Commons Sitting of 22 February 1982

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  INDUSTRY

    Biddulph
    Mr. Knoxasked the Secretary of State for Industry whether he has plans to give any financial assistance to encourage industry for the town of Biddulph, Staffordshire.
    The Under-Secretary of State for Industry (Mr. John MacGregor): Financial assistance is already available under national schemes to projects in the town of Biddulph which are able to meet the necessary criteria for aid.
    Mr. Knox: As unemployment in Biddulph has risen from 126 in January 1974 to 940 now, does my hon. Friend accept that there is a strong case for special help being given to Biddulph to encourage the creation of more jobs?
    Mr. MacGregor: I understand my hon. Friend's concern about the situation in Biddulph, but he knows that special help in the form of assisted area status, which I imagine is what he has in mind, has traditionally and for a long time been directed by several Governments at travel-to-work areas. I understand that many Biddulph residents work outside the town, elsewhere in the Stoke travel-to-work area. I do not believe that the present situation in the Stoke travel-to-work area makes it appropriate for a change in assisted area status. We will, of course, continue to monitor the situation.

    Industrial Expansion
    Mr. Dykesasked the Secretary of State for Industry if he will examine ways in which his Department can work more closely with the National Economic Development Council on policies to promote industrial expansion.
    The Under-Secretary of State for Industry (Mr. John Wakeham): My Department already works closely with the National Economic Development Council, of which my right hon. Friend is, of course, a member, in examining ways in which policies both at national and sectoral level can best promote industrial expansion. Officials from my Department sit on some 40 of the NEDC's economic development committees and sector working parties which are seeking to promote action at company level or to improve our performance
    Mr. Dykes: I thank my hon. Friend for that answer. As there appears to be an atmosphere of some crisis in the
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    NEDC, can he reaffirm that, through his Department, the Government intend to work constructively with the NEDC both on the central formation of policy for an industrial strategy and on the sector working parties?
    Mr. Wakeham: The short answer to that is "Yes". To give a good example of the progress made, I refer to Sir Henry Chilver, who presented a paper to the council on behalf of the electronics EDC setting out a policy for the electronics industry. This month my hon. Friend the Minister for Industry and Information Technology responded to the council by setting out the Government's strategy for this vital sector of British industry.
    Mr. Dixon: Why could British Shipbuilders not carry out the liner contract for the P and O group, bearing, in mind the rationalisation of the industry? If the problem was a shortage of berths, would it not have been a simple matter to switch some of the tankers to Harland and Wolff, in Belfast, or to Swan Hunter's on the river Tyne where there are plenty of joiners, electricians, plumbers and so on who could have been employed on that job?
    Mr. Wakeham: This matter does not arise out of the question. It is for the private sector under successive Governments.
    Mr. Hal Miller: Is the close co-operation with sector working parties likely to result in the Government adopting a sectoral approach to industrial development rather than the present regional policy?
    Mr. Wakeham: The fact that the Government are working closely with the sector working parties does not mean that there is any change in Government policy. Of course, the Government will consider seriously any recommendations of the sector working parties.
    Dr. John Cunningham: Is the Under-Secretary aware of the ACARD report on biotechnology and its contribution to what a good industrial strategy should be? What does he think about the Biogen company, one of the three largest biotechnology companies in existence, deciding because of the situation in Britain, not to embark on industrial expansion here? Is that not an indictment of the Government's policies?
    Mr. Wakeham: I cannot agree with the hon. Gentleman. I certainly read the reports over the weekend. I know of the report referred to by the hon. Gentleman, but I want to study it in more detail before coming to any firm conclusions.

    Information Technology Centres
    Mr. McNamaraasked the Secretary of State for Industry whether he will make a further statement on the opening of information technology centres.
    The Minister for Industry and Information Technology (Mr. Kenneth Baker): I announced to the House on 21 December the location of the first 30 centres under this joint Department of Industry-Manpower Services Commission initiative. Most of these centres will be opening over the next two or three months.
    I also announced our intention to extend the scheme to a total of about 100 centres over the course of the corning year. Potential sponsors should put themselves forward to their local Manpower Services Commission, which will advise on the drawing up of applications.

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    I am encouraged by the very positive response we have received from local authorities and technology companies.
    Mr. McNamara: I am grateful to the hon. Gentleman for that reply. Can he confirm that if Hull gets in its application and complies with planning requirements and so on by the end of next month it will get one of these centres?
    Mr. Baker: I understand that there have been fruitful discussions between Kingston upon Hull and the local MSC office. I believe that the application is now due from Kingston upon Hull. My notes in summary say that Kingston has made the right overtures to the right people and is on the right track. But we need an application.
    Mr. Henderson: Is my hon. Friend aware that Fife region has one of the largest concentrations of electronics industries in the Western world, but that, despite that, the Levenmouth area is an unemployment black spot? Would it not be an appropriate area for a further centre?
    Mr. Baker: I appreciate the importance of technology and technological companies to the county of Fife. I assure my hon. Friend that we are anxious to place more of these centres in Scotland. In the next grouping, I am looking for a figure in excess of 10 for Scotland.
    Mr. Carter-Jones: When these centres are established, will the Minister make sure that adequate provision is made for the training and employment of severely handicapped people?
    Mr. Baker: We are even considering one of the centres being associated with one of the major training centres for the disabled.

    Manufacturing Production
    Mr. Winnickasked the Secretary of State for Industry what has been the decline in manufacturing production since May 1979; and when he now expects to see a revival of manufacturing production.
    Sir David Priceasked the Secretary of State for Industry what are the prospects for United Kingdom manufacturing output during 1982.
    The Secretary of State for Industry (Mr. Patrick Jenkin): In the fourth quarter of 1981 manufacturing output was 16 per cent. below the level of the second quarter of 1979, but 2 per cent. higher than in the second quarter of 1981.
    The latest Treasury assessment suggests that the improvement which began last year will continue during 1982.
    Mr. Winnick: Is the right hon. Gentleman aware of the dramatic decline in manufacturing production since the Government took office, and that the December figure was the lowest since monthly figures were first calculated? Do not those factors show only too well the tragic decline that has occurred under this Government's economic policies? Do not the figures illustrate once again how justified have been the pessimistic speeches of a number of the right hon. Gentleman's Cabinet colleagues and show that recovery is not round the corner but very far away?
    Mr. Jenkin: I am sure that the hon. Gentleman is aware that the whole Western world has been going through the deepest recession since the war.
    Mr. Orme: We are the worst.
    Mr. Jenkin: I remind the right hon. Member for Salford, West (Mr. Orme) that unemployment last year in Germany, Sweden, the United States of America and Canada rose substantially faster than it did in Britain. All the evidence now suggests that we reached the trough of the recession during the middle of last year and that the index of industrial production in the last quarter of 1981 was some 2 per cent, higher than it had been in the second quarter. There is every prospect that this improvement will continue.
    Mr. Stokes: Is my right hon. Friend aware that manufacturing output in the United Kingdom will increase only when more customers at home and abroad wish to buy our products?
    Mr. Jenkin: My hon. Friend has stated an obvious truth with admirable clarity.
    Mr. Orme: does the Secretary of State agree that the December figures for manufacturing output had declined to the lowest level for 15 years and by 2.4 per cent. in December alone? Is that not a disastrous state of affairs and does it not contradict the confidence that the right hon. Gentleman has been expressing in previous months? What action will the Government take? My hon. Friend the Member for Jarrow (Mr. Dixon) referred earlier to the order for the P and O liner. What action will the right hon. Gentleman take to secure that order for British shipyards?
    Mr. Jenkin: The right hon. Gentleman seems to have forgotten that the December blizzards were some of the worst winter weather since the late 1800s. If he imagines that in Britain, where we are not accustomed to such severe weather conditions, industrial production can remain unaffected, he is living in a dream world.
    The right hon. Gentleman referred to the P and O liner order. British Shipbuilders' yards are now fully booked with orders. That order has not come to British Shipbuilders because British Shipbuilders was not able to deliver in the time required by the customer. British Shipbuilders' merchant shipbuilding order book is increasing. I should have expected the Opposition to be delighted to know that the merchant shipbuilding yards of British Shipbuilders are now fully occupied.
    Mr. Grylls: Does my right hon. Friend agree that a most important achievement of British industry in the past year to 18 months has been a great improvement in productivity, and that, as the world comes out of recession, this should lead to more orders for British firms and therefore greater output?
    Mr. Jenkin: My hon. Friend is right. The figures show that the increase in exports currently taking place is one of the most encouraging phenomena that we have seen for a long time. We are on the verge of an export-led boom—[Interruption.] Perhaps I should rephrase that. We are on the verge of an export-led recovery for which successive Governments ever since the war have striven. I congratulate British industry on having secured an unparalled number of major industrial orders from foreign customers. That is the best harbinger for the future.

    British Leyland
    Mr. Beaumont-Darkasked the Secretary of State for Industry if he is satisfied with the productivity improvements at British Leyland over the last year.
    Mr. Patrick Jenkin: Productivity improved last year by 30 per cent. at BL Cars' plants overall and by over 100 per cent. at the Longbridge plant. This is encouraging progress, which reflects credit on all concerned. There is some way to go, however, before the company as a whole becomes internationally competitive.
    Mr. Beaumont-Dark: Is my right hon. Friend aware that this news will be very welcome to all of us who wish to see BL prosper and that great credit is due to the workers and management of BL? However, did my right hon. Friend read the speech by Sir Michael Edwardes on Friday in which he said that he expected British Leyland to buy steel from overseas? Bearing in mind that both BL and the BSC are subsidised to the tune of billions of pounds by taxpayers, would it not be the economics of bedlam for British Leyland to buy steel at the cost of other people's jobs and to improve its productivity at other people's expense?
    Mr. Jenkin: I know that the chairman of BL is in touch with British Steel about steel supplies. Equally, I know that there is no future for any British industry that thinks that it can build on subsidised steel. The advantage of the present system under the Treaty of Paris arrangements is that Europe is now returning its steel industries to profitability on a collaborative basis, which will ensure the long-term supply of steel at economic prices to our engineering industries.
    Mr. McNamara: By what figure has the number of people employed by BL fallen in the past two years, and what estimate does the right hon. Gentleman make for next year?
    Mr. Jenkin: If the hon. Gentleman cares to put down a question on that matter, I shall do my best to answer it.
    Mr. Hal Miller: Will my right hon. Friend say whether the effects on the welcome improvement in productivity at BL of any proposal by Nissan to establish itself in this country have been studied by his Department, and will he take account of such effects when coming to a decision on the Nissan project?
    Mr. Jenkin: There is a later question on the Order Paper about Nissan. All I say at this stage is that we have had useful discussions with the representatives of Nissan. Of course, in considering this matter the Government are bound to have regard, and are having regard, to the overall impact that a major new investment of this kind will have upon the economy generally and upon the vehicle sector in particular. We have to be satisfied that such a project coming to this country will be in the overall interests of the country.
    Mr. Orme: Returning to the important question asked by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) about purchases of British steel, is the right hon. Gentleman aware that British Steel is one of the largest purchasers of BL vehicles? Therefore, should not BL be ordering British steel? Is that not a "Buy British" policy which should be supported by the Government?
    Mr. Jenkin: The right hon. Gentleman knows, because he has had responsibility for these matters, that purchases are matters for the commercial decisions of the managements of the companies concerned. I took great encouragement from the Opinion Research Centre poll in Bathgate at Leyland. That showed that, overwhelmingly,
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    British Leyland employees do not wish to go on living on Government subsidies. They believe it is right that the company should become competitive and profitable in its own right. That must be right for steel as it is for cars.

    Space Policy
    Mr. Michael Marshallasked the Secretary of State for Industry if he will set out his Department's responsibilities for co-ordinating Her Majesty's Government's space policy.
    Mr. Kenneth Baker: Co-ordination of the Government's space policy is carried out by an interdepartmental group of officials, and by the space consultative committee, which is a forum of Government, industry and the major users. I chair both of these committees.
    Mr. Marshall: Will my hon. Friend confirm that the co-ordination will result in orders worth many hundreds of millions of pounds and many jobs in regard to the large satellite for the European Space Agency, the defence satellite and so on? Will he also confirm that his Department takes the view that it must continue to press the industrial argument for direct broadcasting by satellite and cable television as being vital in this regard?
    Mr. Baker: There is an undoubted success story, which has been building up for some years. We have a good, effective and profitable space industry. British Aerospace is making about 10 satellites at the moment. We are engaged in the preliminary stages of making what will be the largest and most powerful satellite of the 1980s called L-Sat.
    I hope that in the near future my right hon. Friend the Home Secretary will be in a position to make a statement on direct broadcasting by satellite and on cable television.
    Mr. Butcher: Will my hon. Friend use his good offices to liaise with his right hon. Friend the Home Secretary to ensure that decisions on access to the satellite are made quickly so that we do not lose some big opportunities for satellite manufacture for British programme suppliers on a world-wide basis?
    Mr. Baker: I shall draw the comments of my hon. Friend to the attention of my right hon. Friend the Home Secretary. The opportunities for direct broadcasting by satellite and cable television are enormous in terms of investment and job creation.

    Regional Policy
    Mr. Barry Jonesasked the Secretary of State for Industry if, in view of the rise of unemployment in the regions, he will institute a review of regional policy aiming for more investment in United Kingdom industry and a greater prospect of new jobs; and if he will make a statement.
    The Minister of State, Department of Industry (Mr. Norman Lamont): As was made clear at the time of the 1979 review of regional industrial policy. the Government attach a high importance to continuity and stability in regional policy. The Government keep the circumstances of particular areas under review, and are presently reviewing those areas which are due to be double downgraded in August.
    Mr. Jones: Is the Minister aware that five British regions now have unemployment of a terrifying 17 per cent. or more? Does he agree that only an unprecedented amount of public investment can make urgent inroads into mass unemployment in those regions? Is his Department prepared to fight in the Whitehall machine to obtain more money in the next financial year to make inroads into mass unemployment?
    Mr. Lamont: My Department already spends over £2.5 billion on supporting industry. Some £600 million of that is spent on regional policy and over £200 million is aid to industry under the Science and Technology Act. [HON. MEMBERS: "Not enough".] Labour Members shout "Not enough." They must say whether they expect that money to come from increased borrowing or taxes and whether they agree that the most important thing for British industry is to obtain lower interest rates, and only containing public expenditure will bring that about.
    Mr. Wrigglesworth: Will the Minister confirm that his Department has no plans to downgrade the status of the Teeside travel-to-work area?
    Mr. Lamont: The Department has no plans to downgrade any areas beyond those which have already been publicly announced.
    Mr. Kenneth Lewis: Is my hon. Friend aware that the most important way to help the regions—and many regions which are considered high unemployment areas now were not so considered three or four years ago—is for the Chancellor, in his Budget, to give all the help that he can to British industry?
    Mr. Lamont: I am sure that my right hon. and learned Friend will note what my hon. Friend has said. I am sure that he is right in saying that large sums of money, doled out as regional assistance to companies, have only a limited effect in countering unemployment. All the evidence suggests that when regional policy has been widely spread, as it was in the 1970s, it was much less effective in creating jobs than it was in the 1960s when it was more concentrated.

    Teletext and Viewdata
    Mr. Kenneth Carlisleasked the Secretary of State for Industry whether he has any plans for the promotion of teletext and viewdata in 1982.
    Mr. Wakeham: In co-operation with all sectors of the industry we shall continue the promotion of teletext and viewdata in 1982 as in 1981.
    We shall also assist the industry in the further technical developments and in the promotion of these technologies both at home and overseas.
    Representatives of the teletext and viewdata industries and the Government attended a commitment conference on 3 February, where the industry announced that a further "National Teletext" month will be held in October.
    Mr. Carlisle: Does my hon. Friend agree that it is important to manufacture as much of this equipment in the United Kingdom as is possible? Are not teletext sets imported?
    Mr. Wakeham: We have a world lead in teletext. About 90 per cent. of teletexts sold or rented in the United Kingdom have been produced here. Sales are going
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    extremely well. In the second half of 1981, the number of teletext sets doubled over the total for the previous five years, and I expect that in 1982 the total will double again.
    Mr. Carter-Jones: In view of the lead that we have in the software element of teletext, viewdata and teledata and other such equipment, will the Minister have discussions with the Secretary of State for Social Services to ensure that adequate information on aids and opportunities for the disabled and the frail elderly are made available to them? Would he also consider financing this aspect?
    Mr. Wakeham: This is an important question, and it is one in which I take an interest. I have been to see some of the research being done at the IBA research establishment near Winchester and at Southampton university.
    Sir Paul Bryan: I declare an indirect interest in teletext. Is my hon. Friend aware that the development of teletext, and all that that means for employment, depends on the treatment that is given to it in the forthcoming Budget? Will my hon. Friend have a word about this with our right hon. and learned Friend the Chancellor of the Exchequer?
    Mr. Wakeham: I am aware of the views expressed by my hon. Friend, but I cannot anticipate my right hon. and learned Friend's Budget.

    Concorde
    Mr. Easthamasked the Secretary of State for Industry what spin-off development benefits have been produced from the Concorde project.
    Mr. Norman Lamont: There have been many such developments, reflecting the rigorous conditions under which Concorde operates. In the aerospace industry these have included developments on cabin pressurisation, autopilots, glazing, carbon brakes, tyres, fuel systems and furnishing materials. Of these, glazing and furnishing materials have also found non-aerospace applications.
    Mr. Eastham: As the research and development cost is in excess of £570 million, which is basically taxpayers' money, will the Minister advise the House what steps are taken by his Department to ensure that some of these benefits come back to the taxpayers rather than go to other countries and competitors in America and Europe?
    Mr. Lamont: The Government do their best to encourage the spread of the latest technologies and have various schemes to sponsor the development of particular technologies. The question ought to be answered by the Labour Opposition, because they, in Government, took decisions on Concorde. It is for them to say whether the technological developments are commensurate with the investment.
    Mr. Adley: Will my hon. Friend reflect for a moment on the irony of Labour Members asking one minute for public investment and the next minute criticising it, particularly in a project that has brought great credit to this country and provided employment in highly advanced technology? Did I mishear my hon. Friend, or did he mention the Olympus engine in his reply? Does he agree that there is a great deal of spin-off from that? Finally, when considering the Concorde project, will my hon.

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    Friend see that in future the country takes a rather more robust attitude, as the French do, towards promoting our own technological industry?
    Mr. Lamont: I agree that Concorde is an outstanding technological achievement. I am grateful to my hon. Friend for reminding us of the Olympus engine, which would not have been developed without Concorde. Decisions on the future of Concorde depend on a number of factors, including the revenues generated by the services of the aircraft already operating under British Airways. I assure my hon. Friend that the Government will do everything that they can to broadcast loud and clear the technological achievements of Concorde.
    Mr. Penhaligon: Will the Minister confirm that one spin-off has been an in-depth study of the effect of sonic booms caused by supersonic flight? Is not the conclusion that supersonic commercial flight means that areas such as Cornwall will be subjected to booms every time such an aeroplane passes overhead? Is that a satisfactory long-term way to live?
    Mr. Lamont: I am not sure that I would classify that as a benefit. I am not sure whether the hon. Gentleman has represented the conclusion entirely accurately. I shall consider what he said.
    Mr. Robert Atkins: Would not the spin-offs from Concorde that my hon. Friend listed be enhanced by more jobs and greater profits and a consequent benefit to British industry if the Government helped British Aerospace to take a larger share in the A320 Airbus project?
    Mr. Lamont: I know of my hon. Friend's interest in the A320 project and the anxiety and interest of all hon. Members who represent aerospace constituencies. I assure my hon. Friend that we are pressing on with the matter as quickly as possible. To he applied, the technologies that spin off from the development of, for example, Concorde, require an aerospace market and industry.

    British Leyland
    Mr. Dalyellasked the Secretary of State for Industry if he will seek to alter the management structure of British Leyland so as to make the company more accountable to its work force for policy decisions, especially when these relate to closures.
    Mr. Norman Lamont: No. It is for the BL board to determine the company's management structure and for the board and management to consult the work force as and when necessary.
    Mr. Dalyell: Have Ministers learnt anything from the agony of the past four weeks?
    Mr. Lamont: The work force has also learnt from the past few weeks. It has learnt that there will be secure jobs only if BL remains competitive, if it has competitive levels of manning and if it has a capacity adjusted to the market. That is the important lesson that should be learnt.
    Mr. Kenneth Lewis: Nevertheless, does my hon. Friend agree that the sooner that we have effective works councils in British industry, so that management and work force can talk together, aside from what the unions may do separately, the better it will be?
    Mr. Lamont: My hon. Friend has always been interested in this issue. Whether there should be works councils in British Leyland is a matter for the management of the company, as my hon. Friend well knows.
    Mr. Winnick: Is the Minister aware that the attitude adopted by Sir Michael Edwardes and some o f his colleagues is bound to lead to aggravation and labour troubles at the plant? When will Sir Michael stop treating his work force like dirt?
    Mr. Lamont: It is about time that hon. Members on the Opposition Benches stopped knocking Sir Michael Edwardes and recognised that he has given the company something that it has not had for many years—hope and the prospect of a future.
    Mr. Archie Hamilton: Does my hon. Friend agree that the sooner that we can sell off parts of BL to the private sector, the better for the taxpayer and for the employees?
    Mr. Lamont: My right hon. Friend who is now the Secretary of State for Education and Science stated on 26 January 1981 that the Government support British Leyland's intention of creating viable businesses and attracting private capital into them. I agree with my hon. Friend that private enterprise is much more likely to provide lasting jobs and prosperity for those who work in industry.
    Mr. Dalyell: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

    Enterprise Allowance Scheme
    Mr. Trippierasked the Secretary of State for Industry what response there has been to his enterprise allowance pilot scheme in East Lancashire, and what is the role of the Small Firms Advice Bureau in this connection.
    Mr. MacGregor: The Small Firms Service is providing business advice to applicants for the enterprise allowance. By 19 February, 55 out of the total of 124 applicants had received individual counselling from the service in the North-East Lancashire pilot area.
    Mr. Trippier: May I thank my hon. Friend for that encouraging reply and for being instrumental in initiating the scheme? Does he accept that many people in North-East Lancashire are still unaware of the excellent scheme? Will he do all that he can to give it wider publicity?
    Mr. MacGregor: I thank my hon. Friend for his comments. As he will know, responsibility for the scheme lies with my right hon. Friend the Secretary of State for Employment, although the Small Firms Service, which is playing an active part, is my responsibility. Credit is also due to my right hon. and hon. Friends for the introduction of the scheme. I note what my hon. Friend says about publicity. Anything that the Small Firms Service can do to publicise the scheme, I shall see is done.
    Mr. Arthur Davidson: Does the Minister accept that most people in North-East Lancashire would regard this as a useful little scheme? How many people have so far taken advantage of the scheme instead of merely seeking advice? While on the subject of North-East Lancashire, may I draw the Minister's attention, in the presence of the—
    Mr. Speaker: Order. That is better done by a motion. The hon. and learned Gentleman has asked his question. Let us have the answer.
    Mr. Davidson: Will the Minister give full development area status to North-East Lancashire? I cannot be more brief than that.
    Mr. MacGregor: That question is way beyond the scope of the original question. The scheme has been in existence for only a short time, but already 51 out of a total of 124 applications have gone from the application stage to acceptance. That is an encouraging start.
    Mr. Kenneth Carlisle: Will my hon. Friend accept that the enterprise allowance is a major bridge to help people move from unemployment into their own business? Can he say when it will be extended to the rest of the country, as it would be of great benefit also in other parts?
    Mr. MacGregor: As my hon. Friend knows, there were difficulties in trying to get a nationwide scheme. It involves many Departments and technical and difficult regulations. We have chosen a pilot scheme, first, to see whether there is a real need, as I believe there is, and, secondly, to see whether we can get over the difficulties. At a later stage we can consider whether the scheme can go much further.
    Mr. Greville Janner: Will the Minister consult the Secretary of State for Employment to see whether the scheme can be extended to areas such as the city of Leicester, which is suffering high and unparalleled levels of unemployment, and which has high levels of technology?
    Mr. MacGregor: I have explained why it had to be a pilot scheme. My right hon. Friend and I—it was particularly his responsibility—chose areas with high unemployment, where it was thought that the scheme would be of great benefit to people who were redundant and otherwise unemployed and where there was not a battery of other aids available on a significant scale. It was not possible to extend it everywhere.

    Shipbuilding Orders
    Sir Albert Costainasked the Secretary of State for Industry how many shipbuilding orders have been obtained in the United Kingdom for Hong Kong companies in the last two years; and what is the tonnage involved.
    Mr. Wakeham: In 1980 and 1981 Hong Kong companies placed orders for 11 ships of around 103, 000 compensated gross registered tons.
    Sir Albert Costain: Does my hon. Friend agree that that is a satisfactory situation? Has he noticed that more publicity is given to orders lost than to orders gained? People complain about imports from Hong Kong, but should we not also take account of orders coming from Hong Kong?
    Mr. Wakeham: Hong Kong shipowners represent a valuable and important market. They own almost as much tonnage as the entire United Kingdom merchant fleet. Their entrepreneurial qualities are well known.
    Dr. John Cunningham: Will the Under-Secretary think again about his right hon. Friend's response to the
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    P and O order? Is it not a great tragedy that the largest shipbuilding order for many years from one of the largest British shipping companies is not being carried out by a British shipyard? Is that not an indictment of the Government's shipping and shipbuilding policies? Will not many thousands of shipyard workers whose jobs are threatened note the Secretary of State's indifference to their plight?
    Mr. Wakeham: The hon. Gentleman misreads the situation. I regret that British Shipbuilders was not able to secure the order. It was not able to offer the delivery that P and O required because of its order book. That is a matter of credit rather than criticism. The House will know that last Monday Swan Hunter announced a £25 million order for a container ship for a United Kingdom company. In each of the past three years about one-third of United Kingdom fleet orders have gone to British Shipbuilders. The orders have provided between one-third and two-thirds of British Shipbuilders' new business. Its order book is about 600, 000 CGRT, which is much higher than last year, when it fell to around 400, 000 CGRT.
    Sir Paul Bryan: Is my hon. Friend aware that Hong Kong is not only our best market for ships but our best market for power stations? We now export more to Hong Kong than we do even to Japan. Will he point out to our exporters that we have only 5 per cent. of that market and that great opportunities still exist?
    Mr. Wakeham: Indeed, I will. Not only have Hong Kong companies placed 11 orders for ships, but we estimate that a further eight ships have been ordered for companies that are associated with, or subsidiary to, Hong Kong companies.
    Mr. Jay: If the Minister is right in saying that the P and O order was lost through a lack of capacity, does that not show the folly of cutting down our industrial capacity during a temporary recession?
    Mr. Wakeham: British Shipbuilders wants to establish a long term viable base for its industry. Its decision has been made in relation to what it sees as its long-term viable base.

    British Steel
    Mr. Gryllsasked the Secretary of State for Industry what losses occurred at British Steel during 1980–81 and so far in the current financial year.
    Mr. Patrick Jenkin: In 1980–81 as a whole the British Steel Corporation incurred a pre-tax loss of £665 million. The loss for the first half of 1981–82 was £196 million. This reduction in the rate of loss is a welcome measure of the progress made by the corporation in its efforts to return to viability.
    Mr. Grylls: May I ask my right hon. Friend whether BSC will break even in 1983, as the chairman forecast?
    Mr. Jenkin: It is difficult to make an accurate forecast because of the uncertainties of which my hon. Friend is well aware, not least the exceptional weather in January, which had a major effect on the plants in South Wales, and the effect of the American anti-dumping and countervailing duty cases. Nevertheless, I expect BSC' s losses in the second half of 1981–82 to be lower than those in the comparable period of 1980–81.
    Mr. Hooley: Is the Minister aware that, as a result of the massive investment of public funds in the modernisation of British Steel over the past 10 years, British Steel companies in Sheffield, for example, are now securing very important orders for North Sea oil equipment and rigs? Will he guarantee that the process of investment will continue and will not be cut off?
    Mr. Jenkin: The external financing limits of the British Steel Corporation provide substantial cash over and above that generated by depreciation provision by the company for capital investment. This is an important part of the rationalisation process in which the corporation is engaged. As I told the Select Committee when I gave evidence to it, the corporation is satisfied that it could increase production from 20 to 25 per cent. without any increase in capacity.
    Mr. Dickens: Is my right hon. Friend aware that many of the multi-million pound contracts awarded to British industry have been won against the fiercest competition in the world? Will he accept that these contracts are now at the drawing board stage, and that details are being prepared which involve steel? Does my hon. Friend agree that this will produce work for the workshops and for the many subcontractors who rely on the industrial giants that have won the contracts?
    Mr. Jenkin: Yes, indeed, and I would go one stage further than my hon. Friend. Many of these very large contracts will have a substantial effect right down the line and help the medium and small business sector as well. The British Steel Corporation has itself obtained major contracts overseas—particularly the bank headquarters in Hong Kong—to the tune of many tens of millions of pounds, in the teeth of fierce international competition. The corporation is to be congratulated on that.
    Mr. Campbell-Savours: If it could be proved that decisions taken by Mr. Ian MacGregor as chairman of the British Steel Corporation, who has now been appointed for two years, were based on erroneous information provided to him by his board, would the Minister be willing to go to Mr. MacGregor and ask for an explanation why those decisions were taken?
    Mr. Jenkin: The hon. Gentleman talks in riddles. If he has any particular problem to put to me, no doubt he will do so.

    Space Programme
    Mr. Warrenasked the Secretary of State for Industry what further developments he expects in the space programme that will benefit United Kingdom industry, consequential upon the successful launch of Marecs-A satellite.
    Mr. Wakeham: The launch of the Marecs-A satellite, which my hon. Friend attended, was a great success for the United Kingdom space industry. Marecs-B and the first ECS satellite will be launched later this year. British industry is now well placed to compete for orders in the rapidly growing market for communications satellites.
    Mr. Warren: Will my hon. Friend consult British Telecommunications and the British Standards Institution to see whether it is possible to speed up the certification of ground equipment associated with the space programme, so that we can hold the dramatic lead that Britain has now obtained in European satellite operations?
    Mr. Wakeham: Certainly, and if my hon. Friend has any particular points to raise, I hope that he will get in touch with me.
    Mr. Michael Marshall: Does my hon. Friend agree that this European Space Agency project, in which British Aerospace has taken a lead, and in which I declare an interest, is typical of the very important return that is obtained from our contribution to the European Space Agency? Does my hon. Friend further agree that if we were to think about withdrawing from the Community that kind of organisation would itself be under threat?
    Mr. Wakeham: My hon. Friend is correct. The European Space Agency's programme to develop a large communications satellite, L-Sat, got under way on 22 December. British Aerospace is the prime contractor for that programme, which will cost £230 million, and in which the United Kingdom has a one-third share.

    Nissan-Datsun Project
    . Mr. Radiceasked the Secretary of State for Industry what is the latest information Her Majesty's Government have received about the intentions of the Nissan Company with regard to its proposed factory in the United Kingdom.
    Mr. Patrick Jenkin: Further discussions between my Department and the company took place in London last week. Some progress was made, but there remain some issues still to be agreed. The final decision of the board of Nissan will also depend upon the identification of a suitable site and a successful outcome to discussions, which it is intended should take place with the relevant trade unions.
    Mr. Radice: I accept the need for a good level of British components, but does the Minister agree that there is a very strong case for siting the factory in the North-East, which has a high level of unemployment?
    Mr. Jenkin: The choice of site must be primarily one for the company, but I assure the hon. Gentleman that all the discussions have taken place upon the assumption that the factory will be sited in either a development area or a special development area.
    Mr. Whitney: Does my right hon. Friend agree that an important element in the Nissan investment decision—as with the decisions of other international companies—is our membership of the EEC? Does he further agree that there is a fundamental paradox, in that Labour Members, while advocating inward investment by foreign companies, oppose our continued membership of the EEC?
    Mr. Jenkin: It has been made very clear to me by the representatives of the Nissan company that one of the main attractions that they see in establishing a base in the United Kingdom is that it will offer access to the whole of the European Community.
    We have not, of course, discussed the prospects of a Labour Government taking Britain out of the European Community, but no doubt that is a matter on which the Nissan company will wish to receive assurances from the official Opposition. If we lose the contract, we shall know why.
    Mr. Dormand: The Secretary of State said that there were still some issues to be settled in the discussions with

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    Nissan. Is he prepared to say what they are? For example, do they include the amount of financial assistance that the Government are likely to give it?
    Mr. Jenkin: I think that it would be most unwise of me to be drawn into details of the discussions that I have had with representatives of the Nissan company. These have been on an extremely friendly and frank basis. As I said in reply to an earlier question, useful progress has been made in the discussions that we have had. I do not think that it would be right for me to be drawn into the details.
    Mr. Hal Miller: Will my right hon. Friend at least say that the Nissan company deserves to be treated no less well than any other major international motor manufacturer with regard to establishment in Britain, but equally that it would be expected to have the same regard as other international manufacturers to the sourcing of components in Britain?
    Mr. Jenkin: As I know my hon. Friend is aware—he follows these matters closely—the local sourcing of components is one of the matters that have figured in the discussions from the very beginning.
    With regard to the overall treatment of a major inward investment project of this sort, it has been one of Nissan's points—which it has made perfectly fairly—that it does not wish to be treated less favourably than other companies in similar circumstances. I have been able to give it that complete assurance. I must repeat that I decline to be drawn on the details of the discussions.
    Mr. Barry Jones: What consultations has the right hon. Gentleman had with the Secretary of State for Wales on this important matter and what representations has he received from the county of Clwyd? Does he know that in that county male unemployment in the town of Flint has reached about 40 per cent.?
    Mr. Jenkin: The hon. Gentleman knows that it is not for the Government to determine the location of the factory. It is for the company to choose the location that it thinks will best suit its purposes. It is conducting discussions on the footing of siting the factory in an assisted area.
    Mr. Wrigglesworth: Will the Secretary of State press the company to make an early decision about the site? Is he aware that considerable time and resources are being devoted to preparing the case for individual areas and developments are being held up while areas await the decision?
    Mr. Jenkin: It is for the company to make the decision. It must look at all the factors and, if it is uncertain about some matters, come back for further discussions with the Government. I am as aware as anyone of the desirability of reaching a conclusion, one way or another, in the near future.

