open market to rent, he would be astonished at how few opportunities there are for anyone with no connection in farming to start from scratch. It is this point which it seems impossible to get over to the hon. Gentleman's colleagues. The harder one makes it to get a tenant out, the harder it is for a new tenant to come in—and that principle applies to furnished flats as well as to farms. Surely it is time that this argument began to carry weight.
    One of the aspects of the argument which has not been made much of tonight is that an agricultural tenancy is a contractual agreement between a willing tenant and a willing landlord. This aspect seems to have got lost in the argument about personal rights and human suffering. It is a contract freely entered into, and it should have a terminal date. Whatever legislation is introduced as a result of the inquiries there are to be, it is important that it should include some way of bringing such a contract to an end.
    The objective of this amendment was to breathe new life into this ageing sys-
    1238
    tem. I do not believe that any landlord with a farm that could be let will now do so, if he is properly advised. There will be some institutions and a handful of large landlords who will do so, but the vast majority will not be so advised and will not do so in the interests of their own property. The difficulties caused by this situation have led to so many partnerships being set up, with partnership companies doing so well, just to get round the existing landlord-tenant legislation. That is the view of many independent people in the industry—not people who own or rent land. It is convenient for the Opposition that I am a tenant farmer. I got the farm from my mother because my landlord did not see why I should not succeed. But I see no reason why he should have been forced to let me succeed. I have made that position clear.
    Two other matters mentioned in the original circular of the NFU have also been forgotten. The first is the question of hardship. The principle of hardship has become submerged under the rules which the agricultural land tribunals will now have to operate—in particular, the hardship to the landlord's son, who has just as much right to farm as the tenant's son. That aspect has been forgotten because of the bias of the Government. It is regrettable that the rights of the landlord to regain his own property have been ignored.
    Mr. Strang: I am sure that the hon. Gentleman does not wish to mislead the House. The greater hardship argument can still be deployed by the landlord before an agricultural land tribunal.
    Mr. Wiggin: That is not my reading of the legislation, and it will be up to others who have to interpret it to make the final decisions.
    The revision of this law is absolutely urgent. The Government ought now to instigate an independent committee, or whatever particular type of tribunal they like, to look into the whole matter. If they do that, at least they will have the support of the Opposition, because without it there will be no farms to let.
    It being Ten o'clock, the debate stood adjourned.

  BUSINESS OF THE HOUSE
  Motion made, and Question put:—
  That, at this day's Sitting the Lords Amendments to the Agriculture (Miscellaneous Provisions) and the Companies (No. 2) Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Bates.]
  The House divided: Ayes 174, Noes 124.
  [For Division List No. 334 see col. 1411]
  Question accordingly agreed to.

  AGRICULTURE (MISCELLANEOUS PROVISIONS) BILL
  Question again proposed, That this House doth disagree with the Lords in the said amendment.
  Mr. Farr: I rise in support of the Lords amendment. Despite what has been said, there is a great deal of merit in having a fixed term of rental between a willing landlord and a willing tenant. In this case we have a term of 25 years, which may be too long or too short. Whether the period be 10, 15, 20 or 25 years is open to argument. However, the amendment has considerable merit.
  I was glad to hear from the Minister that it was the Government's intention further to pursue the question of fixed-term tenancies later, to see whether a satisfactory conclusion could be reached in this respect.
  One of the reasons why I am very concerned is that I see in the hope of having a fixed-term tenancy that we have just about the last hope in Britain of retaining what I still call—and what I used to be very proud of—the farming ladder. Five or 10 years ago the farming ladder meant something in agriculture. There were the old county council smallholdings. From there a successful farmer would move to a small tenancy. Then he would move, farily rapidly, perhaps, as he accumulated a little more capital, to a larger tenancy. That is what was meant by the farming ladder. In that way the most successful, effective and efficient farmers got to the top, which is what was best in the long run for the whole industry.
  However, the clause calling for a succession from a farmer to his son and
  1240
  then to his grandson virtually spells the death knell of the old farming ladder. If we could introduce a fixed-term tenancy of 15, 20 or 25 years—as I would have hoped by this amendment, but if not, in a later Bill—it might provide a rung for the ladder to continue.
  I am not at all surprised that the National Federation of Young Farmers Clubs, with the notable exception of one or two clubs in Wales, is against the Bill. It can see that the bottom of the ladder is being cut off short and that if the Bill establishes, as it will, a closed shop for those tenants already in agriculture, the ladder will be cut off short and those who are not in agriculture on their own account now will be hard put to it, unless they are in a privileged position, to get into the industry.
  Let us consider all those students at present doing courses in the agricultural colleges. When the Bill reaches the statute book, we shall be saying to them, in effect, that unless they are direct descendants of existing tenants, unless they are in a position to go into farming on their own account, or unless they are prepared to go into farming as managers, they will not be able to enter the industry at all, and certainly not—at least, it is highly unlikely—as new tenants. The opportunities just will not be there. The few tenancies that become vacant will never be put on the market again.
  10.15 p.m.
  In due course the National Farmers Unions in England and Wales will see, not for the first time, that the young farmers' clubs are right. They are right to oppose the Bill as one of the most detrimental steps for the efficiency of British farming yet introduced.
  I am old-fashioned enough to believe that no industry can flourish once it becomes a closed shop. We are asked to make farming a closed shop. Without the influx of new blood and new ideas which new tenants bring in, not those descended from old tenants but new tenants with new ideas, straight out of college, bringing a new approach, the industry cannot flourish. This applies to farming just as it does to any other walk of life, and within a short time there will be a marked effect on the industry.
  Question put and agreed to.
  Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their Amendments to the Bill: Mr. Bishop, Mr. Stoddart, Mr. Jopling, Mr. Pym, and Mr. Strang; Three to be the quorum.—[Mr. Bishop.]
  To withdraw immediately.
  Reasons for disagreeing to certain of the Lords Amendments reported, and agreed to; to be communicated to the Lords.

  COMPANIES (No. 2) BILL [LORDS]
  As amended (in the Standing Committee), considered.
  Mr. Speaker: We shall take first New Clause 1, together with the following:
  Amendment (c) to New Clause 1, at end of subsection (8) insert:
  'that are directly related to that audit.'

  COMPANIES (No. 2) BILL [LORDS]
    New Clause 2

      SUPPLEMENTARY PROVISIONS RELATING TO APPOINTMENT AND RENEWAL OF AUDITORS.
      '(1) Special notice shall be required for a resolution at a general meeting of a company—

      (a) appointing as auditor a person other than a retiring auditor; or

      (b) filling a casual vacancy in the office of auditor; or

      (c) reappointing as auditor a retiring auditor who was appointed by the directors to fill a casual vacancy; or

      (d) removing an auditor before the expiration of his term of office.

      (2) On receipt of notice of such an intended resolution as aforesaid the company shall forthwith send a copy thereof—

      (a) to the person proposed to be appointed or removed, as the case may be;

      (b) in a case within subsection (l)(a) above, to the retiring auditor; and

      (c) where, in a case within subsection (1)(b) or (c) above, the casual vacancy was caused by the resignation of an auditor, to the auditor who resigned.

      (3) Where notice is given of such a resolution as is mentioned in subsection (1)(a) or (d) above and the retiring auditor, or as the case may be, the auditor proposed to be removed makes with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall (unless the representations are received by it too late for it to do so)—

      (a) in any notice of the resolution given to members of the company state the fact of the representations having been made, and

      (b) send a copy of the representations to every member of the company to whom notice of the meeting is or has been sent.

      (4) If a copy of any such representations as are mentioned in subsection (3) above are not sent out as required by that subsection because received too late or because of the company's default, the auditor may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting.
      (5) Copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the court may order the company's costs on an application under this subsection to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.
      (6) An auditor of a company who has been removed shall be entitled to attend—

      (a) the general meeting at which his term of office would otherwise have expired, and

      (b) any general meeting at which it is proposed to fill the vacancy caused by his removal,

      and to receive all notices of, and other communications relating to, any such meeting which any member of the company is entitled to receive, and to be heard at any such meeting which he attends on any part of the business of the meeting which concerns him as former auditor of the company.
      (7) Section 160 of the Act of 1948 (which is superseded by this section) shall cease to have effect.'.
      Amendment (a) to New Clause 2, in subsection (6), after "entitled to attend," insert:
      'or to be represented at'.
      Amendment (b) to New Clause 2, in subsection (6), after "and to be heard," insert:
      'either in person or by his representatives'.
      We shall also take Government amendments Nos. 36, 39, 40, 74, 81 and 82.
      Mr. David Mitchell: On a point of order, Mr. Speaker. May I ask whether it is the Government's intention to take a complex Bill through a stage involving 35 separate amendments and debates at this hour of the night? It is, moreover, a Bill which affects a very large number of businesses, especially small firms.
      Mr. Speaker: I think that the hon. Gentleman knows that that is not a point of order for me. I have to follow the Order Paper.

    New Clause 1

      APPOINTMENT AND REMOVAL OF AUDITORS
      '.—(1) Every company shall at each general meeting of the company at which there are complied with—

      (a) the requirements of subsection (6) of section 1 above, or

      (b) in relation to any time before the coming into operation of that section, the requirements of section 148 of the Act of 1948 (profit and loss account and balance sheet to be laid before company in general meeting),

      appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next general meeting of the company at which those requirements are complied with.
      (2) Where at any general meeting of a company at which the requirements mentioned in subsection (1) above are complied with no auditors are appointed or reappointed, the Secretary of State may appoint a person to fill the vacancy; and the company shall, within one week of the Secretary of State's power under this subsection becoming exerciseable, give the Secretary of State notice of that fact.
      (3) The first auditors of a company may be appointed by the directors at any time before the first general meeting of the company at which the requirements mentioned in subsection (1) above are complied with, and auditors so appointed shall hold office until the conclusion of that meeting.
      (4) If the directors fail to exercise their powers under subsection (3) above, those powers may be exercised by the company in general meeting.
      (5) The directors, or the company in general meeting, may fill any casual vacancy in the office of auditor, but while any such vacancy continues, the surviving or continuing auditor or auditors, if any, may act.
      (6) A company may by ordinary resolution remove an auditor before the expiration of his term of office, notwithstanding anything in any agreement between it and him; and where a resolution removing an auditor is passed at a general meeting of a company, the company shall within fourteen days give notice of that fact in the prescribed form to the registrar of companies.
      (7) If a company fails to give any such notice as is mentioned in subsections (2) or (6) above, the company and every officer of the company who is in default shall be guilty of an offence and liable, on summary conviction, to a default fine.
      (8) The remuneration of the auditor of a company—

      (a) in the case of an auditor appointed by the directors or by the Secretary of State, may be fixed by the directors or by the Secretary of State, as the case may be;

      1246

      (b) subject to paragraph (a) above, shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine.

      For the purpose of this subsection "remuneration" includes any sums paid by the company in respect of the auditor's expenses.
      (9) Where a company's auditor or auditors are holding office at the date of the coming into operation of this section, nothing in subsection (1) above shall be taken as terminating their appointment, or as requiring either their reappointment or the appointment of other auditors, before the conclusion of the annual general meeting of the company held next after that date; and subsections (1) and (2) above shall apply in relation to that meeting as if it were a general meeting of the company at which the requirements mentioned in subsection (1) above were complied with (whether it is such a meeting or not).
      (10) Nothing in subsection (6) above shall be taken as depriving a person removed there-under of compensation or damages payable to him in respect of the termination of his appointment as auditor or of any appointment terminating with that as auditor.
      (11) Section 159 of the Act of 1948 (which is superseded by this section) shall cease to have effect.
      (12) The repeal by this Act of subsection (2) of the said section 159 (existing auditors of company normally to be treated as reappointed without the passing of any resolution) shall not affect its operation in relation to any meeting of a company commencing within two months of the coming into operation of this section; and in relation to any such meeting section (Supplementary provisions relating to appointment and removal of auditors) (1) below shall apply also to a resolution providing expressly that a retiring auditor shall not be reappointed.'.—[Mr. Clinton Davis.]
      Brought up, and read the First time.
      10.18 p.m.
      The Under-Secretary of State for Trade (Mr. Clinton Davis): I beg to move, That the clause be read a Second time.
      In Committee the Government undertook, in reply to a number of probing amendments, to reshape the provisions dealing with the appointment and resignation of auditors and to bring forward on Report a coherent set of provisions which avoided the loopholes apparent in the original drafting. This we have done in these new clauses and related amendments. New Clauses 1 and 2 replace Clause 14 and repeal in their entirety Sections 159 and 160 of the 1948 Act, thus consolidating, for convenience, all the relevant provisions on this subject.
      Perhaps I should explain what the weaknesses of the present clauses are and

      1247
      then explain how the new clauses overcome them. Clause 15 requires an auditor who resigns in mid-term to make a statement about the circumstances connected with his resignation. The purpose of this requirement is to bring to light any relevant facts which may have led to the auditor's resignation and to prevent the auditor who comes across fraud or malpractice from taking the easy way out by resigning and remaining mute. The auditor who completes his term of office but then does not seek re-election is not required to make a statement. In the great majority of cases, there is no need for him to do so because he has completed his audit of the accounts and signed his audit report. If he is not satisfied with the accounts, he will have an opportunity to qualify his audit report. The audit report therefore achieves the same objectives in these circumstances as the resignation statement.
      However, it is possible under the Bill as drafted for an auditor to retire without either completing his audit or making a resignation statement. This is a serious lacuna. The problem arises because at present an auditor's term of office runs until the end of the annual general meeting. Normally, audited accounts are laid before this meeting and, if this is done, no problem arises.
      But accounts do not have to be laid at the annual general meeting; they can be laid at another meeting. If accounts are not laid at the AGM, the auditor can retire without completing his audit. This is clearly unsatisfactory. The clause therefore alters the auditor's term of appointment so that in future it will run until the end of the general meeting at which audited accounts are laid—that is until he has finished the job for which he was appointed. In most cases, the auditor will still retire at the AGM, but this amendment will close the loophole and will ensure that whenever an auditor ceases to hold office, he will either have completed his audit report or will have to make a resignation statement.
      The second problem lay in the fact that a company has at present no power to remove an auditor before the end of his term of office. As a result, a company could find itself without an effective auditor if the auditor ceased to act as such but did not formally resign, perhaps
      1248
      because he was too ill or had disappeared or done a bunk. It is essential that a company should at all times have an auditor and companies are therefore given the power in New Clause 1 to remove an auditor by ordinary resolution.
      We recognise that the new power of removal might appear to give the directors of a company the opportunity to remove an auditor who had uncovered fraud or malpractice. However, we are confident that as a result of the safeguards in New Clause 2 the power would not in practice be abused in that way.
      Under the provisions of New Clause 2, special notice is required for a resolution to remove an auditor before the expiration of his term of office and the auditor proposed to be removed is given the right to make written representations, to have the representations sent to every member of the company and to attend and to speak at the meeting at which a successor is to be appointed and the meeting at which his term would have expired. These safeguards should be sufficient to deter abuse of the new Dower of removal.
      Those are the main features of the new clauses. The essential aim of the clauses is to ensure that a company always has an auditor, and that the scope of an auditor to evade his responsibilities towards shareholders or to be influenced in that respect by directors should be reduced as far as possible. We are confident that the new clauses in conjunction with Clauses 15 and 16 as we shall seek to amend them meet those objectives.
      New Clause 1 is complex. Subsection (1) provides that every company shall appoint an auditor at a general meeting at which accounts are laid, and the auditor's term of office shall last until the next such meeting. The general meeting at which an auditor shall be appointed is defined by reference to the Clause 1(6) obligation to lay accounts before the company or the equivalent requirement in the 1948 Act for the period before Clause 1 comes into operation.
      Subsection (2) provides that the Secretary of State may appoint a company's auditor if one is not appointed in accordance with subsection (1) and requires the company to notify the Secretary of State of that fact within one week of the general meeting at which auditors should have been appointed.

      1249
      Subsection (2) provides that the Secretary of State may appoint a company's auditor if one is not appointed in accordance with subsection (1) and requires the company to notify the Secretary of State of that fact within one week of the general meeting at which auditors should have been appointed.
      Subsection (3) provides that a company's first auditors who hold office prior to the first of the general meetings referred to in subsection (1) may be appointed by the directors. This is equivalent to the present provision under Section 159 of the 1948 Act.
      Subsection (4) provides that the company in general meeting may appoint the first auditors if the directors fail to do so. This also follows the equivalent provision of the 1948 Act.
      Subsection (5) gives power to either the directors or the company in general meeting to fill a casual vacancy. This differs from the provision in the 1948 Act which gave this power to the directors only.
      Subsection (6) gives the company in general meeting the right to remove an auditor before the end of his term of office. This is a new provision which is necessitated by the change in the appointment procedure.
      Subsection (7) specifies the penalties to be imposed on a company and on every officer in default for failure either to notify the Secretary of State, under subsection (2), that an auditor has not been appointed at a general meeting at which one was required to be appointed, or to notify the Registrar, under subsection (6), of the passing of the resolution removing an auditor.
      Subsection (8) specifies how an auditor's remuneration shall be determined. That is identical to the current provisions. Subsection (9) provides certain transitional arrangements which I do not think I need go into.
      Subsection (10) provides that an auditor shall not be deprived of his right to compensation in the event of early termination of his office, even though subsection (6) enables a company to remove its auditor despite anything in any agreement with him.
      The rest are fairly technical provisions.
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      I come to New Clause 2. Subsection (1) species the resolutions relating to the appointment and removal of auditors, for which special notice is required. It is required for any resolution proposing a change of auditor, including a resolution to remove an auditor, and also in the situation where an auditor appointed by the directors to fill a casual vacancy is to be reappointed. These are most important matters and it is clearly right that shareholders should have sufficient notice of them.
      Subsection (2) requires that the company shall send copies of such resolutions to all the auditors concerned, both those proposed to be appointed and those retiring or to be removed.
      Subsection (3) requires the company to circulate to members copies of any written representations which a retiring auditor or one proposed to be removed wishes to have circulated, provided that they are not received too late for it to do so, and provided that they are not unreasonably long.
      Subsection (4) provides that the auditor may, in the event of his representations not being circulated, require the representations to be read out at the meeting.
      Subsection (5) provides that the company or any other person claiming to be aggrieved may apply to the court and that the representations need not be circulated if the court is satisfied that needless publicity is being sought in the representations for defamatory matter. This proviso is equivalent to that in Clause 16 relating to a resignation statement.
      Subsection (6) gives an auditor who has been removed the right to attend and speak at the meeting at which his replacement is appointed and at the general meeting at which his term would otherwise have expired.
      Subsection (7) repeals Section 160, which is superseded by subsections (1) to (6) of this clause.
      I turn to Amendment (c) to New Clause 1. This is otiose, as it is already implicit in the phrase "the auditor's expenses" that the expenses must be incurred by the auditor in his capacity as auditor.
      Mr. Dafydd Wigley: Auditors often serve companies in more than one function. They may serve as consultants as well, and incur expenses in that capacity. The intention of the amendment was to make it clear that the expenses were identifiable with their function as auditors and no other function.
      Mr. Davis: I understand the purpose, but I am advised that as a matter of law the amendment is redundant, because the phrase "the auditor's expenses" would be interpreted by the courts as expenses incurred by the auditor in that capacity.
      I turn to Amendments (a) and (b) to New Clause 2. We shall no doubt have the benefit of hearing Opposition Members on the purpose and effect of those amendments. Let me say in anticipation, however, that New Clause 2(6) enables an auditor who has been removed to attend and speak at the general meeting at which his period of office would have expired if he had not been removed, and at any meeting at which the company proposed to fill the vacancy which arose as a result of the removal.
      No provision is made for an agent of the removed auditor to attend these meetings on behalf of the auditor, and there is a very good reason for that. It would be undesirable to provide for a representative of an auditor who has been removed to attend the general meeting of the company. The right is a personal one and it is conferred upon the auditor to give him the opportunity of making a statement to members at the meeting concerning any part of the business which concerned him as the former auditor.
      10.30 p.m.
      The auditor is in the position of making such a statement because he has firsthand knowledge of the affairs of the company with which he has been dealing. If the auditor is unable or unwilling to speak at the meeting I do not think any purpose would be served by delegating that function to an agent, who would not necessarily have the same detailed knowledge of the affairs of the company. Therefore, I contend that the only appropriate person to attend and make that statement is the auditor himself. It will be the auditor who will have been removed. He has made the decision that he wants
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      to make the statement. He carries the responsibility professionally, and it would be wholly inappropriate to delegate that particular function.
      Mr. Terence Higgins: Am I to understand that the right is restricted to the individual member of the auditing firm and does not extend to other members of the firm who might stand in for him?
      Mr. Davis: The provision concerns only the auditor who is appointed. The auditor does not necessarily carry out the details of the audit personally, but he carries the professional responsibility for determining that he wants to make a statement.
      Mr. David Mitchell: If the company has appointed Price Waterhouse and Co. as its auditors, who must appear personally? Is it a partner of Price Waterhouse and Co.?
      Mr. Davis: It will be the partner who has dealt with the audit. I clearly have not satisfied the hon. Member, and I shall listen carefully to his later argument. I shall endeavour to reply to any points he makes.
      Amendment No. 36 is a paving amendment for New Clauses 1 and 2. A number of other amendments are consequential upon those.
      Let me summarise briefly the position we are trying to achieve through the changes. Under Clause 13 we are seeking to tighten up the qualification requirements by providing that one year after the clause comes into effect no further authorisations shall be granted to people who are not members of one of the recognised professional bodies on the basis of adequate knowledge and experience.
      New Clauses 1 and 2 seek to amend the law so that the appointment or reappointment of the auditors will have to be positively considered and voted upon by the shareholders every year.
      Clause 15 seeks to provide that an auditor may resign only after he deposits with his notice of resignation either a statement of any circumstances connected with his resignation which should be brought to the attention of the shareholders or creditors, or a statement that there are no such circumstances. That is

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      a positive development supported by the profession.
      Clause 16 provides for the right of an auditor who resigns to requisition a meeting of the company.
      Clause 17 seeks to require the directors and auditors of a subsidiary to provide the auditors of a holding company with any information they may require for the purposes of auditing the group accounts.
      These measures have to be taken as a package and represent a radical change that will be for the benefit of shareholders, investors and creditors. They also have to be viewed against the background of criticism of auditors made in a number of inspectors' reports recently which have given rise to serious problems which I have no doubt the accountancy profession is taking seriously. They are problems affecting audit standards, discipline and the independence of auditors. They concern us vitally at the Department of Trade, and I have no doubt that the profession is seeking to find a way round these grave problems. It recognises that the standards applied require some revision.
      A sub-committee of the Audit Practice Committee of the Consultative Committee on Accountancy Bodies has been set up to review the various aspects of the relationships between auditors and companies. The profession has undertaken to deal with this work urgently. My right hon. Friend the Secretary of State for Trade and I have held meetings recently with the recognised accountancy bodies and we have discussed the independence of auditors as well as the subject of professional standards. For the moment we are content to leave these matters in the hands of the profession, but I say that only for the time being. We shall follow the matter with close interest and shall consider in due course whether any further legislation is required.
      All this forms a back-cloth against which these current changes have to be viewed, and I have no doubt that this will strengthen the position of auditors, which is a matter of vital concern to the House.
      Mr. Higgins: I begin with what in other circles is called an "explanation of vote", because my colleagues and I
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      felt it right to vote against the Ten o'clock motion. It is monstrous that the Government should seek to bring forward a proposal of this kind when Mr. Speaker has selected for discussion no fewer than 36 separate debates and when discussion on the Bill began at 10.18 p.m.
      I wish to emphasise that this is not a partisan measure. We said in Committee that it deserved support. The Bill is certainly a great deal better than it was when it went upstairs into Committee.
      The Bill contains a number of clauses with which we approve, and I am sure that nobody, least of all the Minister, regards it as a simple Bill. Indeed, it is a measure of great complexity, as was amply illustrated by the Minister's speech. The Minister spoke on the new clauses for a period of twenty minutes—or at least it seemed that long. If we are to spend that amount of time on each amendment, I can only say that the prospect before us is grim.
      Mr. Clinton Davis: The hon. Gentleman realises that a substantial number of amendments are grouped. I do not think that I shall detain the House for quite as long on future amendments—or at least I hope not.
      Mr. Higgins: The way in which the Government have handled this matter is nothing less than a disgrace. I hope the accountancy journals will give due publicity to the way in which the professional bodies who have made representations to the Government have been treated.
      Mr. Clinton Davis: Did not the Conservative Opposition opt for the Bill to be taken second? They knew what the consequences would be.
      Mr. Higgins: It is right that we said that this Bill should be taken second. We believed that the other measure was also extremely important, and the fact that it was debated as it was showed that to be so, but that is no reason for putting two full days business into one day.
      Mr. Richard Wainwright (Colne Valley): Whatever the hon. Gentleman's Whips and himself may have arranged with the Government, that is no consolation to the minority parties, which are even more hard pressed when such

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      matters come on at this time of night, the two major parties having decided that it should come on second.
      Mr. Higgins: It is my understanding that the Government obtained their majority virtually on the vote of the Opposition parties which wanted to continue tonight. I make no personal point against the hon. Gentleman or the hon. Member for Caernarvon (Mr. Wigley), but it will be rather interesting to see how many Members representing the parties which voted for continuing will be here when we eventually draw stumps at some time tomorrow morning.
      I do not want to spend too long on this matter because we are anxious to make progress, but it reflects the lack of weight which Department of Trade Ministers carry with their Whips and those responsible for arranging Government business. This situation is in conflict with the view expressed by the Prime Minister a few days ago—namely, that priority should be given to the reform of company law. It cannot be pushed through in this manner.
      The fact is that the Government are trying to get two lots of business through in one day. It was clear when the business was running late on the earlier affairs of the day that the Government should have taken a sensible decision. The fact is that their whole legislative programme is in a shambles, and they know it. As a result we are having to consider matters of this nature all through the night in a way that is not satisfactory. That applies to Ministers and to the House.
      In Committee we debate the rôle of auditors at considerable length. The Minister was right to say that grave concern has been expressed by a number of those who have studied recent events, especially, of course, the Department of Trade inquiries, the reports of those inquiries and the comments that have been made in some of them about auditors.
      The Under-Secretary of State says that two main points are covered by the new clauses. The first one covers the situation in which an auditor may have resigned and remained mute. On the other hand, he may disappear from the scene without completing the audit,
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      making an audit report or supplying the reason for his resignation. We understand that there is a strong case for preventing that situation from arising. I ask the hon. Gentleman to elaborate on what in shorthand may be called the first problem. I am far from clear—it is a complicated matter—about the Bill being as watertight as he supposes.
      The second problem to which he referred is that which arises when an auditor may be forced to resign. The company will take an ordinary resolution and get rid of the auditor in that way. The hon. Gentleman seemed to suppose that that was an adequate safeguard. The House should be wary of creating a situation in which a company can remove an auditor by ordinary resolution. We need to be assured that the safeguards are adequate.
      The hon. Gentleman has said that the matter will arise at a general meeting and the auditor concerned can appear at it if he wishes. Whether he feels that it is entirely without disadvantage to appear is another matter. We must consider whether the publicity that such an event may get is adequate to ensure that suitable remedial action is taken.
      We all know only too well—it is regrettable—that the number of people attending company annual general meetings is not necessarily very large. The auditor may appear and may make a speech in which he says that he should not be removed. When the matter is put to a vote it is a little more doubtful whether he will succeed in preventing himself from being removed. It may be that the matter will be taken up by the Press, but the Press is limited in the space that it has available. In any event, the affairs of some companies are not necessarily of widespread interest. Therefore, I have some doubts about what the Government are proposing in that respect.
      10.45 p.m.
      The other point is that raised in an intervention during the Minister's speech, namely which auditor should appear if there is a question of an auditor wishing to make a statement? The Minister says that it is a personal right. There are two points which worry us about that. The first is that in some of the more recent cases—London and County was a case in point, and I do not come down one

      1257
      way or the other on the merits of it—it was not the person responsible for signing the accounts who was personally responsible in that sense but one of his assistants. That is perhaps the most precise way of putting it.
      It is the person actually responsible for signing the accounts who, the Minister says, should have the right to appear. I can understand the strong arguments why that should be so. It is ultimately, of course, the person responsible for signing the accounts who carries the can. Perhaps that is something we ought to consider, but it is not the main point. The main point is whether it should only be the person who was carrying out the audit who ought to be allowed to appear. From time to time the individual who was responsible may change firms or may emigrate or disappear altogether from the scene. At that point he will not be able to appear and explain what was wrong and, as I understand it, the Minister is saying that another member of his firm then responsible should not be allowed to appear in his stead. I am far from convinced that that is right.
      Mr. Clinton Davis: I do not want to go into the merits in detail. I thought that the hon. Gentleman was alluding to the non-professional members of firms engaged in audits. Maybe there was a misunderstanding between us. They would not have any right to appear.
      Mr. Higgins: There are two points. The first is that of the non-professional. That would not be quite the correct definition. Perhaps "the manager" would be the right expression, as against the individual who signed the accounts. There may be good reasons for that and I do not wish to come down on one side or the other of that argument.
      The second point is perhaps of greater substance, and one which we are, incidentally, considering for the first time on this Bill. This is not something that has been raised earlier. Clearly the problem facing us is a serious one. I am far from convinced that we can overcome it by establishing a relationship where either the auditor has to resign in the circumstances the Minister has described or he is sacked. What we need is to establish in a much better way the independence of the auditor in such matters.
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      I am far from clear that the Bill as drafted, and with these new clauses, achieves that objective. I am still strongly in favour of self-regulation in these matters rather than legislation, to the extent that that can be achieved. It must depend on the standards set by the profession. I am glad to see that the Minister agrees with that view. I feel bound also to support what he said, namely that recent events, particularly recent DTI inquiries, suggest that the sanction which used to apply, whereby an individual who has been criticised feels that the right course is to resign, no longer applies. This has not happened in recent cases.
      The Minister refers to a new committee which is to consider this subject. I welcome that. Perhaps he would clear up one point. There was an article in the Press on the day after the appointment of the new committee was announced, which I understand is under the chairmanship of Lord Cross of Chelsea. The article was headlined—I agree that sub-editors sometimes get these things wrong—
      "Dell team of eight for check on accountants."
      However, the final paragraph reads:
      "Mr. Dell yesterday welcomed the speedy establishment of the Committee."
      Even this Government are not in the habit of setting up committees and congratulating themselves on doing so. Perhaps the Minister would make clear the status of this committee. Certainly there is no doubt that recent events still give grave cause for concern.
      I hope that action within the profession will be adequate to deal with this issue. We still need legislative back-up and for the reasons I have mentioned, even at this late hour, I am far from clear that the new clauses, which are of great complexity, are adequate to meet the worries rightly held in the professional Press and the Press generally. I hope that the Minister can clarify the points I have raised and that we can go on to consider whether it is right to agree to the new clauses and the amendments he has proposed.
      Mr. Wigley: At the outset, perhaps I might raise what is, in effect, a point of order and draw attention to the fact, although I appreciate that nothing can

      1259
      be done about it tonight, that Amendments (a) and (b) on page 2808 of the Notice Paper were tabled as amendments to New Clause 2 and not to New Clause 1. Somewhere in the process from going into the Table Office and appearing here, they not only have been transferred from one clause to another but now appear with different line numbers. That causes some confusion, to say the least, and it may be a matter which can be looked into.
      Secondly, may I say that when new clauses are tabled, it would be a good idea if their titles could be as different as possible from each other? In the case of New Clauses 1 and 2, the titles are similar, and no doubt that has led to the difficulties.
      To that end, perhaps I might make a few remarks about New Clause 2 against the background of Amendments (a) and (b). Amendment (a) was to have come in subsection (1)(c) of New Clause 2, which reads:
      "(c) reappointing as auditor a retiring auditor"—
      Mr. Clinton Davis: On a point of order, Mr. Deputy Speaker. With respect to the hon. Member for Caernarvon (Mr. Wigley), as I understand it he is seeking to debate two matters which have been ruled out by Mr. Speaker for debate. The hon. Gentleman is referring to Amendments (a) and (b), whereas what has been selected is Amendment (c).
      Mr. Wigley: I do not intend to press those amendments, of course. I cannot. But, in order to make my point on New Clause 2 and to explain my criticism of the clause, it will be helpful if hon. Members appreciate what I am talking about.
      I draw attention to that paragraph of New Clause 2, which says:
      "(c) reappointing as auditor a retiring auditor who was appointed by the directors to fill a casual vacancy".
      My criticism of that is that there could equally be grouped with that
      "or auditors who have been appointed by the Secretary of State."
      It is not inconceivable that auditors appointed by the Secretary of State may need to be reappointed. If that is the case, they should be treated the same as the reappointing of a retiring auditor who is appointed by the directors to fill a
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      casual vacancy. That is a provision which should be made in this Bill, although I appreciate that it is impossible to do at this stage.
      Further down in New Clause 2, there are provisions in subsection (4) for an auditor to seek redress if he feels that there are representations which should be made. But, if it can be argued that the representations that he makes come to hand too late, that auditor is in great danger of missing out by default. It is necessary for an auditor to have some ultimate sanction if that appears to be the case. He should be put in the situation where he can make application to a court for a postponement of a general meeting until a copy of his representations have been sent to the people to whom they would otherwise have been sent had they come to hand in time.
      I believe that there is a device in the new clause which can allow a company which wants to short-circuit an auditor to do so by claiming that time is against him and that there was no time to send out his representations. That is a serious weakness in the clause.
      This is one of the difficulties when substantial new clauses appear at a Report stage. Hon. Members have four or five days in which to digest them, and very little opportunity to amend them. When new clauses of such complexity and magnitude come forward at this late stage, we are in danger of enacting bad legislation which will result in a lot of problems for a great many companies.
      Mr. Peter Morrison: I wish to discuss Amendments (a) and (b). I was bamboozled by what the Minister said about them. When my hon. Friends and I tabled the amendments, we were trying to be helpful.
      The Minister did not seem to understand the situation which could exist in regard to firms such as Price Waterhouse & Co. The purpose of the amendments is to allow an auditor who is either retiring or being removed to be represented at the appropriate general meeting.
      The Minister led me to believe that he thought that specific auditors were in charge of given companies. In fact, a firm such as Price Waterhouse & Co. would be the auditors of a company. A

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      partner in the firm might be specifically responsible for the company, but if it were a large concern, a group of partners in the auditors might be responsible.
      I understood the Minister to say that an auditor had a personal right to go to an extraordinary general meeting where his situation was being reviewed. However, if the auditor is in a partnership and he is unable to attend the meeting—but another partner can attend—surely the other partner should be allowed to represent his colleague.
      When one man is the auditor of a company, he might not—despite what the Minister said—be able to attend the extraordinary general meeting. It might be held at an inconvenient time; the auditor might be out of the country; he might have another even more important meeting; he might be ill. In these circumstances, it is right that a person should be allowed to be represented. It would not be that he would not wish to attend. He would have been prevented for some reason.
      Another important point is that when a company wishes to get rid of an auditor because it feels that he is breathing down its neck, the extraordinary general meeting might be arranged for a time when it is known that the auditor would not be able to attend. Surely it would be sensible to allow him to be represented.
      In large firms of auditors, a fully-qualified member of the staff—not a partner—may be responsible for a given company. It would also be sensible to allow him or her to be represented at an extraordinary general meeting.
      11.0 p.m.
      Mr. Clinton Davis: I wonder whether I might try to shorten matters to some extent. I go along with the hon. Gentleman regarding members of the firm, because they carry responsibility equally with the partner who is directly responsible for the audit. But "representative" is not defined in the amendment. That is one problem.
      Secondly, I do not think that the hon. Gentleman can seriously be saying that it would be right to attach to somebody who does not carry the same degree of professional responsibility for the partnership as a partner the same rights as would
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      be accorded to the partner or partners who would have a right under the clause.
      Mr. Morrison: I do not think that the Minister has been listening to my argument. My point is that the principal in a one-man or one-woman firm, who has a fully qualified accountant in his or her employ who is not necessarily legally responsible, can be prevented from going to a meeting through no fault on his or her part—for example, pneumonia, appendicitis, or whatever it may be. In that case, surely it is only right that the principal should be allowed to send his FCA or fully qualified chartered accountant in his stead so that the argument can be put on his behalf.
      I accept that the amendment may need to be tightened. I accept that a better definition of "representative" may be required. I would not quibble over that. However, it is important that the auditor should be allowed to be represented.
      I should like to make one final point. The Minister may say that I am trying to prolong the debate, but I am not. I am as keen as he is to get on with it.
      There must be some auditors—probably very few, but some—who are incapable of expressing themselves in public. They may do a fantastically good job with the books, but they may have a speech impediment or be deaf and be utterly useless and ill at ease at a public meeting. In cases of physical disability, surely the Minister agrees that they should be represented. Those are the people about whom I am talking. I hope that the Minister will come back with a sympathetic reply.
      Mr. Richard Wainwright: I should like to make three quite unrelated points. The first concerns the attendance of an auditor at the type of extraordinary general meeting which has been under discussion. It would assist the House if, at a time of his own choosing in the debate, the Minister would rescue us from the confusion into which he has started to plunge us by his remarks.
      It is still not clear to some hon. Members—certainly not to me—whether the hon. Gentleman now agrees that a partner's connection with a particular audit is wholly irrelevant. Will he make it clear to the House that, the law of partnership being what it is and what it has been for many years, any partner in a firm which

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      is duly appointed as auditor, even if he has never been near the client in his life, is entitled under the clause to attend? If that will be made clear by the Minister—either now, if he wishes, or later—the House will at least know what it is discussing.
      Secondly, the clause is an example—fortunately, a modest and minor example—of the zigzag government from which this country has suffered for so long and continues to suffer at present. Governments and Government servants become the victims of wild swings of irrational fashion.
      When company law was reviewed after the war, leading up to the Companies Act 1948, the fashion was to say that the auditors' position vis-a-vis the companies should be strengthened. It was enacted, and is still the law, that they should be automatically reappointed unless due notice has been given the appropriate time beforehand. That was considered at the time to be the last word in the conventional new wisdom. The idea was to strengthen the auditors in their duty to the shareholders as against the board which appointed them.
      The root of the trouble is that while the auditors are there on behalf of the shareholders, in 99½ per cent. of cases they are appointed by the board. In an attempt to get over that dilemma, the law was enacted that the auditors should have a strong position vis-a-vis the board of directors.
      Now, without adequate explanation, the pendulum of fashion has swung the other way, partly in panic—and there has been a good deal of panic in various circles, including the Government, as a result of some recent auditing debacles. Now it has been made in some respects marginally easier to get at auditors and possibly to undermine their position.
      Neither of these positions is defensible. Who are the rare beings who are likely to know whether an audit is being conducted sloppily or in a phoney manner? Such people are, by the nature of things, likely to be few. In the first place, they would have to be professionally qualified and experienced enough to know whether the auditor was slipping up in the conduct of the audit; secondly, they would have to be intimately connected with
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      the books of account that were being audited.
      The law has never taken account of the simple fact that the only people likely to know in advance of the debacle whether the audit is being well conducted, or honestly conducted, are, first, the professionally qualified accountants who work for the company, and, secondly, the professionally qualified men employed on the audit by the firm of auditors. These, the only people likely to be in a position to sound the alarm bells, are given no status in law. I have written to the Under-Secretary of State and his predecessor on this point and have had no satisfactory reply. It is a pity that the Government have not taken this aspect up in the Bill, which was taken out of a dusty pigeon hole when the case of London & County suddenly started the panic.
      Thirdly, some status in the audit report, especially where an auditor is making a statement to a meeting of shareholders, should be given to the professionally qualified employees who have been doing what I call the "coal face work" of the audit. It is axiomatic these days that in a complicated audit the professional man, usually a young man, at the coal face of the audit is likely to know some things of importance which his boss, the partner, may never get to hear of, because large firms of auditors are, by their nature, hierarchical. I know this because for some years I was a partner in a reasonably well-known international firm. There is the partner, then there is the qualified manager, and then there is the qualified man in charge of that particular audit, who is responsible only to the manager. Then on the audit there are section leaders who are qualified young men taking a particular aspect of the audit—the stock, the cash, the loans, the bank position, and so on. Then there are the youngest men or women, who are probably articled pupils or the like, doing the actual ticking.
      In these hierarchical firms—some of which, but not many, have suffered debacles in recent months—it is an offence against the firm's code for any professional man lower down the hierarchy to jump the queue and to speak to the partner. In a smaller firm, in which I have also had experience, that does