  ATTORNEY-GENERAL

    Industrial Disputes (Factory Repossession)
    Mr. Charles R. Morrisasked the Attorney-General if the Lord Chancellor will lay down guidelines
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    indicating the qualities sought and the criteria recommended in the selection of individuals to accompany court bailiffs in the execution of court orders to repossess factories during the course of industrial disputes.
    The Attorney-General(Sir Michael Havers): County court bailiffs are not accompanied when executing warrants of possession, otherwise than by a representative of the plaintiff and, where a breach of the peace is feared, by one or more police constables.
    Mr. Morris: Is the Attorney-General aware that when a sledgehammer-wielding team of bailiffs repossessed the Laurence Scott factory in my constituency in August last year they were accompanied by a team of 34, which included a doctor, a farmer and an estate agent? Why are professional men moonlighting in that way and what sort of doctor uses a scalpel during the day and a sledgehammer at night in a team of bailiffs repossessing a factory that is the subject of an industrial dispute?
    The Attorney-General: In spite of the fact that my noble Friend the Lord Chancellor has written to the right hon. Gentleman and sent him the report of the high sheriff and has, in the course of that correspondence, made it clear that what happened on that occasion was that sheriff's officers, for whom I have no ministerial responsibility, were involved, the right hon. Gentleman's initial question related to court bailiffs and not sheriff's officers.
    Mr. Archer: Is the Attorney-General aware that in the case referred to by my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris) the union finally received a bill for £4, 000 in respect of that one episode? Is that not very disturbing?
    The Attorney-General: I repeat that the case involved an enforcement of a High court writ for possession carried out by the under-sheriff with sheriff's officers. It is a matter for which neither my noble Friend the Lord Chancellor nor I have any ministerial responsibility.
    Mr. Dalyell: Given the ghastly prospect of 141 mothers and grandmothers of my Plessey, Bathgate constituents being dragged through the High court on Friday, does the senior Law Officer of the Crown share the unease of the judiciary in having these delicate issues of industrial relations settled in the High court?
    The Attorney-General: I am not aware of the matter that the hon. Gentleman has mentioned. We are discussing circumstances in which a writ for possession has been obtained and those to whom it is addressed have failed to obey. That has nothing to do with court bailiffs. It is a question of enforcement of the writ by sheriff's officers.

    Sentencing Policy
    Mr. Adleyasked the Attorney-General when the Lord Chancellor last discussed sentencing policy with magistrates; and if he will make a statement.
    The Solicitor-General(Sir Ian Percival): The Lord Chancellor meets the magistrates as a body on the occasion of their general meeting in October and on each occasion discusses sentencing policy. In addition, at branch and area level he meets magistrates on a number of occasions each year, the last being in September 1981, and sentencing policy is similarly discussed. The general principles of sentencing form part of the curricula set out in general directions for the training of magistrates.
    Mr. Adley: Is my hon. and learned Friend aware that magistrates whom I meet still express to me their concern and unease about having to deal with shoplifting cases, which they seem to find much more difficult than most other cases? I think that my hon. and learned Friend is aware of that from discussions that we have had in the past. Would it be possible to broaden future discussions on sentencing policy so that the cause—the trading methods of stores—may be taken into account? Perhaps helpful suggestions may emanate from the magistrates and, if appropriate, my hon. and learned Friend could discuss them with other Government Departments.
    The Solicitor-General: One of the difficulties facing magistrates' courts in shoplifting and other cases—but, perhaps, particularly shoplifting—is that the range of cases that comes before them is so enormous. I recall that in their pamphlet "Take it or leave it", my hon. Friend and some of his colleagues pointed out that shoplifting cases varied from the persistent and deliberate offender to the absentminded and confused. Many considerations have to be borne in mind and I am sure that those to which my hon. Friend has referred will be borne in mind.
    Mr. Arthur Davidson: Will the Lord Chancellor continue to stress to magistrates the appallingly overcrowded conditions in our prisons and the desirability of not adding to the problem by sending to prison unsuitable people, such as drunks and vagrants and some young offenders who might benefit from an alternative form of punishment?
    The Solicitor-General: I am sure that the Lord Chancellor and magistrates will have those considerations much in mind. The difficulty is that the categories that come before magistrates include the persistent and deliberate offender for whom imprisonment may be the only proper punishment and the appropriate safeguard for the public. However, I am sure that great care will be taken to ensure that people for whom imprisonment is not suitable will not be sent to prison.

    Contempt of Court Act 1981
    Mr. Christopher Priceasked the Attorney-General if he will seek to amend the Contempt of Court Act 1981 to ensure that matter read out in open court may not be a contempt.
    The Attorney-General: If the hon. Member is referring to the issues in Home Office v. Harman, the Lord Chancellor will carry out the promise he gave in the House of Lords during the passage of the Contempt of Court Bill—a promise which I repeated in Committee—to examine the issues after judgment in the then pending litigation. Until that examination has been carried out any proposal for legislation would be premature.
    Mr. Price: Is the Attorney-General a "Diplockite" or a "Scarmanite" on this issue? In all justice, given the split in the House of Lords, does not the right hon. and learned Gentleman think that it would be fair for him to ask the Home Secretary not to press for costs and bankrupt the NCCL until the matter has been settled in Strasbourg, where the Government will surely lose?
    The Attorney-General: I do not accept the last part of the hon. Gentleman's question. It is interesting that of all the judges who have examined the case—five in the House
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    of Lords, three in the Court of Appeal and the judge at first instance—only two considered that there was a European aspect involved. The case is not really about freedon of the press. It is about the mutual obligation of parties to litigation and their legal advisers as regards documents produced by the other side. When asked whether I belong to one faction or the other in the House of Lords, I must say that I always respect the judgment of the House of Lords and the majority view, if that be the case.
    Mr. Archer: Will the Attorney-General at least agree with the comment of Lord Scarman that, as far as possible, a rule of law should be free from anomaly? Does he recognise that the public find it impossible to understand how anyone who has heard a document read out in court may lawfully discuss its contents, excepting only the solicitor for one of the parties?
    The Attorney-General: It is so easy to choose, particularly when there are two judges finding one way and three the other, a passage that suits the argument that one wishes to advance. I have read all the judgments and I refer the right hon. and learned Gentleman to the leading speech of Lord Diplock, which sets out the matter clearly and understandably.
    Mr. Alexander W. Lyon: If the Attorney-General is already beginning to think about changing the law established by the House of Lords—and every judge who considered the case agreed that Miss Harman was acting in good faith when she handed over the documents—is it not ridiculous that we should ask the NCCL to pay £25, 000 costs when the law may be changed within a year or two?
    The Attorney-General: I remind the hon. Gentleman that the Lord Chancellor gave an undertaking to reconsider the matter after the decision of the House of Lords was known. He gave no undertaking beyond that. In this case the Home Office did not insist upon its costs at the trial of first instance. When Miss Harman decided to go not only to the Court of Appeal, where she lost by a unanimous decision, but to pursue the matter to the House of Lords, events followed the ordinary routine, which is that the costs fall upon those who lose.

    Jurors
    Mr. Neubertasked the Attorney-General what percentage of jurors summoned in 1981 subsequently served; and what was the cost to public funds in respect of (a) those summoned who served and (b) those who did not.
    The Attorney-General: The number of persons summoned found to be ineligible or disqualified, or who are excused from serving, is not recorded centrally. In most centres, jury summoning is carried out as part of the routine duties of court staff and is not identified as a separate head of expenditure. In 1981 expenditure on allowances paid to jurors was £12, 128, 931.
    Mr. Neubert: Is my right hon. and learned Friend satisfied that the number of jurors summoned is no more than is necessary and that expenditure in that connection is kept to a minimum?
    The Attorney-General: Yes, Sir. There have been various investigations, and a departmental study under Sir Derek Rayner was conducted last year. Many problems can occur. If there is a firm determination to plead not

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    guilty, the jurors—there must always be more than 12 to allow for challenges—are told that they will be needed for some weeks. Then, at the eleventh hour, the accused changes his plea to guilty. It cannot be avoided that, in some courts, many jurors must hang around. A system is being tried out now whereby jurors ring in each day at a certain time in order to save their unnecessary attendance.
    Mr. John Page: Will my right hon. and learned Friend consider ways in which jurors waiting for service may have their lives made slightly less boring than at the moment, when they sit in draughty passages day after day
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    waiting for something to happen? Does my right hon. and learned Friend recall that I wrote to him suggesting that there might be a canteen or a library provided?
    The Attorney-General: Facilities vary from court to court. In modern courts there are good facilities for jurors. In some older courts the conditions for everyone who must attend are rather gruesome. However, my noble and learned Friend is keeping the matter under review, because it is unfair that someone who is called to perform a public duty—as jury service is—at great inconvenience, must suffer one iota more discomfort than is necessary.

National Health Service

  (Overseas Visitors)
  3.32 pm
  The Secretary of State for Social Services (Mr. Norman Fowler): With permission, I wish to make a statement about changes that the Government propose to make in the rules for use of the National Health Service by overseas visitors.
  My predecessor told the House last March of the Government's intention to make regulations to provide for charges for hospital treatment for those not ordinarily resident in the United Kingdom. The National Health Service is under pressure, with long waiting lists for some specialties in some parts of the country. It is only fair that people coming from overseas who have not contributed through taxes should be asked to pay for treatment for which our citizens would be required to pay when they were overseas.
  We have consulted widely on the proposals and I can now report to the House that, subject to some important modifications, we intend to implement the proposals with effect from 1 October. When our original proposals were announced, two major fears were expressed. First, there was concern that the procedures might be complex to administer. Secondly, there was concern that, contrary to our intentions, the procedures used to identify chargeable patients could give rise to racial discrimination. The Government therefore decided to set up a working party representing a wide range of interests to advise us on how those difficulties might be overcome.
  I am grateful to the working party, and copies of its report have today been placed in the Vote Office. The working party found that the present rules are not being administered consistently or fairly. In particular, they believed that there was a distinct risk that checks on eligibility may be being applied by many hospitals in a way which discriminates against members of ethnic minorities living here. I am satisfied that a new system can be introduced which will provide extra finance for the National Health Service, and which hospitals can administer in a way that will minimise the risk of racial discrimination. We therefore accept the working party's recommendation that there should be a standard procedure for checking the eligibility of all new hospital patients, and guidance will be issued to hospitals on the main principles identified by the working party.
  However, we propose some further changes in the scope of the scheme. In response to representations that the proposals would bear hard on overseas students here for a considerable period, we have decided that all visitors—including overseas students—should become exempt from charges after they have been here for one year, instead of the three years in the earlier proposals. We also propose that people coming here to work should be fully exempt from the beginning of their stay, as will some visiting dependants of people settled in this country. In other respects the scheme will be broadly the same as that on which we consulted last year. We estimate that the charges will raise about £6 million in a full year. I should emphasise that the money will be available to the district health authorities or boards to finance their expenditure on health care.
  Reciprocal agreements with other countries will, of course, be fully honoured. We shall lay regulations before
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  the House in due course. The new arrangements will be publicised abroad so that visitors coming here can take out insurance before they arrive, as we do when we visit their countries.
  In making the changes we shall bring our position into line with virtually every other Western country. There is no reason why the British taxpayer should provide free hospital treatment to short-term visitors to this country.
  Mrs. Gwyneth Dunwoody: The Secretary of State's bland statement does not hide the fact that the intention behind the introduction of the charges is simply to pander to the most exaggerated prejudices of the Conservative Party. Some detailed matters have not been made clear. For example, the new regulations will depend on the assumption that those who are ordinarily resident in Britain will be excluded. The right hon. Gentleman knows very well that there is no clear legal definition of "ordinarily resident". The matter is already causing difficulty in other Whitehall Departments.
  Is the £6 million that the right hon. Gentleman believes that he will obtain from the changes a net saving or a gross saving? It is clear that even the administrative changes that he is proposing will add considerably to the job of admission clerks, even without the difficulties that will arise from their persistent questioning. Is it the intention that DHSS employees will have the right to go direct to the Home Office to check the status of overseas visitors? That would be a most dangerous development which should be strongly opposed.
  What is the extent of the abuses on which the Secretary of State has founded this absurd statement? The working party stated at paragraph 34 of its report that it was not asked to quantify the extent of the abuse and could not do so. As there are 12 million visitors to Britain every year, of whom over half will be excluded because they are in EEC or other schemes, how does the right hon. Gentleman expect to gain that amount of money from the imposition of charges?
  Will the right hon. Gentleman come clean and make it plain to the House that he intends to provide a system of charging that can be developed in the future so that NHS patients must also pay for treatment? As it is obvious that even now there is no means of recovering private patient costs efficiently, how does the Secretary of State expect to get back any money by this despicable and divisive scheme?
  Mr. Fowler: The hon. Lady has asked many questions and made a great number of silly statements. We are talking about more revenue for the National Health Service. I should have thought that even the Opposition would be in favour of that proposition.
  The hon. Lady mentioned discrimination. The working party found that the present position—not the position that we are changing to—contained a distinct risk of applying the rules in a way that discriminated against members of ethnic minorities living here. That is dealt with in paragraph 15 of its report. I should have thought that the hon. Lady would want that to be changed.
  The hon. Lady mentioned abuse. We know that the present system is not being enforced, because that is what the working party says. We know that it opens the door to abuse. Complaints from inside the National Health Service are made year after year. I am concerned not only with abuse but with raising money for the National Health

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  Service for short-term visitors to Britain. Basically, the question is "Who pays—the taxpayer or the insurance company of the overseas visitors?" I see no reason why the British taxpayer should pay.
  Several Hon Members. rose—
  Mr. Speaker: Order. I remind the House that we are to have a half day's debate on the arts and that there is much interest in it. We must not be too long on the statement.
  Mr. A. J. Beith (: Does the Secretary of State realise that, even with the welcome concessions in this version of the proposals, there will still be a huge disparity between the treatment of overseas students, many of whom are from the poorer countries, and the treatment of students from EEC countries? Does he recognise that, when added to the burden of the high fees that they now have to pay, this is a further disincentive to students from poor countries to come to Britain?
  Mr. Fowler: As the hon. Gentleman recognises, we have made important concessions to overseas students. We do not want to penalise them. On the other hand, I do not believe that any Government have recognised that overseas students are a special case for completely free National Health Service treatment. I think that the balance that we have struck in the proposals is right. When the hon. Gentleman examines the proposals in more detail I am sure that he will support us.
  Mr. Robert Rhodes James: Is my right hon. Friend aware that his decision on overseas students' charges is absolutely right? Will he accept the gratitude of those of us who have made representations for the positive manner in which he has responded to them?
  Mr. Fowler: I am grateful to my hon. Friend. We have made a further concession in respect of general practitioner treatment. The Government have made a resonable response to the conern about overseas students.
  Dr. M. S. Miller: Is the right hon. Gentleman aware that this shameful decision is another way in which this country's prestige is being eroded by this Government? Is he aware that it is a question not simply whether we can make any money out of the proposal—and I doubt whether we can make any—but whether the principle involved since the inception of the Health Service is being eroded by the right hon. Gentleman to an extent that lowers the esteem in which we are held by the world?
  Will the £6 million saving which the right hon. Gentleman thinks he can achieve be at the expense of asking the British people to carry identity cards with them if they consult another doctor in another area? Even if that derisory amount of money were to be lost to the Health Service, would it not be an inexpensive advertisement for the good name of Britain?
  Mr. Fowler: The hon. Gentleman is wrong in principle and in practice. The powers date back to 1949. Guidance was issued in 1963 that, in principle, short-term visitors should be private patients. There is absolutely no question of people carrying identity cards. The hon. Gentleman speaks glibly about £6 million being a trivial amount. I have no doubt that that reflects his colleagues' view, but
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  I do not take that view. About 5 million short-stay visitors come to Britain each year from non-EEC countries or countries without reciprocal arrangements. If the Opposition's concept of the National Health Service is that it is a free service for anyone who enters the country, they are sadly out of date.
  Mrs. Jill Knight: Is my right hon. Friend aware that for years the British taxpayer has been longing for a Secretary of State with the courage to take the step that he has just announced? Is he further aware that many visitors to these shores—particularly from America and Canada, some of whom are extremely wealthy—have for years thought it incredible that we are so lunatic as to offer them a completely free Health Service when they are capable of paying for it and when the ordinary British taxpayer, who is paying for it, has to be denied because of shortage of cash?
  Mr. Fowler: I am grateful to my hon. Friend. I am sure that she is right. We are asking visitors to insure for hospital treatment if they fall ill here. That is precisely what we are expected to do if we go to their countries.
  Mr. Laurie Pavitt: Will the Secretary of State answer the question about the £6 million? Is it net or gross? How many interviews of out-patients and inpatients take place annually? He has that figure in his statistics. What additional work load will there be, and what will be the increase in public expenditure as a result of employing more people in the National Health Service to monitor the scheme? Will there be any net saving?
  Does the Secretary of State recall that this was known as the "Good Samaritan" policy? When he says his prayers tonight, will he read the Good Samaritan parable once again?
  Mr. Fowler: I shall take the hon. Gentleman through the estimates of costs. We are talking about 5 million visitors. My predecessor gave a figure of about £5 million. That has been up-dated to allow for inflation, but the concession that we are making will also cost money. It is unlikely that the amount that we shall receive back from hospital services will be less than £6 million. The estimated cost of acute hospital services is about £3 billion a year.
  Dr. Brian Mawhinney: Does my right hon. Friend accept that his statement will be welcome, not least because it will be seen to be fair to the British taxpayer and to the ethnic minorities? Will he consult his right hon. Friend the Foreign Secretary to ensure that the 5 million people who might be affected by the scheme are informed of the need to buy insurance before they come to Britain so that we can avoid the difficulties of people trying to beat the system by claiming ignorance?
  Mr. Fowler: My hon. Friend makes an important point. The scheme will not come into effect until 1 October. Therefore, holiday visitors this summer will be covered by the present arrangements. After that influx, the new system will come into being. We shall, of course, make the new position clear to the public overseas through all means open to us.
  Mr. William Hamilton: Will the Minister confirm that there is no evidence whatever of extensive abuse of the National Health Service by foreign visitors? If he has evidence, will he please publish it? Is he aware that every trade union in the National Health

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  Service is violently opposed to the principle that he has annunciated? Will it not mean that extra staff will have to question and cross-examine every patient, including psychiatric and mental patients? Is it not an absolute disgrace?
  Mr. Fowler: There is no reason why extra staff should be taken on for that purpose. When the hon. Gentleman has had the opportunity to study the working party's report, he will see that that is so. It is important for the House to understand that the working party has established that the scheme is feasible, can work and will raise extra money for the National Health Service.
  Mr. Hamilton: Rubbish.
  Mr. Fowler: The hon. Gentleman says "Rubbish", but I urge him to read the working party's report and to look objectively at the evidence. He will then see that his fears are, as usual, misplaced.
  Mr. Toby Jessel: Is my right hon. Friend aware that the British people will be glad that from now on they will be expected to provide a National Health Service and not an international health service?
  Mr. Fowler: The British public will welcome this common sense move. I think that they will be puzzled by the Opposition's attitude and by the way in which they apparently regard this common sense way of getting new funds for the National Health Service.
  Mr. David Ennals: Is not this scheme, as with the cuts in overseas aid and the increases in overseas students' fees, a further mean-minded way of alienating people and creating administrative problems that will mean that there will be no saving from this wretched act?
  Mr. Fowler: No; the right hon. Gentleman is wrong. When he reads the working party's report, he will find that the estimates that I and my predecessor have set out are broadly confirmed by the working party's estimate of the money that will be raised. I hope that the right hon. Gentleman will recognise that the change from three years to one year is an important concession for overseas students. We have also made further concessions for general practice treatment. This is a reasonable response to their concern, and I hope that they will see it as that.
  Mr. Mike Thomas: Is the right hon. Gentleman aware that the Social Democratic Party does not lay at his door the cheap charge of racism that has been laid by the hon. Member for Crewe (Mrs. Dunwoody)? However, is he convinced that the scheme will produce real cash benefits for the National Health Service? If it does, will the savings exceed the benefits of good will to overseas students—for whom the charge for the first year seems ridiculous—good race relations, the treatment of communicable diseases and voluntary psychiatric treatment, the latter being an area in which it is very much in the public's interest that even overseas visitors should receive adequate treatment?
  Mr. Fowler: The last two categories in the hon. Gentleman's question are covered in the exemptions that we shall be bringing forward. I thank him for his initial comments.
  The hon. Member for Crewe (Mrs. Dunwoody), who is the Opposition's spokesman on these issues, was completely wrong when she asked the first of her
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  questions. The working party's report shows that the present procedure is racially discriminatory, but that is the procedure that the hon. Lady is defending. Paragraph 39 of the report confirms that there are savings to be made and that the estimate that we have made of the savings is about right.
  Several Hon. Members rose—
  Mr. Speaker: I shall call the hon. Gentleman for Northampton, South (Mr. Morris), but before I do so I tell the House that I shall not call questions on the Secretary of State's statement one second after 4 o'clock. To allow questions to continue after 4 o'clock would not be fair to those who wish to participate in the debate that RS to follow.
  Mr. Michael MorrisIs my right hon. Friend aware that his practical approach to the problem is very much welcomed by the public? Is he confident that the loophole of temporary registration with general practitioners is covered by the report that he has received? While he is in a tidying-up mood for mutual health care, will he examine the arrangements within the EEC, where the system is not working as well as it should be?
  Mr. Fowler: I shall be happy to consider the latter point. We shall be advised to bring general practitioners' practices into line with the hospital service. We are suggesting that overseas students who plan to be here for more than one year should go on to the list straight away. That is a concession for overseas students.
  Mr. Bob Cryer: If the Minister is seeking to save money, why does he not investigate the abuses of National Health Service consultants when they are working for private patients? Would not that be a more fruitful method of seeking to save money than embarking on the scheme that he has outlined, which is bound to lead to apprehension among racial minorities? Will he assure the House clearly and categorically that the scheme is not laying down a basis for universal National Health Service charges?
  Mr. Fowler: This is entirely geared to and intended to meet one aspect of the National Health Service. I give the assurance that the hon. Gentleman seeks. The working party did not inquire into abuse. It merely considered whether the proposed system would be feasible. That was the whole point of the working party. It reported that the scheme was feasible and could be introduced. That is why the report is important.
  Mr. Robert Atkins: I congratulate my right hon. Friend on this long-overdue requirement for the National Health Service, which is one that I and many of my hon. Friends have been pressing upon him since September 1979. If he wishes to present evidence to the Opposition, may I refer him to the many hundreds of letters that have been received on this issue, the vast majority of which have come from doctors, nurses and administrators in the National Health Service, that point to the abuses within the system? Is the £6 million to which he has referred anything like the sum lost by the Labour Government's refusal to implement sections 65 and 121 of the National Health Service Act 1977?
  Mr. Fowler: It would be difficult to estimate the cost of the Labour Government's refusal to implement those

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  sections. I know of my hon. Friend's concern about the matters that are covered by the scheme and I am aware of what he has done in this sphere. Many of the complaints about abuses within the system have come from inside the National Health Service, and that is an added reason why the system should be changed.
  Mr. Alfred Dubs: Is the right hon. Gentleman aware. that many of us are still not convinced by his reasoning that leads him to think that savings will be made on the estimated scale? A year ago the DHSS estimated that there would be a saving of about £5 million if people were charged who had been in the country for up to three years. I am thankful that the Minister has reduced that period to one year. Nevertheless, he says that the saving will be £6 million. He explains that by talking about the effect of inflation. Is he aware that there are serious doubts in the House and among many people who work within the National Health Service that the scheme will cost more to administer than it will produce by introducing charges?
  Mr. Fowler: I reject that. In my view, the saving is unlikely to be less than £6 million. I think that £6 million is a modest estimate of the saving to the National Health Service. I sought, in answering a previous question, to set out the reasoning that led us to arrive at the figure of £6 million. I believe that there is a saving to be made, and we would be foolish to turn our back on such a saving to the NHS.
  Mr. Teddy Taylor: My right hon. Friend seems to have indicated that all Common Market visitors will be entirely exempt from the extra charges. Will the exemption apply also to the overseas territories of France? If so, does he agree that it will be daft to give complete exemption to all visitors from French Guyana while making those from British Guyana liable for the full charges?
  Mr. Fowler: I shall consider the detail of my hon. Friend's question. Reciprocal arrangements exist for EEC countries but it will be necessary in countries such as Australia, where there are no reciprocal arrangements, to make arrangements for insurance. If my hon. Friend or I were to visit Australia, we would be advised to make insurance arrangements.
  Mr. D. N. Campbell-Savours: Will the introduction of this measure have any effect on RAWP or on Government allocations to regional health authorities? When the right hon. Gentleman spoke of an increase in savings from £5 million to £6 million, he referred to inflation. Is that the level of inflation that he believes has been inflicted on the National Health Service by his Government in the past 12 months?
  Mr. Fowler: If the hon. Gentleman had listened to what I said, he would have heard me say that it was over the past two years. The resources will go to the district health authorities, and the authorities will be able to use them in their own areas.
  Mr. Frank Dobson: Will the right hon. Gentleman bear in mind that his Department issued a press statement that suggested that one way of verifying whether people were eligible would be to ask them to show their passports? Will he confirm that it is no longer the intention to ask black or brown British citizens to show their passports? Will he confirm also that he will resign if any of those citizens are asked to produce their passports?
  Mr. Fowler: That is not the intention. The situation that the hon. Gentleman is seeking to describe is the present one and not the position to which we are moving. In any case, we have to move from the present racially discriminatory position.

  Amersham International
  Mr. Merlyn Rees: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
  "the need for the Government to impose a moratorium on dealings in Amersham International shares until a full investigation has been made into the sale of Amersham International at a price that will lead to a substantial loss to the British taxpayer."
  The matter of the sale of shares in Amersham International, a company concerned with radioactive products and services, is specific. It is not part of the wider ideology of the Government in selling off the shares of Cable and Wireless and British Aerospace in the past or the British National Oil Corporation in the future. The Government received the approval of the House for all those sales What is at issue is the method by which Amersham International shares are to be sold.
  It is an important matter because of the events of last Thursday when applications worth £1.5 billion were made for a £71 million offer. Consequently the shares are expected to rise to 180p. Of the £71 million offer, the Government will receive only £63.7 million. This is the third offer for sale of a company that has been grossly over-subscribed as a result of Government policy. Discussion of the matter is urgent and important because dealings start on the Stock Exchange next Thursday. Time is short for discussion of the methods of sale and of the need for a moratorium on the dealings in view of what happened last Thursday.
  There is a need for a full investigation before dealings begin. What happened last week was described as mass hysteria in the City. The low offer price means that the Exchequer has been robbed of funds for desirable public expenditure on hospitals and schools, or to reduce the PSBR.
  We have just heard a statement as a result of which the Government hope to save £6 million, whereas the losses involved in the sale of these shares are much greater. No statement has been made to the House. The House is jealous of its control of Supply. The method of privatisation chosen by the Government places it outside our control. Perhaps in the long run the matter can be considered by the Public Accounts Committee, but before further proceedings take place on Thursday the House should discuss the matter.
  The happenings last week were unedifying. It has been said that
  "The stock market's preference for a fixed price is founded on the practical view that nothing attracts subscription so wel as the promise of a premium; greed oils the wheels."
  Time is running out. It is important that there should be a moratorium before more greed is put before the interests of the nation. Given the shortage of time, I know of no other way to proceed than through Standing Order No. 9. The House should discuss urgently the matter of the sale of Amersham International.
  Mr. Speaker: The right hon. Member for Leeds, South (Mr. Rees) gave me notice before 12 noon today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
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  "the need for the Government to impose a moratorium on dealings in Amersham International shares until a full investigation has been made into the sale of Amersham International at a price that will lead to a substantial loss to the British taxpayer."
  The House listened with concern to the right hon. Gentleman, who raised a serious matter. He especially drew attention to the time factor concerned. However, the House knows that under Standing Order No. 9 I am directed to take into account all the factors that are set out in the order but to give no reasons for my decision. Like the rest of the House, I was concerned at what the right hon. Gentleman had to say, but I have to rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.
  Mr. Ian Wrigglesworth: On a point of order, Mr. Speaker. It will have struck the House as peculiar that, on an Opposition Supply day, an Opposition Front Bench spokesman should raise under Standing Order No. 9 such a matter, with which many of us may have sympathy. Many of us think it desirable that the House—
  Mr. Speaker: Order. Perhaps the hon. Gentleman will come to a point of order on which I can rule, otherwise he will be taking up the time of the House.
  Mr. Wrigglesworth: Is it not an abuse of Standing Order No. 9 when the Opposition have time available to debate the matter, which many of us would like to do—[Interruption.]
  Mr. Speaker: Order. If I had thought that there had been an abuse of our rules, I would have said so. As a matter of fact, I had to give anxious consideration to the application of the right hon. Member for Leeds, South (Mr. Rees) before rejecting it.
  Mr. Michael Morris: Further to that point of order, Mr. Speaker. Bearing in mind your ruling, may I draw your attention to the fact that this point was raised in Committee last Thursday? Therefore, I should have thought that the first opportunity to raise the matter was on Friday and not today.
  Mr. Speaker: I have given my ruling to the right hon. Gentleman.
  Mr. Mike Thomas: Further to that point of order, Mr. Speaker—
  Mr. Speaker: Order. I am taking no further points of order.

  STATUTORY INSTRUMENTS, &c.
  Ordered,
  That the Calshot Oyster Fishery Order 1982 (S.I. 1982, No. 135) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Budgen.J.]