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      not happen, because the partner has the good sense to keep in touch with all his staff.
      But in the sort of audits with which we are concerned, when we think of the difficult scandals which have taken place, it has been impossible for the professionally qualified man at the coal face of the audit to get in touch with the partner who will attend the meeting of shareholders. The Government will be missing the whole point if they do not provide in various ways for the people who are doing the work to participate in the actual judgment on the company's accounts.
      Under the clause the Secretary of State will have power on occasion—admittedly in certain very odd circumstances—to appoint the auditors to a company. Surely in taking this power the Minister will be good enough to give some idea to the House of how his administration would use it. Is it the intention of his Department simply to take the lazy way out—Buggins' turn—and to have a list of the great and good firms whose debacles are at least a few months distant? Or is he to take a dynamic view of the position and to see which firms of auditors are prepared to give the qualified man at the coal face some say in the compilation of the audit report? Does the Department of Trade have any notion of worker participation, or is that simply confined to the Department of Employment?
      The Government are asking us to vote them the power for the Secretary of State in certain circumstances to appoint auditors. Is it right that we should consider passing the clause before the Secretary of State has told us how he would set about exercising that power?
      Mr. David Mitchell: With regard to New Clause 2, perhaps the Minister will guide me as to the meaning of the words at line 13.
      "the casual vacancy was caused by the resignation of an auditor, to the auditor who resigned."
      Who, may I ask, is an auditor to an auditor who has resigned. As one who might have to try to interpret the meaning, I should be grateful for guidance and clarification.
      I support the arguments of my hon. Friend the Member for the City of
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      Chester (Mr. Morrison). The Minister in his introductory remarks tried to deal with the amendment before it had been moved. He said that the auditor himself knows best, and that he certainly knows better than any representative could know. But surely the Minister will realise that there is nothing in the clause compelling a representative to go. It is suggested that it should be within the hands of the auditor himself to decide whether he attends or sends a representative.
      There are very good reasons—my hon. Friend has sketched them in—why an auditor might not be able to attend on a particular occasion. He might be doing another very important audit or even be connected with sonic international audit work. He might not be good at speaking, or he might be nervous. I know a very good auditor but he has a very nervous stammer and would be quite incapable of appearing in a tense moment in front of an opposing board which had a difference of opinion with him. For that reason I think it would be wise to accept the amendment.
      11.15 p.m.
      In particular, I would put it to the Minister that the Bill is either faulty or the Minister has not made clear in his introduction of the new clause what he is up to, because New Clause 2 states in line 3
      "appointing as auditor a person"
      —Not a company or a partnership or a firm of auditors, but—
      "a person".
      If a person is to be appointed does that not mean that every time one particular partner leaves the firm of Deloitte and Co., or Price Waterhouse & Co., or whatever, every one of those companies will have to go through the rigmarole of appointing a new auditor because the Minister has provided in New Clause 2 that they appoint
      "a person"
      and not a partnership? Does that also mean that the accounts will have to be signed by Joe Smith, auditor rather than by Price Waterhouse & Co.? What significance that will convey in international circles I am not sure. Could we please have some guidance from the Minister, because this appears to put the whole clause in a totally new light, from the way in which it was introduced.
      Mr. Peter Rees: I had not proopsed to intervene in this debate but I was totally confused, and I rather sense that some of my hon. Friends have been confused. I do not, of course, mean hon. Members on the other side of the House who were following the Minister's introduction with such acuteness and professional experience.
      The Minister proceeded on the assumption that most auditors of companies are either individuals or corporate entities. The first is untrue in fact. Indeed, as my hon. Friends have pointed out, nowadays, with the compexity of modern life, most firms of accountants contain two, three or may be up to 20 members. The second assumption is quite untrue in law. As the Under-Secretary should know well, a partnership, except in Scotland, is not a body corporate. It is not an entity independent of the members who comprise it.
      On that basis I have been compelled to take a further look at Clauses 15 and 16 and at New Clause 2, which I understand the Under-Secretary is commending to the House. I find it difficult to fit the words to the point that I have been endeavouring to make. Let me ask the Under-Secretary to look at Clause 15(2) which states:
      "An auditor's notice of resignation shall not be effective unless it contains either—
      (a) a statement to the effect that there are no circumstances connected with his resignation which he considers should be brought to the notice of the members or creditors of the company;".
      Who is "he" in the situation where a firm is involved? Is it the firm collectively? Does every single member of the firm have to sign that statement? May one partner sign on behalf of the whole firm? Does the person professionally qualified, or otherwise, who was actually concerned with the audit, have to sign it? These are matters of ambiguity, and they have certainly not been cleared up by the Under-Secretary's intervention so far.
      Perhaps even more important, Clause 15(4) states that:
      "the court may order the company's costs on an application under this subsection to be paid in whole or in part by the auditor".
      That is where the company has been exposed to needless publicity of a defamatory kind. In that situation, against
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      whom may the court award these costs or damages? Is it only against those members of the partnership who were partners at the time that this defamatory matter was circulated? What about those who have become partners subsequently? Indeed, what about those who have left the partnership before the court has heard the application? How does the Secretary of State describe the non-professional persons who may be involved?
      These are matters of great moment. Despite the lateness of the hour, and the fact that the Under-Secretary does not understand the complexity of his own Bill—who can blame him for that, because one appreciates the great burden of his office—he owes it to the House to go into these important matters with a little more care.
      Again, I ask the Under-Secretary to look at Clause 16(2), which states:
      "Where an auditor's note of resignation contains any such statement as aforesaid and the aduitor requests the company to circulate to its members…".
      Does every member of a partnership, or only the senior partner, or only the partner who has been most closely connected with the audit, or the non-professional or professional persons who do not happen to be partners, request this of the company?
      No doubt some of my hon. Friends could find many examples that need elucidation. Finally, what about Clause 16(5)? That states:
      "An auditor of a company who has resigned his office shall be entitled to attend…".
      My hon. Friends may welcome a graphic illustration of who is obliged to attend. Is it the non-professional person who is articulate and not suffering from a stammer, who has had the most close connection with the company's affairs? Is it the senior partner, who may be a deaf mute by this stage? Is it the former partner who is most closely concerned but who has resigned?
      These are important matters. It may surprise the Under-Secretary to learn that our debates are closely followed by professional persons who, whether or not they be partners, may have to interpret and operate the Bill. The Under-Secretary may feel that he has been sponging the bruised and battered face of

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      capitalism tonight. He has left me in a state of total confusion. I hope that he will apply himself with a little more acuteness and perceptiveness to the problems that have been raised by Opposition Members.
      Mr. Cecil Parkinson: I listened with great interest to the hon. Member for Colne Valley (Mr. Wainwright). Like him, I must declare an interest. I am one of those in the Chamber who has been both auditor and audited. I make no secret of that.
      When I listened to the hon. Member describing the reasoning behind the 1948 Act—that the auditor should continue in office provided that he was willing to do so and automatically be re-elected unless he did not want to be re-elected—I thought that it was very useful for the House to he reminded of that fact. The theory behind it was that the auditor needed to have his position strengthened. He needed to be strong enough to stand up to the directors and to speak his mind without fear of being in danger of losing his job. That was very much in the minds of those who drafted the 1948 Act.
      We have now turned full circle and reached the stage at which the Department of Trade thinks that it is strengthening the auditor's position by making it possible or easier to get rid of him. Over a period of 28 years, there is nothing particularly wrong in changing one's mind. But it is a very significant change of mind.
      What I doubt—and this is the reason why I speak in this debate—is whether the reasoning on this occasion is sound. It seems crystal clear—more so as every day passes—that the position of the auditor in relation to the directors and as the representative of the shareholders needs to be strengthened. Labour Members might argue that the auditor has a responsibility to people other than the shareholders. However, at present his responsibility is to the shareholders, and all our efforts in this House should be lent to making him more accountable to those who pay his fees, to making him more answerable to them, not less, and to strengthening his position so that if he feels that he is not happy about the way in which the directors are handling the
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      assets of the company—which belongs to the shareholders, the directors being trustees—he is free and strong enough to speak out against what the directors are doing and to tell the shareholders just what the directors are doing.
      New Clauses 1 and 2 are rather irrelevant at present. To make it easier to get rid of the auditor, and easier to get rid of him on an annual basis, will not serve the interests of shareholders at all. It has no relevance to the problems encountered in companies at the moment.
      At present—I am sure that the House will be interested in this—there is a strict limit on the amount of information which the auditor is allowed to present to the shareholders. If one goes to a company's annual meeting and asks a question, the chairman is quite entitled to say "I am sorry, but the accounts of the company comply with the statutory requirements, and no one here will answer your question". The auditor's report to the shareholders normally consists of a brief sentence, which he reads to the annual general meeting at the invitation of the chairman. In fact, the rather smart and snobbish thing to do nowadays is to make that report as short as possible, and the shorter the report the more eminent the firm is judged to be.
      Thus, from the shareholder's point of view at present, those who care to go to the annual meeting see someone whom they have never seen before stand up, gabble a sentence which means little to them, and then sit down; and in that way the statutory duty of the auditor has been complied with.
      We here should be finding ways by which the shareholders can meet the auditor and get to know him, by which they can get answers to questions which they wish to ask and have the satisfaction of prying into the affairs of the company, knowing that the man they are paying is answering to them about the affairs of the company. These two new clauses add nothing to that. All they do is make it possible for shareholders to sack an auditor on an annual basis, and they make no provision for him to be replaced if the shareholders decide to do so.
      Mr. Bruce Douglas-Mann: I was not a member of the Standing Committee and I am seek-

      1271
      ing information. I stand to be corrected, but my understanding of the new clauses is that they impose a requirement that special notice has to be given of a proposal to remove an auditor. Does that not make it more difficult to remove an auditor than it is at present? Is it not giving a greater right to the auditor to ensure that he presents his views properly to the members and to the public?
      Mr. Parkinson: I am sorry to have to disappoint the hon. Gentleman, who makes fine speeches about housing and who is so admired in the House, but he will find that under the 1948 Act the position of the auditor is much stronger than it will be under the proposed change. The auditor continues in office under the present Act provided that he signifies his willingness to do so, and the procedure for getting rid of him is very involved. Therefore, his position is in no way strengthened by the new clauses.
      The new clauses are voluminous and complex. The Minister obviously does not understand them, as he proved conclusively in his opening speech. They are irrelevant. It is sad that the Government have missed an opportunity to do something about the position of an officer of a company who is very important and whose position is not understood by the people who employ him—and I have to say that the House is wasting its time in being asked to pass these two rather complicated proposals.
      Sir Brandon Rhys Williams: Because of a misunderstanding I did not have the fortune to hear the Minister's presentation of the two new clauses, and for that I apologise, but I support what has been said by my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) because, as I read them, the new clauses will do nothing to add to the confidence or strength of auditors or get to the bottom of the problem, which is that the whole relationship between the auditors and the board is unsatisfactory.
      The clauses are enormously long and, no doubt, will require a great deal of careful interpretation by professional men, and by company secretaries and
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      others. I feel that the Department's aim is wide of the mark if it feels that it will contribute anything of great use by introducing these lengthy provisions at this late stage of the Bill.
      One has known of companies in which the auditors were virtually strangers to the board, which is extremely unsatisfactory. In other cases, the auditors are sometimes little better than an appendage of the board, which also is hightly unsatisfactory. In neither case is the auditor able to act as an effective agent of the shareholders, ensuring that the company operates efficiently and is accurate in its financial statements.
      11.30 p.m.
      Making more detailed provision for changing an auditor will not set the problem right. It is that unsolved problem which gives rise to headline news about auditors failing in their function. If one asks someone to do the impossible, he is bound to fall down. It is remarkable that auditors in this country are still as professional and effective as they are.
      Auditors become ineffective because of their status in relation to the board and because the formal basis of their interaction with the board has never been clarified in legislation or in professional practice. Their function is to look backwards, but an accurate view of the strength of a company can be taken only in relation to its present and likely future performance. I know from my own experience in consultancy, when making inquiries of senior people engaged in a company and meeting the auditors, that one can often hear it said that one can easily discover what is wrong with a company but it is not the auditor's business to tell. There are large gaps in company law in this respect and I hope to be able before the end of the present Session to introduce a Bill which will strengthen and widen the powers of auditors by setting up audit committees to formalise the relationship between the auditors and the board.
      Provisions relating to the appointment and removal of auditors may be necessary and useful but they will contribute little to restoring the confidence of the profession or to improving the efficiency of joint stock companies.
      Mr. Ron Thomas: I shall make several brief remarks to seek advice. I have listened to some of the experts but I am confused because I start from the premise that auditors have let down the workers, if not the general public and general interest. They have not given workers in certain enterprises the information which they want and which the general public wish them to be given.
      I am not sure what is meant by the protection given to auditors under the 1948 Act. Do hon. Members mean that under that Act as long as the auditor does what the board tells him to do, he can never get the sack? To many of us that seems to be the case. We all know the old story of the company chairman interviewing accountants for the post of auditor who asked the first half-dozen applicants what two and two equalled. They said that it made four and did not get the job. The next applicant, when asked the same question asked "What answer do you have in mind?"—and was immediately appointed.
      Will the provision strengthen the position of auditors in relation to the AGM rather than the board and will it make auditors more independent of the board? To relatively large firms of auditors to get the account of a large company is a large commission and there must be considerable pressure on them to do exactly what they are told by the board.
      Mr. Richard Wainwright: I evidently did not succeed in getting across to the hon. Gentleman or the House the point I was seeking to make, which was that the 1948 Act, which is now to be altered, was intended to make it much more difficult and embarrassing for a board to get rid of a truly independent and outspoken auditor. It is that which, irrationally in my view, the Government are seeking to change.
      Mr. Thomas: I am grateful for that information, but it leads to more doubts in my mind, because it seems to me that since 1948 auditors have less and less shown their independence. I hope that in the two clauses the Government are trying to make the auditors really independent, so that they can give a clear picture to shareholders, those who work
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      in the establishments concerned and the general public.
      Mr. Clinton Davis: The whole philosophy behind the provisions is to strengthen the position of auditors, to make them more independent of the directors and more answerable to the shareholders whom they are supposed to represent. Deficiencies have been exhibited on a pretty substantial scale in that respect, and we should give careful attention to these matters.
      It is no good simply saying that we rely on the philosophy of the 1948 Act. The Jenkins Committee felt that that philosophy should be reconsidered, and our predecessors in office thought that it required change very much along the lines of our proposals. That is also the view of the profession, faced, as it has been recently, by massive criticisms of the position of auditors.
      The profession wants to put its house in order. No profession likes to have reflections made upon its competence or, even more seriously, upon the integrity of its members.
      We have not suddenly embarked upon a change without adequate thought. The matter has not exercised only the minds of my Department. It is not only the creature of the Department of Trade or the Department of Trade and Industry, as it was under our predecessors, but is a matter that has involved considerable consultation with the profession—and far wider than the profession.
      My hon. Friend the Member for Bristol, North-West (Mr. Thomas) is right to be concerned about these matters. The Government have sought to precipitate more consideration by the profession of the serious criticisms which have emerged from a whole series of reports. The profession has responded with urgency, setting up a high-powered committee to investigate a whole series of criticisms against auditors.
      Mr. Higgins: The House may have been misled by the Minister's initial remarks. Certainly some of the provisions in these complex new clauses and amendments help overall security. But our impression is that in some respects it is easier now for a company to remove an auditor than it was before, because it can do so in an ordinary general meeting. Is that so?
      Mr. Davis: I shall come to that. It is no good my answering points at random. I want to try to answer them coherently. Serious points have been raised, and I shall largely deal with them in the order in which they were presented.
      I was taken to task over the concept of who was an auditor. The hon. and learned Member for Dover and Deal (Mr. Rees) made a good deal of play about that in his inimitable Kentish way, but he omitted to recall some of the elementary points of partnership law. He is not a barrister in that area of the law, perhaps. He is a taxation expert, and may have forgotten some of the elementary aspects of partnership law.
      Let me deal with the first point about the appointment of a firm of auditors. That was a realistic and bona fide point. In a sense the Price Waterhouse & Co. type of firm is distinct from the small firms of auditors, perhaps one-man firms who may be the auditors for moderate or small businesses. The principle is the same. Under our law a firm as such is not a legal person, and when a firm is appointed as auditor every member of the firm is therefore appointed. Each of them carries a joint and several responsibility. As long as the firm remains the auditor, any partner of the firm can speak as the auditor. Obviously someone who has left the firm is no longer in the position of being an auditor.
      Therefore this picture of the stammering or deaf mute or similarly disabled auditors, who according to the Opposition populate the profession in such numbers, being unable to take to a meeting a representative who carries the same responsibility does not stand up.
      Mr. David Mitchell: I slightly resent the suggestion that the Opposition believe that there are large numbers of the accountancy profession who are stammering and incapable of presenting themselves. The Minister has distorted what we were saying. Will he explain why New Clause 2 deals with the appointment of "a person"? How does he square that with what he has said about a firm?
      Mr. Davis: What I have said squares perfectly with the Bill. The hon. Member will see from Hansard tomorrow
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      that my remarks were an accurate reflection of the law and that in no way is the law impaired by the clause.
      A right is conferred upon a duly appointed auditor because it is the duly appointed auditor who has been removed. It was suggested that employees should be able to participate as representatives. It would be wholly inconsistent with the concepts I have outlined to allow that position to operate. The employees would not be carrying that responsibility.
      Mr. Peter Morrison: The Minister accepts that there are one-man firms. No doubt he also accepts that in some cases these firms suffer from appendicitis and so on. Surely in such cases it is only right that the auditor should be able to send a qualified accountant employed by the firm to the meeting. Such firms are not like Price Waterhouse & Co. with 20 or 25 partners. It is one man working on his own who needs to be represented.
      11.45 p.m.
      Mr. Davis: I cannot accept that one can delegate the responsibility to somebody who does not carry the same degree of responsibility as the partner in law. It is the sole proprietor of the firm, or one of the partners, who binds the other partners and who has asserted the need to make a statement. He would have the opportunity of making a statement in writing. It does not necessarily follow that he would wish to attend the meeting. Therefore, the hon. Gentleman is inviting a situation that would be capable of being subject to considerable abuse. I do not accept his argument.
      I turn to the next point—
      Mr. Higgins rose—
      Mr. Davis: I am coming to the hon. Gentleman's point—or if it is another point, I shall give way.
      Mr. Higgins: Until the Minister says what it is, how can I tell?
      Mr. David Mitchell: Will the Minister guide me on the matter of appointing personally as auditor? Am I to understand that in future one will appoint a person or a partnership?
      Mr. Davis: One does not refer to the appointment of a partner, nor has it been so referred to in previous legislation

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      when dealing with these matters. This is no different from the precedents established earlier on matters of definition. On reflection, I do not think the hon. Member for Worthing (Mr. Higgins) will think that the matters he raises are cause for anxiety or fears.
      Perhaps I can elaborate slightly. It is right to say that "a person" means any individual or individuals. I hope the hon. Gentleman's fears are allayed. It does not include a body corporate.
      Mr. Peter Morrison rose—
      Mr. Davis: I do not think I can give way any more. Hon. Members have had a pretty fair whack. Let me go to some other points that have been made. On the question of removal of auditors—
      Mr. Higgins: The Minister is obviously leaving the point on which I sought to intervene earlier. Perhaps I may now deal with it. The Minister must make the situation clear. It is no good his telling my hon. Friend the Member for City of Chester (Mr. Morrison) that we cannot have any more interventions, because the Minister has not answered the point.
      The Minister made two points. He said that in a small firm if arrangements were made to send a representative the process was open to abuse. He asserted that, but he did not explain how it could be open to abuse. In his first speech the Minister said something that was inconsistent with what he said in replying to the debate. In opening he made it clear—and this is why we have been cross-questioning him—that it was a personal right—that is, a right vested in an individual. Then in reply—no doubt after having received notes from the Box—he said something quite different. He then said that the partnership is the right thing to adopt and that it is not a personal right—not a right vested in the individual but a righ which gives the auditors or the partnership the opportunity to appear. Any individual in the partnership presumably can appear.
      This is a difficult point. If the audit is wrongly carried out, or if the individual partner wants to make the point that he should be the individual who appears, the argument turns itself on its head. The Minister has not clarified this matter. Much of the recent criticism has been
      1278
      on the lines "Why has not a particular individual in a partnership carried the can in a particular case?". We have to consider both aspects, and the Minister has not clarified them.
      Mr. Davis: The hon. Gentleman, with his mighty and massive intervention, which represents his second speech, has hardly clarified the situation. That which he is now urging is in direct conflict with that which his hon. Friends have been arguing. The hon. Gentleman asks me about abuse. What is a representative? Is it a barrister, a solicitor or a friend? These are matters that the Opposition have failed to define. Would there be abuse if someone who had no close connection with the matter and carried no responsibility were able to articulate on behalf of another?
      Mr. David Mitchell rose—
      Mr. Davis: No, I shall not give way again on that issue. I have given an example of the possibility of abuse. There is no monopoly of inconsistency. We have just heard the inconsistency of the hon. Member for Worthing.
      I thought I made it clear in interventions before rising to reply—I might inadvertently have misunderstood what the hon. Gentleman was saying—that "personal right" relates to individual partners in a firm. That is the only way in which the matter can be defined in law.
      It is necessary to provide for the removal of auditors because they will hold office until a general meeting at which audited accounts are laid before the company. If the auditor failed to carry out the audit, the company would be placed in an impossible position. It would have no effective auditor and it would be unable to appoint another because there would be no audited accounts. We have to deal with that situation.
      The hon. Member for Worthing wanted to know about the removal safeguards. My hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) dealt with that matter in his intervention. Special notice is required to be given of a resolution to remove an auditor. The definition of a special notice is provided. A copy of the notice has to be sent to the auditor. The auditor whom it is

      1279
      proposed to remove has the right to make representations and to have them circulated. He can speak at the meeting if he so wishes. I believe that those safeguards are real and a real improvement. I believe that they will assist in strengthening the position of the auditor rather than diminishing it.
      The matter raised by the hon. Member for Colne Valley (Mr. Wainwright) related to the philosophy. I must repeat that these provisions were strongly recommended by the Jenkins Committee. The committee examined the situation with great care.
      Mr. Richard Wainwright: Does the hon. Gentleman agree that one aspect of an auditor's independence that was considered some years ago to be of prime importance is disappearing under the Bill? As the law now stands an auditor is deemed to be reappointed unless certain steps are taken by the shareholders who wish to change him.
      Mr. Davis: But subject to strong safeguards which are spelt out. These are welcomed by those who are primarily concerned with safeguarding the position of auditors.
      Mr. Richard Wainwright: Are they?
      Mr. Davis: I think that they are. The information that I have put to the House on what has happened with the past week or so is evidence of that determination.
      I repeat, that if that determination is seen to be wavering the Government will have to consider what legislation is needed to safeguard the position further. The glare of publicity is a mightily important way of assisting people to know what is going on in a company. It is being given the possibility of being effective by these provisions. There have to be certain safeguards. I do not pretend that this is the last word. If I took that view I would not be urging auditors to take further action, possibly to deal with the matter by self-regulation, possibly by additional legislation.
      The best is the enemy of the good. We have to take urgent action now even if we are not able to encompass all possible safeguards. We are still learn-
      1280
      ing from reports that have been presented to the public recently.
      Mr. Douglas-Mann: Will my hon. Friend agree that the principal effect of New Clause 1 is to direct the minds of the general meeting of every company to the question whether it wishes to reappoint the auditor? To that extent it is a strengthening of the rights of members of that company, if not of the rights of members of the public. The principal effect of New Clause 2 is that it gives the right to an auditor whom it is proposed to dismiss to come along to the meeting and to say why he should not be dismissed. Despite the patronising remarks of the hon. Member for Hertfordshire, South (Mr. Parkinson), these are strengthening provisions and do not weaken the rights of auditors.
      Mr. Davis: My hon. Friend characteristically summarises the safeguards we are seeking to introduce.
      Mr. Parkinson rose—
      Mr. Davis: I will not give way again. I have given way already on eight or nine occasions and that is reasonably generous. I think I have dealt with all the powers—
      Mr. Richard Wainwright: What about the powers of the Secretary of State to appoint?
      Mr. Davis: We already have the powers to appoint auditors. We have not exercised them recently. If the Department had to appoint auditors it would consult the directors and principal shareholders. It would also have regard to the size of the company and the complexity of the accounts in deciding which firm of accountants to approach. The provision dealing with that is section 159(3) of the 1948 Act.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 120, Noes 14.
      For Division List No. 335 [See Col. 1413]
      Question accordingly negatived.
      Clause read a Second time, and added to the Bill.

    New Clause 2

      SUPPLEMENTARY PROVISIONS RELATING TO APPOINTMENT AND REMOVAL OF AUDITORS.
      '(1) Special notice shall be required for a resolution at a general meeting of a company—

      (a) appointing as auditor a person other than a retiring auditor; or

      (b) filling a casual vacancy in the office of auditor; or

      (c) reappointing as auditor a retiring auditor who was appointed by the directors to fill a casual vacancy; or

      (d) removing an auditor before the expiration of his term of office.

      (2) On receipt of notice of such an intended resolution as aforesaid the company shall forthwith send a copy thereof—

      (a) to the person proposed to be appointed or removed, as the case may be;

      (b) in a case within subsection (1)(a) above, to the retiring auditor; and

      (c) where, in a case within subsection (1)(b) or (c) above, the casual vacancy was caused by the resignation of an auditor, to the auditor who resigned.

      (3) Where notice is given of such a resolution as is mentioned in subsection (1)(a) or (d) above and the retiring auditor or, as the case may be, the auditor proposed to be removed makes with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall (unless the representations are received by it too late for it to do so)—

      (a) in any notice of the resolution given to members of the company state the fact of the representations having been made, and

      (b) send a copy of the representations to every member of the company to whom notice of the meeting is or has been sent.

      (4) If a copy of any such representations as are mentioned in subsection (3) above are not sent out as required by that subsection because received too late or because of the company's default, the auditor may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting.
      (5) Copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application, either of the company or of any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the court may order the company's costs on an application under this subsection to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.
      (6) An auditor of a company who has been removed shall be entitled to attend—
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      (a) the general meeting at which his term of office would otherwise have expired, and

      (b) any general meeting at which it is proposed to fill the vacancy caused by his removal,

      and to receive all notices of, and other communications relating to, any such meeting which any member of the company is entitled to receive, and to be heard at any such meeting which he attends on any part of the business of the meeting which concerns him as former auditor of the company.
      (7) Section 160 of the Act of 1948 (which is superseded by this section) shall cease to have effect.'—[Mr. Clinton Davis.]
      Brought up, read the First and Second time, and added to the Bill.

    New Clause 3

      AUDITORS OF BODY WHICH IS BOTH A COMPANY AND A TRADE UNION, ETC.
      '.—(1) Subject to subsection (2) below, this section applies to every body which is both a company and a trade union or employers' association to which section 11 of the Trade Union and Labour Relations Act 1974 applies.
      (2) Where any such body as is mentioned in subsection (1) above has auditors who were appointed, before the coming into operation of this section, under subsection (3) of the said section 11 (duty to appoint auditors), this section shall not apply to that body until—

      (a) the term of office of those auditors expires, or

      (b) auditors are next appointed by or on behalf of that body under section (Appointment and removal of auditors) (1) or (2) above,

      whichever of those events first occurs.
      (3) Subsection (3) of the said section 11 and paragraphs 6 to 15 of Schedule 2 to the said Act of 1974 (qualifications, appointment and removal of auditors) shall cease to have effect in relation to bodies to which this section applies.
      (4) The rights and powers conferred, and the duties imposed, by paragraphs 16 to 21 of the said Schedule 2 on the auditors of a body to which this section applies shall belong to the auditors from time to time appointed by or on behalf of that body under section (Appointment and removal of auditors) above.'.—[Mr. Clinton Davis.]
      Brought up, and read the First time.
      Mr. Clinton Davis: I beg to move, That the clause be read a Second time.
      I can move this clause quite shortly. The provisions of the Companies Acts and of this Bill, as amended, relating to the qualification, appointment and removal of auditors, differ from the equivalent provisions in the Trade Union and Labour

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      Relations Act 1974 and therefore some element of uncertainty could arise as to the position of a trade union or an employers' association which is also a company.
      The new clause overcomes the difficulty by providing that the auditors of a company which is also a trade union or an employers' association are to be appointed in accordance with the provisions of the Companies Acts and are to have the rights conferred by and be subject to the duties imposed by virtue of the 1974 Act.
      The TUC and the CBI have been consulted about the clause and both are content.
      Mr. Higgins: That was a fairly superficial explanation of the new clause by the Under-Secretary. It seemed to show some regrettable tendencies towards the corporate State as the Government, the CBI and the TUC are apparently at one regarding the provisions of the clause.
      What change in policy is involved? I understand that sections of the Trade Union and Labour Relations Act 1974 are to be amended. Presumably when the Bill was drafted the Department of Trade had views on the subject and on why special provisions for auditing should be made. However, the Minister has proposed a new clause which alters the position of auditors to this kind of hybrid body.
      I am not immediately clear about the extent to which the provisions of New Clauses 1 and 2, which have now been added to the Bill, regarding the removal of auditors or of people appearing at general meetings to explain why they should not be removed, would apply here. If a trade union which is also a company decided to remove the auditor, subject to the provisions of new Clause 2, would the individual auditor concerned—perhaps I should say not "individual", but the partnership or representative of the partnership—be able to attend the general meeting of the trade union and put forward reasons for not being removed?
      The Minister's initial remarks did not explain sufficiently why at this late stage, apparently completely out of the blue—or perhaps not quite out of the blue—we should have a provision regarding trade unions thrust upon us at short
      1284
      notice. We have not had an opportunity of carrying out the adequate consultations which we would wish to have carried out. A straight assurance by the Minister to the effect that both the CBI and the TUC agree with the Government is not necessarily adequate to satisfy us that this change should be made.
      There is a problem in this respect because, according to the conventions of the House, the Minister can speak only at the opening and, if it is his amendment or new clause, at the conclusion of the debate. I hope that we shall have a more substantial explanation than we have had so far. I shall naturally be inhibited from speaking again. However, the Minister owes it to the House to give a more comprehensive explanation so that in another place we can, if necessary, revert to the matter. I understand that is in order if we amend a Bill which originated in their Lordships' House.
      12.15 a.m.
      Mr. Ron Thomas: I, too, would like more information. I have read through Schedule 2 of the Trade Union and Labour Relations Act 1974, and I am still not clear, having read New Clause 3 and heard my hon. Friend, what the changes are to be. Paragraph 12 of Schedule 2 makes clear that
      "Notwithstanding anything in the rules of a trade union or employers' association, its auditor or auditors shall not be removed from office except by resolution passed at a general meeting of its members, or of delegates of its members."
      Therefore, auditors for trade unions seem to be in a much stronger position than auditors for companies, judging by what I have heard this evening.
      Does this affect trade union branches? They elect their auditors. Are we talking here only about the auditing of the national accounts of a trade union? What will the changes mean for the trade union movement?
      Mr. Clinton Davis: Perhaps I was too brief in opening the debate. I get rebuked if I take too long and rebuked if I am too brief.
      The purpose of New Clause 3 is to clarify the position of a body which is both a company and a trade union or employers' association. That is the answer to the second point raised by my hon. Friend the Member for Bristol, North-West (Mr. Thomas). We are con-

      1285
      cerned to clarify the position in relation to the qualifications, application and removal of the auditors of such a body.
      The effect of the clause is that auditors appointed for the purposes of the Companies Act are to have the rights and duties of auditors appointed for the purposes of the Trade Union and Labour Relations Act 1974. Section 11 (3) of that Act requires auditors to be appointed to audit the accounts of trade unions and employers' associations. It will therefore cease to apply to such bodies. The provisions of the 1974 Act are very similar, but not identical, to those in the Companies Act. For example, under the 1974 Act an auditor can be removed at a general meeting of delegates of the members, and under the Bill the auditors may be removed by the members themselves.
      I think this is essentially a technical provision. We consider it important, although I must concede that it was not observed when we were dealing with the Bill in Committee. So far as that is concerned, I apologise to the House. This is a complex and technical Bill and I accept responsibility for the fact that this point was missed earlier. But I do not think that it is a matter which should give rise to contention. The CBI and the TUC, which carry some degree of authority in this matter—it is not just a question of saying that they are determining it—have both expressed concern. They wanted the position put right, and we are seeking to do so.
      Mr. Higgins: May I press a point which the Under-Secretary of State has raised? He distinguished, as I understood him, between a meeting of delegates of a union and a meeting of members. The point to which I did not get an answer arises from New Clause 1—whether an auditor who is threatened with being forced out of office by a general meeting is able to appear, presumably at a meeting either of members or of delegates, and argue that he should not be removed.
      As I understand it, he at any rate cannot be a delegate and, as far as I can see, cannot be a member either, in which case it seems a somewhat curious innovation that we are making in what is, as the Minister has rightly said, a complex matter. Will the Minister spell out in
      1286
      rather more detail precisely what scope there will be for auditors insisting on not being removed if they do not wish to be removed?
      Mr. Clinton Davis: I thought I had spelt it out when I said, using these words carefully, that the auditors of a company which is also a trade union or employers' association are to be appointed in accordance with the provisions of the Companies Acts and to have the rights conferred and be subject to the duties imposed by virtue of the 1974 Act. It will be possible for an auditor of a body which is a company and a trade union to be removed only in accordance with the Companies Act provisions.
      I think that deals with the points which have been raised by the hon. Gentleman.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 5

      CONTENTS OF PROSPECTUS
      'In Schedule 4 to the Act of 1948 (matters to be specified in prospectus etc.), in paragraph 6 after the words "on each share" there shall be inserted the words "including the amount, if any, payable by way of premium" and at the end of that paragraph there shall be inserted the words "including the amount, if any, paid by way of premium".'.—[Mr. Clinton Davis.]
      Brought up, and read the First time.
      Mr. Clinton Davis: I beg to move, That the clause be read a Second time.
      This, too, is a complex point. It came to our notice during the Recess, and for that reason was not discussed in Standing Committee. It concerns a matter which in the Government's view is of considerable importance and ought to be dealt with in the Bill. It is a suitable vehicle for it, even though it has entailed introduction at a rather late stage.
      The need for the amendment has arisen principally in relation to a type of company known as an oversea mutual fund. Mutual funds in corporate form are common on the Continent and in North America, but cannot be established in this country because it is a fundamental principle of our company law that a company should not buy back its own shares.