Orders of the Day
  SUPPLY
  [13TH ALLOTTED DAY]—considered

  The Arts
  4.8 pm
  Mr. Andrew Faulds: I beg to move,
  That this House regrets the prolonged delay in response by Her Majesty's Government to the Third Report of the Select Committee on Education, Science and Arts in Session 1980–81; deplores the effect of the Government's economic policies on the life and work of the Arts; and urges a reconsideration of its policies so as to increase the funding available for Arts and heritage purposes.
  A debate on the arts and our heritage is an extremely rare occurrence in the House. I am grateful to you, Mr. Speaker, for doing your best to defend the time available for the debate. That such a debate is a rare occurrence is due to the fact that the subject is not normally, and should not be, one of party political dispute.
  It is common ground that the arts and our heritage are of supreme importance to our country, and not only because of their civilising qualities. Their well-being should be seriously valued by the Treasury in the light of the vast income that they generate by way of tourism. But, general agreement cannot prevent criticism of the conduct of arts affairs.
  A year ago the Select Committee on Education, Science and Arts under the able chairmanship of my hon. Friend the Member for Lewisham, West (Mr. Price) embarked on a detailed scrutiny, as a matter of the utmost urgency, of the dangers threatening the retention in this country of our cultural inheritance of works of art. Its report was unanimous and was widely welcomed. However, despite the fact that with one major exception—that of providing for tax credits when the value of the work of art surrendered in satisfaction of capital transfer tax exceeds the current tax liability—the reforms favoured by the Select Committee would not involve legislation, there has not so far been any response from Her Majesty's Government.
  That is the more extraordinary in that it is allegedly the Government's policy to do everything in its power to encourage the retention of our cultural inheritance. What has emerged from the Select Committee's investigation, however, is that although the legislative means of carrying out the policy already exist, current administrative practice—for which the Office of Arts and Libraries is in no way to blame—is such as to lead to its frustration.
  Responsibility for that state of affairs must be laid yet again at the door of the Treasury, whose extensive memorandum "Capital Taxation and the National Heritage", far too hastily issued in December 1980, did not find favour with the Select Committee which recommended its withdrawal "forthwith". The basic problem is that the Treasury and, above all, its almost autonomous limb, the Inland Revenue, has a vested interest in the preservation of as many administrative deterrents as possible in the way of those members of the public who would otherwise be eager to play their part in the retention of our heritage. Urgent as those genuinely constructive
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  solutions were when the Committee considered the problems a year ago, they have become even more pressing today.
  I turn now to specific matters. Confusion still reigns concerning the consequences of the system whereby sales of heritage objects by private treaty take place to British public institutions and bodies. The fact that by statute, the proceeds of such sales cannot be subjected to capital transfer tax is now common ground. Indeed, the principle can be traced in statute as far back as the Finance Act 1921. That exemption meant that in negotiating a price to be paid, approved institutions were afforded an advantage over all other purchasers, the benefit naturally being shareable between the vendor and the acquiring body.
  The confusion has arisen because a practice—and only a practice—was promoted in 1957 by administrative as distinct from statutory means to establish the apportionment of the benefit at a fixed percentage in every such transaction—25 per cent. to the vendor and 75 per cent. to the purchaser. The truth is that the Treasury and the Inland Revenue have no authority nor status to intervene in that way between independent vendors and independent purchasers. The fact that bargaining between such bodies is properly free and unfettered has only recently been brought to public notice and, is by implication, I believe, accepted by the Select Committee. Indeed, a number of sales of works of art by private treaty have recently taken place which have not conformed to that improper Treasury pretence. In practice, lower-priced items, sometimes of the greatest heritage significance, are sold on the public market rather than to public charities as the Treasury rules give virtually no benefit to the owners, whereas the higher-priced objects can give highly taxed owners over-inflated rewards for their possessions. I am sure that the Minister, if nobody else, knows what I am talking about.
  I turn to one of the most disgraceful aspects of Treasury administration acting through the Inland Revenue. Although the law was designed to facilitate exemption from capital transfer tax of fine works of art in order to stem their flow on to the market for fiscal reasons, the administrative interpretation of the stipulation requiring "reasonable public access" at present frustrates the very purpose of the legislation. The Select Committee made it perfectly clear that there is an unfair anomaly as between works of art in great mansions, which can be readily opened to the public, and art treasures, sometimes only two or three items, in modest flats and houses. The existence of a list of viewable objects that the public may see by appointment is treated by the Inland Revenue as a last resort for exemption purposes. Instead, it usually insists that before exemption is granted owners must offer long-term loans of their possessions to often reluctant museums. Many owners, not caring to be harassed by the Inland Revenue in that way, therefore decide to sell on the open market, with the frequent result that the objects leave Britain and go overseas. This should and must be mitigated by an appropriate ministerial guideline to the Inland Revenue.
  The key issue considered by the Select Committee was that of the discharge of tax liabilities. Even now, it is not generally understood that, while works of art accepted in satisfaction of capital tax are not themselves subject to such tax, in computing the tax liability to be discharged by that surrender the Treasury claws back 75 per cent. of the tax which would have been payable had the object not been exempt. That is a ludicrous situation.

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  In view of the evidence that these "take it or leave it" terms are not sufficiently attractive to tax debtors in such circumstances, the Select Committee recommended that the administrative clawback, which has no statutory basis, should be reduced to 25 per cent. Undoubtedly if the Government were to accept that percentage, the worries of those who seek to retain our heritage would be greatly diminished. As any attempt to assist such a cause in that way would undoubtedly go against the Treasury's renowned philistinism, will the Minister for the Arts not persuade his colleagues in Government to overrule the entrenched Treasury mandarins for once and split the difference to an equitable 50–50? And I hope that the Select Committee would find that acceptable?
  Everyone understands that the Treasury and the Inland Revenue are not concerned about the heritage in the way that the Minister certainly is, and that they surreptitiously welcome its disposal for taxable cash. In this, alas, they possess tacit allies in Sotheby's and Christie's, those vultures of the art world—[Horn. MEMBERS: "Too strong".] The epithet is well merited—which are after the exorbitant commissions that they charge both to seller and buyer alike.
  One of the problems of heritage retention in Britain is the buying power of foreign institutions. This was recently and dramatically highlighted by news that the Getty foundation in California now enjoys an income of some $55 million which, under federal law, has to be spent annually to preserve the foundation's tax-free charitable status. Think what a serious challenge that is to the retention of works of art in Britain. The writing is clearly on the wall, and the Government should waste no more months or years but should take immediate steps along the lines so wisely recommended by the Select Committee a year ago.
  Another area in which the Government's response has been more than tardy is that of public lending right. The framework for a scheme was eventually established by legislation, but the administrative details have had to await further discussions with interested parties and, finally decision by the Minister. Three years of pretty intermittent consultation have ensued and we still await the outcome. That was not the timetable promised by the Minister's predecessor. The Registrar has been appointed and we wish him well, but we wish him also early and full employment. Public lending right cannot be paid until the registrar has asked for and received applications for author registration and until the first sample of loans from the 16 selected libraries have been taken. None of that can start until the House approves the administrative scheme.
  It now appears clear, however, that the Minister is resisting the principle of reciprocity of payment—that is, the payment of British PLR to authors in any other country whose scheme makes payments to British authors. In two years of operation, the West German society for the payment of library loans has already paid £80, 000 to British authors and a further £20, 000 is held over for tax reasons, so British authors are already some £100, 000 better off. As the Minister is well aware, the West Germans are now warning that if reciprocity is not introduced "difficulties may arise"—in other words, if a British scheme does not provide for payments to German authors, the Germans will feel obliged to stop payments to British authors.
  The point here is that Britain is likely to be the gainer from reciprocity because of three factors. First, more
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  British authors would receive payments from Germany than would German authors from our public lending right. Secondly, the West German PLR is on a more generous scale. Thirdly, payments to the estates of dead writers not intended to be covered by our scheme means that a wider spectrum of authors is eligible under the German scheme.
  I would not describe the reluctance to introduce reciprocity as understandable. It is, however, caused by the special problem of the English-speaking book market in the United States. But there is no sign whatever that the United States Government is even contemplating a public lending right scheme. Under the Reagan Administration, there is not the remotest likelihood of it. The right hon. Gentleman really should do the equitable thing and accept reciprocal payments with countries that have a reasonable PLR scheme. There is one other point on this matter.
  The Minister would be well advised to listen to the arguments put to him that the limit paid out to any one author from the pool should be £1, 500. His idea of a £500 maximum payment for any one book could mean that one or two popular authors would scoop the pool. The right hon. Gentleman and his predecessor have both been well advised by the Writers Action Group. On this matter, too he should listen to them.
  A great deal is heard from Government propagandists about how well the Government have done for the arts. But everyone who actually works in the arts knows that the financial pressures on them are more severe now than ever. The Government are trying to spread euphoria simply because the cuts are less than some people feared. That is hardly a cause for self-congratulation.
  What kind of record has this Government got:? I mentioned earlier the need to make critical comments on the conduct of arts affairs. Pledged in Opposition not to make—all hon. Members remember the phrase—"candle end" savings in the arts, one of the Government's first acts in office was to cut £1.5 million from the Arts Council's previously announced cash grant for 1979–80. The strains that the cut imposed cast a financial shadow into 1980–81. They prevented the Arts Council from taking full benefit from the grant in that year, which had been scarcely generous to begin with. In 1981–82, and again in 1982–83, the grant to the Arts Council has fallen below the rate of inflation.
  I wish that the Minister's predecessor, the right hon. Member for Chelmsford (Mr. St. John-Stevas), were present to take part in the debate. Ah! He is. His head is hung lower than is his wont. If, perhaps, someone will awaken him, he will take part. I am glad to welcome him because we all have the greatest admiration for his record in the arts.
  The right hon. Gentleman quoted capital and revenue figures to make the 1981–82 increase for arts organisations look bigger than it was, and then—I am sorry to have to level an accusatory figure at him—blamed the Arts Council for cutting out clients, as it had to do to make ends meet. I think his article in The Sunday Times was one of those little things that one day he will come to regret. The right hon. Gentleman said that he knew nothing about the cuts. One wonders, in that case, why his assessor wz s present at the critical Arts Council meeting that made the decisions. Nobody has suggested that he was not.
  But for 1982–83, the present Minister quotes revenue figures without the capital because, this time, that calculation makes better reading. It is all a question of presentation. Even the better figure, however, leaves the

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  Arts Council grant a good 3 per cent. down in real terms. No one can deny that. Sadly, the Arts Council tends to be the scapegoat for governments' inadequate funding of the arts. All hon. Members saw how much stick the poor Arts Council got when it decided, in December 1980, to cut grant to 41 of the companies that it had been subsidising. The expectation was absurdly abroad that somehow the Council could stretch the amount it was given annually to support an ever-increasing number of commitments. Anthony Field has explained—and as finance director of the Arts Council, he should know—that the Arts Council was over extended because, in the years of relative prosperity, it took on 300 to 400 theatre and dance groups on the experimental and fringe edges of the arts as well as subsidising the major arts organisations, which is its prime purpose.
  And misguidely, in those years, the Council had taken on the grant support of amateur youth organisations such as the National Youth Orchestra, the National Youth Theatre, and the Youth Brass Band, all of which did admirable educational work among young people in fostering both artistic skills and artistic appreciation. But those organisations were more properly the direct responsibility of the Department of Education and Science. It was not the Council's job to fund amateur activities. It should never have been talked into doing so. The Council's concern is professional work. Those, like the director of the National Youth Theatre, who have been stridently vociferous in attacking the Council, have intentionally misunderstood the demarcation. It would have been an unacceptable anomaly to have maintained the marginal grants for these amateur educational activities while having to terminate the funding of professional companies.
  There are other areas in which the Arts Council, because of inadequate funding to do all that is expected of it, has had to draw in its horns. The Council has withdrawn its grant to the New Fiction Society, set up eight years ago to help increase sales of new fiction and to give a needed fillip to the chances of a new writer being taken up by a publisher. The New Fiction magazine had an influential circulation. But all that, has had to be abandoned. The Arts Council has had to take the usual stick because of that.
  Another practice, of value to new composers, has been severely curtailed. The four independent London orchestras had been receiving special grants towards presenting modern works in their regular programmes, as, I am sure, the right hon. Gentleman is well aware. That subsidy was needed because new works require more rehearsal and because such concerts usually draw smaller audiences—an unfortunate fact of musical life. So an effort to sponsor and support contemporary composers has suffered most damagingly.
  Again, a body named Artlaw Services had been established to give information and advice to artists on art-related legal matters. This advice covered everything from contracts to copyright, obscenity, landlord and tenant problems and so on. The Arts Council was driven to withdraw grant aid in 1981–82 from such a valuable service to artists who are at a philosophical and practical disadvantage in dealing with the denizens of the business and legal world whom they have to encounter.
  I wish now to examine the damage to some of the more prestigious operations. The Royal Opera House is to get
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  £9.5 million for 1982–83. A good figure in the circumstances, say the Government. But the Royal Opera House is buying talent in competition with international opera and dance houses overseas. The Paris Opera's grant is nearly £30 million—for which it gives fewer performances than the Royal Opera House. Both the chairman, Sir Claus Moser, and the general administrator, Sir John Tooley, have warned that opera and ballet at the Royal Opera House face a bleak future. It is no wonder that Covent Garden has to cancel productions to stay afloat.
  The Royal Ballet's dancers are so badly paid by international standards that they are starting to look abroad for jobs. Other British dance companies pay their dancers even less, not because they want to or because they are mean minded, but because they are too hard up to do better.
  What of the Royal Shakespeare Company, one of the finest professional outfits in the country? The Arts Council has scraped the barrel to find it a 17½ per cent. increase for 1982–83. It had asked for a 30 per cent. increase. Even that splendid company says it needs that 30 per cent. to maintain its programme and method of operation, to cover its work at its two theatres in Stratford—I know them fairly well—and its first season in its new home at the Barbican and the Pit. No one knows yet the quality of work that will be turn up there.
  The British Film Institute holds a priceless archive of early film. It is on nitrate stock, vulnerable to decay and total loss. To ensure its preservation, it has to be transferred to acetate stock. Here again, the money made available is not enough. The total preservation budget of £675, 000 is calculated to be less than half of what is needed to preserve this endangered and irreplaceable national film heritage.
  Mr. Geoffrey Johnson Smith: Surely the hon. Gentleman is not suggesting that this programme be halted and scrapped. Is it not going ahead with all possible speed?
  Mr. Faulds: It is going ahead with all possible speed, but, unfortunately, with not enough speed. More stock comes into their vaults each year, and the programme that it was hoped would be completed by the year 2000 is simply not feasible within that time scale. That organisation needs twice the amount of money that is presently available, and if it does not get it, much of that valuable stock will not be there come the year 2000. The hon. Gentleman should know that better than anyone. I am arguing for an enormous increase in the funding of that operation.
  The Minister has had clear warning from the national museums and the art galleries. The V and A already does not open at all on Fridays. The National Gallery and the Tate may be reduced to opening only a small number of their rooms. Dr. Wilson of the British Museum warned the Select Committee that if its funding were not increased, the museum would have to close down in two years. What a comment on the Government's conduct of its responsibilities in this regard!
  The Minister for the Arts (Mr. Paul Channon): In reading out that large catalogue of insufficient moneys for

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  the arts, is the hon. Gentleman suggesting that when the Labour Party was in power things were better in real terms?
  Mr. Faulds: As the Minister well knows, there is an accumulation of problems in the arts. We were the innovators, in that it was we who first introduced a Minister for the Arts. We should be given due credit for that. So far, no arts Minister has yet been given the funding that his responsibilities require. I hope that the Minister would agree with that. I hope that future arts Ministers will be more fortunate in terms of funding so that they can do the job properly. Later I shall make some suggestions in my speech about this very problem.
  Let me finish this catalogue of woe. I have'nt yet done! Many arts and cultural activities in both the academic and public sectors are being eroded by the reduction in funds under the Government's present economic policies. Universities and local authorities throughout the country are cutting back on arts, theatres and library spending. Education authorities in all parts of the country are retrenching by imposing cuts on drama and music teaching, under the duress of the Government's damaging economic restraints. The Advisory Council for Adult and Continuing Education has warned that finance for adult education has been cut by more than one third in real terms over the past few years. Indeed, there is a danger that the entire service in some areas might be discontinued.
  Community arts are being denied funding, yet community arts have been such a heartening growth area over the last few years. This is a vital area where every effort is made to arouse interest and participation in all sorts of artistic activities among the mass of the apathetic and, so far, unaware majority. The future of artistic life in this country depends on that work and on a greatly expanded and more effective educational approach to exciting and infecting people with an interest in the arts.
  When the Government first came into office, there were great expectations of a boom in business sponsorship. The Minister will remember that the Government placed considerable reliance on the response of the business community. Lord Goodman, the chairman of the Association for Business Sponsorship of the Arts—and he should know—is on record as expecting no growth in the present trading climate. Sothebys is pulling out because of the recession. How many more companies will find it impossible to continue their funding for arts purposes? In any event, it is irresponsible that arts organisations should have to rely on such a fickle source of financial support. Only in the last few days, a well-known music organisation—the Nash Ensemble—has been told that it will not now receive promised sponsorship for a concert because the chairmanship of the company involved has changed. What sort of a basis for forward planning is that?
  All this is happening in an industry that is a huge net earner for Britain. The £3½ billion tourist industry relies heavily on the arts in attracting overseas visitors. The arts contribute to the economy directly through VAT and income tax, quite apart from the substantial exploitation income derived from royalties world-wide. Investing in the arts—I use that phrase purposely—is not just investing in the quality of life, important though that is, but it is investing in Britain's prosperity. What is so absurd about Government stinginess in this area is that we are talking about peanuts in money terms. The entire arts scene in this country could be transformed at a fraction of the cost of
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  a Trident missile or at the cost of three miles of motorway—[Interruption.]. I am glad that I have the Minister's agreement. For the Government to regard spending on the arts as some kind of virility test, and for them to be as penny-pinching as they can be, is quite ludicrous.
  Mr. Jack Dormand: I remind my hon. Friend that in some cases, the regional arts associations depend heavily on local authority contributions. The Minister should have been the last to say what he did, in view of the fact that the wretched local government legislation now being pushed through the House is squeezing local authorities, which are thereby unable to make the kind of generous contributions that they have made in the past.
  Mr. Faulds: My. hon. Friend is quite right to criticise the Minister on that score. I made a fleeting reference to it, but it is all part of the damaging picture of the overall effects of the Government's policies on the life and work of the arts throughout the country.
  Let me make a few suggestions. In an admirable lecture to the National Theatre a year or so ago, Sir Roy Shaw said that in general the arts are under-subsidised, under-patronised, under-valued and under-distributed. I am sure that the Minister agrees with me and Sir Roy on that. Does he agree with the simple proposition that the 0.1 per cent. of national expenditure that government spend on the arts is simply not enough, and that this Government and ours who will follow must greatly increase that minute proportion—[Horn. MEMBERS: "When?") As soon as we are given a chance of going to the country. I wish that the Government would do so, because while they may have an unhealthy experience, the country would have a healthy one
  Does not the Minister agree that there are other areas of need for financial subvention which will inevitably require public moneys either from central Government or from local authorities in the near future? The British film industry is near collapse. The Royal Academy cannot for ever exist on a profferred begging bowl. There is an accumulation of oral history interviews that needs a body to collect and collate in a new archive. What is happening about that? A policy decision must be taken, backed by the necessary funding, to take the performing arts on to the shop floor. Incidentally, my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone), who regrets that he cannot be present, was an innovator of that policy.
  The National Trust may need bailing out with its heritage of properties, and perhaps, because of that, may have to be subsumed in the new heritage quango to be set up by the Secretary of State for the Environment.
  There will have to be a rescue operation to keep alive and keep open London's West End theatres that are coming under increasing risk because of the vagaries of ownership and expiring leases. The great university museums of Cambridge and Oxford, London and Glasgow will inevitably have to be given direct support from the Exchequer. There is no way in which that will be avoided. So one could go on. The Scottish museums need funding. The Welsh museums need funding.
  These matters are not fantasies of my fevered mind—they are the real problems of Britain's cultural life

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  in the 80s and 90s of this chaotic century. I believe we must meet those challenges with a drastic review and reorganisation of our arts responsibilities.
  Two radical approaches are essential. First, we must require of local authorities a mandatory raising of an arts and heritage rate at some national figure, which should be used to finance the work of enlarged and reorganised regional arts associations across the whole range of arts life; theatre support, greatly increased community arts that would allow ordinary and so far non-artistic folk to do their own thing in whatever medium pleased and excited them, youth and adult education in arts response, expenditure on the heritage of old houses and collections, industrial archaeology in which I believe trade unions should play a greater role, the recording of local history, the regional touring of national companies and any number of related and relevant activities. Those enlarged and properly funded regional arts associations should be made democratically accountable by involving in their running local administrators and the practitioners themselves, as well as the more hard-headed local authority representatives.
  The second radical innovation that is needed is a greatly enlarged ministry. I hope that the Minister can bring that about and, if he cannot, I hope that, whoever his successor may be, he will. Such a ministry would not be responsible just for the small range of performing arts, museums, art galleries and libraries and crafts as at present, but would be a cultural and heritage ministry that should take over the whole range of the heritage—houses, archaeological sites and all the rest—from the Department of the Environment whose Minister really has quite enough on his plate without those.
  We should rescue films from the Department of Trade where the once great British film industry languishes and withers away. In that ministry, perhaps we should consider the inclusion of tourism, because all these matters are related.
  Mr. Norman St. John-Stevas: I am most interested in the hon. Gentleman's suggestions. There seems some doubt as to their exact status. The hon. Gentleman speaks from the Front Bench. Are we to take it that these are now the policies of the Opposition or personal reflections which, however interesting, have no political validity?
  Mr. Faulds: I would urge the right hon. Gentleman to be a little patient. I assure him that these are not my fantasies but are matters being considered by various arts bodies within the Labour movement. I hope that, with my admirable advocacy, they will be adopted as party policy, but let us wait and see. We can but hope.
  I hope that I have the backing of the right hon. Member for Chelmsford in wanting to see these changes. A little nod in affirmation will do. No nod is forthcoming. Such a Ministry should have its own departmental funding and, of course, a seat in the Cabinet, which the right hon. Member for Chelmsford was once fortunate enough to have. On both the arts and heritage, the Minister should retain that invaluable British device—the arm's length principle.
  Mr. Toby Jessel: On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Gentleman
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  to take three quarters of an hour in a three-hour debate and then to expect the House to listen to him summing up as well? If everybody does that there will be time for only three speakers.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. It is in order, of course, for hon. Members to speak for as long as they like but I remind the House that this debate will be interrupted by private business at seven o'clock.
  Mr. Faulds: I assure the hon. Member for Twickenham, on his plea that he be allowed time to speak, that I have spoken for only 35 minutes and not for three quarters of an hour. I am about to terminate my observations and I hope that he will bear with me for another moment.
  Mr. Gerald Kaufman: It is our debate as well.
  Mr. Faulds: It is indeed.
  The retention of that "arm's length" principle is essential. We do not want in Britain a Minister with control of decisions that should be taken in the practice of either arts or heritage matters. If such a ministry is established in those circumstances, then and only then will there be real hope for our sorely beleaguered arts life, under the present policies of the Government, and our endangered treasury of the heritage. All those who follow these matters are aware of that. I hope that I carry the Minister, his predecessor and the House with me in these arguments.
  Mr. Deputy Speaker: Before I call the Minister to speak, perhaps I should say again that this is a three-hour debate by general consent and that all hon. Members should remember that when making speeches.
  4.44 pm
  The Minister for the Arts (Mr. Paul Channon): We have heard a wide-ranging speech from the hon. Member for Warley, East (Mr. Faulds). I shall attempt to be briefer, knowing that there are many hon. Members who wish to participate in the debate. The hon. Member for Warley, East often reminds me of Mount Vesuvius: he sits quietly for months behaving, himself and being perfectly reasonable and just occasionally blows his top.
  I view the motion with sorrow rather than anger. Most hon. Members are strongly in favour of the arts and are delighted to debate them. It is a great pity that this debate should be on a critical motion of this sort, which is unparalleled in the history of British arts debates. I hope to show that the motion is unjustified. It is the greatest pity that we must debate it in this way. I wonder whether anyone will vote for this preposterous motion. It will be interesting to see whether any hon. Member goes into the Lobby to support it.
  I well remember in 1964, during an American election campaign, Senator Barry Goldwater's election slogan:
  "In your heart, you know he's right."
  The hon. Gentleman knows in his heart that he is wrong.
  Mr. Faulds: Not at all! Not at all!
  Mr. Channon: Nevertheless, I shall take the debate seriously and write to those hon. Members I cannot reply to—clearly I shall have little time to reply—with the leave of the House.
  The House knows that I cannot say anything today about the Select Committee's report because the

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  Government have not replied to it. There has been an intensive study within the Government. There are seven Departments involved, which is not unprecedented. They include Scotland, Northern Ireland and Wales and I can name them all if required. Of course, the Government will speak with a united voice when they reply. I cannot believe that delays of this sort are unprecedented. Of course, I shall note what is said in the debate, although that may have the effect of further delaying our reply—unless the debate is to be a charade and I am to press ahead with our reply, which is on the verge of completion, without paying any attention to this debate.
  I take this opportunity to pay tribute to the Select Committee and its work in the arts. I also pay tribute to the British Library report which my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) accepted. I now look forward to the British Library getting under way. The Government took note of the ICCROM report which had a major effect and I particularly look forward to its major report on the funding of the arts which we will want to study with great care.
  We are on the verge of final approval of the last White Paper to which this debate refers. I hoped to have an answer to the report within a month or even quicker, but I shall now have to consider what is said in the debate. I hope that it will not change things too much.
  The hon. Member for Warley, East raised the position of the Minister for the Arts. Of course, any idea of an enlarged Ministry would be a matter for the Prime Minister of the day, not for me and, I suspect, not for him, unless he is promoted rather quickly. In case there is any misunderstanding, I must tell the House that I already have independent responsibility for the arts and the arts budget which will be separately identified in future public expenditure White Papers. I have my own Question Time and I am able to consult the Prime Minister directly. The hon. Gentleman will recall the Prime Minister's answer to him on this point on 2 February last year. I say that in case there is any misunderstanding by him or anyone else.
  On the general question of the heritage, I cannot go into the details of the Select Committee's report. However, our firm policy is to preserve the heritage, both in public and private hands, for the benefit and enjoyment of everyone. I strongly believe that private owners should be helped to retain ownership of outstanding works of art, provided that they agree to care for them on behalf of the public and afford reasonable access to them.
  There should be incentives to sell to public collections or, where appropriate, to offer them in lieu of tax. There is clearly an interest which must be balanced between that of the Government and that of the private owner. A number of the Committee's recommendations are concerned with where and how that balance should be struck. Obviously these are difficult matters of judgment about which the Government want to come to a decision very soon.
  I recognise—it was borne in on me almost on the first day that I became Minister for the Arts—that there is bipartisan agreement in the House that we should have clear and simple guidance on the measures for protecting works of art. I assure the House that as soon as the Select Committee's report is published we shall move ahead to the publication of a simple guide, as I announced to the hon. Member for Warley, East some time ago. There will first be the reply. Later, simple notes of guidance will be
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  prepared. Perhaps I am in danger of leaking the Government's reply, but I do not think so, because I said this in an answer to the hon. Gentleman some time ago.
  Mr. Christopher Price: I want to be clear what the Minister means. Is he saying that he intends to delay publication of the simple guide until after the Committee's subsequent major report on the funding of the arts?
  Mr. Channon: No; but if the Select Committee makes such fundamental proposals and the Government accept them all, no doubt it will have to be rewritten. But that is not our intention, and I hope that the simple guide will be ready in the not too distant future.
  The hon. Member for Warley, East complains about the national heritage, the inadequate resources for it and the rest of it. Of course they may be inadequate. Hon. Members on both sides of the. House agree that more could be done. But I ask hon. Members to consider what the Government have done in setting up the national heritage memorial fund and the achievement of my right hon. Friend the Member for Chelmsford—
  Mr. Faulds: It was our idea.
  Mr. Channon: But the hon. Gentleman's party did nothing about it. It is just like public lending right. It may have been the Labour Government's idea, but nothing happened.
  More than £12 million was made available to set up the national heritage memorial fund. It got £3 million this year plus £1 million for acceptances in lieu. Next year it will get another £3 million plus £2 million for acceptances in lieu—about £5 million in all—and that is a most welcome addition to the facilities available for protecting the national heritage.
  When the Labour Government were in office—and I have to make these points since I am attacked—the national land fund was about the only creation that was any good. No specific fund was available. There was no declared level of funding. The extraordinary example of Mentmore shows what a muddle the Government got into in the absence of a fund of this kind.
  Mr. Faulds: Nor under previous Tory Governments.
  Mr. Channon: As I understand the hon. Gentleman's motion, he is criticising the Government and me. I am saying what this Government have done, which is exceedingly creditable.
  The national heritage memorial fund, by almost universal consent, has done a very good job. It has saved Canons Ashby. It has made grants for the national film archive, the Tunnicliffe drawings, and the "Mary Rose" trust, and many pictures have been saved. I could give plenty of other examples.
  At the same time, the Government's indemnity scheme provides security for local galleries and other institutions when loans are being made or exhibitions are taking place that are in the public interest. Anyone who saw the Japanese exhibition at the Royal Academy will know what a help the Government indemnity scheme was to that exhibition. In addition, there are many regional exhibitions to which the Government indemnity scheme has been of considerable help.
  Until now—and I hope that after today's debate is over we can return to it—there has been pretty well bipartisan agreement that both parties in turn when in office have