      1287
      The amendment will not affect unit trusts, the promotion of which is regulated by the Department of Trade under the Prevention of Fraud (Investments) Act, or listed mutual funds, since under the Companies Act 1948 these enjoy exemption from Schedule 4.
      It has been the Department's view that unlisted mutual funds sell and repurchase shares continually at frequently varying prices could not promote themselves here because of their inability to state in their prospectus the amount which the investor will have to pay for his shares.
      Schedule 4 to the 1948 Act requires "the amount payable" on each share to be stated in the prospectus. The interpretation to be placed on the expression "the amount payable" has been called in question, and it is for that reason that we have thought it appropriate to use the Bill as a vehicle for introducing this matter. To avoid a situation in which unlisted mutuals might be able to offer their shares continually in this country, free of either Department of Trade or Stock Exchange control, it is necessary to clarify the meaning of paragraph 6 of Schedule 4.
      The point is of rather more general application. For all companies which issue shares at a premium, the prospectus should state the full amount payable on allocation or allotment of each share, not just the nominal value.
      In order to ensure, first, that the law states precisely what is required to be specified in a prospectus in respect of the amount payable, and more particularly, second, to ensure that unlisted mutual funds cannot operate in this country, we have to amend the law so that it states clearly that the amount payable on shares, as required to be disclosed in a prospectus in accordance with paragraph 6 of Schedule 4 to the 1948 Act, is the total amount payable, including any amount payable by way of premium, and not simply the nominal value.
      The Government have come to the view that advantage should be taken of this opportunity to present this new clause to deal with this specific point. I hope that the House will recognise that it would be wrong if we were to take no action while knowing that the courts could sanc-
      1288
      tion a different interpretation of paragraph 6. I do not think this is in any way a contentious party political matter.
      Mr. Tim Renton (Mid-Sussex): Would the Under-Secretary clarify one point at this time in his speech. He said that this matter was one of general interest. Is it the case that this has arisen only with regard to open-ended mutual funds? Is it only in their case that it is necessary to legislate in this manner to make certain that the amount payable is included in the Bill or has it arisen in relation to other prospectuses in regard to other companies?
      Mr. Davis: It has arisen in respect of an open-ended mutual fund. It is not a matter which has received general application in that sense. I was coming to the general interest points in a moment.
      The fact is that if unlisted mutual funds were to be free to operate here unregulated, they would be promoting their activities alongside authorised unit trusts but with two important differences. First, the day-to-day supervision of the operations of a unit trust authorised by the Secretary of State for Trade is vested in a trustee who also assumes responsibility for the safe custody of the unit trust's assets, whilst the oversea mutual fund may or may not have a trustee. Even if it has one, it is by no means certain that the trustee's responsibilities will match those which the United Kingdom investor has come to expect of the unit trust trustees.
      Secondly, these oversea mutual funds may invest in property other than securities—for example, commodities, land, bullion and so on. In short, their promotional activities would not be subject to our control and we would be putting back the clock some considerable time—indeed, to the time when finance and commodity pools flourished unchecked and swindles arising from them were common place.
      I am not seeking to suggest that all overseas mutual funds are disreputable. That would be quite wrong and quite unjust to some who thought that they were caught by that general description. That is not intended. But the fact is that without the new clause we may find that we have opened up an avenue for the unscrupulous promoter to push his shares at a public which has become

      1289
      accustomed to a tradition of relative safety and supervision in the field of collective investment.
      I ought also to mention that the EEC Commission has been concerned with the open-ended type of collective investment institution and a draft directive has been published which will seek to lay down minimum standards for both unit trusts and corporate-type funds. These investment institutions will require some form of authorisation before they will be able to promote themselves to the public not only in their own member State but in other member States of the Community. It would be wise for us to take this opportunity of ensuring that this country did not act as a back door for the entry of unauthorised mutual funds.
      I would also suggest that it is desirable to clarify the meaning of paragraph 6 in the context of British as well as overseas company prospectuses. I take the point—part of it at least—that the hon. Member for Mid-Sussex (Mr. Renton) made in his intervention.
      Mr. Tim Renton: As the Under-Secretary has said, this is a highly complex matter. It was not discussed in Committee. It is a great pity that it should be brought to us at 12.29 a.m., rather than, for example, being delayed until the larger securities legislation that I believe the Government intend to introduce during the coming Session—if they can find the time to do that.
      12.30 a.m.
      One thing that puzzles me about the hon. Gentleman's explanation of the new clause is that he implies that this matter came to the Government's notice during the summer months, rather suddenly, and that it was for that reason necessary to plug this loophole now. However, our legislation has been like this ever since the Companies Act 1948, and open-ended mutual funds have existed for a great many years. It is, therefore, hard to see or know what has happened during the months of the Summer Recess that makes it necessary for the Government to bring in this brand new and highly complex point at this very late hour. It would have been much better had we had more time to consider it. It would be very helpful if the hon. Gentleman could explain the danger in rather more detail, and what has happened in recent months
      1290
      that makes it necessary for this point to be introduced now.
      When I first read the new clause I wondered what on earth could be the reason behind it, because it is very hard to see how, in any prospectus, the description of the value being placed on each share is not adequate. If a prospectus does not say what is the total amount of money to be subscribed, how will the person issuing the prospectus ever raise the money? Therefore, my instinctive reaction was very much to wonder what was behind the new clause.
      The hon. Gentleman has given some explanation. However, I want to go rather further and to ask him whether, in seeking to plug this one loophole in prospectuses, he has considered the EEC draft directive on prospectuses, and what is the implication and the effect of that draft directive on United Kingdom legislation concerning the general issue of prospectuses.
      I return to the point with which I started. The hon. Gentleman has frequently said that this is an interim Bill, that it is merely to plug a few gaps, while he promises us a lot more, and much more weighty, legislation in the months ahead. The Parliamentary Secretary to the Law Officers' Department nods his head in approval. However, surely it is a mistake to take just one small point about prospectuses—we do not know the real reason why this is being brought forward at present, or its urgency—when we are faced with the sixth EEC directive on prospectuses, which will make very substantial changes in how prospectuses are handled in Britain.
      The most obvious point to be taken from the draft directive is that at present there is legislation for prospectuses only under the Companies Act 1948, which states only what has to be contained in the prospectus when shares are offered to the public. The 1948 Act does not cover the situation when shares are listed on the Stock Exchange. The EEC directive will change all this because its purpose is to cover the point in time at which shares are listed. That will be a very substantial change. This point should surely be taken on board at present.
      Unless there is some genuine urgency behind this matter which the hon. Gentleman did not make clear, there is a moment

      1291
      in time when we should consider the whole question of prospectuses and how they will fit in with EEC legislation, rather than trying to plug this one small loophole. Therefore, what consideration have the Government been giving to the EEC draft directive on this point of the contents of prospectuses at the moment of listing of shares?
      There is the further point that the draft directive will require that member States shall appoint one or more national authorities to ensure that a prospectus is not published until it satisfies the requirements of the directive. Presumably, in Britain that duty will fall on the Department of Trade, but it will very much lessen the responsibility which at present falls on the Stock Exchange, and that also is a matter to be taken on board and considered in a general review of prospectuses.
      In parenthesis, I must add that, apart from the question of mutual funds, this whole worry about
      "the amount, if any, payable by way of premium"
      would not arise if we were to have no par value shares in this country. The Under-Secretary knows that I argued in Committee for no par value shares to be allowed, and I think it a great pity that the Government set their face against them. If they were to accept them, they would be moving with the times. They would be moving into a situation in which, for example, the dividends payable by a company could be equated to the market value of the shares rather than par value, which is a prehistoric notion and not something of any great importance in most companies today.
      I hope that the Under-Secretary will be able to tell us that the Government are prepared to look again at the question of no par value shares. It would, I am sure, please both sides of the House if he were to do that.
      The Under-Secretary did not talk about Government Amendment No. 71, in Schedule 2, page 42, line 11, at end insert—
      'In section 38(5)b) of the Act of 1948 for the words "dealt in or quoted" there shall be substituted the word "listed".
      In section 39(1)b) of the Act of 1948 for the words "dealt in or quoted" there shall be substituted the word "listed".
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      In section 51(1) of the Act of 1948 for the words "dealt in" there shall be substituted the word "listed".
      In section 52(1) of the Act of 1948 at the end of paragraph (a) there shall be inserted the words "whether on account of the nominal value of the share or by way of premium".
      That is grouped with New Clause 5.
      Mr. Clinton Davis: On a point of order, Mr. Deputy Speaker. It is my understanding that it is no longer so grouped. I think that that was agreed by Mr. Speaker and was notified to the hon. Member for Worthing (Mr. Higgins).
      Mr. Deputy Speaker (Mr. Oscar Murton): Amendment No. 71 is to be taken later.
      Mr. Higgins: Further to that point of order, Mr. Deputy Speaker. The Under-Secretary informed me earlier that he thought that there was some confusion in the grouping, but certainly the House has not been informed, and nor have I, that Mr. Speaker has made a change in the grouping. With respect, it seems a little late at this stage in the debate suddenly to say that the grouping is not what we have on the published list. We have not been officially informed, and the House has not been informed, that there has been a change in the grouping. It is late at night, and one understands that problems are created by dealing with so complex a Bill in this way, but I am surprised by what the Under-Secretary has said.
      Mr. Deputy Speaker: Perhaps it is appropriate that I inform the House now that it has been decided, on the order of Mr. Speaker, that Government Amendment No. 71 should go to the second page of Mr. Speaker's selection list and be taken with Government Amendments Nos. 72, 75, 77 and 78. After Government Amendment No. 69, the next group will begin with Government Amendment No. 71, and include Nos. 72, 75, 77 and 78.
      Mr. Higgins: I am most grateful, Mr. Deputy Speaker. At the moment, the thirty-third debate, that is, the one on Amendment No. 69, is noted at the top of the second page of the selection list. As I understand it, you are now proposing that the next debate should be on Government Amendment No. 71, but I am not quite sure whether that is on its own or with No. 72 and the others.
      Mr. Deputy Speaker: It is to be grouped with Government Amendments Nos. 72, 75. 77 and 78.
      Mr. Higgins: I am very grateful.
      Mr. Renton: I thought that I heard an hon. Member say, from a sedentary position, "Is that clear?". In fact, it is not at all clear. Government Amendment No. 71, which I was about to discuss, contains four items, and, although the fourth item properly belongs with New Clause 5, the first three do not. The arrangement that Amendment No. 71 is now to be grouped with No. 72 does not help the Government a great deal, because the thirty-fourth debate, to which my hon. Friend the Member for Worthing (Mr. Higgins) alluded—to which I am looking forward with great pleasure and which will come at about this time tomorrow—is to deal with the question of quoted and listed companies.
      The amendment to section 52 of the 1948 Act has nothing to do with listed and quoted companies. It deals with the normal value of the share. The Government have got themselves into a hideous muddle on account of the amendments that now appear grouped together under Amendment No. 71. They are clearly imperfectly grouped. In the circumstances, is it appropriate to talk to that part of Amendment No. 71 which is relevant to the new clause that we are now discussing?
      Mr. Clinton Davis: The difficulty is that Amendment No. 71 dealt most effectively with the later amendments. It was thought desirable, therefore, to concentrate the debate on Amendment No. 71 on those points. The amendment also contains one matter which deals with New Clause 5 and if it helps the House at this stage I shall just refer to it. It provides that the "amount payable" which, under Section 52(1) of the 1948 Act is to be stated in a return to the Registrar of an allotment of shares, shall be the total amount including any amount my way of premium—as New Clause 5 requires in the case of prospectuses. It may be helpful to deal with that at this stage.
      Mr. Deputy Speaker: I hope that that will be satisfactory to both sides of the House.
      Mr. Higgins: It is not satisfactory. Why was this amendment not drafted as two separate amendments? The present situation leads to confusion. I see no reason why the Government should draft omnibus amendments and then say that we must discuss parts of them with some amendments and other bits with yet other amendments. The matter could have been resolved simply if the draftsmen had been on the ball.
      Mr. Renton: My hon. Friend is right. It is obviously a hybrid amendment and unfortunate that the grouping should take this form. We look forward to coming back to Amendment No. 71 much later in the night.
      I return to the question of mutual funds. The Under-Secretary could be helpful by making plain that there are many highly respectable open-ended mutual funds operating internationally, particularly in the American market. They have operated for many years and are an important part of the investment scene. I find it difficult to imagine how it is possible for the Under-Secretary's suggested interpretation to be put on the present reading of Schedule 4 of the 1948 Act. It is clear that the words "of each share" mean the total monetary value of each share. But if the Under-Secretary says that there is an important loop-hope, I do not want to stand in his way. We need to hear more about the urgency this summer which has made it necessary for us to consider the matter now rather than in consideration of total securities legislation.
      Mr. Clinton Davis: The hon. Gentleman said that some of his remarks were in parenthesis and, in parenthesis, I shall not reply to them. The debate is not about part value shares and it would be out of order to deal with them. In reply to the hon. Gentleman's repetitive remarks I must tell him that the Department's interpretation has been public knowledge for many years. That was the interpretation presented to the Jenkins Committee.
      It was not until this summer that any serious challenge to the interpretation was made. We should place the matter beyond any shadow of doubt. There is a possibility that certain proceedings will be commenced. An interpretation which the hon. Gentleman has accepted, and

      1295
      which he would want to continue to be accepted, and therefore placed beyond challenge, is the Government's goal in making these proposals.
      12.45 a.m.
      Mr. Tim Renton: Will the Minister be more specific about the challenge? Can he tell us what it involved and how it has come about?
      Mr. Davis: It arises from a Jersey-based mutual fund which produced an opinion from counsel challenging the departmental view, the hon. Gentleman's view and that conventional understanding. As we are anxious to avoid the serious damage to the confidence of investors to which such a misunderstanding or different interpretation might give rise, and which might enable unscrupulous promoters to push their shares on an unsuspecting public, we want to put the matter right. It was not possible to foresee this at the Committee stage.
      The EEC directive on prospectuses is only a draft directive. It will make substantial changes to Schedule 4, which sets out the matters to be covered in a prospectus in respect of listed companies. I do not think that it is likely to affect the subject matter of the amendment. In any event, I have already spelt out the urgent need. It is desirable to require every company to state in a prospectus the amount to be paid up on each share, including any amount to be paid in respect of a premium. The prospective investor is entitled to be made aware of the amount he will have to pay, and a statement of the amount to be paid merely in respect of the nominal value would not be very helpful. Here we are on common ground with the hon. Gentleman, and I hope that he and my hon. Friends will support the clause.
      Sir B. Rhys Williams: I voted against New Clause 1, not because I was convinced that it was wrong, but because it seems to me objectionable for the Government to introduce on Report a matter which should have been introduced in Committee. That seems to apply to New Clause 5 as well, but the Minister has given his explanation of a particular case which has arisen. The Government must have discretion to bring urgent matters to the House at short notice if they think it appropriate to tack them on to an
      1296
      omnibus Bill. However, this is so recondite that it is difficult for hon. Members to appreciate what it is aimed at.
      I was brought to realise that the clause had a bearing on the Commission's draft directive on unit trusts only when the Minister pointed that out. Only on Monday afternoon I had to introduce the subject of the draft directive in the European Parliament's Economic and Monetary Affairs Committee in the capacity of draftsman for an opinion to the Legal Committee, where Lord Ardwick is rapporteur. I should like the Minister to explain a little more clearly how the Department's proposal relates to the Commission's proposals in its draft directive on unit trusts.
      Mr. Clinton Davis: I have already indicated that I do not think that the provision will have an impact on the proposals that we are putting forward. I do not think that this is the right time to invite a debate on the draft directive.
      Question put and agreed to.
      Clause rend a Second time, and added to the Bill.

    New Clause 9

      DUTY OF COMPANY TO NOTIFY RECOGNISED STOCK EXCHANGE OF ACQUISITION ETC. OF ITS SECURITIES BY DIRECTOR
      "(1) Whenever a company in the case of which shares or debentures are listed on a recognised stock exchange is notified of any matter by a director in consequence of the fulfilment of an obligation imposed on him by section 27 or section 31 of the Act of 1967 (duty of directors to notify company of acquisition etc. of securities of the company), and that matter relates to shares or debentures listed on a recognised stock exchange, the company shall be under an obligation to notify that stock exchange of that matter; and the stock exchange may publish, in such manner as it may determine, any information received by it under this subsection.
      (2) An obligation imposed by subsection (1) above must be fulfilled before the end of the day next following that on which it arises; but for this purpose, a day which is a Saturday or Sunday or a bank holiday in any part of Great Britain shall be disregarded.
      (3) If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding £500 and further to a default fine.
      (4) Proceedings in respect of an offence under this section shall not, in England and Wales, be instituted except by, or with the consent of, the Secretary of State or the Director of Public Prosecutions.".—[Mr. Clinton Davis.]
      Brought up, and read the First time.
      Mr. Clinton Davis: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this we may take Government Amendment No. 49.
      Mr. Davis: The clause is closely related to Clause 22 which deals with the duty of a director to notify the company of his dealings in the company's securities. In effect, it replaces subsections (2) and (3) of that clause.
      Clause 22(2) amends Sections 27 and 31 of the 1967 Act so as to require a person acquiring or disposing of listed securities in a company of which he is a director to notify not only the company but also the stock exchange on which the securities are listed. The new clause puts this requirement on the company rather than on the director. It is the practice of the stock exchange to accept communication of company announcements only from the company itself, and it is frequently necessary for it to authenticate messages before publishing them. This would be more difficult if—as would be required by the clause as drafted—notices were to be received from individuals rather than companies.
      It is right to stress the importance of the authentication of messages. Publication of the news that, for example, a director of a major company had sold the whole of his large shareholding would have a significant impact on the market in the company's shares. It is essential, therefore that the stock exchange should be certain that the message is authentic and not a hoax. This can be checked more easily and reliably through the stock exchange's normal contacts with the company than with an individual director who may not be known to the exchange.
      The new clause therefore imposes a requirement on a listed company to notify the stock exchange of any dealings in its listed shares and other securities by one of its directors by the end of the day next following receipt of notice of those dealings from the director. The clause also provides that the company and every
      1298
      officer in default shall be liable to a fine on summary conviction of up to £500, and to a default fine should the requirement not be complied with.
      I shall refrain from going through the various subsections of the clause. I think that they speak for themselves. The stock exchange intends to make this requirement a term of its listing agreement, and will probably in practice require an even tighter time limit than is prescribed under subsection (2). It already requires a company to notify it within 12 hours of any major interest notified to the company under Section 33 of the 1967 Act.
      I wish to make perfectly clear the provision under subsection (3) dealing with penalties for failure to comply. The penalty is the same as that for failure to record information received from a director in the register of directors' shareholdings which companies are required to keep under Section 27 of the 1967 Act.
      Mr. Higgins: The House will be interested in the amendment and new clause which the Minister has proposed. In Committee the Opposition introduced a number of amendments designed to deal with various abuses in company legislation, including some changes which were in the Conservative Government's Companies Bill which fell with the General Election in February 1974.
      The Government have been slow to introduce legislation on company law reform and we thought it right to introduce into this Bill some provisions to cover various abuses. Our consistent view has been that the general approach, which is wholeheartedly in support of private enterprise, should be combined with one that seeks to remove abuses through the operation of company law. At the same time we have felt strongly that legislative limits should be as few as possible and that as far as possible there should be a system of self-regulation.
      The problem of warehousing has been universally condemned and by Clause 22 the Government are seeking to deal with the situation involving the acquisition of a large holding in a company's shares by stealth. Therefore, it is strange that the Government have introduced no new clause on those lines.
      Mr. Clinton Davis: If the hon. Gentleman is so anxious to pursue such a new

      1299
      clause, will he explain why in Committee he tabled an amendment on insider deals and then withdrew it?
      Mr. Higgins: There were good reasons, of which the hon. Gentleman is well aware. I felt that the drafting of such a clause was beyond my capabilities. Furthermore, at that time in Committee we had not the support for a proposal on insider dealings that was subsequently expressed by the Committee dealing with company law reform. Neither of those barriers should have prevented the Government from going ahead on this occasion.
      It is strange that we should have had a statement by the Prime Minister designed to capitalise on recent events to the effect that the Government would take action as soon as legislative time permitted, while at the same time pressing ahead with other clauses on mutual funds, trade unions and so on. That is typical of the Government's approach.
      I made clear that I may not have drafted the warehousing provisions perfectly, even though I lifted them in large part from the 1973 legislation. It is right that the Government should seek to make the drafting more precise and the provisions more reasonable.
      Amendment No. 49 deletes subsections (2) and (3) of Clause 22, and the Minister skated over some of the provisions. I understand the point that duties should be placed on the company rather than on the individual because it is essential that any information that is passed on should be authentic. Serious consequences could flow if shareholders felt that not to be the case.
      I shall not quibble about that point. However, I am a little worried about some other provisions. The first point concerns a comparison between what is set out in New Clause 9 and Clause 22 as it stands. Subsection (2) of the new clause provides:
      "An obligation imposed by subsection (1) above must be fulfilled before the end of the day next following that on which it arises".
      I presume that means that if it arises on a Tuesday it has to be fulfilled on the Wednesday. Perhaps the Minister will correct me if I am mistaken. Although there is a provision that a Saturday, Sunday or Bank Holiday shall be dis
      1300
      regarded, that seems to be a tight schedule.
      1.0 a.m.
      We have a difficult balance to strike between arrangements which, if the period is too long, will leave a large loophole, and, if too tight, arrangements will not be predictable. The clause is imposing a tightness of timetable which was not in the original Clause 22.
      Mr. Clinton Davis: I have already indicated—perhaps the hon. Gentleman did not hear me—that the stock exchange might itself impose even tighter requirements than those we have envisaged in the proposal we are putting before the House.
      Mr. Higgins: I understood well what the hon. Gentleman said. I was coming to that point had he not interrupted. He said that the stock exchange was thinking of imposing a tighter limit—namely, 12 hours. I presume that the clause as drafted is effectively a time limit of 24 hours. I presume it would mean a working day of the stock exchange rather than what might be called after-hours dealing. If that is so, that seems pretty tight.
      However, it seems that the stock exchange feels that it is practicable, and it has infinitely more experience in these matters than I have. I have not received any representations, but I shall make inquiries between now and when the matter is considered in another place. If the hon. Gentleman is satisfied, I am prepared to accept the timetable.
      I am more worried about the penalties. Those which are now introduced were not in the original Clause 22. They apply if there is a default on the timetable that I have described. Subsection (3) states:
      "If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding £500 and further to a default fine."
      That is to say, an unlimited fine.
      A fine of £500 on the individual officers of the company must be regarded as a pretty heavy penalty. We discussed penalties in Committee quite extensively and I do not wish to pursue the matter at this stage, but I return to the point that I made in Committee—namely, whether it is £500 out of taxed income. That may represent a large sum in terms

      1301
      of the individual's resources if he has to raise £500 from taxed income. A person in such a position may well be paying tax of 98 per cent.
      I make no complaint about the Government introducing such a provision at this stage because they agreed to tidy up these matters, but I hope that the Minister will give consideration to the burden on the individual. The burden on the company is a different matter. Obviously the company could pay a fine of that size without any great problem. Presumably it would not be deductable for purposes of corporation tax, but the company would no doubt bear it with a little more equanimity than the individual officer of the company concerned. I hope that the Minister will give the matter consideration between now and when the matter is considered in another place so as to ensure that the penalty is reasonable in all the circumstances. That point apart, this probably helps to improve the quality of the clause and I do not wish to dissent from what the Minister has said.
      Mr. Clinton Davis: We have had repeated debates in Committee about the Government's programme of company law reform and now is not the time to go into the subject again. The hon. Member for Worthing (Mr. Higgins) was not prevented from speaking on insider dealing, Mr. Deputy Speaker, and I assume that he was in order. But he knows better than most how highly complex that legislation is. He knows better than most because representations were made to him not to pursue the matter in Committee. He knows that the points he has been making are purely party points, seeking to embarrass the Government. They have no validity. He is aware that these matters are being considered by the Government and other organisations who will be concerned with the legislation and he knows that such legislation has to be got right.
      The Tory Party did not get the legislation right in its 1973 measure, as was evidenced by the tremendous hulaballoo which arose on the part of some about the inadequacy of the drafting of penalties and on the part of others because they said that everything was too stringent. The hon. Gentleman knows that he has been making bogus points. I notice that,
      1302
      as in Committee, with his customary Olympic speed, he ran away from the issue. The hon. Member has abandoned his point about the tight schedule because on reflection he conceded that the stock exchange knew a little more about this than he did. I agree.
      The subject of penalties is a bee in the hon. Gentleman's bonnet. I do not believe that his hon. Friends would join him in this. He referred to this subject time and again in Committee. It would be strange if we started introducing into criminal law penalties of £500, subject to tax. That is what the hon. Gentleman was arguing. It is the most extraordinary proposition I have ever heard, even from the hon. Gentleman, and that is saying a lot. How does it fit with the constant proclamations of the Tory Party concerning law and order? It is a wholly unrealistic proposition.
      This is a serious matter and has to be dealt with seriously. We are setting maximum penalties here. I do not encourage the view that we should pity the poor fraudsman, the poor miscreant who is not prepared to comply with company law. The penalties are right. I hope that that will satisfy the hon. Gentleman and not cause him to pursue that bee for the rest of the debate.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 6

      DIRECTORS TO HAVE REGARD TO EMPLOYEE'S INTERESTS
      'The matters to which the directors of a company shall have regard in exercising their powers shall include the interests of the company's employees generally as well as the interests of its members.'—[Sir B. Rhys Williams.]
      Brought up, and read the First time.
      Sir B. Rhys Williams: I beg to move, That the clause be read a Second time.
      It seems to me that four important questions are raised by the clause. What is the purpose of the joint stock company? What are the claims of labour and capital to the benefits of their joint efforts? What are the responsibilities of the directors? And what is it useful to do by legislation?

      1303
      I recognise that those are four very large questions and that the Bill, as it was brought before the House originally, was intended not to be a large one. But these are matters which are of intense public interest not only because of the appointment of the Bullock Committee but because the public is waking up to the hopeless inadequacy of our company law. It is right that the House should give its mind to these questions and that the Minister should say precisely where the Government stands on the issue.
      Of course, we recognise that the clause bears a striking similarity to Clause 53 in the Conservative Companies Bill of 1973.
      Dealing as briefly as I can with my four questions, first, what is the purpose of the joint stock company? Is it profit? Is it to provide employment? Is it primarily to secure consumer satisfaction? No doubt those are important aspects of the objectives of a joint stock company, but surely we must include continuity both of the assets and of employment—in so far as the company can achieve those objectives—in any reasonable list of joint stock company purposes. If we are to consider continuity of employment as one of the four objects, the question immediately arises how the directors are to address themselves to that.
      The second question which I have posed is, what are the claims of labour and capital to the benefits of their joint efforts? I am told that employees do not appear anywhere in our company law. This illustrates how desperately out of date British company law has become. I suppose that it was possible at one time for people to hold sincerely that the interests of the employees ended when they received their pay. But public opinion revolts at the commodity theory of labour, and I believe that our company law should acknowledge that fact. It is wrong that we should proceed, towards the end of the twentieth century, with a body of company law which was already obsolete at the end of the nineteenth.
      What are the responsibilities of directors? Here, I hope that I may be allowed to read from the speech of my right hon. Friend the Member for Worcester (Mr. Walker) on 17th January 1974 when he introduced the 1973 Bill. He said:
      1304
      "Clause 53 makes it clear that directors are entitled to have proper regard to the interests of the company's employees in the decisions they take. It would be a poor board if it did not do this, and any reasonably active union or staff association would soon bring to its attention the negligence involved.
      But since it may happen that boards feel inhibited from benefiting the employees in ways which might be represented to shareholders as not directly in the shareholders' interests, we think that it is desirable to make it clear that a director who genuinely decides on measures which benefit the employees would have a complete defence against any claim that he was acting ultra vires."—[Official Report, 17th January 1974; Vol. 867, c. 934.]
      If it were important that that should be done in 1973, it is just as important that it should happen in 1976. Cerainly we should all be embarrassed if an action were brought against a board because it had acted in what appeared to be the interests of the employees in distinction to those of the shareholders. This could be an urgent matter for a company board at any time.
      Parliament should not leave a gap which can be filled only by boards of directors acting in a way which they know to be, morally and in the opinion of the public, inadmissible. So we have to clarify what are the responsibilities of directors, and it is not satisfactory that we should proceed to next year and perhaps the following year with this hopelessly anomalous position in our company law that, in principle, the directors can attend only to the interests of shreholders and may not consider those of the employees. The form in which I have reintroduced Clause 53 has strengthened it, but that is only an acknowledgment of the strength of public opinion on this matter.
      1.15 a.m.
      Finally, what is it useful to do by legislation? We have to recognise that company law may appear to have only a sort of hortatory or incantational quality in cases where boards have very complex matters to decide. Company law cannot foresee all the situations which boards have to consider. But it is right that Parliament should give clear guidelines to the people in joint stock companies who have to take difficult decisions, sometimes involving large numbers of employees or the interests of many shareholders. It is useful that company law should include guidelines as well as highly specific instructions on company procedure.

      1305
      I heard a story many years ago about Elizabeth I, that in a flash of genius, she presented a clock to the people of the Isle of Man. We can well imagine the effect which the introduction of an accurate time piece would have on a primitive agricultural society which had never before had the benefit of accurate time. If hon. Members accept the new clause, we shall be doing something rather like that—we shall be putting a clock in every board room to guide directors and to remind them of their obligations to the company's employees.
      The twentieth century is now in its last quarter. Surely we must all accept that human values are more important than purely material considerations.
      Mr. Clinton Davis: No one in the House, certainly no one who served on the Committee which considered the Bill or has known the hon. Member for Kensington (Sir B. Rhys Williams) for any time, will doubt the personal integrity in his approach to this important matter. He has done much positive thinking about it and a number of his ideas are worthy of the most careful consideration.
      I can assure the hon. Member that his ideas will be given that consideration in time for the next tranche of company legisation—which will not be as modest as this one. The hon. Member is entitled to the assurance which I give now that his ideas on the responsibilities and duties of directors and companies in this matter will be looked at most carefully in relation to the Bullock proposals which will be the subject of the next important legislation in this area.
      I agree with the hon. Gentleman that it is impossible for us to accept any longer that the legal description of the duties of directors should be so narrowly drawn. It is right that the interests of employees should be recognised in law. The hon. Gentleman rightly pointed out that they are not now.
      Although I welcome the hon. Gentleman's approach, I think that this is, in essence, a probing amendment to enable a debate—at a rather late hour unfortunately—on an important issue. I hope that the House will have time to discuss industrial democracy in more depth in future months.
      1306
      The approach of the hon. Member for Kensington is certainly far more radical than that enunciated in the 1973 Bill with its permissive arrangements in Clause 53. I described them in Committee as tepid and tentative, and the speech of the hon. Gentleman has borne out my remarks.
      With regret, I have to advise the House that it would be wrong to isolate this aspect and to legislate on it alone. The issues with which the hon. Gentleman and his hon. Friends are concerned go to the very heart of company law—the duties and responsibilities of a company. This is not something which can be altered lightly. Changes are likely to have major consequences for the rest of company law and would have implications for the way in which companies are run and investment is financed.
      I think that the hon. Gentleman started at the wrong end. The new clause is concerned solely with the matters to which the directors shall have regard in exercising their powers. I suggest that the powers of the directors derive from the powers of the company. Therefore, we should start by considering the powers and responsibilities of companies rather than of directors.
      The traditional concept of the company is as a legal vehicle for enabling the resources of many people—the shareholders—to be grouped together for a common aim, which is essentially the economic gain of its members. This is the way in which the position is reflected in the law and in companies' memoranda and articles of association. It is high time that we and companies started to reorganise our thinking on these matters.
      In order to make employee participation fully effective and properly to recognise the importance of the contribution of the employees, it is necessary to alter the basic concepts on which we act. We must move towards a new philosophy in which both employees and shareholders are regarded as having a stake in the company and in which the company is recognised as having duties and responsibilities both to employees and to shareholders. That is what Bullock is all about.
      If we were disposed to legislate solely in relation to the exercise of the directors' powers, we would be led into an unsatisfactory situation. We have to consider the consequences.

      1307
      In some circumstances it might be entirely outside the powers of the company, as the law stands, to act in the interests of the employees if this were to collide with the interests of the shareholders. The most obvious example is where a company ceases to trade. Indeed in the case of Parke v. Daily News, it was held that a company which was disposing of its business had no power, even with the approval of the shareholders, to make any provision for employees in addition to that to which they were statutorily entitled, because such provision could in no way benefit the interests of the shareholders.
      It is clear that we have to amend the law to overturn that decision, but the clause does not do that. We must address our attention to that matter, because it is of fundamental importance. It would put the directors in a difficult position, because they would be required by law to take account of the interests of employees while being prevented by law from taking the action that would meet those interests. This is an example of the kind of problem which we shall face.
      Another problem that we need to consider is how to enforce the provision. The clause is silent on the question of enforcement.
      What would be the consequences of the right which is said to be given to the employees? We do not want to create a situation in which there is endless litigation about the decisions reached by directors in circumstances in which the interests of the employees and of the shareholders conflicted and one group or the other considered that insufficient regard had been paid to its interests. We must look at this matter in its totality and consider the effects of introducing this proposal.
      I have cited one or two examples which I hope will cause the hon. Member for Kensington to feel that it has been helpful to have had the debate but that it would be unhelpful, because of the difficulties to which I have alluded, to introduce the clause in its present form.
      These are not mere technicalities. They are fundamental questions of company law which are central to the work of the Bullock Committee.
      I do not think that we can sensibly provide for worker participation on com-
      1308
      pany boards until we have considered what are or should be the responsibilities and duties of companies and of their directors. I assure the House that, when we come to legislate on industrial democracy, we shall have to deal with these issues. That is inescapable. I hope, therefore, that the hon. Gentleman will feel it appropriate in the circumstances to seek to ask leave to withdraw the motion and clause.
      Mr. Wigley: This matter arose in different guises in Committee against the background of the Bill, the Bullock Committee and the possibility of legislation in the near future, in that it touches on the question of responsibility towards employees.
      I support the remarks of the hon. Member for Kensington (Sir B. Rhys Williams). I hope that the Government are in a position to give a commitment that, assuming that the Bullock Committee comes forward with recommendations fairly shortly, as expected, they will publish in the next Session their own thoughts on the matter, even if they are not in a position to adhere to the original timetable and to legislate during that session. I hope that, if they can publish their thoughts on the Bullock recommendations, between 1977 and 1978 we can expect a major Bill to provide a great step forward in industrial democracy, taking in many of the points made in this debate and in Committee. The time is more than ripe to give urgent attention to the matter. We have to wait for Bullock, but when that committee's report is published, I hope that there will not be any delay from any quarter.
      Mr. Parkinson: I support my hon. Friend the Member for Kensington (Sir B. Rhys Williams), but I would not like anyone to think that successful businesses are successful only because the directors put the interests of the shareholders ahead of those of the employees. The most successful businesses are those whose sensible directors take account of the interests of the people in the business, of those who own it and of the locality in which it is situated. I put that point in case New Clause 6 should be misinterpreted as suggesting that one can run a successful business only by exploiting the employees and disregarding their interests in the interests of the shareholders. That is not

      1309
      the case. I know the spirit in which my hon. Friend moved the new clause, and in that spirit I support it.
      Mr. Tim Renton: I thank my hon. Friend the Member for Kensington (Sir B. Rhys Williams) for all the work he has done on company law over the years and for the number of matters he has brought to our attention, regarding, for example, the role and power of non-executive directors, when he focused on ways and means of strengthening the corporate structure. He has continued in that role with New Clause 6.
      I support what was said by my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson). The successful company, whatever company law now or at the end of 1977 or 1978 may be, will not think only of the interests of its shareholders but also about its workforce, the environment and its customers and consumers. It is only by thinking of these things that it will remain successful.
      It can be argued on from that that a provision in law that the directors should have regard to the interests of the shareholders and of employees is unnecessary, because it is only by having regard to the interests of the employees that the interests of the shareholders will be furthered. If a company were to be run totally contrary to all the wishes of its employees, to their lives and hopes, it would get into difficulties and the shareholders would be disadvantaged.
      This is a very important new clause and it is distressing, as other hon. Members have said, that we should be discussing it at such a late hour and in such a thin House, because it goes to the root of so many things that will affect the future development of companies in this country.
      1.30 a.m.
      There is a matter on which I should like, unusually, to take issue with the Under-Secretary. He referred to Clause 53 of the Conservative Bill of 1973 as permissive, tepid and tentative. I suppose that at this late hour he had to resort to a bit of hyperbole in order to keep his hon. Friends awake. He may have awakened some of us for a few minutes. But how is it possible to regard that clause as permissive, tepid and tentative
      1310
      when, in contradistinction to the clause moved by my hon. Friend, it says—"are entitled" to have regard to the employees' interests rather than "shall have regard to the employees' interests". To say that that is permissive seems to be stretching the use of the word "permissive" to the extreme.
      Clause 53 of the 1973 Bill was going all the way towards what my hon. Friend the Member for Kensington has moved tonight.
      I think also that it is incorrect to continue to refer to the case of Park v. Daily News as an instance of why the law needs changing. It is abundantly plain, looking back at that case, that it was ruled that it was wrong for the board to make a distribution of assets in the company to the employees because the Daily News had no continuing life. It was coming to an end. Certainly since then I have been advised that in a different case, where a company has a continuing life, the same ruling would not be given. It would be adjudged, as I said in my opening remarks, that there is a direct interest for the shareholders in keeping the employees happy. Therefore the Park v. Daily News case is not particularly apposite, and it is not a particularly good example to quote.
      I appreciate, however, as was said by the hon. Member for Caernarvon (Mr. Wigley)—who added a great deal to our deliberations in Committee—that the Bullock Committee is ahead of us. What it will say on this and other matters is of extreme importance. I feel, therefore, that tempting as the clause is, probably we should wait for the Bullock Committee to report.
      The Under-Secretary finds himself in a very ambivalent position in arguing against the new clause. On the one hand, he naturally feels that he must seem to be the defender of the employees' interests —and quite rightly, too. On the other hand, he has to say "I do not think this is the right moment".
      But the Bullock Report is ahead of us. We must wait for the findings of the Committee. It would be helpful to us if the Under-Secretary could tell us when we are likely to hear from the Bullock Committee. Will it report by the end of the year? When will the findings be

      1311
      published'? Will it be in time for legislation in the 1976–77 Session? Are we to have a Green Paper on the Bullock Committee's recommendations, in order that the House can have a full opportunity of considering them before a Bill comes forward? Or will there be a White Paper on them?
      Is it the Under-Secretary's view that the Bullock Committee will bring forward a unanimous recommendation, or will it split in different directions? All these are matters on which any light would be very helpful.
      I thank my hon. Friend for introducing the new clause and for the interest he has taken in the subject. Like him, we shall wait for the Bullock Report with eager anticipation before coming back to the matter.
      Mr. Clinton Davis: I shall try to deal with these various points as rapidly as possible, but deal with them sufficiently. The hon. Member for Caernarvon (Mr. Wigley) asked me to give an undertaking that we would publish our own thinking on the Bullock recommendations in the next Session of Parliament. That is quite clear. Indeed, we have given an undertaking to introduce legislation in the next Session of Parliament. Whether, in fact, it will be better to introduce a Bill for Second Reading, or annex a draft Bill to a White Paper, one cannot foresee at the moment—nor can I give any undertaking about whether we shall have a Green Paper or a White Paper. We shall have to see what the Bullock recommendations are. That is the right way to deal with this, and that was the point made by the hon. Member for Mid-Sussex (Mr. Renton).
      Certainly, the Bullock report will be published. I can give the hon. Member for Caernarvon that clear undertaking. I have dealt with the way in which the Government will deal with the matter. The uncertainties must depend upon what will be resolved when we look at the Bullock Committee recommendations. I dealt with that during Question Time on Monday. I shall certainly not engage in any speculation about the report itself, and I do not think it is right for the hon. Gentleman to invite me to do so.
      In respect of the point made by the hon. Member for Hertfordshire, South
      1312
      (Mr. Parkinson), which was echoed by his hon. Friend the Member for Mid-Sussex, I think it is right that successful business should have regard to the sort of criteria we have been talking about. But it is not true that most apply the concepts that we have been talking about as widely or as liberally as the hon. Gentleman seemed to suggest. That is why we have set up the Bullock Committee. There are a great many pressures, not only in this country but more widely within Europe. I believe those pressures are irresistible. It is not simply a question of having regard, and presenting a fait accompli, and consulting in that sort of way with one's employees. One has to encourage them in active participation and try to create an emotional attachment to the success of the business, not only on the part of the employees but on the part of everyone engaged in the enterprise. That is what I believe goes to the heart of our thinking on this matter.
      With regard to Clause 53, the hon. Member for Mid-Sussex simply does not understand what "permissive" means. It is the opposite of mandatory. In fact, Clause 53 was not mandatory, it was permissive. That is no sort of queer construction of words on my part. It is absolutely plain and it was intended to be. That is why the hon. Member for Kensington (Sir B. Rhys Williams) has not adopted that wording. He wanted to make it mandatory. That is why he used the word "shall". There is a world of difference between the thinking of the hon. Member for Kensington and that of his hon. Friend the Member for Mid-Sussex.
      When the hon. Member for Kensington seemed to imply that it was unnecessary to have any legal change in these matters I find that perplexing in the extreme. I hope that he does not speak for the Conservative Front Bench on that point. Legal change is absolutely essential and it is irresistible. There is nothing ambivalent in the stance that I have taken, but there is something ambivalent in the stance of the hon. Member for Kensington. In those circumstances, I hope that he will withdraw the motion and new clause.
      Sir B. Rhys Williams: We have ranged over some very serious topics. I believe that this short debate will be of

      1313
      interest to students of company law. I recognise the force of the points which have been made on both sides of the House. I would thank the Minister particularly for the way in which he responded to the initiative of myself and my hon. Friends and the seriousness with which he took our proposal.
      I recognise that he made a particularly valid point when he drew a distinction between the responsibilities of the company and the responsibilities of the directors. If directors are asked to do something which the company is not simultaneously required to do, that may give rise to an impossible situation. That is a valid reason why we should not proceed with New Clause 6 as it stands. However, the problem remains.
      I acknowledge what was said by my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) as to what happens in actual practice. It is because normal practice has gone so far ahead of company law that our joint stock companies are able to operate at all. But company law ought not to be left so completely behind. Boards of directors act with a certainty that they have to protect the interests of the employees, because if they do not do so they are plainly flouting the interests of their shareholders in the normal course of events.
      However, certain problems are now arising with the present difficulties for business and the tragic increase in the number of business failures. There are daily problems for boards in considering their employment policies. Situations are arising all the time in which boards might well perceive that they are acting ultra vires if they plainly support the interests of the employees in a way that could be held to be in conflict with the interests of shareholders.
      Therefore, Parliament must not delay. The Minister has made clear the Government's attitude. From what has been said by Opposition Members, the attitude of the Conservative Party and other Opposition parties is clear. Boards need be in no doubt about the will of Parliament. However, the present state of company law is quite unsatisfactory and I am glad of the Minister's unambiguous assurance that something will be done about it quickly. In the light of that
      1314
      assurance, I am happy to withdraw my new clause. I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New Clause 7

      SMALL BUSINESS EXEMPTION
      '(1) The Directors of a company to which this section refers shall not be required under subsection (7) of section 1 of this Act to deliver to the Register of Companies copies of documents required to be comprised in the accounts of the company in respect of any accounting reference period.
      (2) This section applies to any trading company which

      (a) did not have during the accounting reference period more than 18 full-time employees;

      (b) at no time during the accounting reference period has been to its knowledge the subsidiary of any other company;

      (c) at no time during the accounting reference period has been the holding company of a company which was then limited, and

      (d) has not made an offer to the public to subscribe to its shares.'—[Mr. David Mitchell.]

      Brought up, and read the First time.
      Mr. David Mitchell: I beg to move, That the clause be read a Second time.
      The new clause is designed to relieve small businesses from unnecessary regulations, new burdens, useless disclosures and expense, and to introduce some easement of their burdens. At nearly a quarter to two o'clock in the morning, I shall not detain the House by reading through the new clause. However, I should explain what it does.
      The new clause would relieve the smallest limited company of the need to file its accounts. It defines such a company as a company with 18 employees, or fewer, which is not a subsidiary of another company, not a holding company and not one which has outside shareholders. The new clause would not relieve the need to produce annual accounts for the inspector of taxes. It is concerned only with the filing of accounts.
      The reason for the new clause is that the Bill seeks to treat the large public company in exactly the same way as the small village grocer who trades with limited liability. Thus whether it be

      1315
      Imperial Chemical Industries or Slater Walker, for which we would entirely approve of disclosure, filing of accounts and all the other paraphernalia in the Bill, we do not feel that Bloggs and Company Limited, village grocers, should be treated in the same way.
      Mr. Clinton Davis: Perhaps it will shorten the debate if the hon. Gentleman is not able to answer this question. How can this be reconciled with the EEC's first directive on company law, which was accepted by this country on its accession to the Community and which requires that companies incorporated with limited liability in Great Britain should file accounts?
      Mr. Mitchell: I intended to come to that point later. Perhaps I may do so in my own time.
      I was saying that the Bill treats large and small limited liability companies alike. However, in the case of ICI, or some company of that sort, a large public company, there is a public investment. Therefore, the public have a right to know a lot more. In the case of a large company, there is its effect on the economy and social conditions in the areas in which it operates. It is significant to the economy of those areas. In the case of Bloggs, a village grocer, that is not so.
      1.45 a.m.
      When I refer to "Bloggs and Company Limited, village grocer", I have in mind the small engineering works at which somebody who has oily fingers has to go and wash in order to sign documents, or the butcher who has been chopping meat and has greasy hands. I mean Whitehall Gift Stores round the corner from here, or St. Stephen's Buttery Limited. What on earth is the value in such companies filing accounts? Their activities affect no one else. Their business is their own affair. It used to be true that an English man's home was his castle. Small businesses should be entitled to say "Go away and mind your own business, and we shall mind ours".
      Small businesses are collapsing under the burden of paper work. The Government's proposal in this respect cannot be taken in isolation. It has to be con-
      1316
      sidered along with price controls and census returns, along with the employment protection, contracts of employment and fair trading legislation, as well as hire-purchase regulations and the rest. It goes also with the 640,000 questionnaires send out by the Department of Industry last year requiring answers from business. Only today I learned that a Mr. Eric Grove, the managing director of James Grove and Sons Limited, is to be prosecuted on 26th November for failing to fill up a census of production form. If he had filled it up saying "Three French hens, two turtle doves" and however the rest of it goes, nobody would have minded.
      There is an excess of burdensome work falling upon small businesses, and the Bill adds to it. It is all very well for the Minister to look askance as though it does not. I was grateful to him for his Freudian slip in Committee, when he said that he would be
      "sending out guidance notes in a simplified form, illustrating clearly what new burdens—I mean new requirements—will be imposed …".—[Official Report, Standing Committee C, 6th July 1976; c. 1281
      He corrected himself, but all too clearly the truth shone through, showing that new burdens were to be thrust upon the small business.
      Apart from the burdens, there are to be serious penalties for those who do not fulfil them. The trouble is that the Government are trying to treat two wholly different animals as though they were alike. Of course, ICI must have an annual general meeting with its shareholders. But when Bloggs and Company Limited holds its annual meeting, the directors are Bloggs and Mrs. Bloggs, and they hold its across the kitchen table. To legislate as the Government intend in respect of companies of that kind is ludicrous. It is a waste of time for the company. It is irksome and time consuming. It is a waste of time also for the Companies Office, for the section of the Department for which the Minister is responsible. It has to process, to check and to chase those who fail to comply.
      Four months ago, there were no fewer than 245,000 companies in this country which were late in the filing of their accounts. There is all the work of checking up on Bloggs and Company Limited

      1317
      to see whether it has filed its accounts, when it employs only half a dozen people. It is ludicrous that this should go on. I discovered that 10,000 reminders a week are being sent out from the Companies Office chasing companies which fail to file their accounts.
      These are small companies. It is not ICI which fails to file its accounts. It is the little grocer, butcher or engineering workshop. Such people ought not to have to do it.
      Perhaps I should declare an interest, since I am secretary and file the accounts for three companies. One of them has a turnover of less than £10,000 a year. Who on earth is interested in a company whose total sales are less than £10,000 a year? Yet, all the paraphernalia has to be tackled year after year. Nobody is interested, nobody looks at it, it is a worry to directors, it is expensive for them and the Government. What possible interest is the position of Bloggs and Co.? The principal beneficiaries will be clerks, papermakers, printers, accountants and the endlessly expanding Civil Service which has to cope with the increasingly smaller number of productive workers in industry.
      The Secretary of State has half accepted our case because in Clause 1 he provides for unlimited companies to be exempt. Why the difference between the unlimited and the limited? What is there about "limited" which requires disclosure? The argument is that it is because creditors are entitled to know the risk involved. That is balderdash because nobody actually looks at accounts before he gives credit, and if he did he would be up to ten months out of date. As everyone in business knows, people ask other suppliers and the bank for references. Nobody has to extend credit to anyone if he does not want to. The onus is on the person who wants credit to prove that he is worthy of it. He can offer copies of his accounts. There is no need for public filing of information for that purpose.
      I turn to the question of the Common Market and the issue raised by the Minister. I was grateful to my hon. Friend the Member for Kensington (Sir B. Rhys Williams) for his comments in Committee. He said that the Common
      1318
      Market is moving towards two animals in terms of companies—the public company that must disclose and a statutory form of incorporation similar to the old exempt private company with no, or limited, disclosure. That is the way in which the Government should be moving and I urge the Minister to accept the new clause. If he cannot accept it in its present form, he must tell us the way in which we must move to help the mass of small companies and to save them from the irksome and burdensome regulations he has put forward.
      Mr. Farr: I support my hon. Friend and agree with his remarks. I remind hon. Members of a parallel subject which I raised in the House on 2nd April in relation to a small firm in my constituency which was literally snowed under with paper work and form filling. The business reached its position over 30 years through sheer efficiency but then it was inundated with paper work and flooded by form filling. In one week 283 pages of Government documentation had to be absorbed. The company was faced with changing from a highly competitive and efficient small industry to a less efficient and less competitive one by the necessity of employing one extra person in the office—thus increasing the office staff from three to four—simply to cope with the burden of paper work.
      On 2nd April I raised this matter in the House. I shall not weary the House by repeating what I said, but what the Minister of State, Department of Industry, told me in reply is highly significant. Replying to my criticisms and my picture of the difficulties of Wilbury Engineering, with its few employees, he said:
      "I have always said in as much as I am responsible for these things, that I am against the issuing of unnecessary documentation. I am against the issuing of unnecessary forms. On the question of form filling, I assure the hon. Gentleman that whenever these matters have come to my attention in my Department, which deals particularly with industry, I have questioned persistently the need for any documentation of any kind that comes before me. I am certain that it is for the good of the country that the amount of bureaucratic inquiries should be reduced to the minimum necessary for the purposes of good government. I assure the hon. Gentlemen of that."
      That was a refreshing assurance. The Minister went on to give me an equally

      1319
      encouraging assurance about the Government's intentions. He was not speaking only for himself and his Department when he said:
      "I assure the hon. Gentleman that it is Government policy to minimise the burden of documentation and of form filling which rests on firms. I attach very great importance to this. Ministers have made clear recently … that all forms are kept continuously under review, with a view to reducing the burden wherever possible."—[Official Report, 2nd April 1976; Vol. 908, c. 1872–3.]
      The Minister of State then described what action the Government had taken in relation to the report of the Bolton Committee of Inquiry on Small Firms, which reported in November 1971. One of its significant recommendations was an extension of the powers of the Survey Control Unit of the Central Statistical Office to object to all statistical surveys not considered by it to be essential in character and explicitly justified. The Minister added that a system had been established by this Government whereby all Departments were required to report as early as possible to the Survey Control Unit all new plans in this respect. Has the unit been approached about the necessity of this burden being placed on the tiny firms which are so important to the country? If so, will the Under-Secretary give the House a summary of the reply to his inquiry?
      2.0 a.m.
      Mr. John Loveridge: The clause relates only to very small businesses, those with 18 or fewer employees. It does not affect their duty to prepare accounts for the Inland Revenue, but merely relieves them of the need to provide information given to a third organisation.
      The Minister raised the question of the EEC directives, but do those directives require two sets of accounts to be deposited with two different Government Departments? Surely the Inland Revenue has a look at the accounts. If it wishes to keep a copy of them it can do so. That should be adequate for the requirements of the directive.
      However, there are many thousands of small businesses which would be grateful to be relieved of any obligation. They are told by the Prime Minister to look for new markets abroad. If successful they are hit by higher taxes and threats of ministerial investigations. They are
      1320
      beset by new laws, and are subject to multiple amendments year upon year and to threats of more laws to come.
      The business men, their solicitors and their accountants, and, I suspect, we in this House, cannot readily understand what those laws are. The firms are asked endlessly to fill in forms, some of them stupid forms, and they are threatened with prosecution if no figures are forthcoming, even when no figures are possible.
      Mr. Clinton Davis: On a point of order, Mr. Deputy Speaker. This clause relates specifically to the question of accounts affecting small businesses. The Opposition have repeatedly sought to enlarge the whole scope of the debate. May I suggest that the scope of the clause is narrow and that hon. Gentlemen should confine their remarks to what is on the Amendment Paper?
      Mr. Deputy Speaker: The clause refers to copies of what is required to be included in the accounts of the company. Perhaps hon. Members will bear that in mind. That is the core of the clause.
      Mr. David Mitchell: Further to that point of order, Mr. Deputy Speaker. The phraseology in the clause relating to documents has been taken from the Bill where it deals with unlimited companies which do not have to file their accounts. I trust that that is not in dispute and that the Minister will accept that that is what we are discussing.
      Mr. Deputy Speaker: I believe that to be so.
      Mr. Loveridge: I wish to show how New Clause 7 goes to the very heart of the matter we are discussing. We are talking here about the need for greater simplicity for the smaller companies. As long as they keep sound accounts, why clog up one storage room after another when the storage and recovery systems are paid for and kept by the Government?
      This is not a new matter for the House. In the last century the old wooden tallies which were accountany records were kept in this House. When they were destroyed because they were no longer needed there were so many that their burning set the House on fire and it burnt down. Are we to see the same again, or are the Government to collect so many forms that there

      1321
      will be insufficient oxygen for burning to take place?
      These small firms desire to make a living, to create and to sell what they make. They want to be good employers, to build up profits, to pay their debts, and to pay their just taxes to help improve society. But they are beset by regulations which destroy their initiative and their capacity to fulfil these purposes. They are threatened by regulation following regulation. They cannot read all the new rules, let alone understand them. Forms follow forms. I quote from the Daily Telegraph of Tuesday referring to a case involving one of the 640,000 forms referred to by my hon. Friend the Member for Basingstoke (Mr. Mitchell):
      "The director of a printing firm yesterday described a 15-page questionnaire sent out for completion by the Business Statistics Office of the Department of Industry, as an 'absolute farce'".
      Mr. Clinton Davis: On a point of order, Mr. Deputy Speaker. How is this in order? This relates to the Department of Industry and has nothing to do with the new clause.
      Mr. Deputy Speaker: Perhaps the hon. Member for Upminster (Mr. Loveridge) would confine himself more closely to the amendment.
      Mr. Higgins: Further to that point of order, Mr. Deputy Speaker. The Opposition are happy to leave these matters to the judgment of the Chair. The object of the proposition is to reduce the burden of form filling and the general submission of papers by small businesses. Therefore, it is appropriate to refer to the burden on small businesses.
      Mr. Deputy Speaker: The new clause specifically refers to
      "copies of documents required to be comprised in the accounts of the company
      That is the intention of the provision.
      Mr. Loveridge: I am grateful to you. Mr. Deputy Speaker, for your kindness. I gather that the same principle will apply to accounts put in for storage as will apply to the "absolute farce" described in the Daily Telegraph.
      It is said that there is a need to check the credit-worthiness of firms and that that is why these measures are needed. But how is that checking done in prac-
      1322
      tice? Busy people do not go crawling around archives trying to interpret filed accounts that are already out of date. For that purpose any historical account is too late.
      What is the purpose of asking for a banker's or trader's reference? The purpose behind this depositing of paper has never been truly revealed. It is filing for filing's sake. It reminds one of the woman who went to a psychiatrist and said "I like cornflakes". The psychiatrist replied "That is all right, you are quite sane—I like them too". The lady said "Come and see my collection. I have 500 boxes of cornflakes under my bed".
      In the same way the Government seem to love collecting paper. Just as the ancient governments of Mexico believed that people's hearts must be cut out in sacrifices to make the sun rise, the present Government believe that they must collect pieces of paper from every business to prevent the pound from sinking.
      The new clause is designed to relieve business men of some of the effects of the Government's mental aberration in their passion for the paper chase. Of course, even the smallest firms must keep books and accounts in good order and have them available for the Inland Revenue. But why must yet another organisation be asked to collect them as though they were precious works of art to be preserved? They are a waste of money, time and storage space, and do no good to anybody.
      Why not give this small token of relief from regulation to the very small firm? Thousands of firms have not yet registered but the Government want to make every one register. New penalties have been introduced with that in mind. The fact that such a vast number of firms have never been registered without giving rise, to anyone's knowledge, to any incommoding of business life is an indication of how unnecessary it is. Surely that makes it all the more unnecessary to tack this burden on to the very smallest firms.
      We are often told that the public disclosure of accounts is the price that companies are required to pay in exchange for limited liability. We know that that is true, but what those who are dealing with companies want to know is whether they can pay their debts. They

      1323
      do not learn that from the filing of accounts. The published accounts of large companies do not always prevent unanticipated bankruptcy. Not even the Government's public accounting system has adequately signalled the growing threat that we may not be able to pay our way in the world.
      Why will all the extra filing and depositing help? It will not help. This is not the way to ensure that people know that a firm or company is solvent. If someone wishes to do business with a company, the proper thing is for him to have confidence in its record of debt repayment in the past and in its present capacity. That confidence can be founded only through a banker's reference. A company or a nation that was solvent a few months ago can so conduct itself in folly that an historical record is of little help if one wants to discover whether it is worth doing business with it in future.
      I ask that these small firms be given this small measure of relief. There is also the fact that small firms, especially if they produce only one product, are natural prey to having their products undercut by larger businesses, possibly foreign based, which only want to put them out of business and then lift prices. They need privacy to protect themselves from such aggressor tactics. The evil predator competitor is much more likely to search the archives than potential suppliers of goods.
      We ask for exemption not from the keeping of accounts but from the piling up of more and more Government storage. Give the small man a chance and accept the clause.
      Mr. Michael Shersby: I support the spirit of the new clause moved by my hon. Friend the Member for Basingstoke (Mr. Mitchell). I do so because there are many small firms in my constituency, in common with the constituencies of every other hon. Member, which suffer from the problem of having to provide undue statistical information.
      I shall quote a passage from the Bolton Report, which is relevant to the problem of having to file accounts. In page 256 attention is drawn to the fact that the Northern Economic Planning Council said:
      1324
      "'the burden of form-filling has increased relentlessly in recent years and falls particularly heavily on the small business with a sole proprietor, who, more often than not, is a practical rather than a commercial man.' The root of the problem is that in most small firms the scarcest resource of all is management time, because as we have said in so many contexts, this usually means the time of a single hard-pressed man. His clerical and office staff is quite properly kept as small as possible and is therefore capable of dealing only with routine functions; any enquiry that is outside the ordinary, or which requires knowledge and understanding of the business as a whole, must be handled by the boss."
      The point of that observation is very clear. I end with the statement in page 257 that
      "there must clearly come a point at which the cost of collecting better statistics … desirable though they may be, outweighs their value."
      That is the nub of the question. I support the spirit of the new clause.
      2.15 a.m.
      Mr. Peter Morrison: I must begin by declaring an interest as a director of a company which employs fewer than 18 employees. My hon. Friends have put the point so ably that I need not detain the House for long. My hon. Friend the Member for Basingstoke (Mr. Mitchell) pointed out that there is a substantial difference between ICI or GEC and the smaller businesses. The most important difference, with particular reference to this clause, is simply that ICI and GEC have large accounting departments to provide the necessary statistics. The smaller business does not. That is most relevant.
      The Minister made a Freudian slip in Committee in referring to the further "burden" which would be forced upon smaller businesses. The weight of bureaucracy—and the clause is trying to relieve some of the weight—is enormous. I am sorry that the Under-Secretary with responsibility for small businesses has not seen fit to stay for the remainder of the debate, especially since I had warned him—[Interruption.] I see that he has entered the Chamber once more. We are delighted by his return.
      I must congratulate the hon. Member on his appointment. I hope he will realise that the greatest problem of these businesses is that of bureaucracy. We are attempting to cut that down. These concerns have had enough of paper work, particularly when it has to be done

      1325
      late on Sunday evenings because there is no other time during the week to do it.
      The Minister said that if the clause were accepted it would not be compatible with our obligations to the Common Market countries. He must understand that several of his hon. Friends are constantly saying to him and his right hon. Friends "Cannot we change the EEC rules?" The Common Market is a flexible instrument. It must be possible, within the confines of our negotiated agreement, to change the rules so that smaller businesses are excluded in this respect. I beg the Minister to think about this. Whatever he may say, these people have had enough of bureaucracy.
      Sir B. Rhys Williams: I congratulate my hon. Friend the Member for Basingstoke (Mr. Mitchell) on his initiative and persistence in insisting on holding this debate at this hour. We have to seize every opportunity for drawing attention to the problems of the rapidly dwindling number of small businesses which still contribute so much to the British economy. Though I welcome my hon. Friend's initiative, I have told him that I cannot entirely support the clause in the form in which it is drafted because it is possible that firms with small numbers of employees could achieve a high turnover or a dominating position in their area. Therefore they ought not to be completely excluded from filing accounts.
      I believe that we have to insist that we create a simplified type of company law for firms with very small capital, turnover and staff. I am sure that there is nothing in the EEC directive which makes it impossible for us to devise a simplified form of company law for these small concerns. They do not need to go to the lengths required by this Bill in the presentation of their accounts, or to the lengths required by the 1967 Act, which most people agree went undesirably far in insisting on disclosure in dealing with small and very small businesses.
      These small firms need urgent relief. The Government must take note of this, otherwise there will be collapses on all sides among small businesses which cannot carry on with the burden of paper work and the presentation of returns. The mere labour of carrying through the "pay as you earn" routine each week with a small number of employees work-
      1326
      ing varied amounts of overtime is a serious burden in itself.
      I hope that the Minister has taken note of the examples which my hon. Friends have given and that, in formulating their plans for company law reform for the coming Session, the Government will bear in mind that we must introduce a special form of company law for the very small concerns.
      Mr. Higgins: I suppose that we reach a time of the day when the only people still awake are those of us who are debating this Bill and small business men who are coping with the mass of paper work thrust upon them by the present Government.
      It is the case that on many occasions in Committee we debated the problems of small businesses on a number of specific amendments relating to the contents of the Bill. But I rise to express my views on the points made by my hon. Friend the Member for Basingstoke (Mr. Mitchell), who is a major champion of the small business man and is well known for the way in which he unremittingly and with great enthusiasm stresses the need for help to be given to them.
      The Under-Secretary was ill-advised to rise on points of order when a simple and entirely relevant point was being made that the total burden on small businesses needed to be alleviated and that my hon. Friend thought that his new clause was one way in which this could be achieved. For reasons which I shall come to presently, I do not think that this is the ideal way to do it.
      I listened to the sedentary intervention of the Under-Secretary of State for Industry. We shall be happy to welcome him to our debates and, if he wishes to participate in this important discussion, I am sure that he will succeed in catching your eye, Mr. Deputy Speaker. I can think of only one case in which an appointment has been less appropriate than that of the hon. Gentleman to look after small businesses, and that is the appointment of the right hon. Member for Huyton (Sir H. Wilson) to the Royal Commission which is to look into the City. I thought that appointments of this kind went out with the right hon. Gentleman's departure from the Prime Ministership, but clearly that is not so.

      1327
      I addressed a meeting of 400 or 500 self-employed small business men a few days ago, and the reality is that burden of bureaucracy this is no laughing matter. These people are desperately anxious about the burden being placed upon them. Small business men tend to carry a considerable degree of risk. If they are successful in their businesses, they pay a very high rate of tax. The more successful they are, the higher the rate of tax that they pay. On the other hand, if they are unsuccessful, they carry the losses and not the Government. The burden has been growing more and more.
      It may be inappropriate for me to refer to some of the other provisions in addition to this one of filing accounts, but there is no doubt that the multiple rate of VAT has added a very big burden. I cannot forbear a reference to a matter which is also relevant to the Department of Trade and which came to my attention only today. I understand that the Government have bought 12,000 Japanese calculators for their staff, the calculators being of the "Vatman" type. This shows the extent to which Government bureaucracy is increasing and the extent to which it is necessary to refer to calculators to enable civil servants to cope with it. But they are engaged in that. The small business man is not. He is concerned with trying to run his business. I shall be interested to see the extent to which the introduction of computers enables the number of civil servants to be reduced, but perhaps we can probe that on another occasion.
      The fundamental point is that the small business man is very important as a source of innovation, as a source of employment and as a source of production and output remarkably free, compared with other sections of industry, from restrictive trade practices.
      I think that the new clause goes somewhat too far. There are various EEC provisions which, although they can be amended and may need to be amended, are none the less in existence.
      There were proposals in the recent Conservative document "The Right Approach on the filing of company accounts and the burden of company law on small businesses. We made clear that a new deal is needed for small businesses, an important element of which should be
      1328
      a new legal status for small firms—which we described as proprietary firms—in which the owners of the equity and the directors are the same people, with, we should hope, provision for employee participation.
      There seems to be a need for a distinction as there is in corporation tax law to take account of the varying sizes of firms. The Government have failed to do this in the Bill. We shall shortly be putting forward our proposals in anticipation of the General Election which will, no doubt, come soon.
      My hon. Friend the Member for Basingstoke was right to have raised this matter. My hon. Friends have made a number of important points about the present position of small businesses and it is unfortunate that the Government have not shown a more sympathetic approach to the problems caused by the tremendous burdens imposed on small businesses and amended company law to help them. One cannot treat a massive multi-national company in the same way as the village shop or a small business.
      I hope that the Minister will at least consider these points and see whether legislation could be introduced to reduce the burden on small firms, which is now more onerous than ever.
      Mr. Clinton Davis: At one point in the speech of the hon. Member for Upminster (Mr. Loveridge), I was so emotionally moved that I thought I would not be able to bring myself to reply to the debate.
      My hon. Friend the Parliamentary Secretary to the Law Officers' Department, who will be making his debut in tonight's proceedings soon, remarked during the speech of the hon. Member for Worthing (Mr. Higgins) that he was not sure whether the hon. Member was suggesting that my right hon. Friend the Member for Huyton (Sir H. Wilson) should look into the problems of small businesses while my hon. Friend the Member for Keighley (Mr. Cryer), the Under-Secretary of State for Industry, should be investigating the City of London. Perhaps the hon. Member for Worthing might apply his mind to that proposition.
      The speech of the hon. Member for Worthing—like so many of his contributions on this issue—was ambivalent. He

      1329
      is full of support for the ideas of the hon. Member for Basingstoke (Mr. Mitchell) but when it comes to the crunch, he pours cold water on them. The hon. Member for Worthing knows the realities of the situation. This is just a propaganda exercise in which they engage from time to time.
      There is a price to pay for limited liability and the hon. Member for Basingstoke is not prepared to recognise that fact. Limited liability confers considerable benefits on those who take it. That is why so many firms form themselves into limited liability companies. There is nothing to stop them from remaining as partnerships or adopting unlimited liability status. They opt for limited liability for obvious reasons which I do not need to rehearse. That is something which the hon. Member for Basingstoke and his hon. Friends apparently fail to assimilate and certainly fail to articulate in their speeches.
      2.30 a.m.
      I do not consider that we can make concessions on the lines suggested by the hon. Member for Basingstoke. Indeed, his hon. Friend the Member for Worthing does not think that concessions on those lines should be made. I submit that the clause is wholly misconceived.
      The hon. Member for Kensington said that the activities of these small businesses—undefined, in effect, because the definition that he seeks to apply is wholly unrealistic—affect no one else, that a man's home is his castle, and that therefore they should be free of these requirements. I think that on reflection the hon. Gentleman will recognise that that is nonsense.
      We have always expressed our willingness to ensure that the Bill does not impose on small companies a burden which is out of all proportion to the benefits gained. I have said that time and again. Indeed, we have made provision regarding the filing of accounts. The requirements recognise the more limited resources of private companies by allowing them three months longer to file accounts. We felt it appropriate to take action in that regard. We drew a distinction between the requirements for private and public companies. It would
      1330
      be impossible to draw that distinction in this area, as I hope to demonstrate.
      We take the view that, whatever the size of the company, it is essential that it should disclose its accounts promptly for the reasons that I have already adduced relating to the status of limited liability. Public disclosure of accounts is of benefit to creditors, notwithstanding the somewhat derogatory remarks in that respect made by the hon. Member for Basingstoke. Indeed, disclosure is of wider interest. I demonstrate that by referring to the number of searches of files made during 1975—nearly 2 million. They are not all predators—that was the expression used by one hon. Gentleman—who make searches of files. The hon. Member for Upminster said that no one uses the files. That is palpably false in the light of the figure which I have just quoted.
      What the hon. Member for Kensington is seeking to do is in blatant contradiction of what is permitted under the first EEC directive which the Conservative Government accepted on accession to the Community and to which the hon. Gentleman willingly gave assent as a great supporter of the Common Market. That directive requires all companies incorporated with limited liability to file accounts. That is the law, that is an inescapable fact, and that has not been answered by any hon. Gentleman tonight.
      Reference was made to the Bolton Committee. What did that Committee have to say about this issue? The hon. Gentleman skated over that aspect. The Bolton Committee on small firms, which reported in 1971, was unable to persuade itself that the 1967 Act had been harmful to small private companies. Indeed, it did not recommend that there should be a restoration of the exemption which had been granted under that Act. That Committee was unable to persuade the Conservative Government to do anything about the matter in 1973. Nothing was done by the hon. Gentleman's colleagues at the Department of Trade and Industry who were engaged in drafting the 1973 Bill. There was not a word on this matter. This is all gloss, propaganda, and nonsense, and the Opposition know it.
      Those dealing with limited liability companies have a right to information

      1331
      about the financial dealings of such companies. A company may be a private company and have only two or three employees but may also be operating on a very large scale financially, and creditors and other third parties dealing with it are entitled to access to its accounts even if they may be in arrears.
      In our philosophy on this aspect, we concede that the provisions of the Companies Acts—we said this long before "The Right Approach", which is the wrong approach—generally are not all necessarily appropriate for some of the corporate organisations which come to be registered under them. For instance, there is the question of the associations of residents of flats. There is a case there for looking at differential treatment.
      In the longer term, we are giving serious consideration to the establishment of a new form of incorporation for certain small bodies, but for the moment we have to look at the company legislation as it is, and all the Companies Acts provisions, and this Bill, can in practice only be applied to all companies, subject to some variations along the lines I have mentioned. There can be no doubt, therefore, that New Clause 7 is wholly misconceived, so I hope that the hon. Member for Basingstoke will not feel it appropriate to divide the House on it. Clearly, if he does, he cannot have the support of his own Front Bench.
      Mr. Farr: Before the Minister sits down—
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The Minister has indicated that he has sat down.
      Mr. David Mitchell: When stripped of the peripheral comments which were not relevant to the central issue, the Minister's argument was that, whatever the size of the company, it was essential that there should be disclosure. That is disproved by his own Bill, which provides for unlimited companies not to have disclosure, whatever their size.
      Secondly, the hon. Gentleman said that the price to be paid for limited liability was disclosure. He must have forgotten the history and purpose of limited liability—to enable capital to be raised by those not actively involved in the management of a business, to enable in-
      1332
      creased investment to be carried out in British industry. That was to the benefit of the community, including the creation of jobs. The Minister should be looking not at how he can extract a price from the business community but at what he can do to help increase the viability of the business community and increase employment. I can only express extreme disappointment at his attitude.
      Question put and negatived.
      Mr. Higgins: I beg to move
      "That further consideration of the Bill, as amended, be now adjourned."
      I am grateful that the Government Chief Whip is in his place. For some years it has not been so frequent as it used to be, when we had Finance Bills taken wholly on the Floor of the House, to move the motion which I now seek to persuade the House to accept, but this Bill is every bit as technical as some of the Finance Bills we have had over the years, and I am sure that the Under-Secretary of State will concede that in some respects it is more complicated than many Finance Bills.
      We have had a number of good debates since we began the proceedings of the Bill at 10.18 p.m. yesterday.
      Mr. Clinton Davis: Repetitive.
      Mr. Higgins: The Under-Secretary says that they have been repetitive. I do not think, with respect, that they have been. Apart from his own speeches, the speeches have been remarkably short. We make no complaint, because he has complex matters to propose and to answer. But I do not think that the charge can be levied that we have in any way been repetitive. We have played the various amendments for exactly their full value, seeking to explore the details and the arguments in each case.
      When we voted at 10 p.m., a number of the minority parties voted in favour of continuing. Although there is one member of a minority party on the Benches now, there has not been one for very long stretches of the debates, and no one from a minority party has taken part for some considerable time. They may well consider, on reflection, if they are still here, that they ought to vote in favour of the motion.
      My own feeling, as I suggested at the outset, is that it is rather absurd to press

      1333
      on with legislation of this kind, and debates on it, at this hour. Although I fully accept the point that the Under-Secretary made at the beginning—and it seemed to us more sensible to take what the Government proposed in the order in which we have taken it—none the less the proceedings on the measure which preceded this were much longer than one might have expected. We cannot have a situation in which two full days' business is compressed into one day and still hope that the measure will receive the proper consideration that it ought to have.
      I recognise that the Government are in a dilemma. They have no leeway, as is normally the case and has always been the case in the past, between Prorogation on the one hand and the State Opening on the other. This very greatly reduces their flexibility. Obviously, this is the result of the way in which they have managed their affairs and have been determined to push one piece of controversial legislation after another through the House, regardless of whether it is guillotined or properly considered. The Government are now up against it. We understand it and recognise that this is the situation.
      We have had a number of Government amendments and new clauses of great complexity introduced at this very late stage. It has been done at a much later stage than it normally is done in this House. This is, of course, a House of Lords Bill at Report stage. Many of the amendments and new clauses have been introduced at very short notice and with inadequate time to take proper consultations outside. I may wish to refer to that at a later point.
      I do not believe that anyone outside the House would understand why we are proceeding on matters of this degree of complexity at this hour of the night. I suggest to the Government Chief Whip and to the Under-Secretary that we have made very considerable progress. It is true that we have covered only seven out of the 36 debates, but the last four or so are largely drafting amendments, so that it is not quite as bad as it looks. I suggest, therefore, that we might make better progress if we were to adjourn at this stage and return to the Bill on a later occasion.
      1334
      There is, I understand, the likelihood of the Insolvency Bill being before the House very soon. The Report stage of that Bill has still to be taken. Those of us who are engaged on this Bill are much the same as those engaged on the Insolvency Bill. Certainly the Under-Secretary is the same. I should have thought that it would be convenient to take this measure and the Insolvency Bill one after the other.
      The traditional exercise in proposing this motion is twofold. On the one hand, it is to ask the Government quite clearly what their intentions are, and whether they intend to press on, in which case we can consider them. On the other hand, if the answer is not felt to be satisfactory, we can vote on the Question. On a matter of this kind the Government are pushing the House of Commons beyond what can reasonably be expected. That is not wise and it is not likely to speed up business because, inevitably, as hon. Members become more and more tired their speeches inadvertently tend to become longer and longer.
      2.45 a.m.
      I hope that we shall have a forthcoming reply from the Minister and that he will accept that we have done a useful job so far on the clauses that we have considered, particularly his complex new clauses. I think it would be appropriate for consideration of the Bill to be adjourned at this point.
      The Parliamentary Secretary to the Treasury (Mr. Michael Cocks): I am most obliged to the hon. Member for Worthing (Mr. Higgins) for the courteous way in which he has moved his motion. I appreciate the points he has made and I understand the complexity of the Bill. In fact, as an amateur in this field I would hesitate to make any comment at all on its intricacies.
      The hon. Gentleman in fact answered his own argument. He has outlined in detail the Government's difficulties over their programme. It is with some regret that I must advise my hon. and right hon. Friends to resist the motion.
      My understanding was that the Bill was generally welcomed by the Opposition. I would have thought that the Government's determination to see it through would be a matter of reciprocal congratulations. We must therefore resist

      1335
      the hon. Gentleman's motion and hope to make substantial progress tonight—in fact even completing all the remaining stages.
      Question put:—
      The House divided: Ayes 11, Noes 75.
      [For Division List No. 336 See col. 1415]
      Question accordingly negatived.

    New Clause 8

      DUTY OF THE REGISTRAR OF COMPANIES
      '( ) It shall be the duty of the registrar of companies to place any document that he may receive for registration on the public file within fourteen days of its receipt by him.'—[Mr. Higgins.]
      Brought up, and read the First time.
      3 a.m.
      Mr. Higgins: I beg to move, That the clause be read a Second time.
      The clause concerns the duty of the Registrar of Companies and raises a new issue of which I become aware only a short time ago. Representations have been made to me that difficulties are arising because the Registrar of Companies has not placed any documents of registration on the public file for a considerable period of time and that those who wish to consult the file are experiencing problems.
      This is a probing new clause and no doubt the Under-Secretary has made inquiries into the situation. We want to know the work load of the Registrar and whether there is any reason why the new clause should not be accepted. Perhaps an undertaking by the Under-Secretary that he has looked into the situation and an assurance that delays will not occur in future will be acceptable to us. We do not necessarily need to write into the legislation a time limit which might be onorous to the Registrar. But it is unfortunate if those who wish to use the register find that they cannot get the information within a reasonable time.
      Mr. Clinton Davis: I respond to the hon. Gentleman along the lines of his invitation and I shall not go into the complexities of the legislation. There have been a number of difficulties of a teething nature following the changes
      1336
      which had to be introduced into the operation of Companies House, which moved to Cardiff in April. A considerable scheme of modernisation is progressing and I invite the hon. Member for Worthing (Mr. Higgins) to see it. The delays have been eliminated but the Registrar is not complacent about the situation. The progress of the modernisation is kept under constant review and the intention is to improve services to users wherever possible.
      While some disclocation was inevitable, when one views the scale of the operation, it can be shown that the new system will give greater benefits than before. The system of regular meetings of the register users' working group which we inaugurated, will also be of benefit to the Registrar by ensuring that complaints are funneled through to him. In those circumstances I hope that hon. Members will feel that the matter has been put right. There is no reason to believe that the problem will recur.
      Mr. Higgins: Will the Minister indicate the length of the present delay and when it is likely to be reduced to the level suggested in the new clause?
      Mr. Davis: Representations have also been made to my Department. I cannot specify the exact period but I will write to the hon. Gentleman. He can accept my assurance that the matter has been dealt with.
      Question put and negatived.