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  done their best for the arts and that Ministers of both parties have done their best for the arts. To hear the hon. Member for Warley, East talking, anyone would imagine that the arts had not had economic problems throughout history. Is there any moment in history when the arts have not had economic problems? Does the hon. Gentleman imagine that at the time of Mozart the arts did not have economic problems? There have been economic problems throughout history in dealing with the arts and artists. We are doing our utmost to try to help, within the resources available to the country, to do the best that we can for the arts, and our achievement has not been bad.
  I have taken note of what the hon. Member for Warley, East said about public lending right. The public lending right scheme is with the printers. It will be published in a few weeks. I could give full details to the House, but perhaps it would be better to await publication. I have met the authors on all points except one, and I shall explain in detail why I have not met them on that when I speak on the public lending right scheme.
  Mr. Faulds: Are my fears and comments about that justified?
  Mr. Channon: Half are justified, half are not, and the ones that are justified are unjustified because there are very good reasons for the course that I am taking.
  Mr. Tam Dalyell: Before the Minister leaves the national heritage memorial fund, does he agree that there is a problem with certain collections, especially of scientific papers? I refer specifically to Dr. Joseph Needham's great collection at Cambridge. There is great difficulty in finding a home for it. The national heritage memorial fund says that it may be outwith its remit, yet there is a problem. Could anything be done to reflect on solving it?
  Mr. Channon: I shall examine the point raised by the hon. Gentleman and write to him about it. If other hon. Members draw my attention to other details, I shall take them up and write to the hon. Members concerned. I have only a few minutes at my disposal if other hon. Members are to have a fair share of the proceedings.
  The national heritage memorial fund is an independent fund and represents a great achievement and an important step forward in protecting the country's heritage.
  The third part of the Opposition's motion says that we should spend much more money on the arts and the heritage. In our private capacities, I dare say that the hon. Member for Warley, East and I will agree about that. When he was in office, my right hon. Friend the Member for Chelmsford said that no Government had provided enough money. In our private lives, we can agree about that. But at a time of serious economic problems, can it reasonably be argued that the arts have not done well? I claim that the arts have done extraordinarily well at a time of economic difficulty.
  I must make these points to the hon. Member for Warley, East. It is all very well for him to criticise me and my arts grant. Does he realise that there was one year after an economic crisis when in real terms the Labour Government cut the Arts Council's grant by 10 per cent.? Is he proud of that? If I had attempted to cut it by 10 per cent. in real terms, I hate to think of the criticism that I
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  would have had from the hon. Gentleman. When he looks at all the arts figures, taking into account the new responsibilities for the British Library and the new responsibilities of the national heritage memorial fund, I challenge the hon. Gentleman to name any year in British history in which more has been spent on the arts in real terms. If the hon. Gentleman can do that, I shall vote for his motion.
  Mr. Robert Sheldon: The present state of our local authorities is quite unprecedented. For the first time ever, the Hallé orchestra is under threat because Manchester corporation cannot find the £30, 000 which it has always given—and more in the past. This example can be multiplied many times. These are very important matters in the regions. I know that people in London may not think very much about them, but in the North-West they excite great passions.
  Mr. Channon: I think constantly about them, and I am continually begging local authorities, in making their difficult dispositions, not to discriminate against the arts. Will the hon. Member for Warley, East use his influence with Manchester? It is not my party which is in control of that local authority. It is extraordinary that the Halle orchestra's grant should have been cut. Perhaps the hon. Gentleman will take advantage of any opportunity that he has to discuss it with his colleagues from Manchester.
  I am not pretending to be complacent. There are many problems in the arts. There always have been, and there always will be. But many developments are coming along, and many in the future outside London. I am passionately keen for there to be developments outside London.
  The Bradford museum of photography is a great new museum which will be opening this year. New theatres will be opening in Plymouth, Swansea and Leeds this year. In Bath, I hope with the support of a large amount of private money, a theatre will open next year. In Leeds, a new Henry Moore gallery is to be opened, I hope, by the end of this year. In Nottingham, there is to be a new concert hall. In London, the Barbican is to be opened by the Queen next week. The Tate gallery is going ahead with its Turner extension. For the first time for years that huge hole behind the National gallery will be built on and we shall have an extension to the gallery.
  I am delighted to tell the House that I have decided to allocate the papers of the first Duke of Wellington to Southampton university, they having been accepted in lieu of estate duty, subject to completion of satisfactory accommodation for them in the university library. So we shall be getting major archives outside London as well as all these other activities.
  My right hon. Friend the Member for Chelmsford set the ball rolling, and I am glad to be able to announce that it has been brought to fruition.
  We have given extra help to the film archive. Contrary to what the hon. Member for Warley, East said, an additional £200, 000 has been set aside out of current and capital expenditure. The Henry Cole building is going ahead in the Victoria and Albert, which will see the most dramatic transformation in that museum in modern history.
  Mr.Faulds rose—
  Mr. Channon: I should like to finish in five minutes. It is unfair to the House if I give way much more. The hon. Member for Warley, East spoke for about 45 minutes—
  Mr. Faulds: Thirty-six.
  Mr. Channon: It seemed like 112.
  In recent years, under Governments of both parties, we have seen an enormous increase in access to the arts in touring opera and ballet companies and modern dance. Even as we speak, the Royal Shakespeare Company is in Newcastle. The subsidised theatre has reached new heights. Anyone who saw Nicholas Nickleby with the RSC, or Oresteia at the National Theatre knows that the subsidised theatre is at the top of the league for theatres.
  Mr. Faulds: For how long?
  Mr. Channon: For the foreseeable future.
  In the commercial theatre, in spite of enormous problems, there have been a great many successes. My right hon. Friend the Member for Chelmsford started a campaign for business sponsorship. I have built on what he started and added to it. It goes from strength to strength every week. For example, there is the sponsorship by Barclays International of the Royal Ballet Company which is worth £500, 000 over four years and AMOCO's further support of the Welsh National Opera worth over £450, 000. The hon. Member for Warley, East spoke in unflattering terms about Sotheby's, but last week it announced support for an important poetry competition.
  Mr. Michael Marshall: The hon. Member for Warley, East (Mr. Faulds) made a dangerous remark. He said that this was a hand-to-mouth way to go about things. I trust that my right hon. Friend will pick up that point. I remind him that companies such as IBM and Martini have been underwriting the Chichester festival for many years.
  Mr. Channon: I agree with my hon. Friend. There are many examples and many new firms are coming in. I started a regional campaign and I have a booklet about that with me, which is a supplement to that of my right hon. Friend the Member for Chelmsford. It advises arts organisations that sponsorship can be mutually beneficial.
  The hon. Member for Warley, East said that company sponsorship would be fickle but the 41 companies cut off by the Arts Council last year thought that the Arts Council had been fickle. There may have been good reasons for those cuts. Sponsorship is not fickle. It has been an excellent supplement, not a subsidy, to the money that has been spent on the arts.
  I have been asked about Government expenditure. I have shown that we are spending large amounts of money this year. The hon. Gentleman has not yet been able to tell me a year in which any other Government did better. I cannot prejudge the specific decisions the Government will take in future because a great deal depends on controlling inflation. I look forward to the continuation of public support for the arts without fundamental change.
  British arts are as good as they ever have been. We lead the world in theatre, music, opera, ballet, painting and writing. The motion is palpable nonsense. The Government's policy on the arts is that they should be sustained at an excellent level. Central Government expenditure on the arts should maintain the centres of excellence. There should be more help in the regions. I have shown that there are exciting developments afoot.
  I agree that the proportion of money spent by the Government on the arts is only 0.1 per cent. of the gross
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  national product. It represents a splendid deal for people in this country and is worth every penny that successive Governments have spent on the arts.
  In view of what the hon. Member for Warley, East has said about Government support for the arts and the mean way in which we are supposed to be handling them, I have here a whole sheaf of press cuttings about the grants announced last December. They say, for example,
  "Victory for arts in grants battle."
  "Relief in the art world over higher grants."
  "Arts leaders cheer up…"
  "Arts Council gets extra £6 million."
  "Victory for the arts…"
  "Museums sigh with relief."
  "Arts Minister announces 1982 budget: it's not all gloom."
  The Times said:
  "In present circumstances the allocation is a reasonable one, and it should cause none of the predicted devastation."
  With regard to the opera house Sir Claus Moser said:
  "I think the Arts grant is a terrific achievement by the Minister."
  I am not trying to be complacent, or show off, or blow my own trumpet. However, if the Government are unreasonably attacked by the hon. Member for Warley, East, I am entitled to reply and to show that he is wrong.
  Those are just some of the quotations that I could read to the House. Even the hon. Member for Wolverhampton, North-East (Mrs. Short) was good enough, at Question Time on Monday, to pay tribute to me. I am grateful to her. Perhaps she is joining the SDP—I am not sure.
  Mrs. Renée Short: Not likely.
  Mr. Channon: I am only teasing.
  Mr. Kenneth Robinson chairman of the Arts Council, said that he was grateful to me. I could read out a whole list of tributes the Government—and occasionally personal ones—to what has been done to help to keep the arts going in these difficult times. The motion is a preposterous sham. All of us want to debate the arts but it is ridiculous that we should have to waste our time debating this motion, and I ask the House to reject it contemptuously.
  Mr. Deputy Speaker: Order. So that there may not be too much disappointment, I repeat that 14 hon. Members—there may be more—are anxious to take part in the debate.
  5.5 pm
  Mr. Christopher Price: With regard to the Minister's remarks about the publication of his response to the report of the Select Committee on Education, Science and Arts and the need to take the views of hon. Members into account, I urge the right hon. Gentleman not to allow the debate to cause any delay. I am sure that the views that will be expressed will be relevant but I do not expect them to change the way that the Government are going. I hope that the debate will hasten, rather than delay, the publication of the response. I beg the right hon. Gentleman not to allow the debate to be used as an excuse by those who, for malign reasons, want to delay the response. I hope that the publication of the response will come quickly so that the right hon. Gentleman can come before the Select Committee and discuss the matter with us.
  The first part of my remarks this evening will be made in my capacity as Chairman of the Select Committee, which, while it has produced this report on this aspect., is

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  in the middle of what is probably the most substantial review of funding policy on the Arts since the Second World War. The report will not be printed for a few months yet. Whereas I shall address myself to the report, it is worth emphasising that the Committee is in the middle of considering issues wider than this one and that none of my remarks should be considered to be my words on the subject.
  Of all the Select Committee's activities, this report on the arts and the previous one about the British Library are unanimous. There was no significant difference between us about the general thrust of what we were putting forward. The report was not on issues that involved as much money as others. However, it was one of the most critical reports that the Committee made not of the Minister or his predecessor, but of the sheer muddle that has been allowed to persist over the years. One might be able to argue about the 75 per cent.—I am sure that the Treasury will—and whether it is the right percentage, but the Committee was unanimous that the situation is intolerable.
  One of the problems, particularly for Labour Members, is that over the last few years art has increasingly become a marketable commodity. It is used, wrongly and dishonourably, for speculation, private gain and tax evasion by a minority of people. Even though objects of art are used in that way, the Select Committee did not feel that that fact should stand in the way of having a sensible system of preserving for our people our national heritage, whether in public or private hands. That is the principle that underlay our report.
  Some of the evidence that we received was horrifying. We heard evidence that individual civil servants, particularly in the capital taxes office, on the excuse of preserving every penny to which the Exchequer might in any circumstances be entitled, lost chance after chance of preserving items for the citizens of Britain. The actions of those civil servants were almost an incentive for the sale and disappearance of certain items abroad. The daughter of one of Britain's most distinguished artists told us about the activities of the capital taxes office after her father's death. It held up settlement of the estate for month after month and insisted that she hawked objects left to her round the museums before the estate could be wound up. That is one example of the way that individual civil servants pursue people. As my hon. Friend the Member for Warley, East (Mr. Faulds) rightly said, they work to principles that have no force of law.
  I am pleased to hear that the Minister is well on his way to issuing clear guidance on such matters. We shall be pleased to see his response to the report. I shall say no more on that topic. My hon. Friend put the issue clearly, and I agree with every word he said.
  I make a plea about tax credits. It is a difficult issue. The paper put to the Committee by the former Minister of State, Treasury, was petty and hopelessly unsatisfactory. Select Committees should not be confronted with such small-minded arguments. It was a concatenation of tiny objections.
  Certain works of art are of great value. Unless a tax credit system is available, works such as the Leonardo codex will leave the country. The Inland Revenue might raise difficulties, but I urge the Minister to continue to fight his corner.
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  I have one or two other points to make. The British Film Institute crisis is real. I acknowledge that extra money has been put aside for the BFI, but the chemicals eating into the films are working at a faster pace than the money is coming in through the right hon. Gentleman. The problem is temporary. Only old films are subject to the deterioration. A once-and-for-all injection of money could save part of our heritage. It is absurd for Members of Parliament literally to watch the films disintegrate in front of their eyes. I do not know whether the Minister saw the BFI film about the state of part of its stock. The money coming in is not sufficient to save it.
  Now that the Minister is in the Department of Education and Science, I urge him to look at what is happening to the arts within individual local authorities. The rate support grant cuts are hitting areas where no statutory duty exists. The Select Committee may make recommendations about statutory duties, but that is for the future. In the interval, our municipal museums and art galleries—as well as the Hallé orchestra—are in danger.
  Further, the arts in schools and our education system generally are increasingly being squeezed out, as the curriculum is squeezed. There is an unhealthy concentration on reading, writing and arithmetic to the exclusion of the creative subjects that should be taught in schools. If the trend continues, the RSG cuts will jeopardise our future artists and the clientele for the arts. I urge the Minister to use his influence within the Department.
  My hon. Friends on the Select Committee will have heard me say this before. The narrow concept of the three Rs has no historic justification, even in this country. It was a mistake by an illiterate Member of Parliament in the early nineteenth century. In the seventeenth and eighteenth centuries the original three Rs were, first, reading and writing—literacy—secondly, reckoning and figuring—numeracy—and, thirdly, wrighting and wroughting. The concept of education was that one-third of the time should be spent on creativity in schools. The only point of the literacy and numeracy was to move to the flowering of the individual's personality in creating things.
  The Minister is responsible for the arts in education in schools and in further and higher education. He has received many submissions from the Gulbenkian foundation and others about the dangers of the arts in higher education completely drying up.
  I am not now speaking as Chairman of the Select Committee. I am momentarily stepping aside from that position. Like my hon. Friend, I believe in the arm's-length principle. It is absolutely correct. For it to be preserved, it must be respected by Ministers of both parties and not abused. I mentioned in the House recently the dismissal of Mr. Richard Hoggart, who was deputy chairman of the Arts Council. The Minister answered off the cuff. I do not blame him for his answer or for the dismissal of Mr. Richard Hoggart. It has been said that, if the matter had been left to him, he would not have dismissed him. I do not know. The Minister has been reading newspaper headlines to us, so I quote what the newspapers say back to him. I understand the situation, if orders came from above, but such actions erode the arm's-length principle.
  The Minister replied to me:
  "All that happened was that a person who would otherwise have served 10 years on the Arts Council—an almost unprecedented stint—will not do so." —[Official Report, 18 January 1982; Vol. 16, c. 19.]

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  On reconsideration, I am sure that the right hon. Gentleman will agree that that off-the-cuff remark does not accord with the facts.
  The full facts show that the Arts Council has had four vice-chairmen in the past 30 years. They have served for 13, 17, 15 and three years respectively. The last vice-chairman left to become chairman of the Tate. it is the shortness, not the length, of Mr. Richard Hoggart's stay on the Arts Council that is unprecedented. To say that Mr. Richard Hoggart's leaving has put the arm's-length principle in jeopardy would be to go too far, but a series of decisions to remove people of real stature, who have made a great contribution to the arts and culture of Britain, would destroy the arm's-length principle.
  The Minister is reputedly looking for somebody to replace Mr. Richard Hoggart—a person who will eventually become chairman of the Arts Council when Kenneth Robinson retires. I hope that he will try to find somebody of real stature and not, as has been reported, somebody with a knowledge of money and business who will concentrate most of his time on raising money from private funds. It is important for the arm's-length principle that the Arts Council should have a chairman who can maintain the all-party agreement about arts policy that the Minister commended.
  I regret that I have spoken for as long as I have. I conclude by commending the Select Committee's report—a unanimous all-party report—to the House. I hope that hon. Members will study it and that the Minister will, within a month, be able to respond to it.
  5.22 pm
  Mr. Patrick Cormack: I am glad to follow the hon. Member for Lewisham, West (Mr. Price), the Chairman of the Select Committee, particularly on his all-party plea. When I heard that the Opposition had chosen the arts as the subject for this Supply Day debate, my reaction was one of delight tinged with anxiety.
  I was delighted because we rarely debate the arts in the House, despite their enormous contribution to the spiritual and financial welfare of the nation. I was anxious because I feared that some hon. Members might wish to turn the debate into a party political occasion. I do not think that the hon. Member for Warley, East (Mr. Faulds)—for whom I have a high personal regard—did himself justice in his opening speech.
  The arts are perhaps the only great sphere of our national life that we have successfully succeeded in keeping out of party politics. We argue fiercely about economics, social affairs and foreign policy, but those of us in this House and in the other place who have a care for the visual and the performing arts and for the preservation of our incomparably rich national heritage, have far more to unite us than to divide us when we discuss these matters. That fact is illustrated by the strength and enthusiasm of the all-party heritage group, of which the hon. Member for Warley, East and I have the honour to be joint chairmen. It is one of the largest and most active of all-party groups in Parliament. Unlike some all-party groups, it is composed entirely of parliamentary enthusiasts and it receives no subsidy or secretarial support from pressure groups outside Westminster.
  Another indication of the way in which hon. Members of different political persuasions can work in this sphere has been illustrated by the remarkably united and friendly
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  progress that the Select Committee has made during its current inquiry into the funding of the arts. As the hon. Member for Lewisham, West said, it is probably the most comprehensive inquiry made by Parliament not just since the war but for the whole of this century.
  These two examples well illustrate the importance of all-party accord on these matters. If that accord were shattered, it would be tragic. The nation would be the loser. It would also be tragic, because no one could impugn the non-partisan enthusiasm with which almost all Ministers for the Arts have behaved since the days of the much-loved and greatly respected Baroness Lee, the first Minister for the Arts.
  Among Baroness Lee's most notable and worthy successors have been the two Ministers who have served the arts during this Administration. My right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) spoke with passionate eloquence both inside and outside the Cabinet. The quality and distinction of his period of office were so widely regarded that his departure was regretted throughout the whole of the arts world. His was a daunting act to follow, but the present Minister has brought his own qualities of quiet devotion and unobstrusive effeciency to his task. My right hon. Friend has already earned the gratitude and respect of those who were apprehensive when the changes of January last year were announced.
  Both of my right hon. Friends have been notably successful Ministers in notably difficult times. When the more strident controversies have been long forgotten, their achievements in the establishing and sustaining of the national heritage memorial fund will be gratefully remembered. Perhaps here in parentheses I might refer to the Trojan work done by my hon. Friend the Member for Dumfries (Sir H. Monro), who piloted the relevant Bill through the House of Commons. The work of the Ministers in that regard, in fighting for the Arts Council budget against a voracious Treasury, and in establishing public lending right—in spite of all that was said by '.he hon. Member for Warley, East—will long be remembered and will be a proper and lasting memorial to their great achievements.
  My right hon. Friends have had no easy task. I have often voiced my criticism of the Government's economic policy—and now is not the time to debate that—but I would say most emphatically that, however, questionable the merits of monetarism, my right hon. Friends deserve unreserved congratulations on the way in which they have battled to give the arts their fair share. Yet, in spite of all that, we cannot escape the fact that the arts today are in crisis, and it is a crisis of almost unprecedented proportions.
  There is the plight of the commercial theatre in London where many houses may be closed permanently before too long. There are threats to our great university museums. These have already been alluded to, but they cannot be over-emphasised. There are threats to many local authority services, as in Hereford and Worcester, where only this week the council is being asked to chop £80, 000—or 40 per cent.—from its arts and museums service budget.
  Wherever one looks one finds that the arts and our heritage are in dire peril. Never has their contribution to our national life been more widely appreciated. Never has the quality of dramatic and orchestral performance of our great national companies been higher. My hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) and l bad the opportunity the other night of witnessing a marvellous

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  performance of "The Flying Dutchman". We were able to witness the quality that is produced by one of our great national companies here in London. Never have the treasures in our museums or great country houses been better displayed or more widely enjoyed. Yet all this is at risk.
  It was for this reason—and conscious of the Government's stated objective of replacing public funding, where possible, by private subsidy—that the Select Committee decided to embark on its major inquiry into the funding of the arts. That inquiry is still in progress. The hon. Member for Lewisham, West has referred to it. It would be wrong of me or him or anybody else to anticipate what we might eventually recommend to the House.
  One thing has been clear to those who have followed our public sessions and seen the variety of witnesses who have come before us, or read the numerous written submissions with which we have been positively deluged. It is that no one is unduly optimistic about the future. No one believes that, without a whole range of new opportunities and incentives, private or corporate patronage or sponsorship can ever supply more than a small fraction of the money that is needed to sustain the arts in Britain.
  Perhaps this is the opportunity to emphasise that the arts, which take such a very small share of our national budget—the Minister referred to this—are not hungry parasites, always fed, never feeding, always taking and never giving. Without the high quality of our artistic life, the accomplishment of our performing arts and the stunning beauty of our great collections, tourism, which is our greatest growth industry, would go into mortal decline, forced to rely on the sunshine of our beaches and the gastronomic delights of our cuisine. That is why it is so lamentable that the Government have been so slow to respond to the report, referred to in the motion, that was presented by the Select Committee almost a year ago.
  At the onset of our inquiry it became clear to us that there was one crisis to which we had to give our immediate attention. It was not that we ranked the visual arts above the performing arts, but theatres can be reopened, new opera companies can be established and the works of great dramatists and musicians can be rediscovered and reinterpreted. Great collections and works of art are truly unique. Once lost, they are lost forever.
  Some years ago the infamous Mentmore sale drew graphic attention to that incontestable fact and last year the sale of the Leonardo codex from Holkham showed that the admirable safety net of the National Heritage Memorial Fund would not be strong enough to catch and to save our heritage should a great proportion of it come on the market in a short space of time.
  Knowing of the presence and imminent operation of funds, such as the late Mr. Paul Getty's, whereby just one museum in the United States will have £25 million a year to spend on purchases, we on the Select Committee felt that the question of the retention of works of art in Britain and their acquisition by public bodies demanded immediate attention.
  It was no good our sitting back and waiting while more and more hard-pressed owners felt obliged to retain their
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  productive acres and sell the Van Dycks to repair the roof—and all at a time when our national museums did not have the means to acquire those treasures.
  The Select Committee therefore produced its interim report. It is brief, to the point and unanimous. I pay tribute to our chairman, the hon. Member for Lewisham, West. We have our Committee differences from time to time, but for the most part we work in close harmony and succeed in putting behind us inherited prejudice and dogma. The report is an excellent testimony to that fact.
  Nine hon. Members from three parties unanimously came to one set of conclusions. We produced recommendations which were easy to understand, sent them to a Minister who appeared glad to have them, and we waited. And we still wait. We suspect that we wait because the Treasury is not prepared to open its mind to new ideas or to accept that it is the guardian of our national patrimony, which, if the Treasury does not act quickly, it will be a party to dissipating—and all in the cause of a blinkered fiscal exactitude which refuses to recognise realities.
  We on the Select Committee recognise that owners who adopt a responsible attitude to their possessions and are prepared to guard and share them, should have their problems recognised. It should be recognised that the vast increase in the value of objects often bought for a paltry sum two or three centuries ago is not of their making, and it should be accepted that to conserve anything fragile, old and beautiful is costly and that it is also costly to insure and display it.
  Because no Government could ever provide the funds to purchase all the works of art in private hands in this country, the prime objective of Government policy should be to encourage owners to look after what they possess, to show their possessions to the public as much as possible and always to make them available to scholars. If they have to part with them, they should be encouraged in every way to let them pass into national ownership, either in lieu of tax or as a result of a tax-free sale. That is why we made our eight recommendations and suggested that a tax credit system should be considered. I was delighted by what the hon. Member for Lewisham, West said about that.
  It is always notable when hon. Members of all parties come together to make recommendations of such importance. There was a time when private ownership excited jealousy, but all the members of the Select Committee recognised what successive Governments have said—that the best way of retaining the national heritage is to encourage owners to retain and share.
  There was a time when the Conservative Party was accused of being the philistine party. Despite the marvellous work of my right hon. Friend the Minister, we shall be in danger of acquiring that reputation again if the Treasury does not allow my right hon. Friend to reply to the report soon and to accept most of its recommendations. He cannot wish the Government to be coupled in the history books with those Cromwellians who allowed the incomparable collection of Charles I to be dissipated to the Russians in the cause of Puritan monetarism. Yet a refusal to accept the logic of our simple but urgent recommendations could be the prelude to a disaster of even greater magnitude. If any Government allow that to happen, they will be as guilty of condemning a great and productive industry to death by neglect as they would be if they refused to sanction the spending of another penny on any of our great nationalised industries.

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  Let us remember that a small investment—I use the word "small" advisedly, as it has been used before in the debate—still provides great dividends. An august institution, such as the Royal Academy, could be saved for posterity by less than 1 per cent. of what we have spent on British Leyland in the past year. We collect more in VAT from the repairs to listed buildings than we spend on assisting them and the budget for all our theatre and opera companies—and, indeed, the whole Arts Council grant—is less than a quarter of the most recent British Rail deficit.
  Twenty years ago, three former Members and one current Member were authors of a publication issued by the Conservative Political Centre and entitled "Government and the Arts". They strongly recommended a change in ministerial responsibility, writing:
  "The fact that the arts are one of the only beneficiaries of State spending still administered by the Treasury is an anomaly which can no longer be overlooked. This led us to reject the idea of an `Aesthetic Secretary to the Treasury'. For the Treasury's function is to curb and curtail; if we are to have a ministerial champion for the arts, he must be liberated from Great George Street".
  It is ironic that the present hon. Member who subscribed to that admirable pronouncement, so full of good common sense, is now the Financial—not Aesthetic—Secretary to the Treasury. Perhaps that should give us hope that, in concert with the Minister who has done so much in difficult times to uphold the arts, he will reply quickly to the Select Committee report and accept what it says. Those Ministers will thereby play their part in retaining the great heritage that we all wish to enjoy.
  5.37 pm
  Mr. John Roper: I am conscious of the time limit and I will not follow the hon. Member for Staffordshire, South-West (Mr. Cormack) in attempting to rewrite the history of the seventeenth century in terms of monetarists and Keynesians, although there is great scope for such a analysis.
  The hon. Member for Staffordshire, South-West began by referring to the unanimity in the House on the subject of the arts. There is a great deal of such unanimity, but I suspect that in order to get this debate on a Supply day, the hon. Member for Warley, East (Mr. Faulds) found it necessary to include ritual polemic in the motion. However, in spite of that polemic, I am grateful to the hon. Gentleman and the Opposition for having found half a day for a debate on the arts, because, alas, we have not had such a debate for a long time.
  Although the hon. Member for Warley, East enjoyed his natural talent for hyperbole to the full in the criticisms that he made, many of them, together with many of the other issues that he raised, were justified, if somewhat overstated, and are supported in many parts of the House.
  I commend the Select Committee on its report and its work. Those of us who have read the published evidence and memoranda taken by the Select Committee in its wider study of the funding of the arts will agree with what the hon. Members for Lewisham, West (Mr. Price) and Staffordshire, South-West have said about its work. I believe that it will be of considerable importance to the House and to a wider audience. This report was produced 12 months ago because the Select Committee hoped that the response to it would figure in last year's Finance Bill. I hope that, despite what the Minister said about the possible delay because of this debate, the response will be included in this year's legislation.
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  If one considers the report, it becomes clear that the present position is profoundly unsatisfactory and misunderstood and in great need of clarification. I was glad to hear the Minister say that not only would there be a response, but, as he promised the Select Committee over 12 months ago, a much clearer statement on the matter. It is clear from the supplementary memorandum submitted by the Minister after he had given evidence to the Select Committee—which included the result of a survey carried out among directors of provincial museums—that those who must deal with tax relief on a week-to-week basis if not more frequently, are not aware of the position. If those directors, who are supposed to benefit from the tax concessions, are not clear about them, we certainly need further elucidation.
  When the Minister produces his final response, he should also consider the time limit before works of art come under the scrutiny of the Reviewing Committee on the Export of Works of Art. That time limit has been reduced from 100 to 50 years within the past three years. The Minister referred to the new Henry Moore museum in Leeds. Much of Moore's work would not come under the control of the committee. I believe that the Minister agrees. Therefore, the time limit should be reviewed and perhaps brought down further so that the work of our contemporary artists is controlled as well as the historical objects that are part of the national heritage.
  Secondly, there must be a resuscitation of the Rockley committee, which seemed to disappear on the death of its original chairman. It was most helpful, both to galleries and to others, in acting as an independent arbiter that could resolve some of the problems in the negotiations referred to in the report.
  Thirdly, I have some doubts about the Select Committee's suggestion that the so-called douceur should be increased from 25 per cent. to 75 per cent. I was surprised that the Select Committee chose 75 per cent. Perhaps it was put forward almost as an opening bid. By asking for 75 per cent. they might have persuaded the Treasury to grant them 50 per cent. It was clear from the Minister's supplementary memorandum that most of the museum directors believed that a figure between 25 per cent. and 50 per cent. would be appropriate.
  In the memorandum submitted to the Select Committee by Mr. Saunders Watson on behalf of the Historic Houses Association, he did not ask for 75 per cent. but said only that the
  "undoubted difficulties of arriving at this value, to which I have already referred, might to some extent be mitigated if the `douceur' was raised from 25 to 50 per cent."
  He went on in the next paragraph to say that it was not only a matter between the Treasury and the vendor. It also had an impact on the spending budgets of museums. If the douceur goes up to 75 per cent., unless there is an increase in Government grant to the museums, they can buy fewer objects with a spending grant: because they must pay rather more for the objects.
  I hope that the Minister will take that point into consideration and that he will think twice before accepting the Select Committee's recommendation that the douceur should be increased from 25 per cent. to 75 per cent. However, I agree that there is a case for an increase, especially for objects with a low value. The proposal for a two-tier douceur is worthy of some consideration, although I suspect that the advantages are probably outweighed by the disadvantages of lack of clarity and the

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  need to have as straightforward a system as possible. That is why I advocate using the same system and rate of douceur both for sales by private treaty and for in lieu sales.
  Some hon. Members have referred to tax credits. Despite the rather tedious objections put forward by the Treasury in its evidence to the Select Committee, in some cases tax credits could be valuable. Although the option of private treaty sales is available to owners, there would be an additional flexibility if tax credits could be provided. I hope that the Minister, when he responds to the proposals in a month, will consider the matter favourably and that there will be provision in the Finance Bill for tax credits for such sales.
  I wish to emphasise the point made by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) about the impact of local government cuts on arts spending. He referred to the Hallé orchestra, whose funds are now being cut in order to keep the Manchester city art gallery open. Manchester city council's original proposal was to close the art gallery. That would have been a problem for the citizens of Manchester and, because it is a regional art gallery serving the population of Greater Manchester and much of the North-West, it would have been a considerable blow to a much wider population. That demonstrates the problem of the major regional art galleries funded by one local authority—albeit a relatively large one—but serving a much wider community. Some of the proposals in the Drew report must be re-examined to find a more satisfactory way of dealing with them.
  The hon. Member for Staffordshire, South-West referred to the problems of university museums and galleries, which are being caused by the cuts introduced by the University Grants Committee. I hope that the Minister will use his influence to ensure that the grant to university museums and art galleries is taken out of the UGC grant to protect them from the present round of university cuts.
  I believe that there is unanimous support for our cultural heritage and the arts on both sides of the House. The Select Committee has shown the measure of unanimity on the matter that we are discussing today. The Government should take the Committee's report seriously. I am glad that we have had an opportunity to debate it today.
  5.50 pm
  Mr. Fergus Montgomery: The debate is short and as many hon. Members wish to take part I shall confine my remarks to the minimum. The Opposition are always asking for more and more money to be channelled into the arts. Conservative Members would also like more money to be channelled in that direction, but we must remember that we are in the middle of a world recession. In announcing that the grant to the Arts Council for the year 1982–83 would be £86 million—an increase of nearly £6 million on the previous year—my right hon. Friend the Minister for the Arts showed what an enormous amount of work the council does for the arts and proved how successful he is in his present job.
  I declare an interest in that I am the parliamentary consultant to the Society of West End Theatre. I shall confine my remarks to the problems of the West End
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  theatre, which is closely linked to tourism. It is estimated that last year tourism earned £4, 000 million for the country and that half the visitors went to a West End show.
  On Friday I tried unsuccessfully to introduce a Bill to amend the Restrictive Trade Practices Act. The Bill had support from all sides. The purpose of the Restrictive Trade Practices Act is to help the general public. There is a Director General of Fair Trading. What could sound fairer than that? The Office of Fair Trading is investigating the West End theatre. Some people believe that that means that the general public will get a better deal and that theatre tickets will come down in price. On the contrary, the opposite is more likely.
  The live theatre in Britain is the envy of the world. Because some of our theatres require subsidy to remain in existence some people erroneously believe that the theatre as a whole is uneconomic and dependent upon charitable handouts. Some theatre companies need subsidy to make up the difference between their operating costs and the income from the box office, but the West End theatre is a profitable enterprise and of enormous value to the tourist trade. It is calculated that the country takes from the theatre in various forms of taxation four times as much as the Government provide in subsidy to the live theatre. My right hon. Friend should contemplate that.
  Not only does the West End theatre do a great deal for the country's prestige, but it helps to bring in a great deal of money to the Chancellor's coffers. Nobody can pretend that the West End theatre has had an easy time. This time last year almost a dozen theatres in the West End were empty—or, in theatrical parlance, dark. Today they are open and the prospects are brighter than they were 12 months ago.
  The hit musical "Cats" shows that Britain can produce musicals every bit as good as Broadway. That show proves that if theatre managers give the public what they want, the public will respond. "Cats" is at the New London theatre which, since it opened, has been regarded as a graveyard where nothing can run. People said that it was off the beaten track, that there was no passing trade and that consequently it would never have a success. Now that theatre is doing record business. It proves that if managers in the commercial theatre give the public the entertainment that they desire, the audiences will flock there, wherever the theatre is.
  We can learn much from Broadway. It is interesting to compare the chaotic method of selling tickets on Broadway with the ordered system which, by and large, operates in London. I say "by and large" because our system could be improved.
  Prices for the New York theatre have escalated so much that it is almost pricing itself out of the market. Last year I went to see what was regarded as a great musical success, "42nd Street". I had to pay $50 for a ticket. That was not the black market price, but the price at the box office. That is equivalent to £25 and the ordinary citizen cannot afford such prices often.
  In New York there is no effective control on ticket touts—or scalpers, as they are rightly called. In America one can buy tickets from brokers who charge no fixed fee. The broker can sell the tickets to whoever offers the most money. It is in that respect that the Office of Fair Trading has picked on the Society of West End Theatre.
  In Britain there are ticket agencies, which for some strange reason are called libraries. They are found in big stores, hotels and offices and shops throughout the West