    Clause 1

      DUTY TO PREPARE, LAY AND DELIVER ACCOUNTS BY REFERENCE TO ACCOUNTING REFERENCE PERIODS.
      The Parliamentary Secretary to the Law Officer's Department (Mr. Arthur Davidson): I beg to move Amendment No. 1, in page 1, line 10, leave out 'and cause to be printed'.
      Mr. Deputy Speaker: At the same time we may take the following amendments:
      No. 2, in page 1, line 10, leave out 'cause to be printed a' and insert 'a legible'.
      No. 3, in page 1, line 11, leave out 'printed' and insert 'reproduced in legible form'.
      Government Amendment No. 4.
      No. 5, in page 2, line 7, leave out 'and cause to be printed a' and insert 'a legible'.
      No. 6, in page 2, line 8, leave out 'printed' and insert 'reproduced in legible form'.
      Government Amendment No. 7.
      No. 8, in page 2, line 24, leave out 'printed' and insert 'legible'.
      Government Amendment No. 9.
      No. 10, in page 2, line 29, leave out 'printed' and insert 'legible'.
      Government Amendment No. 17.
      No. 18, in Clause 8, page 11, line 44, leave out 'printed' and insert 'in legible form'.
      Government Amendments Nos. 19, 22, 23 and 73.
      Mr. Davidson: The amendments were originally moved in Committee but were not carried because a number of Members felt that consideration should be given to an alternative way of dealing with the question. The issue of "printed", "legibility", "durability" and so on was debated at great length, if inconclusively. Through, I think, something of a confusion in the minds of hon. Members, although there was a desire for the words
      "and cause to be printed"
      to be left out, they still remain in the Bill.
      The issue is simple. When the Bill was first published a large number of organisations made representations to the Government objecting to the requirement that a company's accounts should be "printed". They felt that this was an unnecessary imposition, particularly for small companies. The same point was made by Members of both Houses on Second Reading and in Committee. The Government made it clear from the beginning that the purpose of the requirement was merely to ensure that the accounts filed with the Registrar of Companies were legible and that the Registrar would accept any of number of processes for reproducing documents which resulted in a document which was suitable both for use on a public file and for microfilming. However, in view of the concern which the word "printed"
      1338
      caused, we were prepared to delete the provision, since Clause 31 in any case gave the Secretary of State power to prescribe the acceptable processes in more detail in regulations.
      Since the Committee stage we have looked further at this provision. Our conclusion is that an adequate description of the acceptable printing processes could not satisfactorily be included in the Bill and that to prescribe standards by regulation remains the best approach.
      To substitute a requirement that accounts should be legible would not, in the Government's view, help greatly. Interpretation of the word "legible" would lead to endless disputes. People have a very subjective view of what is and is not legible. Also, a requirement that accounts should be legible would not be sufficient. For example, it would enable accounts to be submitted in a form in which the lettering tended to fade over a period and the paper tore too easily. Carbon copies are an example of the sort of documents which experience has shown to be unsatisfactory and which therefore should not be permitted. A more detailed prescription of the Registrar's requirements is therefore essential.
      The fears expressed in Committee about the use to be made of the powers in Clause 31 were exaggerated—I think I use a rather mild expression—and in my view without foundation. The requirements to be imposed will be the minimum necessary in the interests of present and future users of company files. No company should have any difficulty in preparing its accounts in a form acceptable to the Registrar, and the view of those who prepare company accounts, particularly those of small companies, will be taken into consideration as much as the needs of the users.
      Since the Committee stage my hon. Friend's Department has undertaken further consultations about the Bill. There has been no opposition to the Government's proposals on this subject. In Committee Opposition Members were a little vague, understandably perhaps, about exactly what the users' committee was. At a meeting on 28th July about 60 regular users of Companies House expressed unanimous support for these provisions, which have also been endorsed

      1339
      by many of the organisations consulted about the Bill.
      Mr. Tim Renton: The Minister said just now that in Committee we were a little vague about the users' committee. We fastened on to the reference to a users' committee simply because we did not know that it existed. At the time the Minister was unable to tell us much about it. We were interested to hear about it and to hear what representations it had made to the Government. We asked in Committee whether we on the Opposition Benches could be advised of these representations so that we might frame or modify our views about the Bill according to the views of the users' committee. What has the committee said about the proposal since we debated it upstairs?
      Mr. Arthur Davidson: I was being kind to the hon. Gentleman when I said that he was vague about the users' committee, because he now tells me that he had never heard of it. I can assure the hon. Gentleman that the information about the users' committee is readily available. My hon. Friend the Under-Secretary answered Questions about it from two hon. Members opposite. It is recorded in Hansard.
      I do not think that I need go into any more detail at this stage. The matter was debated at great length in Committee and many hon. Members voiced their opinions. I do not think that I can usefully add to what I have already said.
      Mr. Loveridge: I am grateful to the Government for having gone some way to meet the criticisms that were put forward. They have removed the absolute requirement in law from the provisions as originally framed that accounts would have to be printed. That would have been difficult for many smaller businesses, both in practical terms of how to get them printed in time and because of the expense.
      Amendment No. 1 leaves the decision over prescription of the form with the Registrar. As a later clause makes clear, however, this leaves the size, the weight, the quality and colour of the paper, the size of the type, and even the colour of the letters and any other matter to be determined.
      Although it may be reasonable that something should be left to regulation, is
      1340
      it not possible to accept the most simple of all solutions—namely, that matters sent to the Registrar should be legible? It maybe that the Registrar will be reasonable, but if unreasonable requirements creep into the Bill who can say that no such power, once given, may not be foolishly applied in the future? I think that the addition of the world "legible" is enough, and I hope that our amendments will prove to be acceptable.
      3.15 a.m.
      Mr. Peter Morrison: Has my hon. Friend taken account of the fact that for very small businesses a substantial added cost will be incurred in having these accounts prepared in certain types? It is a further imposition that they can ill afford.
      Mr. Loveridge: That would happen if the Registrar prescribed peculiar colours and lettering. We all know that red and black ribbons can be used on typewriters, but the Registrar may require the use of all colours of the rainbow.
      Mr. David Mitchell: This provision as originally drafted was an indicaton of the fact that the Government were trying to treat large and small companies alike, and I welcome the fact that they have moved as far as they have. Of course, large public companies must print their accounts. Who would think of ICI's accounts going out in any other form than a printed version? In such a case printing is reasonable, proper and desirable. But let us not forget Bloggs & Co., village grocers, whose directors are the husband and wife running the concern. It would be absurd if they were to be required to print their accounts. The cost of even a small number of copies could be as high as £30.
      Congratulations are due to my hon. Friends who upstairs in Committee persuaded the Government to table an amendment on this matter. Certainly many small business men have reason to be grateful to them. Since the criteria as to legibility will be in the hands of the Registrar, may we have an assurance that small firms will be protected from the process of having to comply with the requirements originally envisaged in the Bill?
      Mr. Tim Renton: The Minister said earlier that he looked forward to the

      1341
      debut in tonight's proceedings of his colleague the Parliamentary Secretary to the Law Officers' Department. The Parliamentary Secretary has now done so with his usual charm and modesty. However, the Government's actions tonight remind me of the old advertisements for the Windmill Theatre, "We Never Closed", because it looks as though this debate will never close.
      It is useful to have an opportunity to go over, if only briefly, these amendments which were debated extensively in Committee. We did object not to the removal from the Bill of the words "caused to be printed" but to the follow-up argument deployed by the Parliamentary Secretary. He said that the Government wished to use the powers in Clause 31 to prescribe requirements as to the detailed form in which amendments could be submitted. We said in Committee that we saw no reason why small companies should not know now the shape, form and size in which they have to produce their accounts. We did not see why this should be done by regulation. We thought that it could be done within the ambit of the Bill. That was the basis of our objection to the amendment in Committee.
      We feel that there is the element of dictatorship if small companies, about which my hon. Friend the Member for Basingstoke (Mr. Mitchell) speaks so eloquently, are not to know the manner in which they have to produce their accounts until the requirements are published, when they will be shown exactly what will be suitable. That is what is undesirable. Rarely do we have the opportunity to debate in the House, and we feel that it would be much better if it could be made clear within the Bill how the accounts are to go forward.
      I speak particularly to Amendment No. 3, which is much the same as the amendment moved by my hon. Friend the Member for Upminster (Mr. Loveridge), in which we request that the requirement should be that accounts be "reproduced in legible form". The Minister said that there is a subjective view of what is legible. I regard that as a delightful phrase. Surely that which is legible can be read and that which is illegible cannot be read. Surely it is one area in which is is difficult to have a subjective view. I submit that legible would be perfectly
      1342
      adequate and would suit the purpose that the Registrar requires.
      My hon. Friend the Member for Upminster put the matter extremely well when he said in Committee:
      "The Minister does not seem to appreciate that many small people and small firms would rather have certainty and knowledge about their obligations, than uncertainty for a long period of time."—[Official Report, Standing Committee C. 29th June 1976; c. 38.]
      That is the essence of our argument as to why the form and manner of accounts should be described in the Bill rather than left to future regulation, which means that the element of uncertainty will continue. Even at this late stage I ask the hon. Gentleman to think again and to consider whether it would be reasonable for the words "reproduced in legible form" to be substituted. If he does not agree, I can only say that when the next Companies Bill comes forward—the Under-Secretary of State is always promising us further Companies Bills—we may have to reconsider this matter and try again to amend.
      Mr. Arthur Davidson: I do not agree with the assumption of the hon. Member for Mid-Sussex (Mr. Renton) that something is legible if it can be read and that there can be no divergence of view about that. The hon. Gentleman was present during the Committee sitting when those advising me from the Box passed me a note that I could not read. No doubt the handwriting was beautiful, and no doubt the person who wrote it could read it immediately, but although she said it was legible, I could not read it. We have subjective views about what is or is not legible. No doubt there are countless arguments and disputes about whether documents are legible.
      The hon. Gentleman asked about the criteria. In our view the prescribing of standards as to durability, legibility and size is necessary to ensure that the documents received by the Registrar are suitable for the public register and in a form that will enable them to be microfilmed.
      I am sure that the hon. Gentleman already knows that the Registrar issues guidance notes on the subject. It is his experience that the majority of companies are willing to co-operate when the documents they have submitted are not in a suitable form. In other words, the Registrar is used to issuing guidelines of

      1343
      this sort. He will not introduce any startling new criteria. The hon. Gentleman can rest assured that the Registrar will use these powers sparingly and within the framework I have given.
      Amendment agreed to.
      Amendments made: No. 4, in page 2, line 7, leave out 'and cause to be printed'.
      No. 7, in page 2, line 24, leave out 'printed'.
      No. 9, in page 2, line 29, leave out 'printed'.—[Mr. Clinton Davis.]
      Mr. Clinton Davis: I beg to move Amendment No. 11, in page 3, leave out lines 38 to 45.
      Members of the Committee will recall that we said that we had serious reservations about this provision. Since then we have been engaged in wide consultation, canvassing the opinions of about 20 different representative organisations whom we usually consult in matters of this kind. I can provide hon. Members with a list of these organisations if they wish. No one has supported subsection (12). Although it appears, on the face of it, to help to focus the attention of directors on their responsibilities, I submit that this is something of an illusion, while it would probably be the cause of considerable inconvenience and render a disservice to shareholders and creditors in some cases by delaying publication of the accounts.
      The law leaves little room for doubt about the collective responsibility of the directors of a company concerning the management of the business generally and in such particular matters as the annual accounts. The requirements are strict. The balance sheet is required to be signed by two of the directors on behalf of the board. That is in Section 155(1) of the 1948 Act. The accounts, profit or loss accounts and the group accounts, if any, have to be approved by the board before the balance sheet is signed. That requirement is in Section 156(2) of the 1948 Act. The requirement in subsection (12) would not, in our judgment, or in that of those we have consulted, make a director any more responsible than he is now for the accounts of the company, and I hope that by now directors are fully aware of the nature of their responsibilities—if they were not so aware earlier.
      1344
      The provision is self-defeating in that it allows a director not to sign provided he gives some plausible reason for not doing so, for example that he is away on business. How is the law to define what are acceptable reasons for a director's signature not being obtained and how is it to ensure that the reasons given in the balance sheet are genuine?
      Mr. Tim Renton: May I correct the Minister on one point? He said that if directors cannot sign they are allowed not to do so if they adduce some "plausible reason." That is not what the lines he seeks to delete state. They say that if for any reason the signature of a director cannot be obtained the reason shall be stated on the balance sheet. It is important to make that point. We went over the question of reasons in Committee and made it abundantly plain that, whatever the reason, it should be stated, because if it were a trivial reason the shareholders would see that and perhaps would be moved to vote against the reelection of the director at a suitable opportunity.
      3.30 p.m.
      Mr. Davis: Even from the hon. Gentleman's point of view, it would not suffice to leave it in the vague way that the clause indicates. It is a reasonable inference to draw that the reason would have to be a plausible one. However, if the hon. Gentleman departs from that, it is most interesting. But it does not add very much to the benefits supposedly conferred by the provision which, I repeat, has found no support amongst those who are experts in these matters.
      The question of delay is one which should concern us. It is common practice in a large company for the full board to approve the accounts in draft form and to delegate the final scrutiny to a small sub-committee. If companies have found that such an approach is the most efficient way of preparing the accounts, it would be wrong for the Government to interfere with that. To require that the accounts in their final form should be signed by as many directors as are available and that an explanation should be given in the accounts for the signatures not obtained would cause administrative difficulties for the larger companies and thus delay publication. It is the larger public companies which have the largest

      1345
      boards, and it is also their accounts which are of most interest to the investing public. Moreover, any provision which serves to inhibit public disclosure is surely quite contrary to the underlying spirit of this Bill.
      Quite apart from the arguments that I have adduced and the questions of principle to which I have referred, I suggest that the subsection is defective as drafted. The requirement that the balance sheet be signed by every director or be endorsed with an explanation for non-signature conflicts with the requirements of Section 155 (1) of the 1948 Act. That provision requires the balance sheet to be signed by at least two directors on behalf of the board. Under Clause 1 (12), it would be sufficient for explanations for non-signature in respect of all the directors to be endorsed on the balance sheet, and it would not be necessary for any of them to sign it. That is a most extraordinary situation to be reached. If we were to enact this provision, directors would not know whether they had to comply with Section 155(1) or with Clause 1(12).
      For those reasons, I hope that the House will support the amendment.
      Mr. Tim Renton: The amendment seeks to delete from the Bill the provision that the balance sheet shall be signed by all the directors of a company. I moved this amendment in Committee, and it was supported by 10 members of the Committee, including the hon Members for Luton, West (Mr. Sedgemore), Tottenham (Mr. Atkinson) and Oldham, East (Mr. Lamond). It is a pity that they are not here to take part in this debate, because I am sure that they, as self-appointed guardians of public rights and tribunes of the people, could have contributed a great deal to it.
      In Committee, the Under-Secretary said:
      "The purpose of the two amendments is to bring home forecfully to directors the measure of their personal responsibility for the contents of the documents delivered to the Registrar."—[Official Report, Standing Committee C, 1st July 1976 c. 92.]
      I got the impression from that that in many ways the hon. Gentleman approved of the principle of what we were trying to do in this amendment.
      I am disappointed that the Minister seems to have moved away from that ap-
      1346
      proval. How does that attitude fit in with the emphasis he has laid in the past five hours on the keenness of the Government to reform company law while chiding us for what he sees as our reluctance to do so? I do not see how he can maintain these contradictory positions.
      The Under-Secretary has told us that he has received representations from a number of bodies and that we should like to accept his offer to make available information about whom he has consulted.
      I take the point that, technically, Section 155(1) of the 1948 Act provides that only two directors are required to sign and that the amendment which we inserted into the Bill could conflict with existing provisions. With that point in mind, together with the fact that representations have been considered by the Government, I shall not suggest to my hon. Friends that we vote against this amendment.
      However, this is a serious matter and we shall be thinking a great deal more about it when we have seen the information which the Under-Secretary will be sending us. We shall also have the opportunity to come back to it in future Companies Bills. I hope that the Government will have agreed by then that the principle of what we are trying to do is one with which they sympathise.
      Amendment agreed to.

    Clause 2

      ACCOUNTING REFERENCE PERIOD OF A COMPANY
      Mr. Arthur Davidson: I beg to move Amendment No. 12, in page 4, line 14 leave out 'December' and insert 'March'.
      Mr. Deputy Speaker: With this, we may discuss Government amendments Nos. 13 and 14.
      Mr. Davidson: These amendments would make 31st March rather than 31st December the accounting reference date which those companies failing to notify the Registrar of their preferred date will be deemed to have chosen.
      The amendment was tabled by the Opposition in Committee and had pre-

      1347
      viously been debated in another place. The Government were not initially persuaded that it was, on balance, a desirable change, but second thoughts are sometimes best and we have given the matter further thought, particularly in the light of points made in Committee. Extensive consultations have shown that, generally, companies have no strong view about the dates, but that auditors have a marked preference for a date other than 31st December. The argument is finely balanced, but overall we feel that we should substitute 31st March for 31st December for the purposes of the Bill.
      Mr. Tim Renton: It is pleasing to hear the Minister say that he has had second thoughts in the light of his consultations and what was said in Committee and has been able to accept our amendments. The main points in their favour are that they would result in less bunching of accounts being produced at the end of the calendar year, that there are fewer holidays at the end of March than at the end of December, that they will help companies in the preparation of their accounts and that they will spread the load for auditors. These are valid points and I am glad that the Government have accepted them.
      Amendment agreed to.
      Amendments made: No. 13, in page 4, line 21 leave out 'December' and insert 'March'.
      No. 14, in page 4, line 27, leave out 'December' and insert 'March'.—[Mr. Arthur Davidson.]

    Clause 4

      PENALTIES FOR NOT COMPLYING WITH SECTION 1 WITHIN THE PERIOD ALLOWED FOR LAYING AND DELIVERING ACCOUNTS
      Mr. Loveridge: I beg to move Amendment No. 16, in page 7, line 33, leave out 'all'.
      Clause 4(2) provides:
      Where a person is charged with an offence … it shall be a defence for him to prove that he took all reasonable steps for securing that those requirements would be complied with before the end of the period allowed for laying and delivering accounts."
      1348
      The offences relate to the duty to prepare and deliver accounts by reference to the accounting periods, and those periods represent a difficult concept for many people. It is possible to be fined £400 and £40 per day for not sending in the accounts to be filed.
      The defence is to prove that any director of the firm "took all reasonable steps". What is the word "all" doing in that sentence? What does it mean?
      If a director told the secretary of the company that he had to comply with the requirements of the law and reminded him to do so, would that constitute "all"? Should he have written to the secretary and the auditors? Should he have written to the secretary and the auditors and the chairman? Should he have written to the secretary and the auditors and the chairman and fellow directors?
      The words "all reasonable steps" are, to use the Parliamentary Secretary's phrase, too subjective. Such subjective phraseology leaves too much power with any vengeful official who wishes to bring a prosecution, even though he knows that such prosecution could not succeed because the court would surely interpret the word "reasonable" in a sensible manner. None the less, such power should not be given to officials to start proceedings in such circumstances. It ought to be an adequate defence for such a director to prove that he took
      "reasonable steps for securing that those requirements would be complied with".
      The subsection does not need the word "all". It does not strengthen the law. It merely gives the opportunity to a vicious official, if such there might be—we hope that there is not—to bring a prosecution.
      The fines of £400 and the further £40 a day, which are to be paid out of taxed income and would soon accumulate to a substantial sum of money, might bankrupt any poorer man so fined.
      I read in The Times this morning that these fines may be amongst those lists of fines which are to be revised upwards in line with inflation. I hope that we shall have an assurance from the Parliamentary Secretary that there is no intention of raising these amounts upwards together with the others forecast in The Times. I hope, too, that he will accept the amendment.
      Mr. David Mitchell: There is a genuine point here. Therefore, I hope that the Minister will feel able to accept the amendment to enable us to make progress.
      The inclusion of the word "all" makes the test so much more severe. A company can be placed in difficulty as a result of someone being ill. For example, if the company's accountant is ill and is going to be ill for some time, should it dismiss him and employ someone else to be able to comply with the requirements or allow the accounts to be delayed? The intricacies of a small company are not a subject that an outsider can quickly pick up, completing the processes involved within the scheduled time.
      These are practical problems, and the inclusion of the word "all" would make interpretation all the more difficult. To specify "reasonable" would be a reasonable approach, and I hope that the hon. Gentleman will be reasonable.
      3.45 a.m.
      Mr. Arthur Davidson: I assure the hon. Member for Upminster (Mr. Loveridge) that there is no intention of increasing the fines. I can put his mind at rest on that point straight away. But I am afraid, although he moved the amendment very gently, as is usual with him, and was gently supported by the hon. Member for Basingstoke (Mr. Mitchell), that I must advise the House to resist it.
      The amendment would broaden in a quite unacceptable manner the defence open to a person charged with having failed to prepare, lay and file accounts in accordance with the provisions of Clause 1. This Bill places the responsibility for producing and filing a company's accounts squarely with the directors of the company and, therefore, all those who were directors at the date when accounts should have been laid and filed are liable for the default, unless they can demonstrate that they took all reasonable steps to secure compliance.
      The word "all" makes it clear that the director must do everything which is necessary and which it is reasonable for him to do in order to ensure that the requirements are met. It cannot be sufficient, for instance, that a director should delegate the function to an employee and thereafter take no action to
      1350
      check that the employee had executed the task.
      What will constitute "all reasonable steps" will, of course, vary according to the circumstances and will depend in particular on the position occupied by the person concerned. More would be expected of a finance director than of, for instance, a non-executive director. However, as the Government have explained, a director has to establish only on the balance of probabilities that he took all reasonable steps. The burden of proof which he has to discharge is a lesser burden than that which the prosecution has to discharge in establishing his guilt.
      Mr. Higgins: I think that the hon. Gentleman said something just now that on reflection he may wish he had not said, although it is understandable that he should have done so at this late hour. He said that the duties of a finance director would be more stringently interpreted than those of a non-executive director. I do not think that he intended to say that. I am sure he agrees that the duties of all directors in their responsibilities in this matter must be the same.
      Mr. Davidson: The duties must be the same, but in interpreting "all reasonable steps" much will depend on circumstances, and, of course, much will depend on the position occupied by the person concerned. The duties are the same, but more would be expected of a finance director than of a non-executive director. I do not think that the point is of any particular consequence, and I do not rest my case on it. If the hon. Gentleman takes issue with me on it, I am quite prepared to put it forward merely as supporting evidence, and no more than that.
      As I was saying, the director has to establish only on the balance of probabilities that he took all reasonable steps. The burden of proof he has to discharge is a lesser burden than the prosecution has to discharge in establishing guilt. The prosecution in all cases has to establish the guilt of the accused beyond all reasonable doubt, which is a much sterner test.
      Mr. David Mitchell: May I give one simple illustration of the quandary in which we find ourselves? Suppose that a company has reached the time at which its accounts should be filed. The accounts

      1351
      are not ready. The managing director is due to go on holiday with his family. If he cancels the holiday, for which he has booked, he can file the accounts. If he does not, he cannot file the accounts. Would he be taking all reasonable steps if he went ahead with his holiday, or should he cancel it? What is "reasonable"?
      Mr. Arthur Davidson: Of course I cannot guide the House and say whether that would be reasonable. The courts are used to these matters. It is not for me to make a judgment on that.
      Having listened to the debate, I do not think there is anything further that I can usefully add. I do not think that the words "all reasonable steps" are unreasonable or overburdensome. In the circumstances I ask the House to resist the amendment.
      Amendment negatived.

    Clause 6

      THE PERIOD ALLOWED FOR LAYING AND DELIVERING ACCOUNTS
      Mr. Peter Morrison: I beg to move Amendment No. 85, in page 10, line 10, after 'company' insert:
      'or in the case of companies of a particular class or description, by notice laid before the Commons House of Parliament'.
      Mr. Deputy Speaker: With this we may take the following amendments:
      No. 86, in page 10, line 15, at end insert:
      'or of any company of the class or description specified in the notice'.
      No. 87, in page 10, line 15, at end insert:
      'except that no notice under this section shall have any effect in respect of any company the majority of the shares of which are owned directly or indirectly by the Government until that notice has been approved by resolution of each house of Parliament'.
      Mr. Morrison: Amendments Nos. 85 and 86 extend the Secretary of State's power concerning the period for the laying and delivering of accounts to groups of companies as opposed to individual companies, that is, individual notices being served on individual companies.
      It would seem to me to make sense that if there is a group of companies which is trading, for example, with countries such
      1352
      as Nigeria or Kenya, and for some very good external reason it is difficult for the accounts to be completed in time, then, rather than those companies having to be individually named and have an individual notice served upon them, they should be dealt with in a group. Equally, I should have thought that a similar example would be companies which happen to be in a specific line of business, whether it be a chocolate making business and there are some complications in respect of the cocoa market. Again it would be simpler if they could be classified as a group of companies rather than as individual companies.
      Amendment No. 87 specifically excludes companies which are nationalised, or indirectly nationalised, except by regulation of both Houses. I hope the Minister would agree that there is nothing particularly doctrinaire about this but as long as Parliament is the custodian of the Government, and the Government, in effect, are in control of the nationalised industries, it is right that Parliament should have that final say. I shall be interested to hear what the Minister has to say about these amendments.
      Mr. Arthur Davidson: I think I can reply briefly. I must ask the House to reject the amendments. They are not necessary. I can assure the hon. Gentleman that the Secretary of State will sparingly use the power under subsection (7)—that is the power to extend a company's accounting reference period. It is to be used in respect of individual companies, not classes of companies. It certainly would not be used to favour companies in which the Government have a controlling interest. That is the answer to Amendments Nos. 85 to 87.
      I can also assure the hon. Gentleman that the provision is similar to an existing power in Section 148(1) of the 1948 Act which allows the Department to extend the period allowed for laying accounts. I am not aware that the manner in which this power has been exercised has given rise to any criticism, nor have I reason to suppose that Clause 6(6) would do so. I would also tell the hon. Gentleman that there is no precedent in the Companies Acts for a notice to be laid before the House of Commons.
      Mr. David Mitchell: I would support my hon. Friend the Member for

      1353
      Chester (Mr. Morrison). In relation to Amendment No. 87 it seemed that the Minister's reply was in contradiction to his recommendation to the House. The Minister has said, in effect, that he can give an assurance that the Government will not use the powers they have got to favour companies in which they themselves have a controlling interest. In that case it would appear that the right course of action would be to recommend that the House accepts Amendment No. 87. If the Minister is not able to give that assurance, there must be a lingering suspicion on this side of the House that he has a reason for refusing to accept the amendment. I would urge the Minister to reconsider not the substance of what he said but the recommendation that he has made to the House.
      An assurance from the Minister during the course of a debate in the House of Commons at 4 o'clock in the morning is not the law of the country. We are therefore entitled to ask that Amendment No. 87 should be put on the statute book in fulfilment of the Minister's own assurance.
      Mr. Deputy Speaker: The Question is—
      Mr. Mitchell: The Minister has not replied, Mr. Deputy Speaker, to the points put to him during the course of the debate. I know it is an early hour, but the House cannot be treated in this way.
      Mr. Deputy Speaker: I am not in a position to control what the Minister is proposing to do.
      Amendment negatived.

    Clause 8
      GROUP ACCOUNTS
      Amendment made: No. 17, in page 11, line 44, leave out 'and printed'.—[Mr. Arthur Davidson.]
    Clause 9

      DUTY TO PREPARE AND DELIVER ACCOUNTS IN THE CASE OF OVERSEA COMPANIES
      Amendment made: No. 19, in page 12, line 31, leave out 'and cause to be printed'.—[Mr. Arthur Davidson.]
      4.0 a.m.
      Mr. Arthur Davidson: I beg to move, Amendment No. 20, in page 12, line 33, leave out 'in such form'.
      Mr. Deputy Speaker: With this we are to take Government Amendment No. 21.
      Mr. Davidson: This clause provides, inter alia, that oversea companies which have a place of business in Great Britain shall prepare accounts which comply with the requirements as to the content and form of accounts applicable to United Kingdom companies, subject to any exceptions which may be prescribed. As it is drafted, the clause enables exceptions to be prescribed only in relation to the content of accounts and in relation to their form. This would mean that oversea companies could not be exempted from any requirements as to the form of accounts which may be imposed on United Kingdom companies in the light of the fourth European directive. It would be impractical to expect oversea companies to comply with all these requirements. By moving the words "in such form" to a different position in the clause these amendments will enable exceptions as to the form of accounts to be prescribed for overseas companies.
      This is a technical and formal amendment.
      Amendment agreed to.
      Amendments made: No. 21, in page 12, line 35, after 'modifications)', insert 'in such form'.
      No. 22, in page 12, line 42 leave out 'printed'.
      No. 23, in page 13, line 10, leave out 'or cause to be printed'.—[Mr. Arthur Davidson.]

    Clause 12

      ACCOUNTING RECORDS
      Mr. David Mitchell: I beg to move, Amendment No. 25, in page 15, line 31, leave out paragraph (a).
      Mr. Deputy Speaker: With this we are to take Government Amendment No. 26, in page 15, line 31, leave out from first 'of' to second 'of' in line 32 and insert
      'stock held by the comapny at the end of each financial year of the company;

      1355

      (b) all statements of stocktakings from which any such statement as is mentioned in paragraph (a) has been or is to be prepared; and

      (c) except in the case of goods sold by way of ordinary retail trade, statements'.

      We are also to take the following amendments to Government Amendment No. 26:
      Amendment (a), leave out paragraph (b).
      Amendment (d), leave out paragraph (c).
      Amendment (b), in paragraph (c), after 'goods' insert 'bought or'.
      Amendment (c), in paragraph (c), leave out 'statements' and insert 'records'.
      We are also to take Amendment No. 27, in page 15, line 32, leave out from 'trade0' to end of line 35.
      And we may take Government Amendment No. 28.
      Mr. Mitchell: This is the most extraordinary paragraph. I cannot imagine what got into the heads of the parliamentary draftsmen or the Ministers when the Bill was being drafted. As it stands, the clause says that the statements referred to, that is, the accounting records that have to be kept—and, be it noted, for six years—should be
      "statements of all stocktakings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased showing the goods and the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified."
      I take issue with the Minister on two counts in respect of this matter. First, while one understands that paragraph (b), relating to stocktaking at the end of the financial year, is an essential part of the accounting and that, therefore, that must be in the Bill, quite clearly the suggestion that statements of all stocktakings should be kept for six years is a nonsense.
      Perhaps I may illustrate that point. There are countless businesses which for various reasons take stock at intermittent or irregular intervals. Many retail businesses, for example, take stock every month in order to keep an eye on the level of pilferage. When public house managers go on holiday and relief managers come in, every pub involved has a stocktaking. Is it seriously suggested that every pub stocktaking when
      1356
      a relief manager comes in should be kept as part of the accounting records for six years? That is ludicrous. It should never have been in the Bill. I hope that the Minister will agree, therefore, that it should not be there.
      The second part of the paragraph requires that a record be kept
      "of all goods sold and purchased showing the goods and the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified"
      except in the case of retail trade.
      What benefit can there be in that? What has it to do with the annual accounts of a company that that degree of detail should be recorded? Moreover, why should a wholesaler be treated in this respect differently from a retailer? The present VAT regulations, I understand—perhaps the Minister can guide the House—already cover all that is here required, and it is therefore superfluous to add it in the present Bill. One can only assume that the purpose of adding it is to add an additional scourge held over the small business man who fails to understand or fails to comply, providing for more serious penalties than under other legislation. Perhaps the Minister will accept, therefore, that the subsection ought not to be there at all.
      What is more, there is a certain right of privacy in this country, and to call for the revealing of the names of the purchasers is an invasion of the privacy of the individual which the House ought not to condone.
      Mr. Higgins: Having been concerned with these matters for some years now, I must say that I regard Government Amendment No. 26 as one of the worst pieces of Government drafting that it has ever been my misfortune to encounter. Government draftsmen are paid large sums, and frequently—indeed, almost invariably—that may well be justified by the complex and hard work which they have to do. But Amendment No. 26 is a disgrace. If one wishes to amend it in any way, because it deals with particular items one has to go about it in an extraordinarily convoluted way. Instead of the entire passage being knocked out and a self-contained amendment substituted, all sorts of loose ends have been left hanging around. The Under-Secretary should pursue this matter with the official concerned.

      1357
      That being said, I do not think that it would be appropriate at this hour of the night to pursue our Amendments (a) and (d). My hon. friend the Member for Basingstoke (Mr. Mitchell) has made the main points of substance which ought to be made. We still have grave doubt about whether the requirement for information which the Government say is necessary can be justified, and about whether the burden which it will impose, especially on small businesses, can be justified.
      I hope, therefore, that the Minister will at least give a moderately encouraging reply to the effect that he will look at this matter between now and the debate in the other place. I think that I am right in saying that they will be able to consider it if the Bill is amended, and this is a matter which should be looked into, not only in the drafting but also on the substance, between now and the next stage.
      Mr. Loveridge: The Government have shown sense in now exempting certain stock provisions from the need for detailed record where goods are sold by way of ordinary retail trade, but one cannot help thinking that, instead of
      "sold by way of ordinary retail trade"
      they may have meant
      "goods bought or sold by way of ordinary retail trade".
      Our Amendment (b) would bring common sense into that sentence. Even large businesses purchase some goods retail, through the petty cash, for example, or on the petrol expenses account. It is not reasonable to expect people always to be able to trace such a seller six years later, especially in the case of minor items bought by a large company. As the Government amendment reads, that expectation appears to be involved. I hope that the Government will agree that it should read "goods bought or sold" and thereby exercise common sense.
      Mr. Arthur Davidson: I have listened with interest to the arguments of hon. Members and they will be the first to admit that with the exception of the hon. Member for Basingstoke (Mr. Mitchell), they covered the same ground.
      Government amendments Nos. 26 and 28 are closely linked to the amendment moved by the hon. Member. The requirement to keep records of stocktaking is narrowed and will be welcomed by hon.
      1358
      Members. In the past most companies carried out stocktaking once a year but now many companies stocktake on a continuous basis. For them the term "the annual stocktaking" which was used in the 1948 Act is meaningless.
      In bringing the requirements as to accounting records up to date, therefore the Bill substituted a requirement to keep records of all stocktakings. In Committee, it was pointed out that some companies undertake frequent stocktakings for their own purposes. For example, an off-licence will check its stock whenever there is a change of licences. As drafted, the Bill would require records of all such stock-takings to be kept.
      On reflection, the Government agree that it is unnecessary for company law purposes for records of these additional stocktakings to be kept. What is essential is that records should be available of the physical check of stocks on which the valuation of stock at the end of the financial year is based. Amendment No. 26 therefore makes it clear that these records must be kept but leaves it open to companies to decide for themselves whether to preserve their records of any other stocktakings. The Government have therefore gone some way, if not the whole way, to meet the objective of hon. Members. The clause will not require an off-licence stocktaking to be recorded.
      The Opposition amendments in different ways omit parts of subsection (5) which requires that the accounting records of companies dealing in goods shall contain statements of stocktakings and of goods sold and purchased. This question was discussed at length in Committee and the Government stand by their original view.
      If the proposal were accepted, companies would not be subject to several very important requirements relating to accounting records, most of which are already requirements under the 1948 Act. Statements of goods sold and purchased are the most fundamental aspect of any company's accounting records and failure to record these matters is at present an offence punishable by imprisonment under Section 331 of the 1948 Act, which this clause supersedes. To delete this requirement would be highly retrograde. None of the professional bodies which have commented on the Bill has recommended doing so.
      Mr. David Mitchell: I seek clarification on existing legislation. The Minister says that it is superseded. Does he mean that earlier legislation is repealed or is new legislation to be superimposed on it?
      4.15 a.m.
      Mr. Davidson: The previous legislation is superseded by this legislation.
      Mr. David Mitchell: I am asking the hon. Gentleman to explain what he means.
      Mr. Davidson: I am sorry if it is ambiguous. The previous legislation is repealed and this supersedes it.
      Amendment negatived.
      Amendments made: No. 26, in page 15, line 31, leave out from first 'of' to second 'of' in line 32 and insert
      "stock held by the company at the end of each financial year of the company;

      (b) all statements of stocktakings from which any such statement as is mentioned in paragraph (a) above has been or is to be prepared; and

      (c) except in the case of goods sold by way of ordinary retail trade, statements".

      No. 28, page 15, line 35, leave out from "identified" to end of line 37.—[Mr. Arthur Davidson.]
      Mr. Arthur Davidson: I beg to move Amendment No. 31, in page 16, line 19, after "it", insert—

      "(a) in the case of a private company, for three years from the date on which they are made; and

      (b) in any other case".

      The amendment reduces from six to three years the period for which private companies must preserve accounting records. The six-year requirement will apply to public companies only.
      Mr. Higgins: We are grateful for this Government concession, and I am sure that we shall make more rapid progress as a result of it.
      Amendment agreed to.