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  End. If one buys a ticket at an agency one pays the price of the ticket plus a fixed percentage. Many people find the service convenient and worth the extra fee. That fee has been held down by the Society of West End Theatre to protect the public, but the Office of Fair Trading says that it is not in the public interest to limit the booking fee as it constitutes a restriction on competition. That Act will entitle ticket agencies to charge whatever commission they can. The result, far from bringing down the price of tickets, will be to increase the price enormously, particularly for a smash hit. Ticket agencies would be able to set the sky as the limit.
  The libraries also collect a strictly controlled percentage from the theatres for selling their tickets. If that "restrictive practice" as it is called, is removed, the producer of a flop could offer a higher percentage to agencies to issue tickets to his show. Unsuspecting people, having been given the soft soap from the person selling the ticket, would pay a great deal of money for a show that was not very good. I wonder whether that is what the office of Fair Trading wants.
  The office is also concerned that the society negotiates with individual newspapers to ensure that advertising rates are kept reasonable. For over 20 years certain newspapers have published a West End theatre guide at an uneconomic rate because they regard it as a service to their readers. If newspapers could charge what they wanted the cost could be as much as £4, 000 a week. That would be excessive for many theatres. To tamper with the present arrangements could mean the disappearance of the West End theatre guide in some of our newspapers. That would be a loss to the general public. It is strange that theatres have to pay for that service. Newspapers do not charge for printing television and radio programmes or the runners at racecourses. They are free services.
  The West End theatres have tried to help themselves. They have instituted the student standby ticket. Last year about 140, 000 tickets were distributed in that way. Recently they opened the Leicester Square half-price ticket booth. In its first year, 350, 000 tickets were sold. It is unbelievable that even those two schemes are questioned by the Office of Fair Trading. It is touch and go whether they will be referred to the restrictive trade practices court. I cannot understand why the schemes are thought to be against the public interest because they provide cheaper tickets to enable more people to go to the theatre.
  The argument is that if the theatres' case is so good they can justify their actions in the restrictive trade practices court. I am told that it would cost £50, 000 before the case even got to court and that the total costs could be enormous. I am delighted to see the Secretary of State for Trade in the Chamber. I give him credit for choosing the right moment to come in. The Secretary of State has no power to prevent references to the restrictive trade practices court which the Office of Fair Trading considers to be significant. If, after investigating, the Office of Fair Trading decides that a practice is not restrictive the Secretary of State's approval is required for a decision not to refer it to the court. Why cannot the Secretary of State have discretionary powers to prevent references to the court of practices which although technically in breach of the law are not necessarily against the public interest?
  Ministerial discretion would avoid excessive legal costs for an industry which can ill afford such costs. I hope that the Minister for the Arts will take this opportunity to have
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  a quiet word with the Secretary of State in the hope that they can come forward with a solution that would be of great value to the West End theatre.
  6 pm
  Mrs. Renée Short: Several hon. Members have said that when we have debates on the arts, which are rare enough, they seem to unite opinion across the Floor of the House. I am glad to be able to support the Minister and those on both sides of the House who have urged greater suport for the arts. I hope that what we say during the debate and in other debates that may follow will concentrate the mind of the Chancellor more dramatically than the minds of previous Chancellors. I do not distinguish between any of them because none of them has supported the arts as I thought proper.
  We should perhaps have a reappraisal of our attitude—this applies to Governments of both the major parties—because we have never allowed the arts to flourish as I think they should. So many areas are ready for a new flowering of artistic activity. Unfortunately, they seem always to be cramped and frustrated by a lack of resources to mount shows and to invest the money that is needed. It is extremely expensive to put on a new show. There are problems apart from those involved in finding a suitable building. The other problems include the designing and building of the sets, the making of costumes and the mounting of publicity.
  Outside the Government those who are willing to put their money into supporting the arts are rare birds. It is really only the Government and some large companies—it is rarely local authorities—that are willing to put money into supporting the arts. Some large companies think that it is prestigious to appear on the programme of the Royal Opera House as supporting its company. There are curious liaisons. It is odd that tobacco companies should support the Royal Opera or my friends in the Welsh National Opera. The money is welcome, but the correlation of singers and tobacco is curious.
  There is a great deal going on outside the prestigious companies, and much more could go on with more support. It is sad that for some years we have had contraction and closure. As the hon. Member for Altrincham and Sale (Mr. Montgomery) said, until recently about 12 theatres in the West End were dark. We are not seeing much expansion now.
  In the past, resources have been put into creating theatres out of unlikely buildings. For example, the Engine House at Chalk Farm is now a theatre in the round. I do not know whether the Minister has visited it, but before disaster strikes perhaps he will. It is flexible and adaptable. In better times it was flourishing with exhibitions, Saturday morning shows and Sunday evening concerts of all sorts—classical and rock—to suit all tastes. Good food and drink were available. Those activities were in addition to the plays that were going on in the main theatre.
  The theatre was sought after by leading experimental companies from abroad as well as by many of our famous companies. The Round House saw ballet and circus as well as leading drama companies such as Prospect, the National, the Royal Exchange Company from Manchester, when it was set up, and many others. It is now in danger. Unless the Arts Council, Camden Council and the GLC can increase their grants, the theatre will have to

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  close. Famous companies that played there have disappeared because of the economic situation, and that has been a tragedy for us all. The Prospect Company is one that has disappeared recently.
  In my constituency the situation is slightly different. We are trying to reopen an old run-down theatre that closed for lack of support because of the type of shows that it put on. Its productions were outdated and its ambience was non-existent. There was nothing there to attract at all. It closed, but the public now want a theatre there again. However, we need £750, 000 to refurbish it and to bring it up to date. We hope that the work will start in April, but that will depend on the resources that come in.
  The local authority is providing about £200, 000. The West Midlands county council has promised £100, 000. An approach has been made to the Arts Council for a grant from the housing the arts fund. Such grants seem always to be very small, but it is not known what the Arts Council can do. Nearly £20, 000 has been raised by an energetic local appeal.
  An important victory has been won as we have won over the council. It would be sad if local enthusiasm were to fade because the work could not go ahead. There must be careful thought about how the theatre will be run. The old-fashioned idea of putting in a manager and bringing in third-rate touring companies is a dead loss. That is why the Grand did not flourish and why it was not successful in the past. The most crucial issue is who will be the director of the theatre. I hope that careful thought will be given to that aspect.
  Mr. Cormack: May I suggest the hon. Member for Warley, East (Mr. Faulds)?
  Mr. Faulds: I have other commitments.
  Mrs. Short: I rather thought that my hon. Friend had. The position of director of the Grand theatre at Wolverhampton would be a full-time job if it were done properly.
  Theatres must relate to the people they hope to serve and must be seen to provide entertainment and mental stimulation that is relevant and exciting. They must cater for the entire age range. They must forge links with the schools and help to create the audiences and participants of the future. They must help also to bring on new talent. That is an important part of good teaching in our schools.
  We must set ourselves clear objectives for the arts if they are to survive. First, they must be available and relevant to all—and not only to those who can afford to pay the high prices for the best seats that the West End theatres and opera houses demand.
  Secondly, they must stimulate different art forms within the community, thus enriching what is conventional and what is new and different. They have an important role to play in those two areas.
  Thirdly, there must be freedom for artists of all types to work without censorship and without fear of poverty. Artists may well have been considered to thrive in the past when they were poor and starving in garrets—for example, La Boheme—but we have rather different ideas today. Artists should be paid well for the work that they do. This predicates more resources for professional artists.
  Fourthly, we must be prepared to provide good working conditions for artists in whatever sphere they work. Long
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  ago, as a predecessor of my hon. Friend the Member for Lewisham, West (Mr. Price), I was Chairman of an Estimates Committee before the august Select Committees were set up. Such Committees had several reincarnations between the Estimates Committees and the Select Committees. When my Estimates Committee considered grants for the arts, its members went to the Royal Opera House, Covent Garden. We were staggered to see the slummy back-stage areas of what I suppose is the most prestigious theatre in the country. We were staggered to see the very poor conditions in the band room. I believe that, following the refurbishment of Covent Garden, the band room still remains. That is scandalous.
  The conditions back-stage in most London theatres are poor. There are bare stone stairways, tiny dressing rooms, no proper ventilation or light and uncomfortable old furniture. They are shabby dumps. We must buck up our ideas about what we provide for our artists.
  All this means more resources for the arts generally. These can come only from public funds. The peripheral sums that come from companies are welcome, but they can be quickly withdrawn. If the productions do not please, the subvention can stop.
  Therefore, we must come back to support from public funds, from the Government and from local authorities. I remember that when Aneurin Bevan first introduced his idea that local authorities should provide help for the arts, he talked about achieving a sixpenny rate. He thought that that would be the minimum that any local authority should be prepared to find. However, that sixpenny rate was never achieved by any local authority. If one goes back over the figures published by the local authority associations, one finds that a 3 farthings rate was the average amount subscribed for support for the arts. Therefore, we have a long way to go in educating the local authorities about what should be done.
  When I chaired the Labour Party's working party on the arts, from which my hon. Friend the Member for Warley, East (Mr. Faulds) was pleased to quote, we were concerned that the entertainment unions, with their vast practical experience, should have a greater say in the way in which the arts were administered. We believed that there was a powerful argument for making the administration of the arts more democratic.
  The arts are a vital and exciting part of the nation's life. They challenge our ideas and beliefs with an intensity that is not found in any other area. They appeal to the emotions and to the mind. In short, they deserve better from any Government. I am not castigating just this Government; I also criticise the previous Labour Government. None of us has supported the arts as we should. They deserve better. They should be not a peripheral activity for the few, but a stimulus to the creative activity of the whole nation, democratically organised and supported with greater resources than any Government have yet provided.
  I hope that the force of the debate, which has been echoed by so many hon. Members on both sides of the House, will help to provide the additional resources.
  6.13 pm
  Mr. Robert Rhodes James: I shall be brief because other of my hon. Friends wish to take part in this short debate. Like the hon. Member for Wolverhampton, North-East (Mrs. Short), I warmly welcome the Opposition's initiative, although I regret the terms of the motion. I applaud the Select Committee's

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  report and I compliment the chairman, the hon. Member for Lewisham, West (Mr. Price) and the other hon. Members involved in the Committee.
  I shall deal with a point that has been raised by my hon. Friend the Member for Staffordshire, South-West, (Mr. Cormack) the hon. Member for Farnworth (Mr. Roper) and others—the plight of our university museums. The situation in this country is without parallel. The principal collections outside the capital cities are universityowned—not only by the universities of Cambridge and Oxford, but by the universities of Manchester, Birmingham, Glasgow and London. The Ashmolean at Oxford and the Fitzwilliam at Cambridge and also the Courtauld Institute in London are recognised museums of major international importance. However, their operations depend essentially on the general funds of the universities concerned. The University Grants Committee allocations do not earmark funds for museums. The resources for the university museums, which are some of our major museums, come from only three sources.
  The first source is a low proportion of the UGC grant made according to the decision of the individual university—that can vary. Secondly, there are grants from the area museums service towards particular projects in conservation or display. Thirdly, there are grants—the normal rate is about 50 per cent.—towards approved purchases, made from the regional fund administered by the Victoria and Albert museum, up to a notional limit per institution, which is currently £60, 000 per annum. There is an occasional extra grant towards special objects. The current problems facing universities, not only those at Cambridge, of which I am only too acutely aware, highlight the insecurity of the funding for university museums under the UGC proposals.
  I am not making a constituency speech, but I shall refer specifically to the Fitzwilliam. I speak as a Friend of the Fitzwilliam and as the nephew of one of its former directors.
  The Fitzwilliam can make reductions in expenditure only by cutting an establishment that is already conspicuously under-staffed. If, as appears likely, it has to achieve up to £40, 000 a year of savings by 31 July 1984 by reduction of staff, by that date it will be brought to the brink of closure to the public. That is the simple fact that I must draw to the attention of my right hon. Friend the Minister for the Arts. Within two years it is possible that one of our great museums will no longer be able to be open to the public.
  Like the Friends of the Fitzwilliam and its director, I am strongly opposed to the principle of charging for admission. We have been through that course before. It would not be practical and would not have the results that some people think it might.
  Occasionally university museums receive grants from the area museums service, which are subject to VAT, which is irrecoverable, either by the university or by private museums. With respect to my right hon. Friend that strikes me as a remarkable anomaly. If the museums are being charged VAT on the grants, it should be recoverable, as it would be in a normal business.
  There is no longer any realistic prospect that local authorities responsible for museums, especially universities, can fund the standard operation of their institutions without recourse to the Government. Although applications for recurrent aid could be sifted, which I recommend,
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  surely that should be done on a different basis. Other aspects such as the national and the tourist interest as well as the general cultural interest should be borne in mind.
  I return to the example of the Fitzwilliam. There are others like it. The number of visitors this year and last year will exceed 200, 000. Any form of charging would have reduced that number significantly. Unless there is a change in the way in which university museums are financed, by 1984 the prospects are that the Fitzwilliam, which is at present open only on limited occasions because of the shortage of resources, might have to be closed completely to the public. That would be a tragedy in which I am sure that the Government would not wish to be involved.
  My right hon. Friend said that the Wellington papers had gone to Southampton university. Will he look again at the abominable decision by the Labour Government, whereby, contrary to the wishes of the Churchill family, the papers of John, the Duke of Marlborough were sent not, to Churchill college, Cambridge, but to the London museum?
  6.18 pm
  Mr. Jim Callaghan: My hon. Friend the Member for Warley, East (Mr. Faulds) made a wide-ranging speech in which he listed a catalogue of woes. My speech will, reflect mainly the Select Committee's report, perhaps rather narrowly, and I shall bring out points on which I should like clarification from the Government Front Bench.
  I am delighted to see that a member of the Treasury team is sitting on the Front Bench because I shall plead with the Chancellor of the Exchequer in the hope that the Treasury can assist more positively in preserving our arts heritage. That has been done in the past.
  Sir Roy Shaw, chairman of the Arts Council, has said:
  "The arts have been under-subsidised, under-patronised, under-valued and under-distributed for decades".
  No Government—I am not being partisan about this—have realised that the arts are an industry generating more than £150 million. Tourists are attracted to theatres, museums and galleries and spend more on the arts than Governments provide in grants. Government expenditure on the arts is a tiny fraction of total expenditure, and Britain spends less on arts subsidies than any comparable Western country. I know that in these difficult times there is no point in pressing the Government to increase the arts grant, but I ask them, via the Treasury, to look afresh at the rules to help keep art treasures in Britain at very little cost to the Government.
  From time to time we read in the press of people wishing to sell art treasures to meet taxes. Often, those treasures are sought by overseas bidders. We have heard that the Getty museum has £25 million with which to purchase works of art throughout the world. That puts British works of art at risk.
  Some time ago, The Guardian reported that 11 pictures by James McNeill Whistler, worth about £150, 000, were to be sold by a university. It appears that the university was building an art gallery at a cost of nearly £1.5 million for which it owed £320, 000. Because of the proposed Whistler sale and that of other works of art, and especially in view of the circumstances surrounding the disposal of the Leicester codex by the trustees of the Holkham estate, I welcome the setting up of the Education, Science and Arts Committee because it recognises the problem of valuable works of art being sold abroad. I was delighted

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  to learn that the Committee was anxious about the possible loss to this country of a large number of important works of art and heritage objects still in private hands. There is indeed a major muddle in this matter which the art world is looking to the Select Committee and the Treasury to tidy up.
  It seems that those who own works of art encounter discouraging delays by the capital taxes office when they seek to satisfy the conditions concerning exemption from capital taxes. The rules governing the conditional exemption of works of art, their sale by private treaty, or their surrender in lieu of capital tax liabilities are set out in the Treasury document, "Capital Taxation and the National Heritage", which is far from helpful and has no force in law but gives the impression that it contents are legally binding. No wonder that in the art world it is known as the "Yellow Peril".
  I welcome the Select Committee's recommendation that the Treasury document should be withdrawn and replaced by one drawn up by the Treasury in conjunction with the office of arts and libraries. The new document should be readily comprehensible by family solicitors, other advisers who have clients needing guidance and indeed any intelligent layman. Comprehensible rules for the exemption of works of art from capital taxes should be drawn up as soon as possible. I think that the Minister said that the Government will consider this matter and produce a document to clarify the position so that even a layman such as myself will be able to understand the rules.
  I fully support the Select Committee recommendation that, in return for exemption, an owner should be under an obligation to give a public institution the first chance of acquisition in the event of his deciding to sell. I also support the recommendation that in the event of the owner refusing to offer his art object to the nation the export reviewing committee should have the power to recommend the indefinite withholding of a licence to export.
  The retention of many works of art of incalculable importance depends upon a sensitive and easily understood system which provides adequate encouragement for owners to retain their possessions, but which also encourages those who feel that they can no longer do so to sell their works of art to the nation without the penalty of capital taxes on the proceeds resulting from straightforward bargaining, or to surrender them in lieu of tax knowing that the price with which they are credited will be fair and reasonable.
  Only through such a system will owners be prepared to consider not selling on the open market and thereby depriving the nation of a proper chance to acquire important art objects. Owners continually have to sell works of art to keep their houses running. The painting by Altdorfer from Luton Hoo, the Poussin from Chatsworth and the Leonardo manuscript from Holkham Hall are but a few highly publicised cases. The national heritage is subject to continual erosion in this way. I therefore urge that the recommendations of the Select Committee be accepted without delay, as they will make a significant
  6.26 pm
  Lord James Douglas-Hamilton: I, too, welcome the Select Committee's report. I shall deal with just one point—educational facilities in galleries—as many colleagues wish to contribute to the debate.
  The principal concern of the Select Committee was to save our heritage of important works of art through acquisition by our own museums and galleries of works which are put on the market and which might otherwise leave the country. In this respect, the Scottish galleries, particularly the national galleries in Edinburgh, feel that they have done very well and have received fair treatment in terms of purchasing grants.
  The Scottish galleries feel that they have done less well, however, in terms of the entirely separate allocation for administrative purposes. The heritage is of little use unless it can be seen and enjoyed and generations growing up have the opportunity to learn about and from it.
  In paragraph 10 of its report the Select Committee dealt with the contentious issue whether to exempt works of art from capital transfer tax unless they can be put on public display forthwith. In this connection, the position of the national galleries in Scotland gives rise to serious concern, as they are suffering a serious shortage of the staff resources necessary to make proper use of their collections. An independent committee, chaired by Dr. Alwyn Williams, which reported on the matter last September, laid particular stress on the educational value of galleries and museums. Recommendation 9.1 stated:
  "The interpretation of collections should take an equal place with other essential national museum functions like acquisition, conservation, research and security."
  It further recommended:
  "Museums need constantly to improve their presentation of collections to the public."
  Recommendation 9.16 stated that the national galleries in Scotland should each have an education department. In fact, there is no education department and, apart from a press officer, there are no adequate educational facilities. Elsewhere—for example, in the National Museum of Wales in Cardiff, in the Glasgow museums and, indeed, in the national museums in London—such facilities are provided.
  The extent to which the resources of the Edinburgh museums have deteriorated by comparison with London has been substantial. Relative to their size, they perform much the same functions as the National gallery, the Tate gallery and the National Portrait gallery in London, but they have lost out in terms of staff wages and salaries because in the 1960s their allocation was increased only two and a half times, compared with four and a quarter times in London. In other words, for every additional £1 provided towards the running costs of the Edinburgh galleries between 1960 and 1970, an extra £1.75 was provided for the London galleries.
  There is nothing new about that. That development was firmly rooted in the past. The allocation comes within the block grant made available to the Secretary of State for Scotland, and I appreciate that there are competing requests. I hope, however, that the Minister will take up with the Secretary of State for Scotland my request that adequate provision be made for educational facilities from which countless schoolchildren will benefit.
  The effect of the deterioration in resources on the Edinburgh galleries is that a minimal staff of trained and competent curators, who should be fully occupied with the

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  proper care of their collections and in generating the kind of exhibitions that involve a wider public in the visual arts in Scotland, are spending the greater part of their time on management for want of competent staff to operate in their place. More seriously, they do not have any resources to engage specialist schools staff, unlike other galleries in other parts of the United Kingdom.
  Mr. Dalyell: More public expenditure.
  Lord James Douglas-Hamilton: I am arguing for a marginal readjustment. Few resources would be necessary. I hope that this will be passed on to the Secretary of State for Scotland. Thousands of people visit the galleries in Edinburgh. Just as the Constable exhibition at the Tate and the Turner exhibition at the Royal Academ attracted people from all over the world, so the exhibitions of Degas and Poussin aroused considerable interest in Scotland.
  I hope that a programme for schools and further education organised on a regular basis will be adopted I shall be grateful if my right hon. Friend will bear my suggestion in mind.
  6.31 pm
  Mr. Toby Jessel (Tickenham): I hope my hon Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) will forgive me if I do not pursue his arguments. I wish to take up a point made by the hon. Member for Wolverhampton, North-East (Mrs. Short) who said that theatre audiences should be wider. The hon. Lady may not have seen an interesting report entitled "The West End Theatre Audience" commissioned by the Society of West End Theatre and carried out by National Opinion Polls which stated in its conclusions
  "The composition of the West End theatre audience is much more widely spread in socio-economic terms and consists of a much greater proportion of younger people than might have been thought".
  There is some way to go. Our theatre audiences, however, are already fairly wide.
  The hon. Lady also said that she hoped that a theatre would reopen in her constituency. She will not mind, I trust, if I boast that a new theatre was opened in my constituency last summer by His Royal Highness the Prince of Wales during his visit to the nine hundredth anniversary celebrations of the town of Twickenham. I refer to the Mary Wallace theatre. It is going well. Another good theatre is located at Hampton Court.
  My constituency is second to none in its appreciation and enjoyment of the arts. Our buildings include Hampton Court Palace, Walpole's Strawberry Hill, now a Roman Catholic teacher training college, Kneller Hall, the Royal Military School of Music, where our army bands are trained, Marble Hill House, belonging to the Greater London Council, Orleans House, a museum run by the Richmond upon Thames borough council; and Ham House is just a ferry journey away across the Thames.
  On the amateur performing side, there are three good choral societies based on Hampton, Twickenham and Teddington and a great range of musical activities for children and young people.
  Mr. Faulds: The hon. Gentleman must not be so modest that he fails to admit that his constituents, unfortunate in many ways, are fortunate to have a talented musician as their Member of Parliament.
  Mr. Jessel: I am grateful for what the hon. Gentleman says. I also happen to be married to an actress. My
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  constituents also appreciate greatly the artistic events that take place in the West End of London. With eight railway stations leading to Waterloo, we are well placed to attend the many superb concerts at the Royal Festival Hall and adjoining halls and also performances at the National Theatre. Together with the Royal Albert Hall, the new Barbican centre, to open next week, and all the many theatres that comprise a tremendous wealth of artistic activity, London is the theatrical, musical and entertainment capital of the world. We are pre-eminent. It is hard for any foreign capital to compete with London. We should be immensely proud. We should be ready to blow our trumpet.
  Although there are many issues with which I should have liked to deal, including European Music Year and exempt chattels, I shall sit down and allow time for other hon. Members to speak.
  6.34 pm
  Mr. Tim Brinton: As a member of the Select Committee, I was delighted to place my imprimatur on a unanimous report. I do not however wish to pursue that aspect in the few minutes of the debate that remain. Without sounding, I hope, too philistine or too gloomy in my prognostications, I should like to hazard one or two guesses about the course of future developments. I was impressed by the suggestions for reorganisation made by the hon. Member for Warley, East (Mr. Faulds). This is the crux of the whole matter.
  Many hon. Members, not least my hon. Friend the Member for Twickenham (Mr. Jessel) have enthused about their favourite arts. I wish to enthuse about two of my favourite arts. I am not so exuberant as my hon. Friend the Member for Twickenham about the state of the West End theatre. There are still some darkened theatres in the West End. The prognostications that I have heard are gloomy. This is not simply a matter of money. Other factors are the state of the West End, the travel complications, even when the railways are not on strike, and the unappetising state of some theatres when audiences reach them. High rates are involved in maintaining these theatres. One therefore comes back to money in the end, but it is not the whole story. There is also the question of the environment in which West End audiences are asked to gather.
  My second enthusiasm is the film industry. This industry is properly a matter for the Department of Trade. The artistic form of the feature film should, however, be considered in any discussion of the arts. Many people may disagree but I believe that the feature film made to be shown in the theatre is a vital part of our whole arts heritage. If the feature film ceases to be made, we shall lose something vital that television cannot replace. There is an urgent need to provide a seed bed of capital to attract further investment to keep the industry going. At the moment, it is almost dead. Whether this can be achieved through an Eady type of contribution from television for showing features or by other suggested means, there is not sufficient time for me to dwell upon. The debate should, however, contain some mention of the problems of the feature film industry.
  I should also like to mention the huge contribution made by broadcasting to the arts. It must be much more than £100 million a year. This does not come into our calculations in discussion of museums, galleries, theatres, music or anything else. I support the expressions of

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  concern that have been made. I believe that progress will be made only if there is a major rethink of the arts policy of this country. This is a matter to which the Select Committee report, when it is published, will, I hope, pay attention. It is a matter that hon. Members and all interested in the arts should consider. Until the arts are contained under one umbrella, in a practical form, they cannot begin to function properly.
  6.38 pm
  Mr. Ken Eastham: It is obvious that a debate on the arts covers a wide sphere. Hon. Members have been enthusiastic about the arts. Their message seems to indicate that we need more and not less. It is therefore a sad reflection on the Government that their first year in office saw a cut of £1·5 million in the grant to the Arts Council. This had a dramatic effect. It was felt particularly by the local authorities when they made applications.
  A few years ago, certain approaches were made when Manchester was thinking of promoting the Palace theatre. In recent months, local government has faced a severe crisis. The financial crisis in Manchester has been so serious that it was touch and go whether the Manchester art gallery would close altogether. The same can be said about the libraries. A serious and savage cut in library services has had a devastating effect. These are the very services that cater for poorer people who cannot afford to buy works of art or pay fancy prices at some of the West End theatres. They are dependent on what local authorities can provide for them.
  Manchester was nearly faced with the possible closure of the Manchester library theatre. It is terrible that that should happen in a community with a population of 2½ million, that wishes to enjoy these cultural activities.
  It is not good enough Conservative Members saying they support expansion of the arts when, time after time, they go through the Lobby in support of these savage cuts. If Conservative Members are sincere about expanding the provision of art and culture, it is their public duty to support the Opposition from time to time when they are critical of some of the savage cuts that we have experienced during the Government's lifetime.
  6.42 pm
  Mr. Esmond Bulmer: I declare my interest as a member of the executive committee of the National Trust. I hope that the suggestion of the hon. Member for Warley, East (Mr. Faulds)—that the National Trust might be subsumed into a huge new quango operated by the Department of the Environment—will for ever remain a figment of his fevered imagination.
  I congratulate the hon. Gentleman on securing a debate on the arts, but I regret the terms in which the motion is couched. Central to the defence of the heritage is the need to get inflation under control. After all, inflation is the most virulent form of dry rot attacking the fabric of our great buildings. We must remember what the cost of repairs in the last 10 years has done to budgets aimed at keeping our buildings in good order.
  Under the Labour Government, the return to industry as a whole was less than 2 per cent. net of inflation. There is acute competition for works of art because it has been so difficult to find good investments: even the British Rail
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  pension fund was forced down that route. Therefore, if we can reduce inflation and get a reasonable return for industry, much of the pressure that is currently causing the heritage to be dissipated will be reduced. That must be in the interest of everyone who cares about our heritage.
  There is now no endowment that is theoretically large enough to allow the National Trust to accept a heritage house. The Government must reverse this situation; for I fear that the floodgates are about to open.
  Let us consider what has happened to inflation in the last 10 years. I take a heritage house as an example. If that house had 4, 000 acres, the price of the land has increased from perhaps £1 million to £8 million, and the house and its contents are now probably worth between £2 million and £3 million. My right hon Friends may find landed on their desks at any time a Mentmore that is even more evocative, because the tax charges may be £5 million, £6 million or £7 million.
  My right hon Friend must be prepared for that situation. He must talk to the Treasury about what he will do if he finds Blenheim, Chatsworth, Keddlestone, Holkham, Castle Howard or any of our great houses in the same situation as Mentmore. All of us who have been to the Loire know what happens when houses are stripped of their contents, and we all know how vital our great houses are as an attraction and inducement for tourists to come to Britain.
  I hope that my right hon Friend, in his talks with the Treasury, will explore the "in lieu" provisions further. I hope he will consider whether the way in which the National Trust was able to support and save Hardwick Hall can be applied to future great houses. I am sure that my right hon. Friend has already taken on board the case for a tax credit. I am equally sure that he believes that prevention is better than cure; that there should be an incentive to keep scheduled houses in good repair. After all, we cannot compel people to repair these great houses in the way that they deserve. My right hon Friend is only too familiar with the arguments for income tax allowance for repairs and Government indemnity on insurance. I wish him luck in his conversations with the Treasury.
  The good Lord agreed to spare Sodom if only 10 just men could be found. Sometimes, in conversation with the Treasury, one feels that if a loophole can be discovered through which one malefactor might pass, that is enough to stop an otherwise sensible provision for the relief of the heritage. I hope that my right hon. Friend will be able to convince the Treasury of the urgent need for special measures at this time.
  6.47 pm
  Mr. Richard Alexander: I join the general welcome for the arts settlement that my right hon. Friend has achieved. Britain is fortunate that it has general excellence in all areas of the arts. Some countries may have more specific excellence, but ours is general. The money that we obtain from the Exchequer is money well spent.
  Of course, the concentration of funding is in London, with some to the provincial cities. Practically nothing goes to those who live beyond commuting distances from the largest provincial cities. Yet there are concert halls, theatres, civic rooms and even village halls where an imaginative spread of support for our artistic performance would be both appreciated and possible.

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  In times of depression—even more important, in areas of depression—well performed artistic work, whether dancing, music or theatre, lifts the soul. I do not mean obscure modern dance, theatrical performance with more social meaning than artistic content, displays of twisted monstrosities, heaps of coal or piles of things even worse in entrances to town halls; I mean excerpts from classical ballets, a Mozart opera or a Chekhov or Sheridan play. People will go to see the classics. Unless we make it possible for them to do so in all parts of the country—not just in London and the larger provincial cities—we shall deprive people of the enrichment that their taxes lead them to be entitled to expect.
  My plea to my right hon. Friend, and through him to the Arts Council, is that we must provide a much wider range of classical excellence in the arts in all areas of the country. It is not fair to leave it to the local authorities, many of which are in the business of maximising their own investments in public buildings. For financial reasons, civic theatres often have to be used for pantomimes, boxing and wrestling matches. Local authorities look after the interests of their ratepayers.
  I pay tribute to the excellent small local companies which put on fine performances of the arts, including fine amateur opera performances. Nevertheless, I repeat that people in the provinces—not the large cities—do not get much of a share of the professional arts that their fellow citizens in London and big cities receive.
  The professional performing arts should not be a rarity for the provinces. My plea is that the Arts Council and the Minister should ensure that professional theatre, opera, concert and ballet companies get out to the smaller towns in Britain.
  6.52 pm
  Mr. Christopher Murphy: A former Prime Minister, Lord Melbourne, said:
  "God help the Government that meddles with art."
  As my constituency contains the splendid house he once owned—Brocket Hall—and as I was fortunate enough to live in part of it before becoming a Member of Parliament, it seemed particularly appropriate to quote his words. Any Government who meddle with art will probably create more problems for themselves than they will be able to solve. However, this Conservative Administration, rather than meddling, took deliberate and well conceived action to enhance our arts and heritage.
  The motion refers to the Select Committee's report on the arts and one can glean an insight into the Government's policies on this fundamental subject from its evidence and conclusions. As befits a Conservative Administration, much emphasis is laid on the contribution that can be provided by the private sector while State involvement provides the necessary framework in which the key aspects of our heritage should be allowed to exist with maximum freedom and minimum Government interference.
  The importance that is attached to the arts is clearly seen by the fact that they now have an independent voice in Government and from the creation of the Office of Arts and Libraries as a separate entity. That importance is further illustrated by the level of financial provision made available for the arts at a time of economic difficulty.
  The importance attached to the heritage is also clearly seen by the passing of the national heritage memorial fund to assist the preservation and acquisition of items of outstanding value that might otherwise be lost to the
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  nation. That importance is further illustrated by the positive approach being adopted to administer and improve conditions for the care and maintenance of ancient monuments and historic buildings.
  Undoubtedly, the campaigns to promote business sponsorship, spearheaded by my right hon. Friends the Members for Chelmsford (Mr. St. John-Stevas) and the Minister for the Arts have been beneficial to many arts organisations and the companies involved. The brief guides "The Arts are Your Business" and "Hove to Win Sponsors and Influence People" were well received. At the same time, the role of private patronage continues to be of immense significance to the arts. Certain taxation changes have proved helpful, and it is to be hoped that further advantages will be gained.
  Other hon. Members mentioned the importance of "enlarging" the Department responsible for the arts. I add my support to that and add that there should he a full ministry for the arts and our heritage. Such a move would mean enhanced co-ordination and due recognition of their significance, particularly when one considers their value to the tourist industry.
  I conclude as I began by referring to another former Prime Minister—Lord Palmerston—who was also a previous owner of Brocket Hall. He said:
  "What is merit? The opinion one man entertains of another."
  The collective opinion of the House regarding the Government's record on the arts and heritage must certainly reflect considerable merit.
  6.56 pm
  Mr. Channon: By leave of the House, I shall reply to the debate. The House will understand that I shall not have a chance of getting through all the matters that have been raised, but I shall consider them and write to hon. Members about the important aspects. My hon. Friend the Member for Cambridge (Mr. Rhodes James) raised the crucial matters of university museums and finance. Other hon. Members touched on that aspect, too. I shall write to my hon. Friend as soon as I am in a position to do so. I pay tribute to the museum in Cambridge. It is of international repute.
  The hon. Member for Middleton and Prestwich (Mr. Callaghan) raised specific points. The national heritage memorial fund has dealt with the major contributions by attempting to rectify some matters that have been mentioned.
  I thank my hon. Friends for their kind remarks find those hon. Members who raised issues connected with the Select Committee's report. I assure them that their comments will be carefully considered.
  I assure the hon. Member for Lewisham, West (Mr. Price) that I shall not attempt to worsen the timetable of the Select Committee. I agree with the hon. Gentleman about the need for no political bias in Arts Council appointments. My predecessors followed the same rule, and I shall do so. What I said to the hon. Gentleman in my answer about Professor Hoggart is right. Only three members in the whole history of the Arts Council have ever been reappointed in such a way that they would serve 10 years or more. Professor Hoggart did a wonderful job for the Arts Council. It is a privilege to serve on the council and one should occasionally move the members around. There has been a great fuss about this incident. In the brief time available to me, I can only assure the House that that is the truth.