    Clause 13

      QUALIFICATIONS OF AUDITORS
      Mr. Shersby: I beg to move Amendment No. 33, in page 17, line 7, at end insert
      'The British Association of Accountants and Auditors Ltd.'.
      Mr. Deputy Speaker: With this we may take the following amendments:
      No. 34, in page 17, line 7, at end insert—
      '(2A) (a) If on the request of a body that it be added to subsection (1) above the Secretary of State refuses, or delays for a period exceeding six months, to comply with the request he shall, if required by that body, state in writing the reason for the refusal or delay, and the body may appeal to the Privy Council.
      (b) On any such appeal the Privy Council, after communication with the Secretary of State, may dismiss or uphold the appeal, and if the appeal is upheld the Secretary of State shall make regulations under this section to give effect thereto'.
      No. 35, in page 17, line 24, leave out subsection (4).
      Mr. Shersby: My intention is to probe further the reasons why the association has not been included in the clause, bearing in mind the events which have taken place since the Committee stage. In Committee the Under-Secretary said that he thought it inappropriate to write the name of the association into the Bill in advance of the association's formal application for inclusion. He also said,
      "We are not satisfied with the examination and marking standards of the association. We say that they are not comparable with those of the professional bodies which are naturally and rightly concerned that the established standards should not be watered down."— [Official Report, Standing Committee C, 15th July 1976; c. 295.]
      Will the hon. Gentleman elucidate that reply? The association has no knowledge that the standard of examination papers has ever been questioned by the Department of Trade. I am advised by the association that the Department has never called for or examined work papers of the candidates. Had there been any communication of that kind between the Department and the association, surely it would follow that consultations would have taken place with the object of revising the syllabus up to the required standard. As I understand it, that has not happened. I may be wrong, and I hope that the Minister will clarify that point.
      A great deal of water has flowed under the bridge since 15th July, and in the association there have been a number of developments which demonstrate that it has a case for saying that its name should be added to the list of associations set out

      1361
      in the Bill. I understand that the association gave formal notification to the Department on 8th December last year of its executive council's intention to make a further application for recognition. I believe that for all practical purposes we may take it that the application now lies upon the table at the Department.
      I presume that it now remains only for the Secretary of State to be satisfied when the independent moderators, whom he suggested to the association, have pronounced upon the question of equivalence with the standards of the other recognised accounting bodies. Have those moderators yet been appointed?
      It seems, on the admission of the Under-Secretary himself, that the association has made considerable efforts to improve its examination standards. I hope therefore that in the light of the progress which appears to have been made since the Committee stage the Under-Secretary will be able to indicate his support for the eventual inclusion of the name of this association either at a later stage or preferably in the Bill.
      Mr. Ray Mawby: A constituent of mine is a member of the body concerned in the amendment. But I also have contact with many other accountants who are members of professional bodies in accountancy which until now have never been questioned on professional standards or the examinations that they hold for their members.
      I certainly support my hon. Friend the Member for Uxbridge (Mr. Shersby) over the British Association of Accountants and Auditors. As far as I can see from my records the Department, while suggesting that the standard of the examination is low, has never indicated where it considers that the standard should be higher.
      If the Bill goes through in its present form, I believe that a number of professional associations, which have operated for many years and which have made periodic applications to the Department of Trade for registration as professional bodies, will be deemed. Unless at least one of these amendments is passed, we shall condemn these organisations to a shotgun marriage with the British Association of Accountants and Auditors Limited, or to a steady deterioration because their standards of examination will
      1362
      not be accepted. Consequently those organisations will die.
      It may be said that an appeal to the Privy Council is not the right way to proceed, but there should be some way in which professional bodies of long standing should be able to have the opportunity of being heard before an independent body so that at least they can be satisfied that they have some future if they are prepared to conform to reasonable requirements laid down by the Department of Trade.
      I support Amendment No. 33 and, more important, I support Amendment No. 34 because it takes in other professional bodies that should be given proper consideration by the Government.
      Mr. David Mitchell: Amendment No. 35 was tabled because of the existence of a parallel problem to that which was mentioned in an earlier debate. In this case I am referring to the problems faced by certain older people in country areas who are without professional qualifications and who are not able to secure such qualifications as would be required of young people now entering the profession.
      The provisions of the Bill will give only 12 months for such people to be phased out and are a little unreasonable. A man who is 58 years of age and who has spent 20 years undertaking adequate and accurate auditing work on smallholdings and small sawmills in country areas should be allowed to continue to work out the rest of his time and not be thrown on the dole queue. I hope that the Government will allow such a man to do just that.
      4.30 a.m.
      Mr. Ben Ford: First, I declare an interest, I have a connection with an association of accountants. I am proposing that provision be made for a proper appeal procedure to be available to bodies applying to be recognised and named in the clause.
      I can describe my intention by reading a short quotation from the speech that I made in Committee on a similar amendment. The amendment was not carried only because of the Chairman's casting vote. I said:
      'The purpose of the amendment is to provide a machinery for ensuring that responsible representations made to the Secretary of State for the inclusion of a further accounting body in the list of qualified bodies are not only taken fully

      1363
      into consideration, and within a reasonable period, but are also seen to be subject to a method of adjudication in the event of an unfavourable decision by the Secretary of State. The amendment is in the interests of the Secretary of State as well as the appellant body, because it is important—and I believe doubly so in a matter of this nature—that justice should not only be done but should manifestly be seen to be done.
      The four bodies named in subsection (1) are eminently respectable bodies which have for nearly 30 years, been recognised and accepted by the Secretary of State under the provisions of Section 161 of the Companies Act 1948, which the new procedure is designed in the first place to consolidate. But the very fact that these four bodies have an entrenched status must of necessity make it more difficult for a new body to break the magic ring."—[Official Report, Standing, Committee C, 15th July 1976; c. 300–1
      The question arises of the form that the appeal machinery should take. It appears from my researches that the Privy Council is the only appropriate body to be the recipient of such appeals. The Department of Trade, in granting or withholding recognition to professional bodies under Clause 13, is acting in a manner similar to the governing council for a professional. It sets standards and does all the things that a governing council would undertake. For instance, it has recently, and very publicly, demonstrated its interest in disciplinary procedures in the accountancy profession.
      It is my contention that the Department of Trade should be in the same position as a governing council. Such a council derives its existence from Parliament. The Department also derives its existence from Parliament, but the difference is that whereas there is provision in statute for an appeal to the Privy Coucil in the case of decisions of governing councils, there is no such provision where the Department is concerned.
      I shall quote a number of Acts where the principle applies. There is the Pharmacy Act 1954, where the Privy Council can take decisions about the appointment of examiners. Under the Medical Act 1956 the Privy Council can adjudicate on courses of studies and appeals regarding the registration of individuals. There is the Dentists Act 1957, where the Privy Council concerns itself with regulations concerning qualifications for the registration of foreign and Commonwealth practitioners. Those registrations must be approved by the
      1364
      Privy Council. The Opticians Act 1958 states that the institution or body may make representations to the Privy Coucil for either withdrawal of approval by the General Council. In default the Privy Council may discharge any function of the General Optical Council. In the Professions Supplementary Medicine Act 1960 the Privy Council may adjudicate on the suitability of courses of training. The body or persons affected may appeal. In the Veterinary Surgeons Act 1966 the Privy Council may adjudicate on courses of training offered by colleges or universities. It is clear that the Privy Council is involved in more than a purely judicial role in these matters and that it would be capable of arranging to adjudicate on a matter of departmental determination regarding accountancy.
      I hope that no one will suggest that accountancy is in any way more testing or important than medicine. I contend that by naming these bodies in statute the matter of recognition has been removed from the administrative arena and into a situation where non-recognition will enormously increase the downgrading effect upon bodies not mentioned. The purpose of recognition is to define eligibility for appointment as an auditor to a company incorporated under the Companies Act. It is neither an assessment of competency nor is it a barrier to the provision of accountancy services to the public.
      It is a fact, however, that overseas Governments apply recognition under Section 161 as a precedent for recognition within their countries in the belief that the section was introduced to define the only reputable bodies of accountants. This places an incubus upon the qualified accountant seeking appointments or wishing to practice in those countries. I submit that Section 161 (1)(a) is being used out of its statutory context. Recognition under Section 161 is taken by those bodies having recognition as an indication of professional superiority, a purpose for which Parliament never intended this section to be used.
      Because of the provisions of the Companies Acts, members of accountancy bodies not recognised under such Acts are continually being labelled with the classification of "unrecognised". Since 1948 other Bills have been promoted, having nothing whatever to do with

      1365
      limited companies, but which nevertheless quote the audit provisions of the Companies Acts and so restrict the area of work carried out by those not recognised within the Companies Acts. I will not develop this but I have a list of functions and Acts which demonstrate my thesis.
      In my view a new and unique situation has been created by the inclusion of this clause. This requires a remedy to be available to bodies not named in the Act. My Amendment No. 34 offers such a remedy and would enable justice manifestly to be seen to be done.
      Mr. Douglas-Mann: At half-past four in the morning I do not propose to set my judgment against what I expect the Minister's judgment is likely to be on Amendment No. 34. I ask the Minister to consider the amendment and the possibility of dealing with the principle embodied in it when the next lot of company legislation comes before the House. It it not desirable that we should seek to incorporate amendments of this kind at the tail end of the Session.
      I can see some problems about giving jurisdiction to the Privy Council without giving any criteria about the judgment it has to apply. I feel apprehensive about giving to these bodies a statutory recognition and responsibility when there is no adequate appeals mechanism available to enable consideration to be given not only whether the bodies are performing the function adequately but whether there are other bodies which might not be performing that function adequately.
      I have in mind particularly the body controlling my own profession, the Law Society. I am by no means always satisfied that it does all it might within that profession. It may well be that there are other bodies which could perform, in accountancy or law, the functions which professional bodies such as the Law Society perform. I would like to feel that there is a means by which another body could come into being. I do not propose to support the amendment but I hope that when company legislation is before us in future we shall have proposals from the Government which will enable other bodies to be put forward as competent to represent qualified auditors able to act for these purposes.
      Mr. Higgins: We debated these issues at great length in Committee, though I well understand that hon. Members who did not serve on the Committee may feel that they wish to comment on the fairly important issues arising on this clause.
      I wish to make three quick points. First, on the matter raised by my hon. Friend the Member for Basingstoke (Mr. Mitchell), my understanding is that the Minister should be able to give my hon. Friend some reassurance about existing practitioners. I hope that the hon. Gentleman is able to do that.
      Secondly, on the issue referred to by the hon. Member for Bradford, North (Mr. Ford), I still feel that reference to the Privy Council is not satisfactory, as I said in Committee. However, I understand that further discussions may have taken place about the body with which he is concerned, and no doubt the Minister can bring us up to date on the position.
      Finally, as regards the British Association of Accountants and Auditors Limited, I know that there has been an exchange of correspondence since the Committee Stage, and I hope that it will be possible to make progress which will be of advantage to that body. My hon. Friend the Member for Uxbridge (Mr. Shersby) was right to raise the matter on this occasion in order to give the Minister an opportunity to put the current position on record
      Mr. Clinton Davis: Our attitude and, indeed, that of our predecessors to the specific case of the BAAA is that, in order to achieve parity of recognition, there also has to be parity of standards in the syllabus, examination and marking. I am afraid that the BAAA has not yet satisfied the Secretary of State that those standards are comparable with those of the bodies which are already recognised. It would be quite wrong to dilute those standards, because we are considering here creditors and shareholders, as well as the interests of the accountancy profession.
      The criteria are spelt out very clearly to everyone who is involved in seeking to qualify, and the BAAA knows what those criteria are.
      The reason why an independent assessment of the BAAA's marking standards has only recently been suggested is that until a short time ago officials were able

      1367
      to conclude that the association's examinations did not offer as vigorous a test of the necessary accountancy disciplines as those of the recognised bodies. They were able to do that merely by looking at the syllabi and examination papers of the association.
      The latest position is that the BAAA has submitted to the Department a draft new syllabus. This was done in June 1976. This shows a very considerable improvement, and the way is now open for an independent assessment of its marking standards. This is shortly to be discussed with the association. A meeting has been fixed for 4th November. It is important that there should be an independent assessment by moderators. I think that I shall carry the whole House with me in saying that.
      As for Amendment No. 34, the hon. Member for Totnes (Mr. Mawby) conceded that it was not right to introduce into legislation an appeal to the Privy Council. I do not think that I need labour this point at any length, because we had a long debate about it.
      The precedents which my hon. Friend the Member for Bradford, North (Mr. Ford) seeks to adduce in support of this proposition are not relevant to what we are discussing. They all relate to restricted professions where there are statutory registration councils. The appeal, where it exists, is basically from the statutory council, largely dominated by the profession, to a Minister or Ministers of the Crown. Its purpose appears to be to provide accountability to Parliament from bodies which would otherwise be totally non-accountable. A decision in this case concerning the recognition of a qualification is taken directly by the Secretary of State, who is accountable to Parliament. What is more, a body of this kind can have recourse, if it feels that there has been maladministration, to the Parliamentary Commissioner. I do not think it right to proceed in the way suggested, for a number of reasons which have been mentioned already.
      On Amendment No. 35, I can give the hon. Member for Basingstoke (Mr. Mitchell) the assurance that auditors who have already been approved by the Secretary of State under Section 161 (1) (b) will not be affected by this legislation.
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      There is also a 12-month phasing-in period.
      However, the procedure of basing recognition on adequate knowledge or experience is hardly used now. I do not think that it would be sensible for it to be perpetuated. The people concerned need not be member of a professional body or subscribe to any professional discipline. There are few applicants.
      We are seeking to tighten the criteria and to ensure a higher degree of competence among auditors. Eliminating these provisions is one way of achieving it.
      4.45 a.m.
      Mr. David Mitchell: I think that the hon. Gentleman is giving the assurance I want. Will a person who is now practising as an auditor in the sticks and who is unqualified and aged, say, 50, be able to carry on until retirement at 65?
      Mr. Davis: If an auditor has been approved by the Secretary of State under Section 161(1)(b), he will not be affected by this legislation. He will, of course, be subject to the disciplines and statutory provisions which now apply, but apart from that, his position will be unchanged.
      Mr. Shersby: In the light of the Minister's assurances, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Amendment proposed: No. 34, in page 17, line 7, at end insert—
      '(2A) (a) If on the request of a body that it be added to subsection (1) above the Secretary of State refuses, or delays for a period exceeding six months, to comply with the request he shall, if required by that body, state in writing the reason for the refusal or delay, and the body may appeal to the Privy Council.
      (b) On any such appeal the Privy Council, after communication with the Secretary of State, may dismiss or uphold the appeal, and if the appeal is upheld the Secretary of State shall make regulations under this section to give effect thereto.'.—[Mr. Ford.]
      Amendment negatived.

    Clause 14
      APPOINTMENT OF AUDITORS
      Amendment made: No. 36, in page 18, line 4, leave out Clause 14.—(Mr. Clinton Davis)
    Clause 15

      RESIGNATION OF AUDITORS
      Mr. Arthur Davidson: I beg to move Amendment No. 37, in page 19, line 17, after '(b)', insert
      'if the notice contains a statement under sub section (2)(b) above'.
      The amendment relieves companies of the unnecessary burden of circulating to all members an auditor's resignation notice accompanied by a statement to the effect that there are no circumstances which the auditor considers should be brought to their attention.
      As drafted, the clause requires all notices to be circulated. Under the amendment, only those accompanied by a statement of circumstances to be brought to the attention of members and creditors would have to be circulated.
      It has been suggested to us in course of consultations with representative bodies that Clause 15(3) would cause an unnecessary waste of time and expense for companies. That is the reason for the amendment.
      Amendment agreed to.
      Mr. Arthur Davidson: I beg to move Amendment No. 38, in page 19, leave out lines 20 to 32 and insert—
      '(4) The company or any person who claims to be aggrieved may, within fourteen days of the receipt by the company of a notice containing a statement under subsection (2)(b) above, apply to the court for an order under subsection (4A) below.
      (4A) If the court, on an application under subsection (4) above, is satisfied that the auditor is using the notice to secure needless publicity for defamatory matter, it may by order direct that copies of the notice need not be sent out; and the court may further order the company's costs on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.
      (5) The company shall, within fourteen days of the court's decision, send to the persons mentioned in subsection (3) above—

      (a) if the court makes an order under subsection (4A) above, a statement setting out the effect of the order;

      (b) if the court does not make an order under that subsection, a copy of the notice containing the statement under subsection (2)(b) above.'.

      The amendment alters the operation of the penalty provision in Clause 15 as it
      1370
      applies to a company which has applied to the court under subsection (4) for an order directing that the auditor's notice of resignation need not be circulated on the grounds that the auditor is allegedly using the notice to secure needless publicity for defamatory matter.
      At present, the clause provides that a company is subject to a penalty if it fails to circulate an auditor's notice of resignation within 14 days of receipt—irrespective of whether it has applied to the court. This seemed to us, on reflection, to be unduly harsh. The court might easily not give a decision until more than 14 days after the company had received the auditor's notice and a fine would be particularly inapproprate if the company's application were eventually to be upheld by the court.
      The amendment therefore provides that a company which applies to the court for an order directing that the auditor's resignation notice need not be circulated, but has its application turned down, has 14 days from the date of the court's decision in which to circulate the notice before a penalty is incurred. I am sure that this will meet with the approval of the House.
      Amendment agreed to.

    Clause 16

      RIGHT OF AUDITOR WHO RESIGNS TO REQUISITION MEETING OF COMPANY, ETC.
      Amendments made: No. 39, in page 20, line 12, leave out 'annual'.
      No. 40, in page 20, line 14, leave out from 'any' to second 'the' in line 15 and insert
      'general meeting at which it is proposed to fill'.—[Mr. Harper.]
      Mr. Arthur Davidson: I beg to move Amendment No. 41, in page 20, line 20, after 'so)', insert '(i)'.
      Mr. Deputy Speaker (Mr. Oscar Murton): With this we may take Government Amendment No. 42.
      Mr. Davidson: These are purely drafting amendments. I do not think that the House will want me to go into the details.
      Amendment agreed to.
      Amendment made: No. 42, in page 20, line 21, leave out from 'and' to end of line 24 and insert—
      '(ii) send a copy of the statement to every member of the company to whom notice of the meeting is or has been sent.'.—[Mr. Arthur Davidson.]

    Clause 18

      FALSE STATEMENTS ETC. TO AUDITORS
      Mr. Arthur Davidson: I beg to move Amendment No. 43, in page 21, line 38, leave out 'an auditor' and insert 'the auditors'.
      Mr. Deputy Speaker: With this we may take Government Amendment No. 44.
      Mr. Davidson: Again, I can be brief. These amendments make it clear that an offence arises under Clause 18 when misleading or false statements are made to employees of the auditor, not only when they are made to a partner of the practice which has been appointed auditor.
      If the Opposition wish me to explain further, I will do so, but I think this is self-evident.
      Amendment agreed to.
      Amendment made: No. 44, in page 21, line 40, leave out
      'he requires, or is entitled to require, as auditor'
      and insert
      'they require, or are entitled to require, as auditors.'.—[Mr. Arthur Davidson.]

    Clause 20

      NOTIFICATION OF CHANGES IN DIRECTORS AND SECRETARY, ETC.
      Mr. Peter Morrison: I beg to move Amendment No. 45, in page 23, line 15, after 'company' insert
      'other than a private company'.
      Mr. Deputy Speaker: With this we may take Amendment No. 46, in page 23, line 16, after 'days', insert
      'and in the case of a private company within three months'.
      Mr. Morrison: We have tabled these amendments for similar reasons to those which we have been rehearsing throughout the evening regarding small businesses. We believe that they need a little
      1372
      leeway, because 14 days to register a change of director or secretary is not long enough.
      I was always brought up to believe that ignorance of the law was no excuse. But some small family business far away from Whitehall or Westminster which is taking on a new director—a son or daughter who has grown up and been in the business for some time—may not know of this provision. It may not have its accountant or solicitor permanently peering into its books. Therefore, through no fault of its own, it may fall foul of the law if this provision goes through as it is. We believe that the time allowed for the registration of a new director or secretary should be substantially more than 14 days. Therefore, in Amendment No. 46 we have suggested a period of three months.
      Mr. David Mitchell: I support my hon. Friend the Member for the City of Chester (Mr. Morrison) in moving this amendment. We have had a long night—it is nearly 5 o'clock in the morning—and I do not think that the Government have given way on any amendment. Therefore, I am sure that we can look forward to a happy event towards the end of this night, because this is obviously an amendment that the Government ought to accept.
      The position as the Bill stands is that penalties are incurred if any change in directors or secretary is not notified within 14 days. But "any change" includes death, and even in the dying weeks of this Government surely they must recognise that death cannot always be foreseen.
      Earlier, I introduced Mr. and Mrs. Bloggs holding their annual general meeting across the kitchen table. There are such companies, but the Government do not seem to recognise the fact. Perhaps it would be appropriate to change the name now to "Mr and Mrs. Oppressed Limited." Mrs Oppressed's husband dies. She does not know anything about the 14-day rule and is scarcely back from the funeral before she is incurring penalties. On grounds of common sense as well as humanity, the Government should specify three months in the case of private companies.
      Mr. Higgins: There is a point here which the Minister should consider carefully. We debated at considerable length

      1373
      in Committee the difficulties which small companies face where perhaps only one or two people may be involved actively and may have problems in meeting the deadlines set out in the Bill. The Bill specifies 14 days, and my hon. Friend the Member for Upminster (Mr. Loveridge) wants three months. I am sure that at this stage he would be prepared to comprise on a slightly shorter period.
      This is a serious point. The Government have made a concession on the length of time companies are required to retain documents. I hope they will feel able to agree to a somewhat longer period than 14 days in the case of smaller companies for the notification of these changes.
      Mr. Arthur Davidson: As the hon. Member for Worthing (Mr. Higgins) has said, this matter was debated at considerable length in Committee when a similar amendment was moved in relation to all companies. I understand the concern expressed by hon. Members about the difficulties of private companies but at this stage the Government do not consider that there is justification, even in relation to private companies, for extending the period.
      It is important that information on file at Companies House relating to a company's officers should be as up to date as possible, and companies should therefore regard it as their duty to notify changes as soon as possible. Notification of a change in the directors or secretary is a very simple task. I think that even the well known firm of Bloggs & Company should have no difficulty. We think that 14 days is a very reasonable period to allow. I do not consider that even the smaller companies—the "mini-Blogglets"—should have difficulty in complying with it.
      Three months would be far too long to allow, but I repeat that in the longer term the Government are giving serious consideration to the establishment of a new form of incorporation for certain smaller bodies. For the moment, however, all the Companies Acts provisions, including this Bill, can be applied practically only to all companies, subject to some variation between public and private companies. Companies are already required to notify changes in their direc-
      1374
      tors and so on within 14 days. I am not aware that this requirement in Section 200 of the 1948 Act has caused any particular problems.
      While I would have liked to cause a happy event at precisely 5 a.m.—I am not a hard man and do not like having to resist the hon. Member's blandishments—I must do so for the reasons I have given.
      5.0 a.m.
      Mr. David Mitchell: The reply is very unsatisfactory. The Minister has read the brief prepared for him before he heard the debate. The question of death had not occurred to those who framed the clause. It was not mentioned in the brief that he read. The Minister totally failed to deal with the circumstance. To say that there are 14 days and that a company director will have time to notify is to assume that all directors have the qualifications required of a qualified company secretary. People as unskilled as myself are company directors. That is the reality. We cannot be expected to know. If there is a husband and wife company and the husband dies, he might have known the position but his wife certainly will not. Therefore, penalties will be incurred. The Minister's answer is wholly unsatisfactory in the circumstances.
      Amendment negatived.
      Mr. Arthur Davidson: I beg to move Amendment No. 47, in page 23, line 20, leave out from "register" to end of line 22.
      The amendment deletes one of the provisions of Clause 20(1) which would have relieved companies of the need to submit a return to Companies House each time one of its directors took on or relinquished a directorship in another company.
      It will be recalled that concern was expressed about this matter in Committee. The hon. Member for Worthing (Mr. Higgins) will know that concern was also expressed privately before the Committee.
      The Government had originally felt that this requirement, imposed by Section 200 of the 1948 Act, was an unnecessary burden on companies and that it was not justified by the benefit to users of the files at Companies House.

      1375
      Reservations were expressed, when the clause was discussed in Committee, as to the desirability of abolishing the requirement, and the Government offered to re-examine the clause. It was suggested that it was desirable that every company file should contain up-to-date information about the other directorships held by the directors of the company. The clause, as originally drafted, would have resulted in a diminution in the information available at Companies House as no changes since the latest annual return was made would have had to be notified. On reflection, the Government have decided that there is substance in the point.
      Amendment agreed to.

    Clause 22

      DUTY OF DIRECTOR TO NOTIFY COMPANY OF ACQUISITION ETC. OF ITS SECURITIES.
      Mr. Clinton Davis: I beg to move Amendment No. 48, in page 25, line 12, leave out 'three' and insert 'five'.
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this we may take Government Amendments Nos. 51 and 52.
      Mr. Davis: Clause 22(1) and Clause 23(1) reduce from 14 days to three days the statutory periods, prescribed under Sections 27, as extended by Section 31, and 33 of the 1967 Act, within which a director and a major shareholder, respectively, must make notifications to a company in connection with their interests in its shares. These amendments increase the period from three to five days, since three days seemed to us on reflection to be unreasonably short.
      Mr. Higgins: This is an amendment to one of the warehousing clauses that we moved in Committee. I made it clear then that the Government would no doubt wish to consider the precise wording and the precise substance of the clause. No doubt they have carried out consultation with the expert bodies which will need to operate the clause and which have an interest in it. I think the best thing to do is to say that we understand the Government's position. We would not wish to dissent from the amendment. No doubt both sides of the House would wish to see how the thing works out in practice,
      1376
      and in the light of that experience we shall, hopefully, have an opportunity of reconsidering the matter in the next Session.
      Amendment agreed to.
      Amendment made: No. 49 in page 25, leave out lines 13 to 25.—[Mr. Harper.]

    Clause 23

      DUTY TO NOTIFY COMPANY OF ACQUISITION ETC. OF VOTING SHARES
      Mr. Clinton Davis: I beg to move Amendment No. 50, in page 25, line 29, leave out
      'Subject to the provisions of subsection (9) below'.
      Mr. Deputy Speaker: With this we may take Government Amendments No. 53 and 54.
      Mr. Davis: These amendments make two separate changes for the purpose of facilitating the operation of section 33 of the 1967 Act, as amended by this clause. The hon. Member for Worthing (Mr. Higgins) will appreciate that we were contemplating some necessary changes here and I do not think he wilt be surprised by what we are seeking to introduce.
      The substantive amendment is No. 53. The first part of it—that is to say, the new subsection 7A—will modify the notification requirement so that only changes which result in a person's shareholding reaching or passing the next percentage point up or down, rather than every change, need be notified after the initial notification at the 5 per cent.—or other percentage which may be prescribed—threshold. The second part—the new subsection 7B—gives jobbers who satisfy certain conditions exemption from the notification requirement and supersedes the exemption for jobbers introduced by the Opposition in Committee. Amendment Nos. 50 and 54 are paving and consequential respectively.
      The purpose of the first amendment—limiting the application of the notification requirement to significant changes—is to ensure that the modification which Clause 23 makes to Section 33 of the 1967 Act is not counter-productive. With a reduction in the threshold from 10 per cent. to 5 per cent., the number of notifications

      1377
      will be greatly increased, and amongst those most likely to hold more than 5 per cent. of the equity—or 5 per cent. of any class of voting shares—of a listed company will he the institutional investors, the size of whose holdings will be constantly changing—though normally only by very small amounts in percentage terms. A company might therefore receive so many notices that it would have difficulty in recognising the significant acquisitions which the provision is intended to spotlight.
      The other amendment—the exemption for jobbers—is desirable because it would be impossible for the jobber to fulfil his role if it were to be publicly known that he held a certain number of a company's shares. In consideration of this exemption, the Government have an undertaking from the Stock Exchange that it will monitor substantial holdings by jobbers and report to the Department on them.
      Mr. Higgins: I think these were both points that I raised in Committee. I suggested that some improvement to the original clauses which I drafted might be necessary, although I was not at all sure that I had the technical sophistication to achieve what is a fairly complex objective.
      I welcome the provisions with regard both to institutional shareholders and to jobbers. It would be appropriate for us to see how the thing works out in practice. We are in fairly unchartered territory in some respects and it is best to accept the amendments which the Government have put forward and see how the matter develops. I certainly think that the general approach that we have adopted is the right one, and I am grateful to the Government for suggesting improvements.
      Amendment agreed to.
      Amendments made: No. 51, in page 25, line 35, leave out 'three' and insert 'five'.
      No. 52, in page 26, line 18, leave out 'three' and insert 'five'.
      No. 53, in page 26, line 40, at end insert—
      '(7A) A person who would, apart from this subsection, be under an obligation, by virtue of subsection (1)(b) of the said section 33, to
      1378
      notify a company of the occurrence of an event shall not be under that obligation if—

      (a) the nominal value of shares comprised in relevant share capital of the company in which he was interested immediately before the event, and

      (b) the nominal value of shares so comprised in which he is interested immediately after the event,

      produce, when each of them is expressed as a percentage of the nominal value of that share capital and (as so expressed) is rounded down, if not a whole number, to the nearest such number, the same result.
      (7B) In subsection (4) of the said section 33, after paragraph (a) there shall be inserted the following paragraph-—
      "(aa) an interest as holder of shares of a member of The Stock Exchange who—

      (i) is recognised by the Council thereof as carrying on the business of a jobber,

      (ii) carries on that business in the United Kingdom, and

      (iii) holds the shares for the purposes of that business;"'.

      No. 54, in page 27, leave out lines 4 to 8.—[Mr. Harper.]

    Clause 24

      POWER OF COMPANY TO REQUIRE DISCLOSURE OF BENEFICIAL INTERESTS IN ITS VOTING SHARES
      Mr. Clinton Davis: I beg to move Amendment No. 95, in page 27, line 14, leave out 'inform it whether' and insert
      'indicate in writing the capacity in which'.
      Mr. Deputy Speaker (Mr. Oscar Murton): With this we are to take Government Amendments Nos. 96 to 101 inclusive.
      Mr. Davis: We feel that it is important that persons replying to a company's request for information about the nature of their shareholding should do so formally in writing. That will avoid any dispute as to whether any answer was given. For example, I think that a telephone conversation would be agreed to be highly inappropriate. This is similar to the requirements of Sections 27 and 33 of the 1967 Act.
      The other amendments are of a similar drafting character.
      I ought to say that during the consultations on the 1973 Bill, in which this clause appeared as Clause 19, I am advised that two deficiencies were brought to the attention of the Department. First, the

      1379
      clause assumed that a member of a company could hold shares either as a beneficial owner or as a trustee. There are, of course, other capacities in which the shares can be held—for example, as a mortgagee. The amendment therefore substitute the wider phrases
      "otherwise than as beneficial owner".
      The second criticism concerned the meaning of the phrase
      "so far as he can",
      which was thought to be ambiguous, as it might mean "so far as he knew" or "so far as he could in compliance with other obligations". The amendments make it clear that the qualification relates to the extent of the person's knowledge.
      Mr. Higgins: At this hour of the morning I do not know whether it would be right for the Minister to be told what consultations took place on the 1973 Bill—but I let that pass. I merely ask the Minister this question. The change to an indication in writing may create some problems concerning timing. Has he had consultations on that matter and is he satisfied that notification can be made in writing within the time limits now suggested?
      Mr. Davis: I am not quite sure on that specific point. I do not want to offer an answer simply out of the back of my head. I would want to confer with my officials as to the nature of the consultations which took place. However, I know that they have gone into the matter very fully and I believe that our proposal is consistent with the time limit. Again, as the hon. Gentleman has previously remarked, in all these matters it is absolutely true that we must look at the experience of events and adjudicate the position then.
      I am advised "No time limit. It must be within a reasonable time". Perhaps there is the answer. I hope that that clarifies the position. It has certainly done wonders for me.
      Amendment agreed to.
      Amendments made: No. 96, in page 27, line 15, leave out from 'company' to end of line 18 and insert
      'and (b) is he holds them otherwise than as beneficial owner to indicate in writing so far as it lies within his knowledge the person who have an interest in them either by name and address
      No. 97, in page 27, line 27, leave out 'inform it whether' and insert
      'indicate in writing the capicity in which'.
      No. 98, in page 27, line 27, leave out from 'interest' to 'or' in line 30 and insert
      'and
      (b) if he holds it otherwise than as beneficial owner, to indicate in writing so far as it lies within his knowledge the persons who have an interest in it (either by name and address'.
      No. 101, in page 27, line 35, leave out 'inform it' and insert 'indicate in writing'.
      No. 99, in page 27, line 40, after 'give', insert
      'so far as it lies within his knowledge written'.
      No. 100, in page 27, line 41, at end insert—
      '(3A) Where a company is informed in pursuance of a notice given to any person under subsection (3) above or under this subsection that any other person is a party to any such agreement or arrangement as is mentioned in subsection (3) above, the company may by notice in writing require that other person within such reasonable time as is specified in the notice to give so far as it lies within his knowledge written particulars of the agreement or arrangement and the parties to it.'—[Mr. Clinton Davis.]
      Mr. Clinton Davis: I beg to move Amendment No. 61, in page 28, line 21, after "liable", insert "(i)".
      Mr. Deputy Speaker: With this we are to take Government Amendment No. 62.
      Mr. Davis: This amendment makes provision for summary proceedings to be instituted in respect of an offence under Clause 24. When the clause appeared in the 1973 Bill there was no need to make specific provision for summary proceedings since the matter would have been dealt with by reference to the Magistrates Courts Act, but this procedure is no longer adopted for new offences and there is consequently a need for provision to be made in the clause.
      Amendment agreed to.
      Amendment made: No. 62, in page 28, line 23, at end insert
      "or (ii) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding £400 or to both."—[Mr. Bates.]

    Clause 25

      DISQUALIFICATION FOR PERSISTENT DEFAULT IN RELATION TO DELIVERY OF DOCUMENTS TO REGISTRAR
      5.15 a.m.
      Mr. Loveridge: I beg to move Amendment No. 64, in page 28, line 41, after "persistently", insert "and unreasonably".
      This simple amendment relates to the power of the High Court to make a disqualification order for persistent default by directors. As the clause stands, an order might prohibit from being a director a person who had been in persistent default. That seems proper, but the High Court should have a discretion to check as to the reasonableness of the default. If it was reasonable that there should be persistent default, the High Court should be allowed a discretion in the matter, and Parliament should not force the High Court to make a conviction against its better judgment.
      Second, I was not clear in Committee, and I am not clear now, what being persistently in default might imply. Does it mean that one series of documental failures on one occasion, so to speak, could be counted as persistent, or would there have to be separate series of defaults to make the reference to persistence apply, and how many such series would be required?
      Mr. Arthur Davidson: I shall have to go in some detail into the effect of Clause 25 in order to answer the very reasonable points raised by the hon. Member for Upminster (Mr. Loveridge). Basically, the clause provides that the Secretary of State may apply to the court for a disqualification order to be made in respect of a person who has been persistently in default under one or other of the various provisions of the Companies Act and the Bill relating to the delivery of returns, notices and other documents required to be delivered to the registrar. If the court is satisfied that the person has been persistently in default, it may make an order disqualifying that person from being a director or being concerned in any way in the management of a company for a period up to five years.
      The clause provides that it shall be conclusive proof that a person has been
      1382
      persistently in default if over a period of five years he has been three or more times convicted or has had three or more default orders made against him in connection with the relevant defaults.
      I assure the hon. Gentleman that the Secretary of State need not apply for a disqualification order to be made in every case where there appears to have been persistent default in complying with the provisions. He has a discretion as to whether to apply, and a reasonable Secretary of State would, of course, use that discretion sensibly.
      Perhaps I should add that disqualification by the court is not automatic. The court has to be satisfied that there has been persistant default, and provision is made in the clause for the person against whom an order is sought to appear before the court and give evidence and to call witnesses on his behalf. He will thus have an opportunity of bringing evidence to show that, while he may have failed to comply with the relevant provisions, his failure was not unreasonable. He is therefore able to call evidence to the effect that his failure was not unreasonable, and the question of reasonableness is one which the courts are accustomed to determine. It is a matter which the court may be expected to take into account when deciding whether to make an order. In the case envisaged by the hon. Gentleman, I imagine that the court would wish to take the circumstances into account and might not make an order, although, of course, I cannot give a definitive judgment on that.
      The effect of the amendment would be to require the Secretary of State to satisfy the court that the defaults were unreasonable, and, therefore, the burden of proof would be shifted to the Secretary of State. The Government do not consider that this is a burden he should be required to discharge. In many cases it would mean that issues decided by the court several years before the application for disqualification would be re-opened. That would cause difficulties. All the convictions of a persistent defaulter would have to be examined to decide whether they were reasonable, and a subsequent court could not be expected to do that.
      Whilst unreasonableness is something which, under the present provisions, should be taken into account, it would

      1383
      not be practical to shift the burden of proving unreasonable conduct on to the Secretary of State or to reopen old issues.
      Mr. David Mitchell: The Minister's last argument seemed to carry considerable weight but the point about three convictions within five years has not been covered. A man could be director of three companies and in respect of each, in one year out of five, be in default and therefore receive three convictions. That would be harsh.
      Mr. Davidson: That would be a matter of considerable doubt. Some might think it harsh and others that such a man got all he deserved. I cannot adjudicate on that.
      I am informed that three convictions on the same occasion may form the basis of an application.
      Amendment negatived.

    Clause 31

      SIZE, DURABILITY AND LEGIBILITY OF DOCUMENTS DELIVERED TO REGISTRAR
      Mr. Peter Morrison: I beg to move Amendment No. 89, in page 34, line 46, at end insert—
      '(2) Regulations made under subsection 1 of this section shall not come into force earlier than one year after their publication in the London and Edinburgh Gazettes'.
      Mr. Deputy Speaker: With this we may take Amendment No. 90, in page 35, line 5, after 'may', insert
      'within 14 days of the document being delivered'.
      Mr. Morrison: Amendment No. 89 makes clear that it is unnecessary and unreasonable for companies to comply with the registrar's specified forms for one year. It may be impossible for them to acquire the correct forms because of a printing strike, for instance. In such circumstances a company would not be able to comply with the law and a year's grace is reasonable.
      I now turn to Amendment No. 90. If the registrar has had a document for 14 days it should be deemed to have been accepted.
      Mr. David Mitchell: I support my hon. Friend the Member for City of Chester
      1384
      (Mr. Morrison), particularly in connection with Amendment No. 90, which is very reasonable.
      While the Minister is clarifying that matter will he clarify another matter, related to these documents, that is causing some concern? The accounting records referred to on page 15 must, according to Clause 12(6),
      "be kept at the registered office of the company or at such other place as the directors…think fit".
      Does the use of the word "place" mean that they must be kept in one place? What is the position of companies in places such as Basingstoke, with part of their accounting records in London and other accounting records—
      Mr. Deputy Speaker: Order. I do not think that that question has anything to do with the amendments under discussion.
      Mr. Mitchell: I hoped that it would come in under Amendment No. 90, Mr. Deputy Speaker.
      Mr. Deputy Speaker: That is probably rather a pious hope.
      Mr. Arthur Davidson: I am sorry once again to have to resist Opposition amendments.
      Amendment No. 89 is undesirable because it would not only give companies one year's notice of regulations concerning the size, legibility and durability of documents to be delivered to the registrar but would prevent any alteration of such regulations without a further year's delay. This is an unnecessary restriction on the registrar.
      Amendment No. 90 would tie the registrar too rigidly to a fixed time within which he must deal with documents. If a document is received which does not comply with the requirements, the registrar will use his best efforts to notify the company as soon as possible—normally within 14 days. However, should there be any delay before a company is notified by the registrar that a document does not comply with the requirements the company would not incur a penalty as a result of that delay. The period in respect of which a penalty may be imposed runs from the date on which the registrar serves notice that the document is defective.
      Amendment negatived.

    Clause 33

      FEES PAYABLE TO REGISTRAR
      Mr. David Mitchell: I beg to move Amendment No. 92, in page 36, line 17, at end insert:
      'provided that such fees shall not in total, taking one year with another, be likely to exceed the costs to the Government of the Companies Registration Office'.
      I imagine that at last the Minister can accept one of our amendments. This is a simple amendment to prevent the Government from using the fees as a concealed form of taxation. It will give a small reassurance to the multitude of small companies which find the costs of registration an additional burden that they will not be more than the costs incurred in running the Companies Registration Office.
      5.30 a.m.
      Mr. Clinton Davis: The amendment is unnecessary and is in any event defective in its drafting. It would be unacceptable on those grounds. Under Clause 33 the Secretary of State may make regulations prescribing fees to be paid to the registrar in respect of the matter specified in subsection (1). I do not consider that the fees can be determined by reference to the costs incurred by the Department outside the Companies Registration Office.
      The fees are paid to the registrar in respect of the specified matters, and that means that the size of the fee must bear a relationship to the work undertaken by the registrar.
      Other benefits are conferred on companies by virtue of the surveillance exercised by the Department to endeavour to ensure that companies create for themselves a good atmosphere for investment and confidence. Surveillance is a very important foctor in that whole question of regulation, and the taxpayer has to pay for that.
      The hon. Member may not feel that the inspections and surveillance are important, but that burden is borne by the taxpayer and not by companies.
      Amendment negatived.

    Clause 37

      APPLICATION OF CERTAIN PROVISIONS OF THIS ACT TO UNREGISTERED COMPANIES.
      Amendments made: No. 67, in page 38, line 6, leave out '17' and insert
      '18, (Appointment and removal of auditors), (Supplementary provisions relating to appointment and removal of auditors)'.
      No. 68, in page 38, line 8, leave out '17' and insert
      '18', (Appointment and removal of auditors), (Supplementary provisions relating to appointment and removal of auditors)'.—[Mr. Arthur Davidson.]

    Clause 41

      SHORT TITLE, CITATION, COMMENCEMENT AND EXTENT
      Amendment made: No. 69, in page 39, line 22, after '1972', insert
      'section 9 of the Insolvency Act 1976, sections 1 to 4 of the Stock Exchange (Completion of Bargains) Act 1976'.—[Mr. Arthur Davidson.]