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  We have granted more money to the film archive. I am in continual discussion with the British Film Institute. I believe that the film archive is one of our major problems.
  I noted all the points made by the hon. Member for Farnworth (Mr. Roper) about the Select Committee. I shall certainly bear his remarks in mind when considering the matter.
  My hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) made some pertinent points about West End theatres and my right hon. Friend the Secretary of State listened carefully to his remarks. I shall make representations to him on my hon. Friend's behalf, although I feel sure that my hon. Friend will do so himself.
  The hon. Member for Wolverhampton, North-East (Mrs. Short) should remember that the last major debate on the arts was on her report. I managed to take part in that debate. I read my speech from that debate today to make sure that I had not said something that I would bitterly regret. Thank God, no one else looked it up. The hon Lady intended to write to me about Wolverhampton. I waited for her letter, and I am still anxiously awaiting it. I am not sure that there is much I can do to help, but I sympathise with her point of view.
  My hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) mentioned aspects that I will, of course, discuss with my right hon. Friend the Secretary of State for Scotland. I hope to discuss them further when I am lucky enough to go north of the border to grant the Scottish Museum of the Year award. I shall then explore the matters further.
  My hon. Friend the Member for Twickenham (Mr. Jessel) told us how wonderfully endowed and represented his constituency is. I congratulate him on his immense services to the European Music Year. If and when it comes off, as I believe it will, it will be due largely to his
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  activities as rapporteur at the Council of Europe. He will earn a great deal of credit not only in Britain but elsewhere.
  I also bear in mind what my hon. Friend the Member for Gravesend (Mr. Brinton) said about the Select Committee on Broadcasting and about the film industry. I believe there has been some mild improvement in the British film industry recently. Those who have seen some of the recent films, such as "Chariots of Fire", will agree with that. It depends how one defines the film industry, but there is some sign of a modest resurgence which I certainly strongly support.
  I agree with my hon. Friend the Member for Kidderminster (Mr. Bulmer) about historic houses, although they are not entirely my responsibility. My right hon. Friend the Secretary of State for the Environment is well aware of the points that he made, and I shall certainly bear them in mind. That is a very important aspect.
  My hon. Friend the Member for Newark (Mr. Alexander, rightly stated the need for arts support not only in but outside the big cities. The amount spent by the Arts Council outside London now represents 60 per cent. of its grant. I shall discuss that aspect further with the Arts Council. It is not an easy problem to solve in rural areas. I shall see what can be done to help my hon. Friend in the difficult task of trying to share the arts support grant round the country.
  I also note what my hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) said about meddling with art. I shall meddle with it a little, as he does, but I am grateful to him for mentioning my sponsorship booklets. If any hon. Member wants advice or wants arts organisations to have advice, the two booklets produced by the arts and libraries are well worth studying. I recommend them to the House.
  I hope very much that the debate, which has been very friendly, will not end in a Division. However, if it does, I invite the House to reject the motion.
  Question put and negatived.

  Lloyd's Bill (By Order)
  As amended, further considered.

  SEPARATION OF FUNCTIONS
  —(1) The Council shall by byelaw—

  (a) prohibit a body corporate who is an underwriting agent from being the subsidiary of a body corporate who is a Lloyd's broker; provided that a body corporate who is an underwriting agent and a body corporate who is a Lloyd's broker may be the subsidiaries of the same holding company;

  (b) prohibit a person from being a director of an underwriting agent or otherwise concerned in the management of an underwriting agent if he is either—

  (i)actively engaged in the business of a Lloyd's broker, or

  (ii)a director of a Lloyd's broker, where such underwriting agent and such Lloyd's broker are bodies corporate and are subsidiaries of the same holding company;

  (c) prohibit any person who acts as an executive director of the holding company of both a body corporate who is a Lloyd's broker and a body corporate who is an underwriting agent from being a director of or in any way concerned in the management of such underwriting agent; provided that a person who acts as the chairman or finance director of such holding company may be a director of such underwriting agent and that a person who acts as the chairman of the underwriting agent may act as an executive director of such holding company;

  >(d) require that an undertaking be given by each Lloyd's broker and by each director and partner of a Lloyd's broker that they, their directors, partners and employees will not seek to influence the management of an underwriting agent nor to induce an underwriting agent or any director, partner or employee of an underwriting agent to act in a way which such underwriting agent, director, partner or employee believe is not in the best interests of the underwriting members for whom he is acting:

  (e) require that an undertaking be given by each underwriting agent and by each director and partner of an underwriting agent that they, their directors, partners and employees will not submit or permit himself to be induced to act in any way which such underwriting agent, director, partner or employee believe is not in the best interests of the underwriting members for whom he is acting; and

  (f) prohibit any individual being a natural person from owning more than 20 per cent. of the voting rights of any underwriting agent which is controlled by or through any person who is, or also controls, a Lloyd's broker, and for the purposes of this prohibition the reference to an individual includes, in addition to that individual:—

  (i) the spouse of that individual;

  (ii) the minor children and step-children of that individual;

  (iii) the trustees of any settlement in relation to which that individual is a settlor;

  (iv) the trustees of any settlement of which that individual or that individual's spouse or minor children or step-children is or are beneficiaries;

  (v) any body corporate which that individual or any of the persons specified in sub-paragraphs (i) to (iv) of this paragraph controls:

  Provided that in any particular case the Council may determine that this paragraph shall not apply so as to include the spouse of an individual where that spouse is or proposes to become, or works or proposes to work substantially full time for, a person who is, or who by this section is included as, a Lloyd's broker or a managing agent.

  (2) The Council shall ensure that the provisions of subsection (1) above are complied with within such reasonable period, not exceeding five years after the passing of this Act, as they consider appropriate.

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  (3) If, at any time after the expiration of five years from the date when the provisions of subsection (1) above have been complied with, it becomes necessary in the national interest, the Secretary of State may, by order made by statutory instrument—

  (a) bring into operation Schedule (Separation of Functions) of this Act;

  (b) repeal byelaws made under this section; and

  (c) repeal subsections (1) and (2) of this section; with effect from such date as he may determine.

  (4) No order under this section shall have effect until approved by a resolution of each House of Parliament. '.—[Mr. Moate.]

  Brought up, and read the First time.
  7.2 pm
  Mr. Roger Moate: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this it will be convenient to discuss the following amendments:
  No. 6, in page 12, line 22, leave out Clauses 10 to 12.
  No. 24, new schedule—Separation of Functions.
  No. 18, in schedule 2, page 25, leave out lines 17 to 27.
  Mr. Moate: I am not sure whether we are in For a parliamentary debate or a field day for the blood sports associations. I understand from yesterday's Sunday Express that my hon. Friend the Member for Gainsborough (Sir M. Kimball), who is described as the leader of the blood sports lobby in the Commons. intends to set "his pack of Tories" on me. No doubt when my hon. Friend arrives in the Chamber we shall have that field day for blood sports. Apparently his objective is to prevent me from stalling.
  This is the first occasion that we have had the opportunity in the House of debating fully the problem of divestment. It is a major subject and one on which the House is entitled to spend some hours. However, am full of hope that at some stage my hon. Friend the Member for Harrow, Central (Mr. Grant), so convinced by my argument or possibly already convinced by the case, with which he is familiar, will say that the Committee of Lloyd's, the promoter of the Bill, has agreed with the proposition contained in my amendment so that the debate can be curtailed.
  In any event, I do not think that the few hours available to us need disturb us unduly. The Government have been very helpful in tabling a motion to suspend the rule at 10 o'clock, which means that we have ample time at our disposal to discuss this very important subject.
  I noted, as I am sure other hon. Members did, that at the installation of our new chaplain as rector of St. Margaret's the other day, he told us that in the past hon. Members had been treated to sermons lasting four hours. Circumstances have changed a little, but I do not think that a few hours' debate on the subject of divestment is unreasonable.
  It has been said that the argument about divestment lasted some 13 days in Committee and that in some way the matter has been treated exhaustively and can be left there. In my view, that is to misrepresent the position. It cannot be disputed that for many days in Committee learned counsel and witnesses argued for and against the proposal before just four hon. Members. It can be said that it has been examined fairly thoroughly. However, at no time has the House expressed a view on the matter or thoroughly considered the arguments.

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  It is a major issue, and later I shall explain at some length, because it is of such fundamental importance, why I believe this proposal to be detrimental to Lloyd's of London, to all the interested parties and to our London insurance industry. I shall spell that out, because I believe the proposal in the Bill to be very extreme and one that I suggest the House of Commons should not include in private legislation.
  I do not suggest that the divestment proposal exceeds what should properly be in private legislation. That would be to criticise the authorities of the House, and I do not intend to do that. However, when we are contemplating the forced sale of substantial assets in companies of all kinds, the House of Commons should think very carefully before taking a step which resulted in such an extreme action.
  At this stage, I have to declare my interest in the matter. As the House knows, I am a director of a firm of Lloyd's brokers, a subsidiary company of Alexander Howden, one of the petitioners against this proposal. I declare my interest so that the House may be quite clear about it.
  It is also fair to say generally about the declaration of interests that there are large numbers of members of Lloyd's present in this debate and that having a financial interest means in no way that people stand to gain or to lose by a proposition.
  I understand that members of Lloyd's have been advised not to vote in any Division. But they can vote on procedural matters or they can decline to speak, which in some circumstances may help the Bill make progress, by an ironic twist. However, I think that there is a duty on members of Lloyd's and on brokers who have some, if only a little, knowledge of these matters to speak and to argue for the interests with which they may have some financial link.
  In private legislation, which often involves special interests, it is incumbent on those who have some connection to discuss the subject. But it is not true to say that just because people oppose a proposition they stand to gain or lose financially. I emphasise that because I do not believe that the vast majority of the Bill's proponents or opponents are arguing from the standpoint of their pecuniary interests. In my view, they are arguing about the general interests of the institutions to which they belong.
  Mr. Richard Needham: Does my hon. Friend agree that, if an hon. Member who has such an interest talks and talks and talks, the effect is to destroy the Bill and is exactly the same as though he voted in the eventual Division?
  Mr. Moate: My hon. Friend has made a significant point. Equally, if members of Lloyd's are allowed to vote on a procedural point, which they are, they too are just as effectively contributing, or not contributing, to the debate. That is simply another procedural method open to them. Under the rules of the House, which are sometimes rather odd, those with interests to declare are allowed to vote on points of procedure but not on merit, and that is odd.
  I have already expressed, I suppose I should say, gratitude to the Government for allowing the suspension of the 10 o'clock rule. Therefore, in no way can I talk out the proposition. I intend, however, to put the case at some length. If my hon. Friend and his colleagues are sufficiently responsive to my hon. Friend the Member for
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  Gainsborough, produce their 100 Members in the Lobbies and are whipped in like a pack of hounds, no doubt they will score procedurally. That is fair enough. This is what I intend to pursue, for it is the only opportunity that I and the House have to discuss a fundamentally important matter.
  The House is in danger of making a great mistake. The hon. Member for Oldham, West (Mr. Meacher) chaired the Committee that examined the Bill. I suggest to my hon. Friends that the only reason that we are debating this proposition is that four hon. Members—not the House as a whole—diligently carrying out their duty in Committee, came to a different conclusion from that which the promoters originally came to and which the House of Commons came to on Second Reading. Are we now to take as gospel—the gospel according to Oldham—the amendment moved in Committee? That would be a novel proposition.
  Viscount Cranborne: Would my hon. Friend care to speculate on the consequences of the opinion of one person on the hon. Member for Oldham, West (Mr. Meacher)? As I recall the eloquent speech of the hon. Member during our last debate on the Bill, he relied heavily on the evidence provided by Mr. Ian Posgate for the opinion that he formed about the desirability or otherwise of going for divestment. I am sure that my hon. Friend will correct me if I am wrong, but I am under the impression that that gentlemen has now revised his views about divestment and, instead of being in favour, he has now compromised with other people in the market at Lloyd's and would be happy with some lesser form than the one that he advocated to the Committee.
  Mr. Moate: Many people have changed their position during the process of the legislation. There is nothing necessarily dishonourable about that. It is legitimate and normal, during the process of private legislation, for there to be negotiation and dealing. It is part of my complaint that the Committee of Lloyd's has not expressed a readiness to negotiate with opponents and critics. I shall elaborate on that later.
  Sir John Biggs-Davison: As my hon. Friend has referred to the gospel according to Oldham, and in the temporary absence of the hon. Member for Oldham, West (Mr. Meacher) would he not recognise that in this testament there are also gospels according to Cromer and Fisher?
  Mr. Moate: My hon Friend tempts me to curtail my remarks by leaping many paragraphs. I intend to deal with Cromer and Fisher and with the other members of the Committee. If my hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison) will forgive my shorthand, it is partly because the hon. Member for Oldham, West unwisely—although this is rather a technical point—spelt out, as Chairman, his reasons for requiring divestment that there is a problem. There is a strong case when one is chairing a Private Bill Committee—a privilege that I have enjoyed in the past—for not spelling out reasons. If that happens, we should change the Private Bill procedure to that which obtains for public legislation so that the debate takes place in public and one can know the arguments for and against the final conclusion.
  7.15 pm
  I think that later the hon. Member for Oldham, West contradicted or changed those reasons in the House. He

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  was misled in Committee and he is failing to respond—although I would like to think that he might change his views tonight—to my amendment. I believe that my amendments meet the Committee's points.
  Mr. Michael Marshall: My hon. Friend seemed to imply that the message according to the hon. Member for Oldham, West (Mr. Meacher) was in some sense that of a lone voice. I was a member of the Committee and I challenge that rather unfair connotation. I accept the point that my hon. Friend makes about the semi-judicial nature of the sitting of the Committee. He will recognise that a compromise was reached. I would not wish to argue with the view put by the hon. Member for Oldham, West which reflects the compromise finally reached.
  Mr. Moate: Again, my hon. Friend is tempting me to curtail my remarks, but he leads me to an important point, which I shall put to the House.
  I remind the House that basically the divestment clauses are designed to require mandatory separation and the enforced sale of substantial underwriting interests or broking interests by the holding companies. The sale could involve—I have not seen a figure—hundreds of millions of pounds worth of assets. It is a major and extreme step that is being proposed in private legislation.
  We are not dealing with something that was originally required by the promoters of the Bill, and it was not approved of in the original Wharncliffe meeting at the Albert Hall. When the House dealt with the Bill on Second Reading, mandatory sale was not required. That is an important factor. In Committee four hon. Members, including my hon. Friend the Member for Arundel (Mr. Marshall), went a stage further. All the evidence given by the Committee of Lloyd's on the first part of the Committee was basically in favour of what I am now proposing. That accords with what the promoters were asking for in the first place.
  My hon. Friend the Member for Arundel said that there was unanimity in the Committee. I shall quote my hon. Friend, because I am sure that he said exactly what he meant, when he spoke on Second Reading:
  "I joined the Committee for the stage which the hon. Gentleman is now discussing. Will he confirm that our view was that we should have liked to examine the self-regulation aspect, but that the problem at the parliamentary end prevented us from reaching a decision in favour of the petitioners? Perhaps a lesson can be drawn from that which we can examine in other circles."— [Official Report, 3 February 1982; Vol. 17, c. 383.]
  The hon. Member for Oldham, West was good enough to approve. He said, "That is a fair comment." In other words, my hon. Friend was saying that we should have a right to examine the self-regulation aspect, but the problem at the parliamentary end prevented us from doing so.
  If that means anything—and my hon. Friend seldom says anything that does not have a significant purpose—it means that it was felt that the halfway house, the management separation, was one of those options retained in the original legislation without the compulsory sale. We would have liked to examine self-regulation—which is something we heard often about in the Committee—but there was no guarantee, because of the substantial difficulties in parliamentary procedures if one tried to reinforce that.
  The Chairman made a significant point. I emphasise that fact, because my amendments exactly meet the point.
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  They run to five pages. I have not spelt them out at length. Essentially they place an obligation on Lloyd's to introduce byelaws to require management separation. he matter was considered carefully by the Committee, but it said that it was not enough; if the byelaws failed to work, there would be no guarantee that Parliament could or would take steps to enforce the separation. The amendments provide that within five years the management separation must be clearly laid down.
  There is a trigger clause in the amendments if that fails. Simply by regulation operating in the national interest, the Secretary of State will have powers to introduce mandatory separation—to force the separation of broking and underwriting. That meets exactly the point made by my hon. Friend the Member for Arundel. If management separation failed and it was decided to bring in a new Act of Parliament, we all know the difficulties that we would encounter. We should have difficulty in finding lime for a straightforward Public Bill. Further, it would almost certainly be a hybrid Bill. The House finds it difficult to carry through such a Bill. It is a long and complex procedure. Any Government would throw up their hands in horror at the idea of bringing in hybrid legislation.
  The regulation-making power is the fall-back. It is a reasonable proposition. We are putting to the House what the promoters originally wanted and what the House approved on Second Reading. But we are going a little further. We are providing a long stop. I believe that management separation will work, but if it does not, under the amendments the Secretary of State can introduce a regulation in the national interest requiring mandatory separation.
  It may be said that there is no guarantee that such a course would be followed. But the power is there. Although it is most unlikely, if there was a flagrant scandal and if it was seen that management separation had not worked, the Secretary of State would have the necessary power. It would be arrogant for us to assume that in the face of a scandal the Secretary of State would not intervene.
  Mr. Archie Hamilton: How would it be judged whether it had worked?
  Mr. Moate: Until the time of Fisher, divestment was not a sensitive issue. Although there have been one or two problems in Lloyd's with which the House is familiar, except in the case of one smallish firm, through the centuries in which Lloyd's has operated there is no evidence that there has ever been a problem, and there has always been a great overlap of interests between underwriters and brokers. But if it ever was a problem, it could be dealt with by the stronger committees. Everyone wants the Bill because it gives greater disciplinary and investigatory powers to the committee. With those powers, plus the rules provided in the amendments, we should not have the problems referred to.
  If there was a problem, it would be of such magnitude that we should all know about it, as with Savonita or Sasse. There would be no problem about knowing that there was a duty on the Secretary of State to invoke the regulation-making power.
  The hon. Member for Oldham, West and my hon. Friend the Member for Arundel are crucial to the matter. Without them we should not be discussing it. They changed the Bill that Lloyd's originally wanted. My

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  criticism of Lloyd's is that it seems to pay more attention to the hon. Gentleman than to the House. I am sure that everyone treats him with great respect, but I do not regard the decisions of a Committee of four as sacred, much as I respect the Private Bill procedure.
  I do not see why, because of the procedures of the House, we should be bullied—I use the word advisedly—into accepting legislation that the vast majority of people would not accept on its merits. I use the word "bullied" because of the time factor. I have had many letters on the subject, and many articles have been written. People say that we must get the legislation through; anyone who argues about divestment, immunities or the electorate is merely taking time and endangering the passage of the legislation. I do not mean that we are bullied by individual hon. Members but by the procedures of the House, so that we do not have the opportunity to debate arguments on their merits. We are told that if we hold up the legislation we shall lose the Bill, and none of us wants that.
  Mr. Clinton Davis: Is the hon. Gentleman not getting the matter out of context? First, the issue was raised in principle in the Fisher report. Secondly, it was debated in principle on Second Reading. Thirdly, throughout that time it has been subject to long debate within Lloyd's. Fourthly, it has been subject to intensive debate in the Committee.
  Mr. Moate: The matter was rightly and normally debated before the Bill was put forward. Generally, we wish to see private legislation settled privately, with agreement between the parties before the matter comes to the House. That happened. After the Fisher report there was extensive discussion, and the Bill was produced. That was the first, valuable and important stage.
  There was no vote on Second Reading. We did not count heads or take voices. One cannot say that that was a debate on divestment. One or two hon. Members might have expressed a view. The late Sir Graham Page made clear the Bill's purpose on divestment. It was something short of mandatory divestment. On Second Reading the House went forward in the belief that the Bill was in the form to which I am trying to return it.
  The hon. Member for Hackney, Central (Mr. Davis) said that the Bill had been debated intensively or extensively in Committee. That is not what happens in Private Bill Committees. There is no debate. Learned counsel put the case, but one never hears debates between hon. Members of the Committee; they just give their view at the end.
  7.30 pm
  The hon. Gentleman made the point that there had been extensive debate outside. There has not been extensive debate outside. What there has been, over and over again, is the simple putting of the proposition that if we do not accept the findings of that Committee we shall lose the Bill. That is what I call bullying, or force majeure. Very few people to whom I have spoken outside actually want divestment. What they have been told loud and clear is that if they do not accept the findings of the Committee, they will endanger the passage of the Bill. I know that the hon. Gentleman believes in it. I have heard him say so. It is a
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  fair point of view. However, I do not believe that there has been the sort of debate that the hon. Gentleman proclains there has been.
  In order to meet the point made by the hon. Member for Oldham, West I return to the merits of my amendment. On the last day of the Select Committee hearing, one of the QCs who presented the case to the Committee, Mr. Mann, said:
  "We share the anxiety of the promoters about identifying the moment in time when it is right to pull the legislative trigger. We also apprehend that the legislative form would have to be that of a public Bill promoted by the Department which would almost certainly be declared hybrid. It is our understanding that the Department are not conspicuously enthusiastic about promoting hybrid Bills."
  Those were almost the final remarks before the Chairman concluded.
  How could we provide a legislative trigger? The House will already have grasped that in my amendment we have that legislative trigger. The hon. Member for Oldham, West said:
  "It is because we believe there can be no certainty that the proposals will be carried through that we have rejected this route."
  That route was the carrying through of byelaws within a fixed period. The hon. Gentleman continued:
  "We are fully aware that considerable consequences would follow from divestment, both for Lloyd's as a whole and for individuals and companies. Nevertheless, on balance our view is that in the public interest the original provision should form part of the Bill."
  He repeated the point that there could be no certainty that those proposals would be carried through and he emphasised the considerable consequences that would follow.
  There will be considerable consequences and I will spell out some of them. I do not believe that the House, or many members of Lloyd's, have yet fully grasped the consequences that will follow if the enforced separation of relationships that have been built up—and that will contribute so much to the London insurance market and to that great institution as we know it today—is carried through.
  The hon. Member for Oldham, West conceded that there would be grave consequences, but he could not be certain that the proposals would be fully carried through. However, the amendments that I have proposed give the opportunity to carry through those proposals with a guarantee. Why does the hon. Gentleman not say that it is a very acceptable proposition? Why has Lloyd's not done the same? Why has my hon. Friend the Member for Harrow, Central not said that this is a very sensible proposition?
  Mr. Michael Meacher: I rise because it is not an acceptable proposition. The Secretary of State has always had the opportunity to introduce a Bill if he so chose to require the divestment as between underwriters and brokers. I accept that there is a hybridity point but the Secretary of State has always had that power. All that the hon. Gentleman is doing is laying on the line that there is such a power. Subsection (3) of new clause 1 says that
  "the Secretary of State may, by order made by statutory instrument"
  undertake what is required. There is no guarantee that he would. That was the point to which we were referred. The hon. Gentleman made no advance on that at all.
  Mr. Moate: I thought that I had dealt with that specific point. Of course, there is no guarantee that a Secretary of

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  State would invoke that, but why should he, if there is no need to do so? We are talking about an action in the national interest. I took the hon. Gentleman literally when he agreed with my hon. Friend the Member for Arundel on 3 February that it was a fair comment that we would like to examine the self-regulation aspect but that the problem at the parliamentary end prevented us from doing so.
  When the hon. Gentleman said that it was a fair comment, I rather assumed that he wanted to examine self-regulation but had not the full-backed guarantee. We are not saying that a Secretary of State would inevitably introduce it; he would do so only if there were a need for it to be done. The hon. Gentleman might love legislation for its own sake, or compulsion for its own sake, but I hope that hon. Members would feel that it was necessary to invoke this measure—and it is an extreme measure—only if it were in the national interest to do so. I venture to suggest that had this amendment been put forward to the Committee, the hon. Gentleman might have found other hon. Members willing to support the proposition. I suggest that simply because of the manner in which he expressed himself when he made his concluding remarks to the Select Committee.
  I think that the hon. Member for Oldham, West got it wrong—certainly judging by some of his questions in the Select Committee and by his remarks on 3 February. I should like to mention a few examples to show where he got it wrong. He made a great point in the Committee, through his questions, of the fact that the Lloyd's Committee was broker-dominated. That was part of his case for assuming that divestment would not be carried through in its fullest form, or that the Secretary of State would ever implement any further legislation. When the hon. Gentleman described the Lloyd's Committee as "broker-dominated", it betrayed a total misunderstanding of Lloyd's.
  I must express something that perhaps hon. Members do not associate with me, and that is an element of humility. [HoN. MEMBERS: "Oh".] Very few people in Lloyd's would claim to be omniscient about that great community. There are very few people who know it all, and I know very little. I have been involved as a Lloyd's broker for many years, but there are Lloyd's brokers and Lloyd's brokers. I do not know an enormous amount—[HON. MEMBERS: "Oh".]—about the Lloyd's community. I know probably rather more about the insurance company market outside.
  One could have many opinions about the constitution or the make-up of the Committee of Lloyd's but most people in Lloyd's would say that it is generally recognised that the Committee of Lloyd's is made up of working underwriters, not of brokers. The very fact that many of those underwriters might well be directors now of holding companies that have been described as brokers does not suddenly turn them into brokers.
  That is a very important point and it is fundamental to the thinking of the Select Committee. Indeed, the hon. Member for Oldham, West said it again on 3 February:
  "If the broking fraternity controlled 10 or 11 of the 16 votes of working members on the council"— [Official Report, 3 February 1982; Vol. 17, c. 379.]
  —and so on.
  But the hon. Gentleman was clearly and hopelessly wrong. Let us take, for example, Mr. Peter Green, the chairman of Lloyd's, who was one of the witnesses before the Select
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  Committee. The committee and the council went to great length to try to establish that Mr. Peter Green was a broker. Indeed, he is a director of one of the great firms of Lloyd's brokers, a holding company, but no one would suggest that Mr. Peter Green was a broker and not an underwriter,
  The name of Mr. Ian Postgate has been highly significant in all these proceedings. He has just been elected to the Committee of Lloyd's. He, too, is a director of one of our great firms of insurance brokers, but it is a holding company. No one in his right mind, apart from the hon. Member for Oldham, West, would describe Mr. Postgate as a broker and not as an underwriter.
  It is ridiculous to believe that the Lloyd's Committee is broker-dominated. I do not believe that anyone working in Lloyd's would say that it had a broker-dominated committee. Much time was spent on that point by the House's Committee and it got it hopelessly wrong. There were many examples of where our Committee got things wrong. It also got the fundamentals wrong.
  Time and again, the Committee came back to the question of the unacceptable conflict of interests. Lloyd's has been in existence for hundreds of years. It is probably only in the past 20 years that, the great insurance supermarkets have been created, with an obvious financial and structural link between brokers and underwriters, but the overlap between broking and underwriting is not new. There has been that conflict of interest—I prefer to call it a community of interest—throughout the history of Lloyd's. The hon. Member for Oldham, West laughs, which suggests that he has not understood what this is all about.
  The great names who founded Lloyd's were great underwriters and great brokers as well. The father of the modern Lloyd's, Cuthbert Heath, whose name is remembered in a great broking house and in underwriting syndicates, became a member of Lloyd's in about 1830. Even then there were great brokers and underwriters It may be said that the work 'was on a different scale then. That is true, but the principle is the same. It was acceptable then for a person to wear two hats and there has been no fundamental change. Lloyd's has always had a community of interest because members are all "Lloyd's men". They do not live in a permanent state of conflict.
  Mr. Archie Hamilton: Has not the situation changed by virtue of the fact that a number of brokers have been taking over managing agencies and taking ever greater control of the syndicates, while remaining brokers?
  Mr. Moate: The situation has certainly changed dramatically in the past few decades and it has changed for the good as regards the interests of the country. My hon. Friend perpetuates an over-simplification and misunderstanding of the situation. We have large insurance brokers, derogatorily called mega-brokers, and basically they are large insurance holding companies covering a vast area of insurance activities. The fact that they have taken over managing agencies does not mean that brokers are dominating those agencies.
  It is technically possible that, if some of the agencies had been more profitable than the brokers, the public quotation would have been described differently and they would have been called underwriting groups rather than broking groups, but we need holding companies of that size if we are to compete in the modern world. I have not yet begun to describe the damage that the proposal could do to Lloyd's and London in the long term.

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  7.45 pm
  There is nothing detrimental in the situation that has developed and I do not see that the point made by my hon. Friend the Member for Epsom and Ewell (Mr. Hamilton) demonstrates any significant change in philosophy. There has been a structural change, but people have been Lloyd's underwriters and brokers throughout the ages.
  Theoretically, a broker could be a name and broke his family business into a Lloyd's syndicate of which he was a member. It has always been like that and there is not much evidence that anything has gone seriously wrong.
  The House, in its wisdom, imposes upon Lloyd's against its will—members of Lloyd's voted for it but only with a pistol to their heads and the demand "If you do not do this, you will lose your legislation"—a piece of naive, superficial and simplistic consumerism. We have suddenly decided that there is something called a conflict of interest. I suggest that the proposal is misconceived and based on false apprehensions.
  Who is likely to suffer from a conflict of interest? Let us examine who are the clients of Lloyd's. There are the consumers whom we generally try to protect—the householder or the motor client; the man in the street. It is generally understood that Lloyd's is not one of the leading insurers of personal line business, but we wish to ensure that such customers are not likely to suffer.
  It is also understood that the vast bulk of private line business is not handled in the traditional manner. Binding authorities are given out to brokers to handle householders' insurance. They were examined in detail by the Committee and the hon. Member for Oldham, West ignored the question of principle on that aspect. It is not suggested that there should be any change there. The householder will continue to get his insurance through Lloyd's under a binding authority given by an underwriter to a broker. The broker may get substantial profit commission and extra commissions and there is a theoretical conflict of interest, but no one seems to worry about that. I have heard no underwriter suggest that he will stop giving binding authorities. The consumer with whom the House is often properly concerned is not at risk in that respect.
  Are we talking about the great industrial companies that insure through Lloyd's? Are we suggesting that they are unaware that if they place their insurance through one of our great broking houses the brokers may be involved with some of the syndicates with which the business is placed? We are entitled to assume some responsibility, wisdom and knowledge among the industrial customers.
  The bulk of the business—and I suspect that it will be an increasing proportion in future—is reinsurance. Are we seriously suggesting that we have to take the proposed extreme step to protect knowledgeable reinsurers against the possibility of a broker placing business on advantageous terms with his own syndicate? Surely we are allowed to assume some sophistication among such clients? Who are we trying to protect?
  We are involved in phoney consumerism, which has elevated the proposition of a conflict of interest into a poor piece of legislation. We have had insultingly little evidence. My hon. Friend the Member for Epping Forest referred to the Fisher working party. He is a diligent Member and I suspect that he has read the Fisher report. The remarkable thing about that report was that it produced no evidence of abuse in this area. It produced a
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  conclusion and presumably examined some material, but it did not produce any evidence to show that there were problems caused by the supposed conflict of interest.
  I do not find that satisfactory. I do not believe that the House should pass extreme legislation on the basis of such a conclusion. I invite hon. Members to read the report from end to end. They will find no examples quoted. Some members of the working party said that they had seen evidence of abuse. Those were the examples quoted during the Select Committee proceedings. The general feeling was that there was potential abuse. It is even worse to suggest that we should have extreme legislation carried through on the ground of potential abuse of a principle, which I suspect is not a principle at all but is something that has persisted and has helped to build up Lloyd's to what it is today. Fisher is totally inadequate in that respect.
  My hon. Friend referred to the Cromer report, which came to the same conclusion. It was never really a public document; it became available only recently. Lloyd's had plenty of time to implement as much of Cromer as it wished or needed to do, and it did so effectively. However, the Cromer report did not include a mass of evidence to show why the divestment should be forced upon the companies.
  Mr. Nicholas Lyell: My hon. Friend will be familiar with paragraph 12.18 of the Fisher report, which deals with actual evidence. It states:
  "we have been told of cases where it is either known, or strongly suspected, that abuses of the kind described in 12.12–13 have occured."
  Then it states that much of it would not stand up in a court of law and that witnesses are reluctant to name names.
  The report goes on to state:
  "the evidence is confirmed by the experience of the Lloyd's members of the Working Party who are sure that conflict of interest involved is not only potential but actual."
  Can my hon. Friend say that there is no evidence, bearing in mind what is printed in the report?
  Mr. Moate: My hon. and learned Friend has confirmed what I said. We have the working party's conclusion and views. We do not have evidence. My hon. and learned Friend, who is a distinguished lawyer, would not be satisfied with that evidence. Even in the passages that he quoted, one has some doubt about the full and literal meaning of the words. The report says that much of it would not stand up in a court of law and that the facts are either known or strongly suspected. Presumably, even the facts that are known are not necessarily known but are strongly suspected. That is not evidence.
  I return to my belief that somehow people have been overwhelmed by the simplistic notion that a conflict of interest is so bad that it must be eradicated as a possibility. If that is my hon. and learned Friend's case, it is not a very good one. It is not enough to carry through an extreme remedy.
  Whether it be for reasons of morality or commerce, there is no one who does not believe in management separation of underwriting and broking. If one operates a holding company and one makes a simple commercial judgment, a requirement is that the broking and underwriting operations should stay at arm's length.
  Mr. Lyell: That seems to be the weakness of my hon. Friend's case. If management separation is necessary, it must be necessary for a purpose. That brings one back to the evidence that was confirmed by the experience of the