  Schedule 2

    MINOR AND CONSEQUENTIAL AMENDMENTS
    Amendments made: No. 71, in page 42, line 11, at end insert—
    In section 38(5)(b) of the Act of 1948 for the words "dealt in or quoted" there shall be substituted the word "listed".
    In section 39(1)(b) of the Act of 1948 for the words "dealt in or quoted" there shall be substituted the word "listed".
    In section 51(1) of the Act of 1948 for the words "dealt in" there shall be substituted the word "listed".
    In section 52(1) of the Act of 1948 at the end of paragraph (a) there shall be inserted the words "whether on account of the nominal value of the share or by way of premium".'.
    No. 72, in page 43, line 42, at end insert—
    'In section 417(5)(b) of the Act of 1948 for the words "dealt in or quoted" there shall be substituted the word "listed".
    In section 418(1)(b) of the Act of 1948 for the words "dealt in or quoted" there shall be substituted the word "listed".'.
    No. 73, in page 44, line 34, leave out from '1976' to end of line 35.
    No. 74, in page 44, line 40, leave out from 'Table C' to 'of' in line 41 and insert
    'for the words from "section 159" to the end there shall be substituted the words

    1387
    "section 161 of the Act, section 14 of the Companies Act 1967 and sections 13 to 17 (Appointment and removal of auditors) and (Supplementary provisions relating to the appointment and removal of auditors)".'.
    No. 75, in page 44, line 42, at end insert—
    'In Schedule 8 to the Act of 1948, in paragraph 5(2)(c) for the word "quoted" there shall be substituted the word "listed" and for the word "unquoted" there shall be substituted the word "unlisted".
    In Schedule 8 to the Act of 1948, in paragraph 5A for the word "unquoted" there shall be substituted the word "unlisted".
    In Schedule 8 to the Act of 1948, in paragraph 8 for the word "quoted" in subparagraphs (1)(a) and (3) there shall be substituted the word "listed", for the word "unquoted" in sub-paragraph (1)(a) there shall be substituted the word "unlisted" and for the words "quotation or permission to deal" in sub-paragraph (3) there shall be substituted the word "listing".
    In Schedule 8 to the Act of 1948, in paragraph 11 for the word "unquoted" in subparagraph (6A) there shall be substituted the word "unlisted" and for the word "quoted" in sub-paragraph (8) there shall be substituted the word "listed".
    In Schedule 8 to the Act of 1948, in paragraph 12(1)(g) for the word "quoted" there shall be substituted the word "listed" and for the word "unquoted" there shall be substituted the word "unlisted".
    In Schedule 8 to the Act of 1948, in paragraph 28 for the word "quoted" there shall be substituted the word "listed", for the words "quotation or permission to deal" there shall be substituted the word "listing" and for the word "unquoted" there shall be substituted the word "unlisted".'.
    No. 76, in page 45, line 39, leave out 'section 22' and insert 'the foregoing provisions of this Part'.
    No. 77, in page 46, line 7, at end insert—
    'In section 25(2)(a) and (b) of the Act of 1967 for the word "quotation" there shall be substituted the word "listing".'.
    No. 78, in page 46, line 9, at end insert—
    'In section 33(10) of the Act of 1967 for the word "quotation" there shall be substituted the word "listing".'.
    No. 79, in page 46, line 13, at end insert—
    'In section 17(1) of the Insurance Companies Act 1974 for the words "Companies Acts 1948 to 1967" there shall be substituted the words "Companies Acts 1948 to 1976".'.
    No. 80, in page 46, line 22, at end insert—
    'The Stock Exchange (Completion of Bargains) Act 1976
    In section 3(3) and (4) of the Stock Exchange (Completion of Bargains) Act 1976 for the words "Companies Acts 1948 to 1967" there shall be substituted the words "Companies Acts 1948 to 1976".'.—[Mr. Arthur Davidson.]

  Schedule 3

    REPEALS
    Amendments made: No. 81, in page 47, line 28, column 3, leave out 'Section 159(2)' and insert 'Sections 159 and 160'
    No. 82, in page 48, line 17, column 3, at end insert 'Section 14(8)(c)'.—[Mr. Arthur Davidson.]
    Mr. Clinton Davis: I beg formally to move, That the Bill be now read the Third time.
    5.35 a.m.
    Mr. Higgins: I am grateful to the Minister for moving the motion formally, but no doubt he will be able to say a few words in a moment or two. We have had a long series of debates—indeed 36 of them in all—and I do not wish to weary the House at this hour, but there are one or two points that need to be made.
    This is an unusual Bill in many respects. The Opposition have consistently pressed the Government to improve the Bill by including various provisions that were contained in the 1973 Conservative Bill. I am glad that the Government have incorporated some major provisions on warehousing and have now improved the drafting of those clauses.
    The important point for an Opposition concerning legislation is that our task is to persuade and illuminate rather than merely to vote. Often it is difficult for Governments, however careful they may be in the drafting of Bills, to see some of the snags in the wording. My experience in the Treasury suggests that the House has a flair for putting its finger on faults in drafting or on flaws in conception which internally Ministers and officials cannot do. Therefore, I emphasise that it is right where possible to operate by persuasion and illumination rather than by voting.
    However, we thought it right to register a protest to the 10 o'clock motion and subsequently because the Government insisted on going through the night. We have now been discussing the Bill from

    1389
    10.18 p.m. yesterday until 5.38 this morning. That is a very long time, and I suggest that it is wrong to press through legislation of this technical, though noncontroversial, kind at that sort of pace. I hope that the Government will have learned the lesson for next Session and will not seek to push through other legislation at the same pace, because it means that Bills are not properly considered.
    I hope that in their legislative programme for the new Session the Government will carefully consider dealing with the Bullock Report on employee participation and the other matters that need to be clarified in this sphere. The Prime Minister said only a few days ago that priority must be given to company law reform. However, I do not think that the Department of Trade carries as much weight as it should in obtaining legislative time for such proposals. Therefore, we hope that the Prime Minister's view will be expressed in legislative form next Session.
    There is a case for splitting such a measure into two parts rather than to have some of the highly controversial matters in the Bullock Report, on which Labour Members are far from unanimous, contained in one Bill. I think that could be done with the co-operation of the Under-Secretary of State for Trade and his colleague the Parliamentary Secretary to the Law Officer's Department, who have borne a heavy burden. I express my thanks to both of them and I add particularly my thanks to my colleagues who in Committee and on the Floor of the House have been concerned with the major parts of the Bill and a number of matters concerning small businesses. We should carefully consider reducing the burden which company law at present places upon small businesses.
    I still feel that we should rely as far as possible on self-regulation, but I recognise that we require a framework of law which prevents the abuse of limited liability and the benefits that companies enjoy. I believe that that is the right way to proceed and I hope that we shall continue to do that. I hope we shall manage to complete the process of reform which is so necessary in this area.
    5.41 a.m.
    Mr. Clinton Davis: I agree with the hon. Member for Worthing (Mr. Higgins) that very many of the Members on both sides of the Committee who participated during its 10 sittings made a substantial contribution to the debate. In particular, I thank my hon. Friend the Parliamentary Secretary to the Law Officers' Department. Willingly or not, he participated fully in our deliberations and took a great deal of the burden from my shoulders.
    It is the view of the hon. Gentleman that the Department of Trade does not carry substantial weight. That suggestion is not borne out by the state of my stomach.
    As regards the legislative programme, the Bullock Report will certainly be a subject of important debate not only in the House and among hon. Members but throughout the community. That is a debate in which we have to engage.
    The Bill in its original form was said to be a technical measure, but it contained a number of matters which in the Government's view needed to be dealt with at the first available opportunity. That has been done and I think that we have improved the Bill. It is true to say that it covers a number of important areas. For example, there are the important provisions against warehousing. We have many other things to do, and we have made it clear that the company law programme will be an important part of our programme in the forthcoming Session and, indeed, in the one after that.
    We had to reject the underlying philosophy of the 1973 Bill because it was out of date. It continued to reflect the basic principle that company law should relate solely to the providers of capital, whether shareholders or creditors. We have to take into account in a real way the interests of employees and trade unions in companies' affairs. They are the people who invest their working lives in companies. That is an asset and a form of investment that is at least as valuable as the capital that comes from shareholders and creditors. That is why we have placed such great importance on the work of the Bullock Committee.
    I have already dealt with the time when the Bullock Committee is to report.

    1391
    We are looking forward to the presentation of the report before the end of the year. On Second Reading I outlined the programme for our changes and reforms in company law. They include, notably, a study of the arrangements for the supervision of the securities market. We expect to make a statement on that shortly but I cannot anticipate its contents. We have already touched on the important matters revealed by the inspectors' reports and on the role that my right hon. Friend and I have played in engaging in discussions with the accountancy profession, including the steps that it is currently taking. I think that is is cognisant of the duty that falls upon it to remedy the difficulties that have been revealed by the reports.
    There is also the committee of inquiry, established under the chairmanship of my right hon. Friend the Member for Huyton (Sir H. Wilson), that is to look into the financial institutions. The committee follows on to some extent the review which we have been carrying out. Among other things, it will examine arrangements for the supervision of financial institutions and their associated markets connected with the channelling of savings in the economy. It will review in particular the provision of funds for industry and trade and will report in due course to the Prime Minister. We intend that other work already in progress will continue without interruption. For example, we are preparing legislation relating to insider dealing and loans by companies to their directors.
    In short, there is a great deal of work to be done in relation to company law and the attendant problems of the capital market, more work than perhaps will ever have been done before. The total of this work will be a massive programme of modernisation of company law to meet the needs of our society.
    This measure is a modest step in the direction in which we have to go. It will help to correct some long-standing abuses. It will strengthen the position of auditors and provide for disclosure in relation to the shares of companies. I do not pretend that in itself it amounts to a major reform, but in the context of the Government's long-term intentions which I have spelt out I commend it to the House.
    Question put and agreed to.
    Bill accordingly read the Third time and passed, with amendments.

  UNEMPLOYMENT (MERSEYSIDE)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]
  5.46 a.m.
  Mr. Eddie Loyden: I realise that the hour is late, but I do not believe that that can be relevant to the important matter I wish to raise concerning Merseyside. In debating the question of unemployment on Merseyside, I wish to bring to the attention of the House and of my hon. Friend the Minister the situation which exists in that region.
  I accept that the Department is fully aware of the unemployment position and that the Government have taken certain measures to deal with it. It is clear that those measures are inadequate to cope with the problems facing Merseyside. For this reason I wish to raise a number of matters concerning Merseyside unemployment.
  It is necessary that the House should recognise that 11·7 per cent. of the total working population in the Liverpool travel-to-work area is unemployed. The male unemployment rate stands at 13·8 per cent. and the female unemployment rate at 8·3 per cent. The latter has risen rapidly recently. The Department must pay some attention to the increase in female unemployment. In the Merseyside development area there is a total of 87,153 unemployed. In spite of measures taken by the Government, such as employment grants and premiums, the situation has not responded.
  There are two main problems facing the Merseyside area. The first is the steady decline of its natural industries, by which I mean the docks industry, the distributive and warehousing industries and many of the other industries which basically have been the centre of economic activity in the area. Over the years, we have seen a decline in the traditional industries. But—and this is the second problem—there has been very little compensation for that decline in the shape of new industries coming into the area.

  1393
  It is recognised in the locality that much has been attempted by the Government to overcome the problems presented by areas like Merseyside. I do not suggest for one moment that the situation on Merseyside is peculiar to that area, because there are other parts of the country which are as bad as and, in some cases, slightly worse than Merseyside. However, in my view there are very important factors in the Merseyside situation which have to be taken into account.
  We are not, for example, considering the introduction of industry in a period of normal economic circumstances, and by and large Government policy has been designed to deal with the normal economic circumstances of areas like Merseyside. Unfortunately, the Government have failed to recognise the present abnormal situation, and certainly they have failed to act upon it.
  In addition to the normal problems of Merseyside and other large conurbations, we must attempt to deal with factors like a declining population, the introduction of new industry and the creation of a much improved social infrastructure in the area. In normal circumstances that would be difficult enough. However, the problems are worsened by the present general economic situation of the country. Although the Government's intentions have been well thought out in terms of normal situations, they have not taken into account the abnormal situation in industrial conurbations like Merseyside.
  We see in the area a decline in the docks, in ship repairing, in shipbuilding and in distribution and warehousing. The economy of the area was based largely on the port transport industry. That industry has gone through tremendous revolutionary change with the introduction of new technology. It has moved from being a labour-intensive industry to become one that it capital-intensive. It has also had the additional problem of becoming a contracting industry in terms of the work force that it employs. The same is true of much of the ancillary industry on which the area has mainly depended in the post for its economic and social existence.
  Although I accept that the original ideas of the Government were designed to resolve these problems, I suggest that they are no longer relevant in the present economic situation. While the Govern-
  1394
  ment's actions in relation to Merseyside's special development area status and through other measures would have been helpful in ordinary circumstances, they deal with only the peripheral problems in the present situation rather than the basic employment problem on Merseyside.
  Despite the Government's efforts to alleviate youth unemployment, an increasing number of school leavers on Merseyside are out of work. They do not always appear in the figures issued by the Department of Employment, but surveys in my constituency indicate a tragic situation.
  The Young Socialists carried out a survey in a tightly-knit community in my constituency and discovered that in 70 of every 100 homes at least one member of the family was out of work.
  Figures on youth unemployment produced by the Merseyside Metropolitan Council indicate a dramatic rise in the number of young people out of work and a dramatic fall in the number of apprenticeship opportunities in the area. The unemployment figure has risen from 1,700 to more than 7,000 in 10 years and the number of apprenticeships decreased by 49 per cent. between 1969 and 1973.
  Those figures indicate not only the volume of the problem but its nature. We are not only failing to attract the necessary volume of industry to the area, but we are failing to attract industry of the right quality.
  I accept that my hon. Friend the Under-Secretary will not be able to answer all the points I am making; many are not directed exclusively to his Department. I hope he will recognise that in considering employment and unemployment we have also to consider such things as industry and the environment.
  Government action on Merseyside—on advance factories, for example—has not dealt with the problem. In simplistic terms, our problem is that industries have been declining, moving away or becoming capital-intensive rather than labour-intensive. The whole strategy of the Government must be considered against the background of that problem and the general problem of infrastructure, which is not unique to Merseyside.
  We must recognise that in the old major industrial conurbations there is

  1395
  now emerging a new problem—the question not only of employment and job opportunities but of declining population. The desertion of the city centres in both population and industrial terms is a long-term problem that the Government obviously must consider.
  It is against that background that employment on Merseyside must be considered. I think that all of us would regard the efforts made in the locality and by the central Government as having been well-intentioned. No one could argue that either the metropolitan county or the district council has been coy in putting before the central Government ideas on how the Government should react to the situation on Merseyside.
  I think that, against this background of unemployment on Merseyside, the Government have attempted to deal with the problem with the instruments available to them at the moment. My point—this has been mentioned in exchanges of letters with the Secretaries of State for Industry and Employment—is that some of the instruments which have been used are outdated and are no longer appropriate for dealing with the situation.
  The problem which emerges is not purely one of employment or unemployment in the way we normally see it. Other factors are involved in a conurbation such as Merseyside. Efforts have been made in the locality, but we appear to be making no inroads on the massive problem of unemployment. Indeed, the situation is worsening day by day.
  The Government must rethink their whole strategy on solving the unemployment problem in the major conurbations, particularly in the North and North-West Regions. Industries are in decline and job opportunities are constantly being reduced. The Government must take some positive action on not only the quantitative but the qualitative nature of employment in those areas.
  It will not be acceptable to me for areas such as Merseyside, because of the high levels of unemployment, to be beggars rather than choosers when it comes to deciding what industries should come to those places. If we are beggars completely, we shall have no influence at all over the types of industries which will come into our area. It appears to me
  1396
  that Merseyside faces the prospect of having a mass of unskilled labour without any apprenticeship schemes or any of the things which indicate some kind of future in the industrial infrastructure of that part of the country. We face the prospect of having an old and unskilled populace. This will obviously have an effect upon the whole social and economic future of the region.
  This is a matter not only of regional but of national concern. The Government ought now to pay attention to the fact that their remedies to deal with the problem are not working. Those remedies were designed to deal with a different problem entirely. The problem now is not merely the infrastruture on Merseyside but the contribution that it will make to the economic and social future of the United Kingdom.
  I do not charge my hon. Friend with the responsibility for all the points I have raised, but I ask not only his Department but the Department of Industry to give meaningful consideration to them, particularly those concerning declining industry, the future of industry in the area, the economic structure of Merseyside and especially unemployment.
  6.5 a.m.
  The Under-Secretary of State for Employment (Mr. John Golding): My hon. Friend the Member for Liverpool, Garston (Mr. Loyden), who has long been a champion of the unemployed, should be warmly thanked for bringing this important subject before the House. He has suffered some personal discomfort to be here, and it has not been eased by his having to be here all night for this debate.
  The situation is desperate in Liverpool, as I found on a recent visit. I was particularly concerned to find the plight of youngsters, and everyone in Liverpool—led by Councillor Bill Sefton—is very anxious to do something quickly for them. Of course, what they badly need is permanent jobs, but before talking of this I would like to say something about the contribution made by governmental measures in taking the edge off unemployment.
  The Community Industry Scheme helps youngsters who even in better times would find it difficult to get jobs. It has been making an important contribution

  1397
  in Liverpool. We have increased the number of places available under the scheme from 200 at two centres to 400 at three centres.
  The Job Creation Programme on Merseyside is also very worth while, having created 6,000 jobs. When in Liverpool, I was very impressed by a visit to Life-chance Construction. There, faced with an enormous task, the organisers are doing all they can to save youngsters—and themselves—from despair. Of course, all I spoke to wanted more money to be devoted to this work—and so I was glad that Liverpool was given an extra £1 million early in September and another £2 million later. Merseyside, indeed, will have received £13 million for this work out of a national budget of £90 million.
  We hope that Merseyside will also make considerable use of the new Work Experience Scheme, which will provide a realistic introduction to working life for unemployed youngsters under the age of 19. The success of this scheme will depend to a very big extent on the cooperation of employers, and I hope very much that they will respond well.
  We also hope that the employers will take advantage of the new youth employment subsidy, under which a £10 weekly allowance can be paid for up to 26 weeks to employers who take on young people under the age of 20 who have been continuously registered as unemployed for a period of six months or more. This has replaced the recruitment subsidy for school leavers, because we want to give particular help to the long-term unemployed, of which Liverpool has more than its share. These schemes have helped nearly 2,500 young people on Merseyside.
  These, then, are the measures which particularly have helped the young. But we have also been concerned to alleviate the situation for others. The Temporary Employment Subsidy Scheme has already saved the jobs of about 6,500 people on Merseyside.
  Our new Job Release Scheme should also give help. Under the scheme, men over 64 and women over 59 in full-time employment in assisted areas, including Liverpool, will from 1st January next be offered an allowance of £23 per week free of tax until they reach pensionable age, provided that they leave their jobs and
  1398
  are replaced by unemployed workers. It will also apply to the unemployed if they cease looking for work.
  The unemployment situation in Liverpool will also be assisted, both in the short and longer terms, by training. There are far too many unskilled in the inner areas of the city, and these are far more vulnerable to unemployment than are the skilled.
  With the increased funds, the Training Services Agency has been able to expand its Training Opportunities Scheme target. We expect that 5,000 people will have completed training under this scheme in Merseyside and Warrington by the end of the year.
  Merseyside has also benefited from the substantial funds we have provided for the TSA, through the industrial training boards, to assist training carried out by industry itself. These schemes will have helped many young people to take up apprenticeships in the area. These special measures have made a significant contribution but, as I said earlier, it is regular jobs that are needed.
  As my hon. Friend has recognised, the problems on Merseyside are difficult and deep-rooted. While new industry, aided by the Government's regional policy, has brought many new jobs to the area, these have not been sufficient to replace the jobs continuously being lost. In addition, the new industries have been severely hit by the recession, as have other established concerns.
  The Government made Merseyside a special development area in August 1974 because they realised the gravity of the situation. They try to encourage and persuade firms to go to Merseyside, and offer the full range of regional financial incentives to prospective employers. And now the new National Enterprise Board regional office in Liverpool is actively seeking out opportunities for investment.
  Great attention has been paid to the building of advance factories on Merseyside. I believe them to be of importance to the area. Of the 27 allocated since July 1974, five have been built and are available, 13 are under construction—including two in the inner city area at Rock Ferry and Sandown Dock—one is already occupied and three have been allocated to employers. The Department of Industry

  1399
  is also currently acquiring 100 acres of land for future industrial development.
  This will also help the construction industry, as will also other significant Government contracts now or soon to go ahead—a new £12½ million special hospital, a Crown court costing £18 million, and new Civil Service office accommodation in Southport costing £5 million. The Inland Revenue building at Bootle is now under way.
  My hon. Friend drew particular attention to the problems of the inner city area, and I am absolutely in accord with his view that this is a major problem. The problems of the inner city, including employment, are particularly difficult, and a committee of Ministers, chaired by my right hon. Friend the Secretary of State for the Environment, is urgently looking at the problem.
  My hon. Friend will know that a particular study has been made of Liverpool itself, and we hope that this will soon be completed. The Department of Industry is also undertaking a survey of the industrial needs of the North-West, particularly Merseyside.
  Many aids are being given to Merseyside at the present time. Over the next
  1400
  few years some 5,000 Civil Service jobs will go to Merseyside—considerably more than the number recommended in the Hardman Report on Civil Service dispersal.
  We recognise that from all points of view Merseyside has plenty to offer to employers, not least a lively and talented work force. Already there are encouraging signs that additional work is going to Merseyside. There has been substantial recruitment to the car industry. Although redundancies hit the headlines, a number of small-to-medium-size firms have moved to Merseyside recently or have expanded.
  This, on a larger scale, is ultimately the only answer to our problem in Liverpool. New—and prosperous—manufacturing industry is needed if we are to get away from a level of unemployment which is deeply upsetting to us all. The Government are determined to solve the problem which my hon. Friend has so ably presented this evening.
  Question put and agreed to.
  Adjourned accordingly at fifteen minutes past Six o'clock. a.m.

  AGRICULTURE (MISCELLANEOUS PROVISIONS) BILL
  Division List No. 330 [See col. 1193]

  Division No. 330.]

  AYES

  [7.14 p.m.

  Abse, Leo

  Grant, George (Morpeth)

  Park, George

  Allaun, Frank

  Grant, John (Islington C)

  Pavitt, Laurie

  Anderson, Donald

  Grocott, Bruce

  Penhaligon, David

  Archer, Peter

  Hamilton, James (Bothwell)

  Phipps, Dr Colin

  Ashton, Joe

  Harper, Joseph

  Powell, Rt Hon J. Enoch

  Atkins, Ronald (Preston N)

  Harrison, Walter (Wakefield)

  Price, William (Rugby)

  Atkinson, Norman

  Hatton, Frank

  Reid, George

  Barnett, Guy (Greenwich)

  Heffer, Eric S.

  Richardson, Miss Jo

  Bates, All

  Hooson, Emlyn

  Roberts, Albert (Normanton)

  Beith, A. J.

  Howell, Rt Hon Denis (B'ham, Sm H)

  Robinson, Geoffrey

  Bennett, Andrew (Stockport N)

  Howells, Geraint (Cardigan)

  Roderick, Caerwyn

  Bidwell, Sydney

  Hoyle, Doug (Nelson)

  Rooker, J. W.

  Bishop, E. S.

  Hughes, Rt Hon C. (Anglesey)

  Rose, Paul B.

  Blenkinsop, Arthur

  Hughes, Mark (Durham)

  Ross, Stephen (Isle of Wight)

  Boardman, H.

  Hughes, Robert (Aberdeen N)

  Ross, Rt Hon W. (Kilmarnock)

  Boyden, James (Bish Auck)

  Hughes, Roy (Newport)

  Ross, William (Londonderry)

  Bray, Dr Jeremy

  Irvine, Rt Hon Sir A. (Edge Hill)

  Rowlands, Ted

  Brown, Hugh D. (Provan)

  Irving, Rt Hon S. (Dartford)

  Ryman, John

  Buchan, Norman

  Jackson, Miss Margaret (Lincoln)

  Shaw, Arnold (Ilford South)

  Callaghan, Jim (Middleton & P)

  Jay, Rt Hon Douglas

  Short, Mrs Renée (Wolv NE)

  Campbell, Ian

  Jenkins, Hugh (Putney)

  Silkin, Rt Hon John (Deptford)

  Cant, R. B.

  John, Brynmor

  Sillars, James

  Carmichael, Neil

  Johnson, James (Hull West)

  Silverman, Julius

  Cartwright, John

  Johnston, Russell (Inverness)

  Skinner, Dennis

  Clemitson, Ivor

  Jones, Alec (Rhondda)

  Small, William

  Cocks, Rt Hon Michael (Bristol S)

  Jones, Barry (East Flint)

  Smith, Cyril (Rochdale)

  Cohen, Stanley

  Judd, Frank

  Smith, John (N Lanarkshire)

  Colquhoun, Ms Maureen

  Kaufman, Gerald

  Spriggs, Leslie

  Conlan, Bernard

  Kerr, Russell

  Stallard, A. W.

  Cook, Robin F. (Edin C)

  Kilroy-Silk, Robert

  Steel, David (Roxburgh)

  Corbett, Robin

  Lambie, David

  Stewart, Donald (Western Isles)

  Crawford, Douglas

  Lamborn, Harry

  Stott, Roger

  Crawshaw, Richard

  Lamond, James

  Strang, Gavin

  Crowther, Stan (Rotherham)

  Latham, Arthur (Paddington)

  Summerskill, Hon Dr Shirley

  Davidson, Arthur

  Leadbitter, Ted

  Taylor, Mrs Ann (Bolton W)

  Davis, Clinton (Hackney C)

  Lewis, Ron (Carlisle)

  Thomas, Ron (Bristol NW)

  Deakins, Eric

  Litterick, Tom

  Torney, Tom

  Dempsey, James

  Loyden, Eddie

  Wainwright, Edwin (Dearne V)

  Doig, Peter

  McCartney, Hugh

  Wainwright, Richard (Colne V)

  Dormand, J. D.

  MacCormick, Iain

  Walker, Terry (Kingswood)

  Douglas-Mann, Bruce

  McDonald, Dr Oonagh

  Ward, Michael

  Duffy, A. E. P.

  McElhone, Frank

  Watkins, David

  Edge, Geoff

  McGuire, Michael (Ince)

  Welsh, Andrew

  Ellis, Tom (Wrexham)

  MacKenzie, Gregor

  White, Frank R. (Bury)

  Evans, Fred (Caerphilly)

  Mackintosh, John P.

  Whitehead, Phillip

  Evans, Gwynfor (Carmarthen)

  Mallalieu, J. P. W.

  Wigley, Dafydd

  Evans, Ioan (Aberdare)

  Marks, Kenneth

  Willey, Rt Hon Frederick

  Ewing, Mrs Winifred (Moray)

  Marquand, David

  Williams, Alan (Swansea W)

  Faulds, Andrew

  Marshall, Dr Edmund (Goole)

  Williams, Sir Thomas (Warrington)

  Fernyhough, Rt Hon E.

  Maynard, Miss Joan

  Wilson, Alexander (Hamilton)

  Fletcher, Ted (Darlington)

  Mendelson, John

  Wilson, Gordon (Dundee E)

  Ford, Ben

  Mikardo, Ian

  Wilson, Rt Hon Sir Harold (Huyton)

  Forrester, John

  Miller, Dr M. S. (E Kilbride)

  Wilson, William (Coventry SE)

  Fowler, Gerald (The Wrekin)

  Molyneaux, James

  Wise, Mrs Audrey

  Freud, Clement

  Morris, Charles R. (Opensnaw)

  Woodall, Alec

  Garrett, John (Norwich S)

  Murray, Rt Hon Ronald King

  Woof, Robert

  Garrett, W. E. (Wallsend)

  Newens, Stanley

  George, Bruce

  Noble, Mike

  TELLERS FOR THE AYES:

  Gilbert, Dr John

  Ogden, Eric

  Mr. Ted Graham and

  Golding, John

  Orbach, Maurice

  Mr. David Stoddart.

  Gould, Bryan

  Pardoe, John

  NOES

  Adley, Robert

  Clark, Alan (Plymouth, Sutton)

  Fletcher-Cooke, Charles

  Arnold, Tom

  Clarke, Kenneth (Rushcliffe)

  Fookes, Miss Janet

  Atkins, Rt Hon H. (Spelthorne)

  Clegg, Walter

  Forman, Nigel

  Bell, Ronald

  Cooke, Robert (Bristol W)

  Gilmour, Rt Hon Ian (Chesham)

  Bennett, Sir Frederic (Torbay)

  Dean, Paul (N Somerset)

  Goodlad, Alastair

  Bennett, Dr Reginald (Fareham)

  Douglas-Hamilton, Lord James

  Gow, Ian (Eastbourne)

  Benyon, W.

  Drayson, Burnaby

  Gower, Sir Raymond (Barry)

  Boscawen, Hon Robert

  Durant, Tony

  Griffiths, Eldon

  Brocklebank-Fowler, C.

  Elliott, Sir William

  Grist, Ian

  Brown, Sir Edward (Bath)

  Emery, Peter

  Grylls, Michael

  Budgen, Nick

  Eyre, Reginald

  Hall, Sir John

  Bulmer, Esmond

  Farr, John

  Hall-Davis, A. G. F.

  Butler, Adam (Bosworth)

  Finsberg, Geoffrey

  Hamilton, Michael (Salisbury)

  Chalker, Mrs Lynda

  Fisher, Sir Nigel

  Hampson, Dr Keith

  1402

  1403

  Hannam, John

  Mills, Peter

  Rost, Peter (SE Derbyshire)

  Higgins, Terence L.

  Miscampbell, Norman

  Scott, Nicholas

  Hordern, Peter

  Mitchell, David (Basingstoke)

  Shaw, Giles (Pudsey)

  Howell, Ralph (North Norfolk)

  More, Jasper (Ludlow)

  Shepherd, Colin

  Hunt, David (Wirral)

  Morgan, Geraint

  Shersby, Michael

  Hunt, John (Bromley)

  Morris, Michael (Northampton S)

  Sims, Roger

  James, David

  Morrison, Charles (Devizes)

  Skeet, T. H. H.

  Jones, Arthur (Daventry)

  Morrison, Hon Peter (Chester)

  Speed, Keith

  Jopling, Michael

  Neave, Airey

  Spicer, Michael (S Worcester)

  Joseph, Rt Hon Sir Keith

  Nelson, Anthony

  Sproat, Iain

  Kimball, Marcus

  Neubert, Michael

  Stainton, Keith

  King, Evelyn (South Dorset)

  Newton, Tony

  Stanbrook, Ivor

  Kitson, Sir Timothy

  Nott, John

  Stanley, John

  Knox, David

  Oppenheim, Mrs Sally

  Stewart, Ian (Hitchin)

  Lane, David

  Osborn, John

  Stradling Thomas, J.

  Langford-Holt, Sir John

  Page, John (Harrow West)

  Temple-Morris, Peter

  Latham, Michael (Melton)

  Page, Rt Hon R. Graham (Crosby)

  Thatcher, Rt Hon Margaret

  Lawrence, Ivan

  Parkinson, Cecil

  Townsend, Cyril D.

  Le Marchant, Spencer

  Pattie, Geoffrey

  Trotter, Neville

  Loveridge, John

  Peyton, Rt Hon John

  Viggers, Peter

  Luce, Richard

  Price, David (Eastleigh)

  Walters, Dennis

  McAdoen, Sir Stephen

  Prior, Rt Hon James

  Warren, Kenneth

  Macfarlane, Neil

  Pym, Rt Hon Francis

  Weatherill, Bernard

  Madel, David

  Rathbone, Tim

  Whitelaw, Rt Hon William

  Marshall, Michael (Arundel)

  Renton, Rt Hon Sir D. (Hunts)

  Wiggin, Jerry

  Marten, Neil

  Renton, Tim (Mid-Sussex)

  Mawby, Ray

  Ridley, Hon Nicholas

  TELLERS FOR THE NOES:

  Maxwell-Hyslop, Robin

  Roberts, Wyn (Conway)

  Mr. Fred Silvester and

  Mayhew, Patrick

  Rossi, Hugh (Hornsey)

  Mr. Carol Mather.

  Miller, Hal (Bromsgrove)

  Division List No. 331 [See col.1200]

  Division No. 331.]

  AYES

  [7.44 p.m.

  Abse, Leo

  Forrester, John

  Mackintosh, John P.

  Allaun, Frank

  Fowler, Gerald (The Wrekin)

  Mallalieu, J. P. W.

  Anderson, Donald

  Freud, Clement

  Marks, Kenneth

  Archer, Peter

  Garrett, W. E. (Wallsend)

  Marquand, David

  Ashton, Joe

  George, Bruce

  Marshall, Dr Edmund (Goole)

  Atkins, Ronald (Preston N)

  Gilbert, Dr John

  Maynard, Miss Joan

  Atkinson, Norman

  Golding, John

  Mendelson, John

  Barnett, Guy (Greenwich)

  Gould, Bryan

  Mikardo, Ian

  Bates, All

  Graham, Ted

  Miller, Dr M. S. (E Kilbride)

  Beith, A. J.

  Grant, George (Morpeth)

  Molyneaux, James

  Bennett, Andrew (Stockport N)

  Grant, John (Islington C)

  Morris, Charles R. (Openshaw)

  Bldwell, Sydney

  Grocott, Bruce

  Murray, Rt Hon Ronald King

  Bishop, E. S.

  Harper, Joseph

  Newens, Stanley

  Blenkinsop, Arthur

  Harrison, Walter (Wakefield)

  Noble, Mike

  Boardman, H.

  Hatton, Frank

  Orbach, Maurice

  Boyden, James (Bish Auck)

  Heffer, Eric S.

  Pardoe, John

  Bray, Dr Jeremy

  Hooson, Emlyn

  Park, George

  Brown, Hugh D. (Provan)

  Howell, Rt Hon Denis (B'ham, Sm H)

  Pavitt, Laurie

  Buchan, Norman

  Howells, Geraint (Cardigan)

  Penhaligon, David

  Callaghan, Jim (Middleton & P)

  Hoyle, Doug (Nelson)

  Phipps, Dr Colin

  Campbell, Ian

  Hughes, Mark (Durham)

  Powell, Rt Hon J. Enoch

  Cant, R. B.

  Hughes, Robert (Aberdeen N)

  Price, William (Rugby)

  Carmichael, Neil

  Hughes, Roy (Newport)

  Reid, George

  Cartwright, John

  Irvine, Rt Hon Sir A. (Edge Hill)

  Richardson, Miss Jo

  Clemitson, Ivor

  Irving, Rt Hon S. (Dartford)

  Roberts, Albert (Normanton)

  Cocks, Rt Hon Michael (Bristol S)

  Jackson, Miss Margaret (Lincoln)

  Robinson, Geoffrey

  Cohen, Stanley

  Janner, Greville

  Roderick, Caerwyn

  Colquhoun, Ms Maureen

  Jay, Rt Hon Douglas

  Rooker, J. W.

  Conlan, Bernard

  Jenkins, Hugh (Putney)

  Rose, Paul B.

  Cook, Robin F. (Edin C)

  John, Brynmor

  Ross, Stephen (Isle of Wight)

  Corbett, Robin

  Johnson, James (Hull West)

  Ross, Rt Hon W. (Kilmarnock)

  Crawford, Douglas

  Johnston, Russell (Inverness)

  Ross, William (Londonderry)

  Crawshaw, Richard

  Jones, Alec (Rhondda)

  Ryman, John

  Crowther, Stan (Rotherham)

  Jones, Barry (East Flint)

  Shaw, Arnold (Ilford South)

  Davidson, Arthur

  Judd, Frank

  Short, Mrs Renée (Wolv NE)

  Davis, Clinton (Hackney C)

  Kaufman, Gerald

  Silkin, Rt Hon John (Deptford)

  Deakins, Eric

  Kerr, Russell

  Sillars, James

  Dempsey, James

  Kilroy-Silk, Robert

  Silverman, Julius

  Doig, Peter

  Lambie, David

  Skinner, Dennis

  Dormand, J. D.

  Lamborn, Harry

  Small, William

  Douglas-Mann, Bruce

  Lamond, James

  Smith, Cyril (Rochdale)

  Duffy, A. E. P.

  Latham, Arthur (Paddington)

  Smith, John (N Lanarkshire)

  Edge, Geoff

  Leadbitter, Ted

  Spriggs, Leslie

  Ellis, Tom (Wrexham)

  Lewis, Ron (Carlisle)

  Stallard, A. W.

  Evans, Fred (Caerphilly)

  Litterick, Tom

  Steel, David (Roxburgh)

  Evans, Gwynfor (Carmarthen)

  Loyden, Eddie

  Stewart, Donald (Western Isles)

  Evans, Ioan (Aberdare)

  McCartney, Hugh

  Stott, Roger

  Ewing, Mrs Winifred (Moray)

  MacCormick, Iain

  Strang, Gavin

  Faulds, Andrew

  McDonald, Dr Oonagh

  Summerskill, Hon Dr Shirley

  Fernyhough, Rt Hon E.

  McElhone, Frank

  Taylor, Mrs Ann (Bolton W)

  Fletcher, Ted (Darlington)

  McGuire, Michael (Ince)

  Thomas, Ron (Bristol NW)

  Ford, Ben

  MacKenzie, Gregor

  Torney, Tom

  1404

  1405

  Wainwright, Edwin (Dearne V)

  Whitehead, Phillip

  Wise, Mrs Audrey

  Wainwright, Richard (Colne V)

  Wigley, Dafydd

  Woodall, Alec

  Walker, Tarry (Kingswood)

  Willey, Rt Hon Frederick

  Woof, Robert

  Ward, Michael

  Williams, Alan (Swansea W)

  Watkins, David

  Wilson, Alexander (Hamilton)

  TELLERS FOR THE AYES:

  Welsh, Andrew

  Wilson, Rt Hon Sir Harold (Huyton)

  Mr. James Hamilton and

  White, Frank R. (Bury)

  Wilson, William (Coventry SE)

  Mr. David Stoddart

  NOES

  Adley, Robert

  Hordern, Peter

  Parkinson, Cecil

  Arnold, Tom

  Howell, Ralph (North Norfolk)

  Pattie, Geoffrey

  Atkins, Rt Hon H. (Spelthorne)

  Hunt, David (Wirral)

  Peyton, Rt Hon John

  Bell, Ronald

  Hunt, John (Bromley)

  Price, David (Eastleigh)

  Bennett, Dr Reginald (Fareham)

  James, David

  Prior, Rt Hon James

  Benyon, W.

  Jones, Arthur (Daventry)

  Pym, Rt Hon Francis

  Boscawen, Hon Robert

  Jopling, Michael

  Rathbone, Tim

  Brocklebank-Fowler, C.

  King, Evelyn (South Dorset)

  Renton, Rt Hon Sir D. (Hunts)

  Brown, Sir Edward (Bath)

  Kitson, Sir Timothy

  Renton, Tim (Mid-Sussex)

  Budgen, Nick

  Knox, David

  Ridley, Hon Nicholas

  Bulmer, Esmond

  Lane, David

  Roberts, Wyn (Conway)

  Butler, Adam (Bosworth)

  Langford-Holt, Sir John

  Rossi, Hugh (Hornsey)

  Chalker, Mrs Lynda

  Latham, Michael (Melton)

  Rost, Peter (SE Derbyshire)

  Clark, Alan (Plymouth, Sutton)

  Lawrence, Ivan

  Scott, Nicholas

  Clarke, Kenneth (Rushcliffe)

  Loveridge, John

  Shaw, Giles (Pudsey)

  Clegg, Walter

  Luce, Richard

  Shepherd, Colin

  Cooke, Robert (Bristol W)

  McAdden, Sir Stephen

  Shersby, Michael

  Dean, Paul (N Somerset)

  Macfarlane, Neil

  Silvester, Fred

  Douglas-Hamilton, Lord James

  Madel, David

  Sims, Roger

  Drayson, Burnaby

  Marshall, Michael (Arundel)

  Skeet, T. H. H.

  Durant, Tony

  Marten, Nell

  Speed, Keith

  Elliott, Sir William

  Mawby, Ray

  Spicer, Michael (S Worcester)

  Emery, Peter

  Maxwell-Hyslop, Robin

  Sproat, Iain

  Eyre, Reginald

  Mayhew, Patrick

  Stainton, Keith

  Farr, John

  Miller, Hal (Bromsgrove)

  Stanley, John

  Finsberg, Geoffrey

  Mills, Peter

  Stewart, Ian (Hitchin)

  Fisher, Sir Nigel

  Miscampbell, Norman

  Stradling Thomas, J.

  Fletcher-Cooke, Charles

  Mitchell, David (Basingstoke)

  Temple-Morris, Peter

  Fookes, Miss Janet

  More, Jasper (Ludlow)

  Thatcher, Rt Hon Margaret

  Forman, Nigel

  Morgan, Geraint

  Townsend, Cyril D.

  Gilmour, Rt Hon Ian (Chesham)

  Morris, Michael (Northampton S)

  Trotter, Neville

  Gow, Ian (Eastbourne)

  Morrison, Charles (Devizes)

  Viggers, Peter

  Gower, Sir Raymond (Barry)

  Morrison, Hon Peter (Chester)

  Walters, Dennis

  Griffiths, Eldon

  Neave, Airey

  Warren, Kenneth

  Grist, Ian

  Nelson, Anthony

  Weatherill, Bernard

  Grylls, Michael

  Neubert, Michael

  Whitelaw, Rt Hon William

  Hall, Sir John

  Newton, Tony

  Wiggin, Jerry

  Hall-Davis, A. G. F.

  Oppenheim, Mrs Sally

  Hamilton, Michael (Salisbury)

  Osborn, John

  TELLERS FOR THE NOES:

  Hampson, Dr Keith

  Page, John (Harrow West)

  Mr. Spencer Le Marchant and

  Hannam, John

  Page, Rt Hon R. Graham (Crosby)

  Mr. Carol Mather.

  Higgins, Terence L.

  Division List No. 332 [See col. 1228]

  Division No. 332.]

  AYES

  [8.20 p.m.

  Allaun, Frank

  Crawford, Douglas

  Graham, Ted

  Anderson, Donald

  Crawshaw, Richard

  Grant, George (Morpeth)

  Archer, Peter

  Crowther, Stan (Rotherham)

  Grant, John (Islington C)

  Ashton, Joe

  Cryer, Bob

  Grocott, Bruce

  Atkins, Ronald (Preston N)

  Davidson, Arthur

  Hamilton, James (Bothwell)

  Atkinson, Norman

  Davis, Clinton (Hackney C)

  Harrison, Walter (Wakefield)

  Barnett, Guy (Greenwich)

  Deakins, Eric

  Hatton, Frank

  Bates, All

  Dempsey, James

  Heffer, Eric S.

  Beith, A. J.

  Doig, Peter

  Hooson, Emlyn

  Bennett, Andrew (Stockport N)

  Dormand, J. D.

  Howell, Rt Hon Denis (B'ham, Sm H)

  Bldwell, Sydney

  Douglas-Mann, Bruce

  Howells, Geraint (Cardigan)

  Bishop, E. S.

  Duffy, A. E. P.

  Hoyle, Doug (Nelson)

  Blenkinsop, Arthur

  Edge, Geoff

  Hughes, Mark (Durham)

  Boardman, H.

  Ellis, Tom (Wrexham)

  Hughes, Robert (Aberdeen N)

  Boyden, James (Bish Auck)

  Evans, Fred (Caerphilly)

  Hughes, Roy (Newport)

  Bray, Dr Jeremy

  Evans, Gwynfor (Carmarthen)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Brown, Hugh D. (Provan)

  Evans, Ioan (Aberdare)

  Irving, Rt Hon S. (Dartford)

  Buchan, Norman

  Ewing, Mrs Winifred (Moray)

  Jackson, Miss Margaret (Lincoln)

  Callaghan, Jim (Middleton & P)

  Faulds, Andrew

  Janner, Greville

  Campbell, Ian

  Fernyhough, Rt Hon E.

  Jay, Rt Hon Douglas

  Cant, R. B.

  Fletcher, Ted (Darlington)

  Jenkins, Hugh (Putney)

  Carmichael, Neil

  Ford, Ben

  John, Brynmor

  Cartwright, John

  Forrester, John

  Johnson, James (Hull West)

  Clemitson, Ivor

  Fowler, Gerald (The Wrekin)

  Johnston, Russell (Inverness)

  Cocks, Rt Hon Michael (Bristol S)

  Freud, Clement

  Jones, Alec (Rhondda)

  Cohen, Stanley

  Garrett, W. E. (Wallsend)

  Jones, Barry (East Flint)

  Colquhoun, Ms Maureen

  George, Bruce

  Judd, Frank

  Conlan, Bernard

  Gilbert, Dr John

  Kaufman, Gerald

  Cook, Robin F. (Edin C)

  Golding, John

  Kerr, Russell

  Corbett, Robin

  Gould, Bryan

  Kilroy-Silk, Robert

  1406

  1407

  Lambie, David

  Pardoe, John

  Stott, Roger

  Lamborn, Harry

  Park, George

  Strang, Gavin

  Lamond, James

  Pavitt, Laurie

  Summerskill, Hon Dr Shirley

  Latham, Arthur (Paddington)

  Penhaligon, David

  Taylor, Mrs Ann (Bolton W)

  Leadbitter, Ted

  Phipps, Dr Colin

  Thomas, Ron (Bristol NW)

  Lee, John

  Powell, Rt Hon J. Enoch

  Tinn, James

  Lewis, Ron (Carlisle)

  Price, William (Rugby)

  Torney, Tom

  Litterick, Tom

  Reid, George

  Wainwright, Edwin (Dearne V)

  Loyden, Eddie

  Richardson, Miss Jo

  Wainwright, Richard (Colne V)

  McCartney, Hugh

  Roberts, Albert (Normanton)

  Walker, Harold (Doncaster)

  MacCormick, Iain

  Robinson, Geoffrey

  Walker, Terry (Kingswood)

  McDonald, Dr Oonagh

  Roderick, Caerwyn

  Ward, Michael

  McElhone, Frank

  Rooker, J. W.

  Watkins, David

  McGuire, Michael (Ince)

  Rose, Paul B.

  Welsh, Andrew

  MacKenzie, Gregor

  Ross, Stephen (Isle of Wight)

  White, Frank R. (Bury)

  Mackintosh, John P.

  Ross, Rt Hon W. (Kilmarnock)

  Whitehead, Phillip

  McMillan, Tom (Glasgow C)

  Ross, William (Londonderry)

  Wigley, Dafydd

  Mallalieu, J. P. W.

  Rowlands, Ted

  Willey, Rt Hon Frederick

  Marks, Kenneth

  Shaw, Arnold (Ilford South)

  Williams, Alan (Swansea W)

  Marquand, David

  Short, Mrs René (Wolv NE)

  Williams, Sir Thomas (Warrington)

  Marshall, Dr Edmund (Goole)

  Silkin, Rt Hon John (Deptford)

  Wilson, Alexander (Hamilton)

  Maynard, Miss Joan

  Sillars, James

  Wilson, Rt Hon Sir Harold (Huyton)

  Mendelson, John

  Silverman, Julius

  Wilson, William (Coventry SE)

  Mikardo, Ian

  Skinner, Dennis

  Wise, Mrs Audrey

  Miller, Dr M. S. (E Kilbride)

  Small, William

  Woodall, Alec

  Molyneaux, James

  Smith, Cyril (Rochdale)

  Woof, Robert

  Morris, Charles R. (Openshaw)

  Smith, John (N Lanarkshire)

  Murray, Rt Hon Ronald King

  Spriggs, Leslie

  TELLERS FOR THE AYES:

  Newens, Stanley

  Stallard, A. W.

  Mr. Joseph Harper and

  Noble, Mike

  Steel, David (Roxburgh)

  Mr. David Stoddart.

  Orbach, Maurice

  Stewart, Donald (Western Isles)

  NOES

  Adley, Robert

  Howell, Ralph (North Norfolk)

  Peyton, Rt Hon John

  Arnold, Tom

  Hunt, David (Wirral)

  Price, David (Eastleigh)

  Atkins, Rt Hon H. (Spelthorne)

  Hunt, John (Bromley)

  Prior, Rt Hon James

  Bell, Ronald

  James, David

  Pym, Rt Hon Francis

  Bennett, Sir Frederic (Torbay)

  Jopling, Michael

  Rathbone, Tim

  Bennett, Dr Reginald (Fareham)

  Kimball, Marcus

  Renton, Rt Hon Sir D. (Hunts)

  Benyon, W.

  King, Evelyn (South Dorset)

  Renton, Tim (Mid-Sussex)

  Boscawen, Hon Robert

  Kitson, Sir Timothy

  Ridley, Hon Nicholas

  Brocklebank-Fowler, C.

  Knox, David

  Roberts, Wyn (Conway)

  Brown, Sir Edward (Bath)

  Lane, David

  Rossi, Hugh (Hornsey)

  Budgen, Nick

  Langford-Holt, Sir John

  Rost, Peter (SE Derbyshire)

  Bulmer, Esmond

  Latham, Michael (Melton)

  Shaw, Giles (Pudsey)

  Butler, Adam (Bosworth)

  Lawrence, Ivan

  Shepherd, Colin

  Chalker, Mrs Lynda

  Loveridge, John

  Shersby, Michael

  Clark, Alan (Plymouth, Sutton)

  Luce, Richard

  Silvester, Fred

  Clarke, Kenneth (Rushcliffe)

  McAdden, Sir Stephen

  Sims, Roger

  Clegg, Walter

  Macfarlane, Neil

  Skeet, T. H. H.

  Cooke, Robert (Bristol W)

  Madel, David

  Speed, Keith

  Dean, Paul (N Somerset)

  Marshall, Michael (Arundel)

  Spicer, Michael (S Worcester)

  Douglas-Hamilton, Lord James

  Marten, Neil

  Sproat, Iain

  Drayson, Burnaby

  Mawby, Ray

  Stainton, Keith

  Durant, Tony

  Maxwell-Hyslop, Robin

  Stanbrook, Ivor

  Elliott, Sir William

  Mayhew, Patrick

  Stanley, John

  Emery, Peter

  Miller, Hal (Bromsgrove)

  Stewart, Ian (Hitchin)

  Eyre, Reginald

  Mills, Peter

  Stradling Thomas, J.

  Farr, John

  Mitchell, David (Basingstoke)

  Temple-Morris, Peter

  Finsberg, Geoffrey

  More, Jasper (Ludlow)

  Thatcher, Rt Hon Margaret

  Fisher, Sir Nigel

  Morgan, Geraint

  Townsend, Cyril D.

  Fletcher-Cooke, Charles

  Morris, Michael (Northampton S)

  Trotter, Neville

  Fookes, Miss Janet

  Morrison, Charles (Devizes)

  Viggers, Peter

  Forman, Nigel

  Morrison, Hon Peter (Chester)

  Wall, Patrick

  Gilmour, Rt Hon Ian (Chesham)

  Neave, Airey

  Walters, Dennis

  Gow, Ian (Eastbourne)

  Nelson, Anthony

  Warren, Kenneth

  Gower, Sir Raymond (Barry)

  Neubert, Michael

  Weatherill, Bernard

  Grist, Ian

  Newton, Tony

  Whitelaw, Rt Hon William

  Grylls, Michael

  Oppenheim Mrs Sally

  Wiggin, Jerry

  Hall, Sir John

  Osborn, John

  Winterton, Nicholas

  Hall-Davis, A. G. F.

  Page, John (Harrow West)

  Hamilton, Michael (Salisbury)

  Page, Rt Hon R. Graham (Crosby)

  TELLERS FOR THE NOES:

  Hampson, Dr Keith

  Parkinson, Cecil

  Mr. Spencer Le Marchant and

  Hannam, John

  Pattie, Geoffrey

  Mr. Carol Mather.

  Higgins, Terence L.

  Division List No. 333 [See col. 1228]

  Division No. 333.]

  AYES

  [9.25 p.m.

  Abse, Leo

  Atkinson, Norman

  Bishop, E. S.

  Allaun, Frank

  Barnett, Guy (Greenwich)

  Blenkinsop, Arthur

  Anderson, Donald

  Bates, Alt

  Boardman, H.

  Archer, Peter

  Beith, A. J.

  Boyden, James (Bish Ack)

  Ashton, Joe

  Bennett, Andrew (Stockport N)

  Bray, Dr Jeremy

  Atkins, Ronald (Preston N)

  Bidwell, Sydney

  Brown, Hugh D. (Provan)

  1408

  1409

  Buchan, Norman

  Phipps, Dr Colin

  Price, William (Rugby)

  Callaghan, Jim (Middleton & P)

  Hughes, Mark (Durham)

  Reid, George

  Campbell, Ian

  Hughes, Robert (Aberdeen N)

  Richardson, Miss Jo

  Cant, R. B.

  Hughes, Roy (Newport)

  Roberts, Albert (Normanton)

  Carmichael, Nell

  Irvine, Rt Hon Sir A. (Edge Hill)

  Robinson, Geoffrey

  Cartwright, John

  Irving, Rt Hon S. (Dartford)

  Roderick, Caerwyn

  Clemitson, Ivor

  Jackson, Miss Margaret (Lincoln)

  Rooker, J. W.

  Cocks, Rt Hon Michael (Bristol S)

  Janner, Greville

  Rose, Paul B.

  Cohen, Stanley

  Jay, Rt Hon Douglas

  Ross, Stephen (Isle of Wight)

  Colquhoun, Ms Maureen

  Jenkins, Hugh (Putney)

  Rose, Rt Hon W. (Kilmarnock)

  Conlan, Bernard

  John, Brynmor

  Shaw, Arnold (Ilford South)

  Cook, Robin F. (Edin C)

  Johnson, James (Hull West)

  Short, Mrs Renée (Wolv NE)

  Corbett, Robin

  Johnston, Russell (Inverness)

  Silkin, Rt Hon John (Deptford)

  Crawford, Douglas

  Jones, Alec (Rhondda)

  Silkin, Rt Hon S. C. (Dulwich)

  Crawshaw, Richard

  Jones, Barry (East Flint)

  Silverman, Julius

  Crowther, Stan (Rotherham)

  Judd, Frank

  Skinner, Dennis

  Cryer, Bob

  Kaufman, Gerald

  Small, William

  Davidson, Arthur

  Kerr, Russell

  Smith, Cyril (Rochdale)

  Davis, Clinton (Hackney C)

  Kilroy-Silk, Robert

  Smith, John (N Lanarkshire)

  Deakins, Eric

  Lambie, David

  Spriggs, Leslie

  Dempsey, James

  Lamborn, Harry

  Stallard, A. W.

  Doig, Peter

  Lamond, James

  Steel, David (Roxburgh)

  Dormand, J. D.

  Latham, Arthur (Paddington)

  Stewart, Donald (Western Isles)

  Douglas-Mann, Bruce

  Leadbitter, Ted

  Stoddart, David

  Duffy, A. E. P.

  Lee, John

  Stott, Roger

  Edge, Geoff

  Lewis, Ron (Carlisle)

  Strang, Gavin

  Evans, Fred (Caerphilly)

  Loyden, Eddie

  Summerskill, Hon Dr Shirley

  Evans, Gwynfor (Carmarthen)

  McCartney, Hugh

  Taylor, Mrs Ann (Bolton W)

  Evans, Ioan (Aberdare)

  MacCormick, Iain

  Thomas, Ron (Bristol NW)

  Faulds, Andrew

  McDonald, Dr Oonagh

  Torney, Tom

  Fernyhough, Rt Hon E.

  McElhone, Frank

  Wainwright, Edwin (Dearne V)

  Fletcher, Ted (Darlington)

  McGuire, Michael (Ince)

  Wainwright, Richard (Colne V)

  Ford, Ben

  MacKenzle, Gregor

  Walker, Harold (Doncaster)

  Forrester, John

  Mackintosh, John P.

  Walker, Terry (Kingswood)

  Fowler, Gerald (The Wrekin)

  McMillan, Tom (Glasgow C)

  Ward, Michael

  Freud, Clement

  Mallalieu, J. P. W.

  Watkins, David

  Garrett, W. E. (Wallsend)

  Marks, Kenneth

  Welsh, Andrew

  George, Bruce

  Marquand, David

  White, Frank R. (Bury)

  Gilbert, Dr John

  Marshall, Dr Edmund (Goole)

  Whitehead, Phillip

  Golding, John

  Maynard, Miss Joan

  Wigley, Dafydd

  Gould, Bryan

  Mendelson, John

  Williams, Alan (Swansea W)

  Graham, Ted

  Mikardo, Ian

  Williams, Sir Thomas (Warrington)

  Grant, George (Morpeth)

  Miller, Dr M. S. (E Kilbride)

  Wilson, Alexander (Hamilton)

  Grant, John (Islington C)

  Morris, Charles R. (Openshaw)

  Wilson, William (Coventry SE)

  Grocott, Bruce

  Murray, Rt Hon Ronald King

  Wise, Mrs Audrey

  Hamilton, James (Bothwell)

  Newens, Stanley

  Woodall, Alec

  Harrison, Walter (Wakefield)

  Noble, Mike

  Woof, Robert

  Hatton, Frank

  Orbach, Maurice

  Young, David (Bolton E)

  Heffer, Eric S.

  Pardoe, John

  Hooson, Emlyn

  Park, George

  TELLERS FOR THE AYES:

  Howell, Rt Hon Denis (B'ham, Sm H)

  Pavitt, Laurie

  Mr. James Tinn and

  Kowells, Geraint (Cardigan)

  Penhallgon, David

  Mr. Joseph Harper.

  Hoyle, Doug (Nelson)

  NOES

  Adley, Robert

  Forman, Nigel

  Macfarlane, Neil

  Atkins, Rt Hon H. (Spelthorne)

  Gilmour, Rt Hon Ian (Chesham)

  Madel, David

  Bennett, Sir Frederic (Torbay)

  Gow, Ian (Eastbourne)

  Marshall, Michael (Arundel)

  Bennett, Dr Reginald (Fareham)

  Gower, Sir Raymond (Barry)

  Marten, Neil

  Benyon, W.

  Gray, Hamish

  Mather, Carol

  Boscawen, Hon Robert

  Grist, Ian

  Mawby, Ray

  Bradford, Rev Robert

  Grylls, Michael

  Maxwell-Hyslop, Robin

  Brocklebank-Fowler, C.

  Hall, Sir John

  Mayhew, Patrick

  Brown, Sir Edward (Bath)

  Hall-Davis, A. G. F.

  Miller, Hal (Bromsgrove)

  Budgen, Nick

  Hamilton, Michael (Salisbury)

  Mills, Peter

  Bulmer, Esmond

  Hampson, Dr Keith

  Miscampbell, Norman

  Butler, Adam (Bosworth)

  Hannam, John

  Mitchell, David (Basingstoke)

  Chalker, Mrs Lynda

  Higgins, Terence L

  Molyneaux, James

  Clark, Alan (Plymouth, Sutton)

  Hordern, Peter

  More, Jasper (Ludlow)

  Clarke, Kenneth (Rushcliffe)

  Howell, Ralph (North Norfolk)

  Morgan, Geraint

  Clegg, Walter

  Hunt, David (Wirral)

  Morris, Michael (Northampton S)

  Cooke, Robert (Bristol W)

  Hunt, John (Bromley)

  Morrison, Charles (Devizes)

  Dean, Paul (N Somerset)

  James, David

  Morrison, Hon Peter (Chester)

  Douglas-Hamilton, Lord James

  Jopling, Michael

  Mudd, David

  Drayson, Burnaby

  Kimball, Marcus

  Neave, Airey

  Dunlop, John

  King, Evelyn (South Dorset)

  Nelson, Anthony

  Durant, Tony

  Kitson, Sir Timothy

  Neubert, Michael

  Elliott, Sir William

  Knox, David

  Newton, Tony

  Emery, Peter

  Lane, David

  Oppenheim, Mrs Sally

  Eyre, Reginald

  Langford-Holt, Sir John

  Osborn, John

  Farr, John

  Latham, Michael (Melton)

  Page, John (Harrow West)

  Finsberg, Geoffrey

  Lawrence, Ivan

  Page, Rt Hon R. Graham (Crosby)

  Fisher, Sir Nigel

  Loveridge, John

  Parkinson, Cecil

  Fletcher-Cooke, Charles

  Luce, Richard

  Pattie, Geoffrey

  Fookes, Miss Janet

  McAdden, Sir Stephen

  Peyton, Rt Hon John

  1410

  1411

  Powell, Rt Hon J. Enoch

  Shersby, Michael

  Townsend, Cyril D.

  Price, David (Eastleigh)

  Sims, Roger

  Trotter, Neville

  Prior, Rt Hon James

  Skeet, T. H. H.

  Viggers, Peter

  Pym, Rt Hon Francis

  Speed, Keith

  Wall, Patrick

  Rathbone, Tim

  Spicer, Michael (S Worcester)

  Walters, Dennis

  Renton, Rt Hon Sir D. (Hunts)

  Sproat, Iain

  Warren, Kenneth

  Renton, Tim (Mid-Sussex)

  Stainton, Keith

  Weatherill, Bernard

  Ridley, Hon Nicholas

  Stanbrook, Ivor

  Whitelaw, Rt Hon William

  Roberts, Wyn (Conway)

  Stanley, John

  Wiggin, Jerry

  Ross, William (Londonderry)

  Stewart, Ian (Hitchin)

  Winterton, Nicholas

  Rossi, Hugh (Hornsey)

  Stradling Thomas, J.

  Rost, Peter (SE Derbyshire)

  Taylor, Teddy (Cathcart)

  TELLERS FOR THE NOES:

  Shaw, Giles (Pudsey)

  Temple-Morris, Peter

  Mr. Fred Sylvester and

  Shepherd, Colin

  Thatcher, Rt Hon Margaret

  Mr. Spencer Le Marchant.

  BUSINESS OF THE HOUSE
  Division List No. 334 [See col. 1239]

  Division No. 334.]

  AYES

  [10.00 p.m.

  Abse, Leo

  Gould, Bryan

  Orme, Rt Hon Stanley

  Allaun, Frank

  Grant, George (Morpeth)

  Pardoe, John

  Anderson, Donald

  Grant, John (Islington C)

  Park, George

  Archer, Peter

  Grocott, Bruce

  Pavitt, Laurie

  Ashton, Joe

  Hamilton, James (Bothwell)

  Penhallgon, David

  Atkins, Ronald (Preston N)

  Harrison, Walter (Wakefield)

  Phipps, Dr Colin

  Atkinson, Norman

  Hatton, Frank

  Price, C. (Lewisham W)

  Barnett, Guy (Greenwich)

  Heffer, Eric S.

  Price, William (Rugby)

  Bates, Alt

  Howell, Rt Hon Denis (B'ham, Sm H)

  Reid, George

  Beith, A. J.

  Howells, Geraint (Cardigan)

  Richardson, Miss Jo

  Bennett, Andrew (Stockport N)

  Hoyle, Doug (Nelson)

  Roberts, Albert (Normanton)

  Bidwell, Sydney

  Hughes, Mark (Durham)

  Robinson, Geoffrey

  Bishop, E. S.

  Hughes, Robert (Aberdeen N)

  Roderick, Caerwyn

  Blenkinsop, Arthur

  Hughes, Roy (Newport)

  Rooker, J. W.

  Boardman, H.

  Irving, Rt Hon S. (Dartford)

  Rose, Paul B.

  Boyden, James (Bish Auck)

  Jackson, Miss Margaret (Lincoln)

  Ross, Stephen (Isle of Wight)

  Bray, Dr Jeremy

  Janner, Greville

  Ross, Rt Hon W. (Kilmarnock)

  Brown, Hugh D. (Provan)

  Jay, Rt Hon Douglas

  Ryman, John

  Buchan, Norman

  Jenkins, Hugh (Putney)

  Shaw, Arnold (Ilford South)

  Callaghan, Jim (Middleton & P)

  John, Brynmor

  Short, Mrs Renée (Wolv NE)

  Campbell, Ian

  Johnson, James (Hull West)

  Silkin, Rt Hon John (Deptford)

  Cant, R. B.

  Johnston, Russell (Inverness)

  Silkin, Rt Hon S. C. (Dulwich)

  Carmichael, Nell

  Jones, Alec (Rhondda)

  Silverman, Julius

  Cartwright, John

  Jones, Barry (East Flint)

  Skinner, Dennis

  Clemitson, Ivor

  Judd, Frank

  Small, William

  Cocks, Rt Hon Michael (Bristol S)

  Kaufman, Gerald

  Smith, Cyril (Rochdale)

  Cohen, Stanley

  Kerr, Russell

  Smith, John (N Lanarkshire)

  Colquhoun, Ms Maureen

  Kilroy-Silk, Robert

  Spriggs, Leslie

  Conlan, Bernard

  Lambie, David

  Stallard, A. W.

  Cook, Robin F. (Edin C)

  Lambom, Harry

  Steel, David (Roxburgh)

  Corbett, Robin

  Lamond, James

  Stoddart, David

  Crawford, Douglas

  Latham, Arthur (Paddington)

  Stott, Roger

  Crawshaw, Richard

  Leadbitter, Ted

  Strang, Gavin

  Crowther, Stan (Rotherham)

  Lee, John

  Summerskill, Hon Dr Shirley

  Cryer, Bob

  Lewis, Ron (Carlisle)

  Taylor, Mrs Ann (Bolton W)

  Davidson, Arthur

  Loyden, Eddie

  Thomas, Ron (Bristol NW)

  Davis, Clinton (Hackney C)

  McCartney, Hugh

  Tinn, James

  Deakins, Eric

  MacCormick, Iain

  Torney, Tom

  Dempsey, James

  McDonald, Dr Oonagh

  Wainwright, Edwin (Dearne V)

  Doig, Peter

  McElhone, Frank

  Wainwright, Richard (Colne V)

  Dormand, J. D.

  McGuire, Michael (Ince)

  Walker, Harold (Doncaster)

  Douglas-Mann, Bruce

  MacKenzie, Gregor

  Walker, Terry (Kingswood)

  Duffy, A. E. P.

  Mackintosh, John P.

  Ward, Michael

  Edge, Geoff

  McMillan, Tom (Glasgow C)

  Watkins, David

  Ellis, Tom (Wrexham)

  Mallalieu, J. P. W.

  Welsh, Andrew

  Evans, Fred (Caerphilly)

  Marks, Kenneth

  White, Frank R. (Bury)

  Evans, Gwynfor (Carmarthen)

  Marquand, David

  Whitehead, Phillip

  Evans, Ioan (Aberdare)

  Marshall, Dr Edmund (Goole)

  Wlgley, Dafydd

  Ewing, Mrs Winifred (Moray)

  Maynard, Miss Joan

  Williams, Sir Thomas (Warrington)

  Faulds, Andrew

  Mendelson, John

  Wilson, Alexander (Hamilton)

  Fernyhough, Rt Hon E.

  Mikardo, Ian

  Wilson, William (Coventry SE)

  Fletcher, Ted (Darlington)

  Miller, Dr M. S. (E Kilbride)

  Wise. Mrs Audrey

  Ford, Ben

  Moonman, Eric

  Woodell, Alec

  Forrester, John

  Morris, Charles R. (Openshaw)

  Woof, Robert

  Fowler, Gerald (The Wrekin)

  Murray, Rt Hon Ronald King

  Young, David (Bolton E)

  Freud, Clement

  Newens, Stanley

  Garrett, W. E. (Wallsend)

  Noble, Mike

  TELLERS FOR THE AYES:

  George, Bruce

  Oakes, Gordon

  Mr. Ted Graham and

  Gilbert, Dr John

  Orbach, Maurice

  Mr. Joseph Harper

  Golding, John

  NOES

  Adley, Robert

  Boscawen, Hon Robert

  Butler, Adam (Bosworth)

  Atkins, Rt Hon H. (Spelthorne)

  Brocklebank-Fowler, C.

  Chalker, Mrs Lynda

  Bennett, Sir Frederic (Torbay)

  Brown, Sir Edward (Bath)

  Clarke, Kenneth (Rushcliffe)

  Bennett, Dr Reginald (Fareham)

  Budgen, Nick

  Clegg, Walter

  Benyon, W.

  Bulmer, Esmond

  Cooke, Robert (Bristol W)

  1412

  1413

  Dean, Paul (N Somerset)

  Latham, Michael (Melton)

  Pym, Rt Hon Francis

  Douglas-Hamilton, Lord James

  Renton, Rt Hon Sir D. (Hunts)

  Rathbone, Tim

  Drayson, Burnaby

  Lawrence, Ivan

  Renton, Tim (Mid-Sussex)

  Dunlop, John

  Le Marchant, Spencer

  Ridley, Hon Nicholas

  Durant, Tony

  Loverldge, John

  Roberts, Wyn (Conway)

  Elliott, Sir William

  Luce, Richard

  Rossi, Hugh (Hornsey)

  Emery, Peter

  McAdden, Sir Stephen

  Rost, Peter (SE Derbyshire)

  Eyre, Reginald

  Macfarlane, Neil

  Shaw, Giles (Pudsey)

  Fare, John

  Madel, David

  Shepherd, Colin

  Finsberg, Geoffrey

  Marshall, Michael (Arundel)

  Shersby, Michael

  Fisher, Sir Nigel

  Marten, Neil

  Sims, Roger

  Fletcher-Cooke, Charles

  Mather, Carol

  Skeet, T. H. H.

  Fookes, Miss Janet

  Mawby, Ray

  Speed, Keith

  Forman, Nigel

  Maxwell-Hysiop, Robin

  Spicer, Michael (S Worcester)

  Gilmour, Rt Hon Ian (Cheshnm)

  Mayhew, Patrick

  Sproat, Iain

  Gow, Ian (Eastbourne)

  Miller, Hal (Bromsgrove)

  Stainton, Keith

  Gower, Sir Raymond (Barry)

  Mills, Peter

  Stanbrook, Ivor

  Gray, Hamish

  Miscampbell, Norman

  Stanley, John

  Grist, Ian

  Mitchell, David (Basingstoke)

  Stewart, Ian (Hitchin)

  Grylls, Michael

  More, Jasper (Ludlow)

  Stradling Thomas, J.

  Hall, Sir John

  Morgan, Geraint

  Taylor, Teddy (Cathcart)

  Hall-Davis, A. G. F.

  Morris, Michael (Northampton S)

  Temple-Morris, Peter

  Hamilton, Michael (Salisbury)

  Morrison, Charles (Devizes)

  Thatcher, Rt Hon Margaret

  Hampson, Dr Keith

  Morrison, Hon Peter (Chester)

  Townsend, Cyril D.

  Hannam, John

  Mudd, David

  Trotter, Neville

  Higgins, Terence L.

  Neave, Airey

  Viggers, Peter

  Hordern, Peter

  Nelson, Anthony

  Wall, Patrick

  Howell, Ralph (North Norfolk)

  Neubert, Michael

  Walters, Dennis

  Hunt, David (Wirral)

  Newton, Tony

  Warren, Kenneth

  Hunt, John (Bromley)

  Oakes, Gordon

  Weatherill, Bernard

  James, David

  Oppenheim, Mrs Sally

  Whitelaw, Rt Hon William

  Jopling, Michael

  Osborn, John

  Wiggin, Jerry

  Kimball, Marcus

  Page, John (Harrow West)

  Winterton, Nicholas

  King, Evelyn (South Dorset)

  Page, Rt Hon R. Graham (Crosby)

  Kitson, Sir Timothy

  Pattie, Geoffrey

  TELLERS FOR THE NOES:

  Knox, David

  Peyton, Rt Hon John

  Mr. Fred Silvester and

  Lane, David

  Price, David (Eastleigh)

  Mr. Cecil Parkinson

  Langford-Holt, Sir John

  Prior, Rt Hon James

  COMPANIES (No. 2) BILL
  Division List No. 335 [See col. 1280]

  Division No. 335.]

  AYES

  [11.58 p.m.

  Allaun, Frank

  Graham, Ted

  Richardson, Miss Jo

  Archer, Peter

  Grant, George (Morpeth)

  Roberts, Albert (Normanton)

  Ashton, Joe

  Grant, John (Islington C)

  Robinson, Geoffrey

  Atkins, Ronald (Preston N)

  Grocott, Bruce

  Roderick, Caerwyn

  Atkinson, Norman

  Hamilton, James (Bothwetl)

  Rooker, J. W.

  Barnett, Guy (Greenwich)

  Harrison, Walter (Wakefield)

  Ross, Rt Hon w. (Kilmarnock)

  Bidwell, Sydney

  Hatton, Frank

  Rowlands, Ted

  Bishop, E. S.

  Heffer, Eric S.

  Ryman, John

  Blenkinsop, Arthur

  Howell, Rt Hon Denis (B'ham, Sm H)

  Shaw, Arnold (Ilford South)

  Boardman, H.

  Hughes, Robert (Aberdeen N)

  Short, Mrs Renee (Wolv NE)

  Bray, Dr Jeremy

  Jackson, Miss Margaret (Lincoln)

  Silkin, Rt Hon John (Deptford)

  Brown, Hugh D. (Provan)

  Janner, Greville

  Silkin, Rt Hon S. C. (Dulwich)

  Buchan, Norman

  John, Brynmor

  Silverman, Julius

  Callaghan, Jim (Middleton & P)

  Johnson, James (Hull West)

  Skinner, Dennis

  Cant, R. B.

  Jones, Barry (East Flint)

  Small, William

  Carmichael, Nell

  Judd, Frank

  Smith, John (N Lanarkshire)

  Cartwright, John

  Kaufman, Gerald

  Spriggs, Leslie

  Clemitson, Ivor

  Latham, Arthur (Paddington)

  Stallard, A. W.

  Cocks, Rt Hon Michael (Bristol S)

  Leadbitter, Ted

  Stoddart, David

  Cohen, Stanley

  Lewis, Ron (Carlisle)

  Stott, Roger

  Conlan, Bernard

  Loyden, Eddie

  Strang, Gavin

  Cook, Robin F. (Edin C)

  McCartney, Hugh

  Taylor, Mrs Ann (Bolton W)

  Corbett, Robin

  McDonald, Dr Oonagh

  Thomas, Ron (Bristol NW)

  Crowther, Stan (Rotherham)

  McElhone, Frank

  Tinn, James

  Oyer, Bob

  McGuire, Michael (Ince)

  Wainwright, Edwin (Dearne V)

  Davidson, Arthur

  McMillan, Tom (Glasgow C)

  Walker, Harold (Doncaster)

  Davis, Clinton (Hackney C)

  Marks, Kenneth

  Walker, Terry (Kingswood)

  Deakins, Eric

  Marquand, David

  Ward, Michael

  Dempsey, James

  Marshall, Dr Edmund (Goole)

  White, Frank R. (Bury)

  Dormand, J. D.

  Mikardo, Ian

  Whitehead, Phillip

  Douglas-Mann, Bruce

  Miller, Dr M. S. (E Kilbride]

  Williams, Sir Thomas (Warrington)

  Evans, loan (Aberdare)

  Moonman, Eric

  Wilson, Alexander (Hamilton)

  Faulds, Andrew

  Morris, Charles R. (Openshaw)

  Wilson, William (Coventry SE)

  Fernyhough, Rt Hon E.

  Murray, Rt Hon Ronald King

  Wise, Mrs Audrey

  Fletcher, Ted (Darlington)

  Newens, Stanley

  Woodall, Alec

  Ford, Ben

  Noble, Mike

  Wool, Robert

  Forrester, John

  Oakes, Gordon

  Young, David (Bolton E)

  Fowler, Gerald (The Wrekin)

  Orme, Rt Hon Stanley

  Garrett, W. E. (Wallsend)

  Park, George

  TELLERS FOR THE AYES:

  George, Bruce

  Pavitt, Laurie

  Mr. Joseph Harper and

  Golding, John

  Price, William (Rugby)

  Mr. AH Bates.

  1414

  1415

  NOES

  Beith, A. J.

  Mitchell, David (Basingstoke)

  Smith, Cyril (Rochdale)

  Farr, John

  Morrison, Hon Peter (Chester)

  Winterton, Nicholas

  Freud, Clement

  Penhaligon, David

  Knight, Mrs Jill

  Rhys Williams, Sir Brandon

  TELLERS FOR THE NOES:

  Loveridge, John

  Ross, Stephen (Isle of Wight)

  Mr. Dafydd Wigley and

  Luce, Richard

  Shaw, Giles (Pudsey)

  Mr. Richard Wainwright

  Division List No. 336 [See col. 1335]

  Division No. 336.]

  AYES

  [2.47 a.m.

  Farr, John

  Morrison, Hon Peter (Chester)

  Weatherill, Bernard

  Higgins, Terence L.

  Parkinson, Cecil

  Loveridge, John

  Renton, Tim (Mid-Sussex)

  TELLERS FOR THE AYES:

  Mawby, Ray

  Ross, Stephen (Isle of Wight)

  Sir Brandon Rhys Williams and

  Mitchell, David (Basingstoke)

  Stradling Thomas, J.

  Mr. Michael Shersby.

  NOES

  Allaun, Frank

  Graham, Ted

  Roderick, Caerwyn

  Archer, Peter

  Hamilton, James (Bothwell)

  Rooker, J. W.

  Bates, Alt

  Harrison, Walter (Wakefield)

  Ross, Rt Hon W. (Kilmarnock)

  Bidwell, Sydney

  Heffer, Eric S.

  Rowlands, Ted

  Bishop, E. S.

  Jackson, Miss Margaret (Lincoln)

  Shaw, Arnold (Ilford South)

  Blenkinsop, Arthur

  John, Brynmor

  Short, Mrs Renée (Wolv NE)

  Bray, Dr Jeremy

  Johnson, James (Hull West)

  Silkin, Rt Hon S. C. (Dulwich)

  Brown, Hugh D. (Provan)

  Jones, Barry (East Flint)

  Skinner, Dennis

  Buchan, Norman

  Judd, Frank

  Small, William

  Cant, R. B.

  Kaufman, Gerald

  Smith, John (N Lanarkshire)

  Carmichael, Neil

  Loyden, Eddie

  Taylor, Mrs Ann (Bolton W)

  Cocks, Rt Hon Michael (Bristol S)

  McCartney, Hugh

  Thomas, Ron (Bristol NW)

  Cohen, Stanley

  McElhone, Frank

  Tinn, James

  Cook, Robin F. (Edin C)

  McGuire, Michael (Ince)

  Wainwright, Edwin (Dearne V)

  Corbett, Robin

  McMillan, Tom (Glasgow C)

  Walker, Harold (Doncaster)

  Cryer, Bob

  Mallalieu, J. P. W.

  Ward, Michael

  Davidson, Arthur

  Marks, Kenneth

  White, Frank R. (Bury)

  Davis, Clinton (Hackney C)

  Mikardo, Ian

  Whitehead, Phillip

  Dempsey, James

  Miller, Dr M. S. (E Kilbride)

  Wilson, William (Coventry SE)

  Dormand, J. D.

  Moonman, Eric

  Wise, Mrs Audrey

  Douglas-Mann, Bruce

  Morris, Charles R. (Openshaw)

  Woodall, Alec

  Evans, loan (Aberdare)

  Murray, Rt Hon Ronald King

  Young, David (Bolton E)

  Fletcher, Ted (Darlington)

  Newens, Stanley

  Ford, Ben

  Park, George

  TELLERS FOR THE NOES:

  Forrester, John

  Richardson, Miss Jo

  Mr. David Stoddart and

  George, Bruce

  Robinson, Geoffrey

  Mr. Joseph Harper.

  Golding, John