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  Lloyd's members of the working party. How does my hon. Friend explain the dilemma in his argument that if it is necessary to have a separation of functions, and yet that is not based on any evidence, it is unnecessary to have what he regards as the extreme remedy because that is also not based on evidence?
  Mr. Moate: I do not see it as a dilemma. First, let me deal with the Lloyd's members of the working party. I do not wish to be disparaging about anyone, but I do not believe that what I would call the great international brokers were represented on the Fisher working party. I regard those brokers as being part of the key to the success of Lloyd's. Perhaps that is putting it too high, because the system is a great partnership. Without the international brokers, one does not get the true picture of Lloyd's. There was one broker, but he would regard himself essentially as a great domestic broker rather than a great international broker.
  Although it is logical common sense and desirable that there is a separation of management functions, there is an equally good case for having an association between the two, as with the holding companies that have been built up in recent years, to create organisations that can compete in the modern world. I shall turn in a moment to the challenges that face Lloyd's in London today—challenges that can be met only if one has the sophisticated organisation that has been built up in recent years. There is much common sense and morality in trying to ensure separation. There is also an overwhelmingly powerful commercial case for trying to keep together the organisations that have grown up in the past few decades.
  Mr. Needham: Paragraph 12.18 of the Fisher report states that the evidence
  "is confirmed by the …Lloyd's members of the Working Party who are sure that the conflict of interest involved is not only potential but actual."
  Surely my hon. Friend would agree that that cannot leave any doubt in anyone's mind.
  The report goes on to state:
  "Nevertheless it is unrealistic to assume that the strength of this deterrent to abuse will remain unimpaired. The arrival of many Underwriters with little or no previous Lloyd's experience, and of Brokers owned by non-Lloyd's interests, in the UK or overseas, dilutes the tradition and tends to increase the danger of abuse."
  My hon. Friend cannot be allowed to get away with the suggestion that the evidence is doubtful and not good enough to stand up in court. The members of the Fisher working party were very clear.
  Mr. Moate: Fisher was right on that point, but I disagree with the Fisher conclusions. I do not call it evidence. If the Government are proposing extreme legislation, we are entitled to have more evidence than that.
  On the basis of the Fisher report, the Lloyd's community came forward with a proposition to Parliament. It was not what is now in the Bill. On the basis of the report, Lloyd's felt it desirable to put forward legislation that fell short of mandatory divestment. There was some debate in the Select Committee about what Fisher recommended. Some strange nuances in his proposals were interpreted as suggesting that he did not go for mandatory divestment. However, I read every day of the report—it was hard work—and was left in some doubt about what Fisher had proposed. Nevertheless, on the basis of the report, Parliament was presented with a Bill
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  that fell short of mandatory divestment. My hon. Friend might be arguing in support of my case as much as against it.
  8 pm
  Mr. Nicholas Baker: The Fisher working party received 437 written submissions and 72 people gave oral evidence. Fisher was not acting as a court of law in trying to decide whether someone was guilty or innocent of a crime. It was gathering evidence on the basis of which to make recommendations. That is different from making a judgment as a court of law. The working party was thorough and took a mass of evidence. On that basis, it came to clear and easily comprehensible conclusions.
  Mr. Moate: I do not wish to fall out on points over which there is no dispute. I agree that it was a thorough report. There is an argument as to whether the working party heard from as many people as it should have done or made itself as available as it should have done. That is contained in the Select Committee proceedings. I doubt whether the real voice of the international broking organisation was heard.
  We are called to act upon the basis of Fisher's conclusion. I should like more evidence. If we are proposing an extreme remedy—and we often have to take extreme remedies to deal with abuse—we usually know what the abuse is. On this occasion we have to take on trust that Fisher was given evidence of abuse. There is enough reference to potential abuse or opinion to make one doubt that. If the public had suffered abuse, we should have known about it. The Lloyd's community would have known and there would have been talk about it. I suggest that much evidence is hearsay evidence or worry about a potential conflict that does not exist.
  In our daily life many conflicts of interest are acceptable. My hon. Friend the Member for Dorset, North (Mr. Baker) is a distinguished lawyer.
  Mr. Needham: And a successful lawyer.
  Mr. Moate: I assume that "successful" means distinguished. [HoN. MEMBERS: "Not necessarily".] The House is full of distinguished lawyers who are perhaps not as successful—
  Mr. Nicholas Fairbairn: I trust that the House will not think that if to be distinguished may also mean unsuccessful, successful does not mean undistinguished.
  Mr. Moate: I am certain that all my hon. Friends are as successful as they should be.
  The point that I was trying to make was that my hon. Friend the Member for Dorset, North and other lawyers are also officers of the court. On occasions they have a conflict of interest. I do not suppose that they find it difficult to honour both interests.
  Mr. Nicholas Baker: On the contrary. My hon. Friend is perhaps not aware that, as a lawyer, one is prevented from acting for two parties where there is a conflict of interest. That is the point. If we apply the analogy of the legal profession to the insurance profession, we should not say that the conflict of interests is taken lightly. A lawyer is required, as an officer of the court, to adhere to certain principles. If he is required by a client to go against those principles, his duty is clear: he can no longer act for that client.
  Mr. Moate: It was foolish of me even to venture into this delicate area. However, I still wonder whether I have a point. My hon. Friend the Member for Dorset, North has not demolished my argument entirely. He still has a duty to behave in a certain way to the court, and on some occasions that might not be in the best interests of his client. Perhaps I am wrong.
  Mr. Fairbairn: No. My hon. Friend is right.
  Mr. Moate: I am right. The Under-Secretary of State also has a conflict of interest. We live with that in our constitution. Unlike most legislatures, our Executive is in the legislature. The Under-Secretary is a Minister, a parliamentarian and a legislator. In the United States the separation of powers makes it clear that one cannot be both.
  A more mundane but insurance example could involve burst pipes. I am sure that most hon. Members have experienced that in our recent bad winters. After a claim, the insurance brokers or company will appoint a firm of assessors. It will be appointed and paid for by the insurer. It is open to the claimant to appoint an independent assessor, but that is not often done and it is not essential. The assessor acts for the insurance company and uses his professional skill to negotiate a fair settlement. That is a conflict of interests, but we accept it readily because it works.
  Conflicts of interest are not always bad. It depends upon context, professional standards, history and so on. The Select Committee neglected a conflict of interest which is to be allowed to persist. I refer to binding authorities. Is it not odd that the Committee was so worried about the conflict of interest between the broker and the underwriter that it did not even bother to pursue the question of binding authorities? A much greater conflict of interest exists there. The underwriter will hand over to the broker the power of the pen—the power to take on a large volume of business—and the broker will gain considerable advantage, as will the underwriter. When the client goes to the broker, the broker will have a vested interest in placing business under that cover facility rather than with another company. The system works well. I have never heard any complaints about it, nor should there be any. But there is a conflict of interest. Why did the Committee not pursue that?
  A much bigger area worries me in relation to the logic, common sense and principles upon which we operate. I am worried about the Government's position. We are entitled to a full and frank explanation of the Government's position. The Government intend tonight to move the suspension of the 10 o'clock rule. I assume that the Government approve of the Bill as it stands. The control of underwriting interests by Lloyd's brokers extends not only to underwriting agencies. This matter was explored in great depth in Committee.
  Mr. Kenneth Lewis: Does my hon. Friend accept that the Government would have been remiss had they not sought to change the 10 o'clock rule? My hon. Friend is making a long speech and it is important that hon. Members who have an opposite view should be allowed to take part. If other hon. Members make the same length of speech, the debate will continue long after 10 o'clock.
  Mr. Moate: I am not sure with what depth of sincerity I expressed it, but earlier I said that I was grateful to the
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  Government for extending the debate beyond 10 o'clock. I was saying that the Government obviously approve of the proposition.
  The House should know that the control of underwriting interests by broking houses—the insurance supermarkets—extends far beyond interests in Lloyd's syndicates. The House may agree that it is wrong for a broking house to own underwriting agencies, but what about the control of insurance companies and the great underwriting agencies—the non-Lloyd's underwriting agencies which represent large overseas insurance interests? Are we to do anything about that? I hope not. That works to the advantage of this country.
  I was a member of the Committee on the Insurance Companies Act 1974. We went into the question of control of companies in great depth and detail. One of the principal reasons why I resent the proposition is my experience of that legislation. From the moment that I first read Fisher, regardless of any connection that I had with any broking house, I thought that it was wrong and begged the fundamental question why, if it is right now, did we not discuss it in 1974 when we debated the control of insurance companies?
  Mr. John Fraser: I think that the hon. Gentleman will find that in recent insurance company legislation the relationship between a non-Lloyd ' s company and its agent was included.
  Mr. Moate: It was dealt with, but not in the manner that we are discussing. There is nothing in legislation to prevent an insurance broker from owning an insurance company. The hon. Gentleman knows that.
  One of the factors that prompted the 1974 Act was the collapse of the Vehicle and General Insurance Company. That was a specific example of the consumer suffering. We discussed in great depth and detail how we could ensure that such a collapse would not happen again. At that time, the BIA was advertising "Get the strength of British insurance around you". That was followed by the collapse of a BIA company.
  We were extremely concerned. We spent hours debating who should and who should not control insurance companies. We gave great powers to the Secretary of State to prevent undesirable people from owning insurance companies. We laid down rules on how to prevent abuse and how to prevent people from getting round the rules by various relationships and hidden shareholdings. However, it was never suggested that brokers should not control insurance companies. It was never suggested that there was an undesirable conflict of interest, even though one of the problems had arisen because the Vehicle and General had owned a substantial firm of insurance brokers known as Andrew and Booth Ltd.
  Parliament decided that we should have absolute disclosure. It decided that the ownership of a broker by an underwriter or vice versa should lead to disclosure of that fact and that that fact should be displayed clearly. That was our conclusion then. Why have we now decided suddenly that it is undesirable for brokers to control an insurance interest or insurance underwriting? Are brokers suddenly improper persons? Perhaps my hon. Friend the Under-Secretary of State will inform us of the Government's view. Are we to leave the issue undecided and open-ended?
  The Under-Secretary of State for Trade (Mr. Reginald Eyre): I cannot resist my hon. Friend's invitation. He asks why we should pass legislation to compel brokers to sell off their interests in insurance companies. That is an entirely different issue. It was brought out clearly in Committee that there is a fundamental difference between insurance companies and the managers of Lloyd's syndicates. The syndicate manager does not carry the underwriting risk on his own capital, but the names do. If the managing firm is owned by a broker, there is a clear conflict of duties for the managing agent. He has a duty to his names and a duty to his parent company. By contrast, if a broking firm owns an insurance company, that conflict does not arise as the broker himself provides the capital to bear the risk on the business.
  Mr. Moate: There are moments when I have to confess not only humility but inadequacy. My hon. Friend has made the sort of statement that it is necessary to read and re-read to ascertain what it means, if it means anything. If we are talking about a conflict of interest, the principle is exactly the same. My hon. Friend knows that is so. If I were a Lloyd's underwriting agent, a managing agent, especially an independent, I should be relieved by my hon. Friend's approach. Perhaps I would not. Perhaps the very reverse would be the truth. I should be worried about Lloyd's brokers taking the business out of Lloyd's and putting it into the underwriting agents and companies outside which he says they can carry on controlling. That is a danger.
  8.15 pm
  The conflict is the same and the principle is the same. If a broker puts up the capital and owns an insurance company he will have an interest in supporting that company. Equally, much of the structure outside Lloyd's means that a broker may not necessarily own an insurance company but may be operating an agency on behalf of a group of overseas insurance companies. The capital consideration does not arise in that instance. I do not want my hon. Friend to act in that way and I do not think that anybody else does either, but he cannot have it both ways. He cannot say that there is a conflict of interest, which he regards as wrong, undesirable and necessary to legislate out of existence, and then say that he will do nothing about the vast additional world of brokers owning companies and outside interests. That is a grossly unsatisfactory area.
  I shall emphasise again why I feel so strongly that we are doing the wrong thing. It is undesirable that a Private Bill of this sort should be used to do what in other circumstances my right hon. and hon. Friends would deplore—to enforce mandatory sales of assets upon public companies, private companies and the like. Even if the proposition has gone through the Wharncliffe procedures and has the support of many who are directly affected, many others will be affected who have not had a say.
  There are about 40, 000 shareholders in the companies that will be affected. Are my right hon. and hon. Friends prepared to justify the use of private legislation to enforce the sale of shareholders' assets? If such a measure had been proposed in other circumstances as part of public legislation by a Labour Government, my right hon. and hon. Friends would have been up in arms against it. However, on this occasion they are prepared to sanction it. About 40, 000 shareholders and 70, 000 employees of the large organisations connected with Lloyd's will be
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  affected. They, too, have not had a say. When private legislation begins to operate on such a great scale, Parliament should consider the procedures that allow such a proposal to pass through.
  When we first considered the Bill, it did not contain the proposals that we are now discussing, and in that form it was reasonable. Subsequently the hon. Member for Oldham, West and his Committee inserted them. As it was a considerable extension of the original proposals, the House described it as an additional provision.
  The hon. Member for Oldham, West was praised by many of my hon. Friends, and he must have felt distinctly embarrassed. My hon. Friends said that he had been a marvellous Chairman. Everything that I read suggested that he had been an eloquent and good Chairman, in spite of coming to the wrong conclusions. I suggest that there is something fundamentally wrong with an additional provision that is demanded by the same Committee that judges the petitions against the provision. That is rather like a judge imposing a sentence and hearing the appeal against it.
  I know that the hon. Member for Oldham, West is fair and open-minded, but after he and his Committee had insisted on the insertion of the additional provision there was not much chance that the petitioners would persuade him to change his mind. The hon. Gentlemam used a dubious phrase when he endorsed the comments of one of the counsel. He said that the petitioners would have to be doughty petitioners. That was an indication that they would have an uphill struggle. I do not think we can say that the new Committee—with the exception of my hon. Friend the Member for Arundel who joined it later—was truly independent and impartial. That is criticism not of the hon. Member for Oldham, West, but of our procedures. There should have been a new Committee.
  Mr. Kenneth Lewis: It is important that ray hon. Friend should not be allowed to say something that could be misunderstood about the procedure for Private Bills. The Committee that considers a Private Bill is different from a normal Standing Committee. However, the Committee reports to the House. My hon. Friend has tabled many amendments that have been grouped together by the Chair. We are debating the amendments, and if he wins the vote the amendments will be carried. The Bill is being debated in public on the Floor of the House. Therefore, it is being treated no differently from any other Bill, except that my hon. Friend does not have the advantage—we do not either—of having the involvement of the Whips. The issue will be decided on a free vote. The entire House can vote on this issue if it wishes. It is important that that should be said.
  Mr. Moate: I do not disagree. That is right. My hon. Friend has taken part in Private Bill discussions, as I have. Impartiality is vital. There is an additional provision—in other words, an extra power beyond the original powers suggested on Second Reading. When the Committee requires that additional provision, new members should look at it. I agree with my hon. Friend that we now have the opportunity to put the case.
  One of the reasons why I am putting the case at length—as hon. Members appreciate, there is no procedural advantage because the 10 o'clock rule is to be suspended—is that I still hope that in later proceedings in the House the Committee of Lloyd's, the sponsors, and

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  another place will say that what we are talking about makes sense and that we should allow the proposition that I have tabled to be carried. If it could be negotiated and carried, it would be better for Lloyd's, London and the whole insurance market.
  My hon. Friend said that the Whips had not been brought in. He has obviously not read about my hon. Friend the Member for Gainsborough in the Sunday Express, who has got all the whips and the hounds out. I would say that that was a more effective whipping system, but that would be to disparage my hon. Friend the Member for Eye (Mr. Gummer), who is now sitting on the Government Front Bench. There will be heavy whipping tonight; my hon. Friend knows that.
  I do not complain about the Committee, but I do not believe that the hon. Member for Oldham, West was an impartial Chairman, nor could he have been expected to be. He had already made it clear that he wanted the additional provision. If the House goes to the length of providing for petitioners when their interests are affected, it is incumbent on us to make sure that the Chairman of the Committee comes fresh to those proceedings. I hope that I am not being rude to the hon. Member for Oldham, West, for whom I have considerable respect, but it was the wrong approach.
  Why is the matter so important? Why is it so bad to force divestment? Are we talking about damage done to a few private interests or about an abstract principle to which I take exception? It is more than that. I want to try to explain in my own words why I feel that the measure is damaging to the insurance business. It is hard to explain because the effect of such changes is incalculable in the real meaning of the word. One does not know what damage will be done until five, perhaps 15 or 20, years hence. The change is fundamentally wrong.
  The growth of the great insurance organisations in recent years has helped to secure for Britain, against immense international competition, a unique and special role. If the organisations had not grown up in that way, we would all have lost. We do not know how things will change in the future, but I believe that our competitiveness, powers, flexibility and innovatory skills in the world market will be weakened, so we will lose.
  To emphasise that, one has to demonstrate the nature of the competition against which we are fighting. Lloyd's is a remarkable organisation. Nevertheless, we must see it in context. The premium income of Lloyd's is about £2 billion. Some of the great reinsurance organisations in the world have been building up their premium income almost to the same level. Some of those organisations are getting a total premium income that is almost equivalent to that of Lloyd's. They are great competitors.
  Throughout the world we see an immense growth of national insurance companies and professional reinsurance organisations. Our small home market is about 5 per cent. of the total world insurance market. We have a tiny home base on which to operate. It is only the international strength that we have built up—the international organisations with their flexibility, skill and expertise—that has allowed us to compete. It is nationalism throughout the world creating national insurance companies, and a natural desire to retain as much business as possible in those companies that offers us tremendous competition.
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  The great broking and insurance companies and conglomerates, seen through a window of sophistication, as was said in Committee, have been able to sell throughout the world and bring business to London. It is because those companies are conglomerates that they have been able to do so. When the national insurance companies were set up, they turned to the brokers to ask for their advice and guidance on the establishment of their organisations. Those brokers have obtained the reinsurance from those companies and brought it to London. The setting up of captive insurance companies throughout the world by the brokers has also helped to bring business to London.
  If those links are cut and it is said that no broker shall be able to own an insurance company, will that not damage the capacity for bringing business to London? The new link between the broker and the underwriter—the whole package—has meant that London has been able to compete. It has worked successfully. If one severs that link on artificial lines for no obvious reason, in the long term a great deal of damage will be done.
  What will be the incentive for a Lloyd's broking house to put its business into Lloyd's if one discourages it from having an interest in the underwriting syndicates? Is not that an inevitable deterrent and an encouragement to put business into other insurance centres which are not as restrictive? Great damage will be done.
  I do not know whether this is a fact, but I believe that it is likely that the activities of the Lloyd's brokers around the world have brought in the names that have made Lloyd's what it is today. I am guessing because I do not have the figures to prove it. However, I think it would be right to say that many of the 5, 000 names of people who live abroad have been brought in by the great broking houses, through the broking houses' connections and clients abroad. They have had an incentive to build up syndicates and underwriting strength. Is that a bad or a good thing? If that link is severed, the companies will be discouraged. That would be bad for Lloyd's.
  Many hon. Members connected with Lloyd's are in the House today. I wonder how many of them are connected with broking houses. Many other hon. Members have joined Lloyd's through the good offices of one of the larger broking houses. They have come to trust and to depend on that Lloyd's arrangement because of their trust in that broking house. If an hon. Member has been attracted into Lloyd's to become an underwriting name as a result of close association with one of the great broking houses such as Heath's or Willis Faber, his trust will have been built up in that organisation.
  Ten thousand or more such people will now be told that the underwriting can no longer be handled by companies such as Willis Faber or Heath's. It must be separate, so it must be sold off. I do not think that many members of Lloyd's have expressed dissatisfaction with the arrangement, but they are to be told that it must change. The House has been told that it must be changed, but no major reason has been advanced for doing so. Is it right that such persons should be told that in future their affairs must no longer be handled within the same family of organisations but that they must be entirely separate? I believe that many people will be worried, disappointed and concerned when that starts to happen.

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  8.30 pm
  That brings me to the crucial question of who will own the managing agencies in the future. It may be said that the Committee of Lloyd's would continue to exercise great control and authority over ownership changes, as I hope that it would. It is reasonable to suppose that it would be very careful about approving any institution which it believed might not operate properly within the Lloyd's community.
  But how can one be sure that an institution which is acceptable today will remain so tomorrow? A Rolls-Royce type of organisation might take over an underwriting agency. Rolls-Royce went bankrupt. Many reputable institutions today might seem proper to take over and buy up agencies, but there is no guarantee that they will remain financially stable and solvent thereafter.
  I suggest that it is far easier for the Committee of Lloyd's to control Lloyd's broking houses and to keep a close watching brief on the whole community because it is all Lloyd's than to control new institutions buying up profitable agencies. I am speculating, of course. Many agencies may be bought by the names themselves, but there will be nothing to prevent them from selling to other organisations later. I am not thinking so much of the foreign organisations which seem to put the fear of God into some people, because that in itself is not the point. Are my hon. Friends saying that they do not mind to whom the agencies are sold or that it will be equally easy to control outside financial institutions?
  Mr. Needham: They might be brokers.
  Mr. Moate: Yes, they might be brokers.
  I personally see nothing fundamentally wrong or dangerous in international insurance organisations exercising control over such managing agencies. If we are talking about like-minded organisations and international groups becoming truly international and taking over British groups, that is part of the international way of life.
  To me, there is far greater danger in agencies being taken over by entirely non-insurance interests. I do not recall this matter being dealt with at great length in the Select Committee, which seemed simply to assume that a conflict of interests was undesirable so the agencies must be sold off. A financial institution which today appears reasonable may buy effective control of the management of syndicates, but if, after a year or two, it gets into financial difficulties it will not exercise the same concern and control over the syndicates as would a publicly quoted Lloyd's broker whose very survival is at stake.
  I suggest that we are embarking on a very dangerous course if we force the sale of these managing agencies without Parliament laying down who should control them. What rules will be laid down? I invite my hon. Friends or anyone else to tell me the answer. Are they just as happy that the managing agencies should be owned and operated by foreign companies or non-insurance companies as by publicly quoted insurance organisations in this country? That seems very foolish to me, but that is the proposition before us.
  We are told that there is a great conflict of interest which is highly detrimental to the London market. Strangely enough, however, just as we are proposing to make this change, organisations in other countries are starting to emulate the procedures that we have followed. Does this not make my hon. Friends think that we may have got it wrong, that the promoters were right in
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  introducing the Bill in the first place and the hon. Member for Oldham, West is wrong? If one looks across the Atlantic, one sees new organisations being established to compete with Lloyd's. So far as I know, three new insurance exchanges are being set up in Florida, New York and Chicago. Are they saying it is wrong for brokers and underwriters to have conflicts of interest? Not at all. At a time when we are proposing to force separation in this country, three insurance exchanges, some more advanced than others in their development in the United States, are allowing and, indeed, encouraging brokers to start syndicates. Does that not perhaps make us think that we are right and that the situation should not be changed?
  Some of the most impressive evidence presented to the Select Committee came from Mr. Corroon, a distinguished American broker, who stated basically that the United States was dealing with the matter in a different way. He remarked:
  "In the US for example where insurance traditionally has been highly regulated, the view is contrary to Parliament's proposal regarding divestment. In essence, the infant, embryonic New York exchange is based on the Lloyd's system and if imitation is the highest form of flattery that is a classic example of this."
  In talking about the establishment of the New York insurance exchange, he added:
  "Brokers in particular, and it was the large ones that made the greatest contribution, and when I am talking about the large ones I am talking about Frank B. Hall, Marsh McLennan and Alexander and Alexander…we have put up substantial amounts of money necessary for the passage of the enabling legislation to bring the New York exchange into being Many of the brokers also put up money for the establishment of syndicates operating on the New York Stock Exchange."
  Mr. Corroon refers over and over again to the United States insurance links between brokers and companies. On page 56 he says that
  "brokers are permitted to own or have an ownership in the managing agencies of the syndicates".
  There are some limits. There is a limit, I think, on the New York exchange. I am not sure how it operates. The principle exists. The United States is setting up an imitation Lloyd's with exactly the same community of interest that we say is wrong here. It seems to me that we are cutting our own throats for the sake of a naive proposition put forward by the Committee.
  I am basically arguing what the promoters were arguing in the Committee in the first place. The proposition that I put should therefore be acceptable. Yet, for some reason, it does not seem to be accepted. I should like to quote evidence in support of what I say. I quote from days 1 and 2 of the Committee when Mr. Peter Green, chairman of Lloyd's, was giving evidence. My point basically is. that the amendments that I am putting forward provide by law powers for management separation with fall-back mandatory powers if things go wrong. This is basically what Lloyd's wanted in the first place. Mr. Green, it seems to me, gave some superb answers that demonstrate my argument. He says:
  "This is not an easy issue. We are quite certain that it must be right for a future council with its knowledge of and responsibility for the market to make the necessary decisions when they hive heard all the arguments not only concerning divestment but also concerning the various other ways of achieving independence of operation. They will have to reach a decision which is in the best interests of Lloyd's and its policy holders."
  He was talking about self-regulation. I thought that is what the Bill was supposed to provide. Is not that what my hon. Friends have been preaching, yet on this occasion they are talking about enforcing mandatory separation?
  Mr. Richard Body: My hon. Friend has quoted the views powerfully expressed by Mr. Green, who is still chairman of Lloyd's. It seems that he was arguing in favour of what my hon. Friend is now proposing. When Mr. Green spoke as he did, does my hon. Friend know whether he was speaking for other members of the community of Lloyd's? What about their views? Is it true that the Committee of Lloyd's as a whole was at that time in favour of the proposals that my hon. Friend is now putting forward?
  Mr. Moate: I am sure that on that occasion the chairman of Lloyd's was speaking for the whole Committee. I am not aware of any dissenting view having been expressed at that time. I presume that he was speaking on behalf of the Committee of Lloyd's, the promoters and for all those who voted to support the Bill at the Albert Hall meeting, in accordance with the Wharncliffe procedures.
  Basically, what the chairman of Lloyd's said was very much in accord with what the community of Lloyd's has agreed. It is only because of what the four members of the Select Committee decided that we are now faced with a different situation. I presume that Mr. Peter Green was saying what he felt to be right. I am sure that he has not changed his views. All that has changed is that the Select Committee insisted on an amendment, and in its wisdom Lloyd's has said "We must go along with that amendment or lose the Bill". It is fundamentally wrong that we should be faced with that position. I believe that based on the merits of the case, the vast majority of Lloyd's members and all the others affected—the shareholders, the employees, the managers and so on—would not go for mandatory divestment. It may be that some will—there are some who would stand to gain—but the vast majority will not.
  Lloyd's was never really given the argument against divestment. It was told "You have divestment or you lose the Bill". That may be true, and that is our dilemma, but what an indictment of our parliamentary procedures that we cannot debate the merits of this matter in a sensible way—[Interruption.] It is all very well for the hon. Member for Norwood (Mr. Fraser) to smirk, but he knows that I have no other way of drawing this to the attention of the House.
  Mr. John Fraser: When it comes to a choice between the private eccentricity of the hon. Gentleman and the public interest, we know from experience what holds sway with the hon. Gentleman. All I would like is perhaps some other contributions to the debate.
  Mr. Moate: The hon. Gentleman knows that we have all night. Therefore, there is plenty of time for other contributions. When the hon. Gentleman speaks in that way, and refers to past conflicts that he and I have had, I am content and pleased that I have been on the opposite side. Much of the legislaton introduced by the hon. Gentleman in his various governmental roles seems to have done plenty of damage to our institutions. I shall return to the question of private eccentricity, because that raises many other points that I shall develop.
  Mr. Body: I am grateful to my hon. Friend for again giving way. Charges of eccentricity have been levelled. It seems extraordinarily eccentric of Lloyd's to change course by 180 degrees. Has there been any explanation
  668
  from Mr. Green or the Committee of Lloyd's as to why they now propose something that seems to be opposite to what they were proposing before? Is there any explanation why they seem to have treated the House with a lack of courtesy?
  Mr. Moate: That is perhaps unfair to the chairman and Committee of Lloyd's. They have an overwhelming belief that they must get the legislation through. Broadly speaking, that is the view of the vast majority.
  8.45 pm
  There is an overwhelming feeling, certainly after this long debate and since the Fisher report, that not to proceed with legislation would be damaging to Lloyd's. There is much to be said for such a view. I am not necessarily saying that there might not be other ways of dealing with this aspect. Had there not been a Fisher report and if the Committee had come forward simply with proposals that gave more disciplinary powers to the Select Committee, I suspect that we would all have been better off. Neverthless, having got this far, it is seen by most concerned as an overwhelming necessity to pass this legislation. I respect that view.
  That basically explains why the Lloyd's Committee feels it has no choice but to recommend to its members, as it did, that divestment goes through. Otherwise, it would have lost the Bill and it feared that the hon. Member for Oldham, West and his colleagues in Committee would have said "If you do not give us divestment, we will refuse to find for the Bill", and that would have been the end of the matter.
  Being honest, I would rather the Committee had had the courage of its convictions and said "No, we basically had a market understanding on divestment." There was much negotiation on how to proceed. The Committee should not have gone back and asked for approval for a change of direction because one must stand up to Parliament sometimes. That is what it is all about. It did not on this occasion; it was its judgment and remains so. The Committee did not change its views but its tactics. It is legitimate for a committee to do that.
  However, on the Floor of the House—an hon. Gentleman said that we have an opportunity to debate it now—we are entitled to consider the merits, supported by the arguments advanced by the chairman of Lloyd's and other witnesses during those Committee proceedings.
  Many of the remarks made by the chairman of Lloyd's were significant and I only wish that the Committee had listened to him and taken on board his remarks. They made a great deal of sense and I shall quote some examples that are worth registering today.
  On page 48 of the report it was asked:
  "As a matter of interest, have any of those syndicates which are either owned or controlled by or partially owned by brokers been in any sort of trouble?"
  The answer was:
  "No, I think it is fair to say that they have not been. It may be that because of their association with a large firm of brokers they can draw on a broader spectrum of expertise than they might do if they were by themselves."
  There is a splendid testimony to the link between broker and underwriter. It did not impress the hon. Member for Oldham, West, but I believe that that was a significant statement.
  The chairman of Lloyd's then referred to the 1974 Act. He was asked:
  "What is the position under the general law relating to other insurance interests outside Lloyd's?"

  669
  He replied:
  "To the best of my knowledge and belief there is nothing in the general law that says anything about a relationship between insurance brokers and insurance companies, underwriting agencies for overseas companies, of which there are many in London."
  He was then asked:
  "I think the matter is not covered, is it, in the Insurance Companies Act of 1974?"
  He replied "No". The proceedings continued:
  "Are there examples of ownership by brokers of insurance companies?"
  He replied:
  "There are many examples I could give you where brokers own either the whole of the capital of an insurance company or are very substantial shareholders in insurance companies, or they own insurance underwriting agencies which underwrite on behalf of insurance companies."
  Again, the broad link between brokers and a whole range of other insurance interests is emphasised. Many examples are given by Mr. Green on his arguments against mandatory divestment. He expressed concern about controlling future owners and that was an important point which even the right hon. Member for Manchester, Ardwick (Mr. Kaufman) should take on board. The chairman of Lloyd's was asked:
  "You might have, for example, agencies owned by—I do not know—chains of supermarkets, almost anything, I think?"
  He replied "Investment trusts situated overseas." The next question was:
  "So it is not just a question of excluding one particular element, namely brokers, but you have to consider who else must be excluded?"
  He replied:
  "Yes, and some of the owners might be far more difficult to control than a Lloyd's broker or somebody who is within the Lloyd's community."
  That is immensely significant. It would be much harder to control an organisation outside the Lloyd's community. But does not that matter to anyone? Are we just to sweep through the proposed legislation and ignore the chairman of Lloyd's?
  The Lloyd's chairman was pressed about whether the committee would carry through these byelaws if it was asked to achieve management separation, and again he stressed his determination. He said:
  "So far as it is in my power to influence the council I would hope that we would be able to achieve effective rules, byelaws, regulations for the separation of control and management possibly within 12 months of the first meeting of the council and certainly within 18 months."
  He expressed clear determination to do it.
  All these desirable objectives to achieve separation where it does not exist—and in most cases it exists today—would have been attained by the determination of the council, particularly one backed up with the new powers that the House proposes to give it in the Bill.
  Later the chairman of Lloyd's said:
  "If I could come back to what we said earlier, there is nothing to my knowledge in the general law that says underwriting and broking should be separated. I think it would be a mistake, with respect to the hon. Members here, that Lloyd's should be singled out, just Lloyd's for this one particular thing. If it is believed that Lloyd's can regulate this properly in other spheres I honestly think we can regulate ourselves properly in this particular issue, particularly as it is the one which is so close to the heart and the whole wellbeing of Lloyd's."
  That is a very important series of statements. It may have no effect on the hon. Member for Norwood but I think that it is significant, yet the House is prepared to sweep all this aside and enforce divestment against the wishes of the Lloyd's community.
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  I quote what is really an important tribute emphasising what I said earlier about the significance of the link between brokers and underwriters. The chairman of Lloyd's said:
  "That the Lloyd's market developed on the scale that it has and enjoys the world-wide reputation that it unquestionably does enjoy is due in very large part to the energy and ingenuity of Lloyd's brokers and to a not inconsiderable degree the foreign brokers that Lloyd's brokers have cultivated through the years. There can be little question that the Lloyd's underwriting syndicate and the Lloyd's broker are essentially complementary to each other in forming the Lloyd's market as a whole."
  There again is another emphasis by someone promoting the Bill—and now would be against what I am saying but who cannot change his views because we have them in black and white—that mandatory divestment is not what he wanted, not what the Committee wanted, not what the promoters wanted and not what the House wanted on Second Reading. It is just what the hon. Member for Oldham, West forced down the throat of the Lloyd's community. In the long run,
  I think that it will be dangerous because, if all these achievements have been made because of these links between the broking houses and underwriters, in future those opportunities may not exist.
  I offer the House another quotation:
  "It has been the versatility of the broker in seeking means of satisfying the needs of his customers balanced against the judgment of the underwriter, that has contributed so much to the reputation of Lloyd's as the market where the customers' needs are met. This balance of judgment is not likely to remain unimpaired unless it is genuinely impartial. We would reiterate our belief that the success of the market will always depend on the skill, professionalism and impartiality of the underwriter."
  Mr. Green replied that that was unequivocal material. He added:
  "It could equally be applied to brokers' ownership of insurance companies."
  Again and again the chairman of Lloyd's made very important statements about the need to maintain these links and the belief that Lloyd's could introduce those byelaws to carry through that management separation without die need for mandatory divestment and the need to force the sale of assets that this Bill proposes.
  The Lloyd's chairman made some other statements that I thought were of some significance. About the conflict, an article from The Times was put to him:
  "Mr. Green, himself both a long-standing underwriter and director of a broking group, once made his view clear with the remark: 'You do not have to commit incest just because your mother is the only other person in the house."'
  He replied:
  "Yes I have often lived with my mother for long periods rind to the best of my knowledge I have never committed incest with her."
  He went on:
  "I suppose the cynic might add, 'unless there is a tax advantage in doing so'."
  I suspect that not carrying out those activities could be more appropriately described as self-regulation, which is what we are trying to promote in the Bill.
  The very fact that there are a variety of interests represented in one large organisation does not mean to say that that conflict of interests operates detrimentally to anybody. I emphasise again that there is an overwhelming commercial interest to ensure that it does not do so. There are exceptions to that general rule. There have to be. I am not saying that everybody in the world is an angel and that there have not been examples of things going wrong.

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  It has been suggested, and I am not sufficiently familiar with the history to know whether it is right or not, that where problems have existed it is usually because there was a small organisation with one or two individuals having control of all or a large portion of the shareholding. They would tend to manipulate the situation without the sort of control exercised by the large boards of large firms.
  It is for that reason that in the new clause I have put forward the proposition that there should be a 20 per cent. limit on the shareholding. The amendment would
  "prohibit any individual… from owning more than 20 percent. of the voting rights of any underwriting agent."
  If that is a danger then the opportunity exists to ensure that that type of problem can be eliminated. That is covering yet another contingency.
  Having put forward an amendment of this kind, which meets the views of the promoter, gives a long-stop to the hon. Member for Oldham, West and provides other safeguards, are we not doing the right thing? Would it not have been better if the promoters had come to us and said that they would negotiate, as was the case with subsequent amendments? As often as not, it is the practice of the House with private legislation, when time is of the essence because not much is available, to start to negotiate.
  I have been greatly disappointed that the promoters have not been prepared to talk to their critics and see whether some compromise could not have been reached and agreed upon. I suppose that they have not done so because they fear that the hon. Member for Oldham, West would vote against it. But that is what the House is about. Had the promoters come back and said that they now agreed to the sort of amendment that I have put forward, we would have had a vote tonight and the hon. Member for Oldham, West would have been defeated. The hon. Member for Gainsborough, with his whips, hounds and packs would have been whipping in the troops on my side, not on the other side. The Committee of Lloyd's could have done that and it would have been a more satisfactory situation.
  Later, we shall come to the arguments on immunities and it is possible that there too we could have achieved a compromise. That could have happened and it should have happened. It would have saved further proceedings tonight, on Third Reading and in the other place, and the legislation would have been passed. That is the way private legislation should be handled, and the way that it is usually handled—by negotiation and agreement. Had the Government not agreed to suspend the ten o'clock rule tonight, that is what would have happened by now. We would have been talking and coining to agreement between us on the matter.
  I strongly feel that we are entitled to some answers from my hon. Friend the Member for Harrow, Central on these points. We have not yet had a proper debate on divestment and the prospects of having one are rather slim. That is simply because all that we have left is procedure, which is not the way to proceed.
  The hon. Member for Norwood described my position as being one of individual eccentricity, or words to that effect. The hon. Gentleman is totally wrong. He usually is. Although there have been overwhelming votes in support of the present situation, I believe that Lloyd's members, under names, have voted only because they had the stark choice: if they did not vote, they would not get
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  the legislation, and the legislation is needed. In talking to various members of the Lloyd's community I find hardly anyone who wants divestment. I am approached by underwriters. I fully expect to be upbraided or criticised, but they say that they are against the proposal too. Given a free choice, I believe that the vast majority would not have mandatory divestment. They know that in the long term it could do incalculable damage.
  9 pm
  Mr. Body: Some time ago, at the time of the Albert Hall meeting, the vote was overwhelmingly in favour of divestment. Lloyd's as a whole believed that it was the right policy. Since then there has been a movement away from it. The more that it is considered, the greater is the opposition to divestment.
  Mr. Moate: I was not privileged to attend the original Albert Hall meeting. I am not a member of Lloyd's, but I understand that there was approval of the Bill put to the House on Second Reading. The meeting was not in favour of mandatory divestment. Basically, it gave the option to the Committee to carry through by byelaw a series of rules on management separation. As a result of sensible and proper market discussions prior to the Albert Hall meeting, there was a slight change but, nevertheless, the members of Lloyd's were basically in favour of something less than mandatory divestment at the meeting. Since then we have had the Committee proposal, which required mandatory divestment. The new and pervading atmosphere—
  Mr. John Wells: On a point of order, Mr. Deputy Speaker. My hon. Friend has been addressing the House for precisely two hours, with assistance from other hon. Members.
  I declare an interest. I am a name at Lloyd's, as are my four children. My hon. Friend is abusing the privileges of the House in the length of his speech. I draw your attention, Mr. Deputy Speaker, to the fact that the group of which my hon. Friend is an employee or an associate is in a particularly vulnerable position if divestment were not accepted. In reinsurance premiums received, the in and out position for the Alexander Howden group was over 67 per cent. Those figures were presented to the Committee presided over by the hon. Member for Oldham, West.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I understand that the hon. Member for Faversham (Mr. Moate) declared his interest before making his speech. The question of the length of speeches is not for me.
  Mr. Moate: I have great respect for my hon. Friend. I wish that I had as great a financial interest in the matter as he or his children. Mine is nil. I am a director of a firm of insurance brokers. My hon. Friend and I have shared battle before. I hope that he knows full well that I am ready to take an independent line, depending on my feelings in a situation, regardless of my personal interest. Frankly, had I disagreed with the Alexander Howden petition, I would have expressed my disagreement. I have disagreed with that company on many occasions on previous insurance legislation and I would do so again. I hope that my hon. Friend will at least allow me that.
  My hon. Friend is wrong to pick out the particular figures that presumably have been fed to him in order to raise a point of order. They were dealt with extensively by the Select Committee, and they totally misrepresent the

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  situation. Anybody in the Lloyd's community would tear figures like that apart. Every broking firm is totally different. Some are reinsurance brokers, taking out more than they are putting in. The whole thing is much too complex to be dealt with in that way.
  I wish that my hon. Friend had been here earlier to hear me say, with great sincerity, that there is disagreement among members of Lloyd's and people in the Lloyd's community about how to proceed. Personal interest does not come into it at all. Not even the chairmen and directors of companies, who are resisting the proposals today, have the long-term interests—
  Mr. Deputy Speaker: Order. The hon. Gentleman had better return to the new clause.
  Mr. Moate: Certainly, Mr. Deputy Speaker. Perhaps I may emphasise that financial interest does not necessarily mean financial gain. It is right that we should declare our interests. Everybody is ultimately concerned with the well-being of Lloyd's and the prosperity of the London insurance market. That is what the amendments are designed to achieve.
  My hon. Friend the Member for Maidstone (Mr. Wells) is leaving. I thought that he would make a speech. I had intended to bow to his wish that I should sit down in a few moments, so that he might make his speech. I shall conclude in a few moments. One has to use procedure on these occasions in many ways. It is the only way that is open in certain circumstances. The House understands the facts of life in these situations.
  I do not believe that I am making points in which I alone believe. A vast number of people agree with what I am saying. Those views will start to come forward in the weeks and months ahead as this legislation proceeds. It will not finish tonight. It still has a long way to go. In that time, I hope that new counsel will prevail and that the amendments will be considered objectively and perhaps accepted in another place if we do not accept them tonight.
  A leading underwriter, and an ex-member of the Lloyd's committee, Mr. Kiln, wrote a letter, to which reference was made when we considered the matter earlier. He said:
  "Divestment: This will be divisive and place Lloyd's at a commercial disadvantage and drive good underwriters out of our market. I have always been in favour of voluntary divestment. I divested myself in 1962 and I have never regretted doing so.
  Compulsory divestment is not necessary and it will lead us into endless difficulties in practice. It may make us less competitive and once started may lead us into deeper waters. Who is to own agencies? Should brokers be members? Should brokers hold binding cover powers? Why exclude a financial conglomerate from owning a Lloyd's agency and a broker?"
  That is one very distinguished underwriter who is against divestment.
  I have notes that have been signed by a large number of underwriting agents. I do not need to quote the names. Many have already given evidence. They underwrite for thousands and thousands of people who place trust in them. Those people are saying that divestment, as proposed in the Bill, is wrong.
  Many of the letters suggest that the Bill should be amended in the following three respects. There should be mandatory separation of broking and managing agencies' operations, with compulsory divestment by subordinate legislation only if this fails to work.
  That is exactly what I have proposed in the amendments. All those people are part of the Lloyd's
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  community. The views of the Lloyd's community are not, I submit, those expressed in the mass vote that has been taken in response to the demands of the Committee that was chaired by the hon. Member for Oldham, West
  I believe passionately that what is proposed in the Bill will do massive damage, in the long term, to Lloyd's interests—not just to the Lloyd's brokers but to the Lloyd's syndicates and the agencies generally. When radical steps of this kind are taken, we never quite know what damage ensues, but I believe that damage will be done. Above all, I believe that what we are now doing is against the wishes of the vast majority of Lloyd's members. If we can now have time—as we can in the coming weeks and months—to try to ascertain once against what their views are, so that the matter can be considered afresh in another place, I believe that we shall come to a better conclusion. I believe that basically it will be the conclusion that was put forward by the chairman of Lloyd's and defended in the Committee—and the proposal that was supported by this House on Second Reading.
  The amendments will, I believe, put the Bill into a better shape. It will be better for Lloyd's. If we cannot achieve it tonight—as a realist, I know that there is little chance of its being carried tonight—at least in the later stages it will, I believe, be accepted by Parliament.
  Mr. Michael Meacher: The hon. Member for Faversham (Mr. Moate) has spoken at exceptional length and has, no doubt, created sonic parliamentary records in so doing. I listened to the proceedings on the five days of the first part of the Committee hearings, most of which was taken up with the question of divestment. I listened for a further six or seven days in the second half of the Committee hearings. I thought that I was hearing it all over again today, with the hon. Gentleman regurgitating the evidence—or, at least, one side of it—very much as I had heard it before.
  I have a high regard for any hon. Member who, place d in a position such as the hon. Gentleman is in, is fighting a valiant rearguard action. I think that the hon. Gentleman realises that that is what he is doing. I have a high regard for his determination and perseverance, and his desire to place on the record what he clearly feels so passionately, even though I shall try to indicate—I hope to be as brief as he was long—that he has misunderstood a number of the arguments.
  The hon. Gentleman referred to the Committee that I was honoured to chair, and suggested that, in its second round of hearings it was less than independent. I hope he will accept that the Committee, during six or seven days, considered the matter in great thoroughness. There was a detailed presentation by leading counsel and a constant flow of questions from members of the Committee. I pay tribute to my colleagues on the Committee. I hope that the hon. Gentleman will accept that it is not fair to suggest that the Committee hearings were not as independent, fair-minded, open and impartial as he would have liked them to be. I hope that he will accept that, far from the Committee forcing mandatory divestment down the throats of people who do not want it, it is for Parliament—not that Committee—to decide the issue. It will be decided by Parliament in the due and proper way this evening.

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  The hon. Gentleman, in the course of a speech lasting over two hours, used a blunderbuss which he sprayed on all and sundry. He raised so many arguments that it is difficult to know where to start in replying to them.
  9.15 pm
  I pay the hon. Member for Faversham the compliment of saying that I am glad that he tabled his detailed new clause and the consequential amendments. They provide an opportunity for the House to re-examine the alternatives to divestment that were proposed at the end of the latest series of Committee sittings on the Bill. As the hon. Gentleman said, the Committee seriously considered the option that forms the basis of the new clause, but it was obliged to reject it, mainly because there could be no certainty about its implementation.
  The hon. Member has sought to put a certain interpretation on my remarks at the end of the Committee hearings and to join them with what I said in my exchange with the hon. Member for Arundel (Mr. Marshall). I am telling him the situation as I understood it. The Committee examined the matter in detail but, although we agreed that there were merits—as well as considerable demerits which I shall refer to later—in the proposal, there was no guarantee about its implementation. That was the critical issue. A power would have been given to the Secretary of State, but there was no guarantee that he would use it.
  Mr. Moate: I do not seek to prolong the hon. Gentleman's speech, but will he accept that at no time, certainly in the public sessions, did the Committee have before it the amendments and the schedule that I propose under which the Secretary of State would have regulation-making power?
  Mr. Meacher: That is true. The hon. Gentleman closely followed paragraph 12.30 of the Fisher report in drawing up his new clause and joined on to it the subsection (3) to which I drew attention. That was not in the original proposal, but that does not clinch his case.
  Every intervention that the hon. Gentleman makes reinforces my belief that he regards his amendments as an ingenious attempt to get round the Committee's reservations. That attempt fails for several reasons. The Committee's rejection of the alternative hinges on the impossibility of guaranteeing that it would be implemented, so that the whole question of its effectiveness for the purposes required never arose, but there were also a number of other doubts which I shall outline.
  The Committee's concern was not whether there would be an opportunity for the Secretary of State to intervene after five years or whether there might be difficulties over hybridity. We were concerned about whether there could be any certainty that the Secretary of State would intervene. That was the crucial point.
  The Committee decided, correctly I am sure, that there could be no such certainty. Therefore, contrary to what the hon. Member for Faversham said on several occasions, there could not be the sort of long-stop provision that he wants and which he believes, mistakenly in my view, that his new clause provides. The new clause merely says that the Secretary of State
  "may, by order made by statutory instrument—
  (a) bring into operation Schedule (Separation of Functions) of this Act.".
  The crucial word is "may".
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  The issue facing us is how Parliament can be certain that the Secretary of State will intervene. This is not a new issue. It was set out in the Cromer report. The hon. Gentleman suggested that the conflict of interest issue is not serious, but the Cromer report said nearly 12 years ago:
  "There is a conflict of interest which cannot be ignored."
  The case put to the Committee is that for 12 years the conflict which, in Cromer's view, cannot be ignored has been ignored by Lloyd's. That is why we believe the divestment argument is clinched.
  Even leaving that aside, I am bound to say that the only problem was a procedural technicality. In my view, there are several other serious difficulties about the alternative proposal that the hon. Gentleman sketched out. The first is that it appears to make no special provision for the small agencies, where many of the recent abuses originated. A significant fact brought to light in Committee was that in no fewer than 43 small companies an individual had a majority shareholding in a holding company controlling both brokers and underwriters. The hon. Gentleman has not covered the need for divestment in such a case. From that case, the Moran, Oakeley Vaughan and other abuses have developed. I do not remember whether the hon. Gentleman said that there were no abuses or only one abuse in such cases. He is incorrect. There have been a few very serious abuses.
  Nothing in the new clause would require that, in the one-person controlled agency, there should be divestment of the majority of the voting or trustee shares held by such a dominant shareholder. That is a fatal omission.
  Mr. Moate: I mention the question of 20 per cent. control at subsection (1)(f) of the new clause. That would deal with the problem that the hon. Gentleman has described. When I referred to the fact that there were no problems, I was quoting from the evidence of the chairman of Lloyd's. Perhaps I took it out of context. If so, I apologise. Of course one is aware of the circumstances to which the hon. Gentleman referred, which is why this provision was inserted in the new clause.
  Mr. Meacher: I did not read subsection (1)(f) as referring to holding companies. I believed that it referred to broker control and not to individual control in both broking and underwriting agencies. If it refers to my point, I accept that it is a requirement that must be met. Secondly, there is the major consideration that the proposal in paragraph 12.30 of Fisher—which is the basis of the new clause—did not satisfy the majority of the Fisher working party, which included Mr. Frizzell, who is a Lloyd's broker.
  The hon. Gentleman played fast and loose with the issue of conflict of interest, which is at the heart of the debate, by suggesting that there are other conflicts of interest, so why should we worry about this one especially? Of course, he is right and perhaps in some areas we must go further, but two wrongs do not make a right. Just because there are other conflicts of interest, one cannot ignore this fundamental conflict.
  Paragraph 12.32 of Fisher states the point clearly and forcefully:
  "The majority of us do not feel that the solution outlined above"—
  that is the hon. Gentleman's proposal—

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  "is adequate to deal with the seriousness of the problem. A fundamental principle is at stake here, namely, the principle that an agent should not put himself into a position where he may have conflicting duties."
  That is not where there will be abuse but where he may have conflicting duties.
  The paragraph goes on to say:
  "The interests of the Assured (for whom the Broker acts) and the interests of the Names (for whom the Agent and Underwriter act) are separate and distinct, and are sometimes in conflict. It is unacceptable that Brokers should, through common share ownership, have the power to control the Agency company, which has a legal duty towards the Names. Conversely, Assureds are at risk that the Broker will not be wholehearted in looking after their interests if he has a financial stake in an Agency which manages Underwriting Syndicates and draws a profit commission from the Syndicates. These risks, which are in any case likely to be aggravated with the concentration of business in the hands of the big brokers."—
  we were told that the eight largest brokers controlled about 59 per cent. of the premiums in the total market; that is a high concentration of ownership—
  "are now sufficiently well known to constitute a real threat to the good name of Lloyd's and could significantly prejudice the willingness of third parties to place business at Lloyd's or of potential Members of Lloyd's to become Names in the future. Each time an actual abuse comes to light this damage is redoubled. The majority of us"—
  the overwhelming majority—
  "believe that no proposal short of complete divorce is sufficiently watertight to reassure the public and the Names, and give active Underwriters the greater independence and standing which the health of the market requires".
  Those are powerful words. Even if they are not decisive—and one is entitled to take a different view—given the nature of the Committee which sat for 15 months with a distinguished membership, the judgment is weighty and cannot easily be cast aside.
  Thirdly, there is the problem of an incestuous relationship even if the new clause is implemented. That is an important fact which the hon. Member for Faversham may have neglected. Alexander Howden, the hon. Gentleman's company, is perhaps the biggest broker in the United Kingdom. It was a petitioner against divestment in the second part of the Committee's proceedings. It asserted in its defence that the company already had full separation of management functions between broking and underwriting. Yet it emerged under cross-examination that, of the total reinsurance orders handled by the Posgate underwriting syndicate within Alexander Howden, no less than 58 per cent. was received by the Alexander Howden broking syndicate and that, of that, no less than 42 per cent. of the business which Alexander Howden brokers were instructed to place went to in-house companies.
  I stress that that applies in the case of the petitioner against divestment. It applies in the case of a company in which the separation of management functions was already supposed to have taken place. I do not believe that such a situation is compatible with the absolute guarantee of arm's length transactions that is needed. That revelation in itself goes a long way to demonstrate why nothing short of full divestment will secure that guarantee.
  The fourth problem is that of policing the separation of functions if the new clause is carried when management is still operating in a single company. The problem is whether evidence of misdemeanours, which we all wish to expose, would come out if the new clause applied. In paragraph 12.34 Fisher states: "Alternatives, involving 'penalties for abuse', run foul of the criticism that they not only fail to cure the evil but have, as a deterrent, the near-fatal defect that they rely upon people (chiefly
  678
  members of the Lloyd's Community) being willing to give evidence before a Disciplinary Committee of the alleged shortcomings of their colleagues"
  That is important in view of what is proposed in the new clause.
  Evidence was, indeed, adduced that large United Kingdom broking companies which insisted that they were properly and virtuously operating the separation of functions within their companies had—at least in one case—required the transfer of shares in blank by the directors of the underwriting agency to the ho(ding company. Whether in such a situation underwriters owned by a broker-controlled agency would willingly complain if they risked the sack must be extremely doubtful.
  For all those reasons—I could advance many more—and not only because of the lack of ultimate guarantee of implementation, the Committee rejected the route proffered by the new clause. I believe that that decision was right, and I hope that it will be upheld.
  9.30 pm
  Mr. Anthony Grant: I, too, shall be brief. My hon. Friend the Member for Faversham (Mr. Moate) advanced his arguments at length. Even if we do not agree with him, we can admire his energy and fortitude.
  I can be brief because the hon. Member for Oldham, West (Mr. Meacher), who was Chairman of the Committee, has effectively given all the answers. He drew attention especially, as I wish to do, to paragraphs 12.32 and 12.34 of the Fisher report, which set out the position clearly. On Second Reading the late Sir Graham Page made Lloyd's view quite clear. He said:
  "Lloyd's is determined to estabish the independence of broking and underwriting." —[Official Report, 24 Marc h 1981; Vol. 1, c. 865.]
  Lloyd's original proposal was to enable a future council to make the future decision. It was not the proposal that my hon. Friend the Member for Faversham has put forward in the new clause. As the hon. Member for Oldham, West explained, the Bill went before his Committee, where it was opposed by petitioners. After a five-day hearing, the Committee recommended that there should be a complete divestment of brokers and underwriters. That recommendation went before a specially convened meeting of Lloyd's members, who must be presumed to know exactly what they are doing. They had before them only one issue, and it was their own business and profession that was involved. At that meeting, by 13, 511 votes to 1, 013 they decided in favour of the proposal. That vote was accepted by the Committee, and Lloyd's produced the additional provisions that are now clauses 10 to 12.
  The proposal has been debated in detail. Immense consideration has been given to it both inside and outside the House. Lloyd's has behaved completely responsibly on this issue. The public expect a new, modern constitution for Lloyd's to ensure no conflict of interest, and there will be seen to be no conflict of interest between brokers and underwriters.
  Mr. Fairbairn rose—
  Mr. Grant: I shall not give way at this stage. The overwhelming view is that the proposals in clauses 10 to 12 are satisfactory, but my hon. Friend the Member for

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  Faversham, with his customary ingenuity, for which I praise him, has sought to revive the old arguments that have already been rejected.
  Mr. Fairbairn rose—
  Mr. Grant: I must advise the House to reject those arguments again.
  Question put and negatived.

  New clause 2
  LIMITATION OF THE LIABILITY OF THE SOCIETY, ETC.

  `(1) No member of the Lloyd's community shall begin an action which is, or includes, a claim against the Society for damages whether for negligence or other tort, breach of duty or otherwise, in respect of any exercise of or omission to exercise any power, duty or function conferred or imposed by Lloyd's Acts 1871 to 1982 or any byelaw or regulation made thereunder—

  (a) insofar as the underwriting business of any member of the Society or the costs of his membership or the business of any person as a Lloyd's broker or underwriting agent may be affected; or

  (b)insofar as relates to the admission or non-admission to or the continuance of, or the suspension or exclusion from, membership of the Society; or

  (c)insofar as relates to the grant, continuance, suspension, withdrawal or refusal of permission to carry on business at Lloyd's as a Lloyd's broker or an underwriting agent or in any capacity connected therewith; or

  (d)insofar as relates to the exercise of, or omission to exercise, disciplinary functions, powers and duties; or

  (e)insofar as relates to the exercise of, or omission to exercise, any powers, functions or duties under bye-laws made pursuant to paragraphs (21), (22), (23), (24) and (25) of Schedule 2 to this Act;

  Unless—

  (i)The act or omission complained of was done or omitted to be done in bad faith; or

  (ii)Leave to begin such an action has been granted by the High Court in accordance with the provisions of section (Actions in respect of section (Limitation of the Liability of the Society, etc.)) of this Act.—[Sir Nicholas Bonsor.]

  Brought up, and read the First time.
  Sir Nicholas Bonsor: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker: With this it will be convenient to discuss new clause 3—Actions in respect of section (Limitation of the liability of the Society, etc.)—and the following amendments:

  No. 7, in page 18, line 8, leave out clause 14.

  No. 8, in Clause 14, page 18, line 17, leave out paragraph (iv).

  No. 9, in page 18, line 18, leave out paragraph (v).

  No. 10, in page 18, line 19, leave out paragraph (vi).

  No. 11, in page 18, line 21, leave out paragraph (vii).

  No. 12, in page 19, leave out lines 11 and 12 and insert 'unless the act or omission complained of:

  (i)was done or omitted to be done in bad faith; or

  (ii)was that of an employee of the Society and occurred in the course of the employee carrying out routine or clerical duties, that is to say duties which do not involve the exercise of any discretion'.

  No. 13, in page 19, line 12, at end insert—
  `Provided always that the Society shall also be liable for damages in an action in which a member of the Society, in his
  680
  capacity as such member, has brought an action against an underwriting agent and has joined the Society as a defendant to that action.'.
  No. 14, in page 19, line 14, after 'respect', insert 'of defamation, or'.
  Sir Nicholas Bonsor: First, I declare my interest as a name in Lloyd's. I wish to remind the House that I have an interest in Mr. Postgate's syndicate and also in Mr. Kiln's syndicate, but that does not affect my judgment on the amendments that I have tabled. What I have to say comes from me and from no one else.
  The clause is designed to replace clause 14. Its purpose is to give a filtering ability to the Lloyd's Committee and Council so that no case can be brought against it unless it has first had a preliminary hearing in the High Court, which seeks to establish damages for negligence or tort. Before I consider in detail the proposals in the new clause, it is necessary for the House to consider in some depth the proposals that are contained in clause 14. Without question, clause 14 gives a blanket immunity to the Committee of Lloyd's. It is intended to give it complete cover against any suit for damages brought by a member of the Lloyd's community. Those suits include those concerning libel and slander as well as negligence and any form of wrongful act. Clause 14 is a wide immunity clause. It is wider than any provision which has been enjoyed by any other similar body. In the letter that the proposers of the Bill have been circulating to hon. Members they refer to a limited immunity clause. There is nothing whatsoever that is limited about the immunity, which is far too wide.
  No other regulatory or investigatory body has ever sought, let alone achieved, any equivalent immunity. The Bar Council, the Law Society, the General Medical Council and the Royal Institute of British Architects do not have such immunity. The list of bodies with similar powers to those of the Committee and Council of Lloyd's, which do not have similar immunity, is boundless. Not a single one has yet claimed to be given the privilege sought by Lloyd's. If my hon. Friend the Member for Gainsborough (Sir M. Kimball) were here I would be tempted to add to my list the Jockey Club, as that might be of interest to him.
  Such a blanket immunity is too great. I do not believe that any hon. Member would wish lightly to impose such a condition upon the membership of Lloyd's or the Lloyd's community who may seek to achieve damages because their livelihoods, their jobs, their homes and everything that they possess has been lost, through negligence, libel, slander or a tort committed upon them by the Lloyd's Committee and Council. It would be wrong for the House to give such a power to that body of already powerful men.
  Without question, in all the principles of English law the greatest is that there is no power without responsibility. There is no right without a corresponding duty. Where the Lloyd's Committee has the power to discipline and control what occurs in the Lloyd's community, it also has a duty to do so properly and with due care. The clause would enable it to do so without any redress being given to those whom it has harmed.
  I find it difficult to reconcile the words of the Under-Secretary of State for Trade my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre), who spoke on behalf of the Government in the previous debate on the Lloyd's Bill, with those of the Under-Secretary of State for Employment my hon. and learned Friend the Member for

  681
  Clitheroe (Mr. Waddington) who spoke on behalf of the Government on the Employment Bill a week last Monday. My hon. and learned Friend said that it was wrong in principle to set trade unions above the law. He said that it was absurd that they should be given immunities that were not offered to their officers. He said that they did not need such immunity. Absolutely correctly he attacked the Liberal Government, who introduced the Trade Disputes Bill with the Labour Party in 1906. He said that on one night the Solicitor-General in the Liberal Government argued frequently and powerfully that no immunity should be granted to the trade unions. The next day he changed his mind.
  There is a distinction between one member of the Government saying two opposite things on successive days and two members of the Government saying opposite things with the separation of one week. Whatever the distinction, the similarity is too close.
  I wonder why on the Labour Benches there is support for clause 14. Why is the hon. Member for Keighley (Mr. Cryer) present, almost alone on the Labour Benches? Is it because the hon. Gentleman supports the Lloyd's community, or because he feels strongly that the Committee of Lloyd's needs the power that is proposed, or is it because he sees the similarity between the trade unions' position and that of the Committee of Lloyd's? Why is it that others of his hon. Friends have taken the same view over the past two or three months while the matter has been considered by the House? It is certainly not love of the City or love of the capitalist system, nor even a love of liberty or justice being seen to be done. It is because it is virtually impossible for a Government to propose powers of immunity for a City institution while simultaneously trying to remove similar powers from the trade union movement.
  The other day, my hon. and learned Friend the Member for Clitheroe quoted the Royal Commission report on the Taff Vale case. I shall quote the report as it puts my point of view better than I could. It says:
  "There is no rule of law so elementary, so universal and so indispensable as the rule that a wrongdoer should be made to redress his wrong."
  That is precisely the position in which the House should stand. We must take the view that the Committee of Lloyd's should be forced to redress any wrong it may commit. Although I accept that there are differences between the position of Lloyd's and that of the trade unions, they are similar in that both abrogate that fundamental principle of law. In no circumstances should the House grant the immunities being sought. I accept that others do not take so robust a view of the principles of law in this country, but I do not believe that anyone would disagree that such a principle must be abided by unless there are overwhelming reasons to the contrary.
  The Committee of Lloyd's argued, as it is perfectly entitled to do, that it has established such an overriding reason, which can be summed up in a nutshell as a reason of commercial necessity. It argues that, without such safeguards against wrongdoing which the Committee of Lloyd's might commit, it will be unable to fulfil its task of properly regulating this large and important financial institution. That argument was put forward in some detail in what is called an opinion by Mr. Southwell and Mr. Philips of counsel. In my view, it is not an opinion at all. It is an unsigned statement of the case and in no way a balanced assessment of the merits of this important
  682
  argument. I submit that it is also fully rebutted by Mr. Michael Mann in an opinion which he gave in answer to the details of the case. It is important that the House should examine details of the Lloyd's argument and the reasons why, in my view, it should not be followed.
  It is argued that the community of Lloyd's has already voted on clause 14—or clause 11 as it was at the Wharncliffe meeting. At that time, Mr. Peter Miller, a member of the Committee of Lloyd's and a barrister, gave evidence to the Select Committee. He said that even to him as a qualified lawyer the terms of clause 11 were not clear. I think that the word he used was "unclear". It is not right that the House should think that what is unclear to Mr. Miller was clear to the 20, 000 members of Lloyd's when they considered the Bill. Most of them have no legal qualifications. Furthermore, the Wharncliffe meeting only took account of the views of the members of Lloyd's. It did not take account of the views of the Lloyd's community as a whole and it is the Lloyd's community as a whole which is affected by the immunities which the House is being asked to grant.
  The community is much wider than merely the members of the society of Lloyd's. It is defined in some detail in clause 14(2)(c).
  Clause 14 provides:

  "(1) This section shall only exempt the Society from liability in damages at the suit of a member of the Lloyd's community.

  (2) For the purposes of this section a member of the Lloyd's community shall be:—

  (a) a person who is:—

  (i)a member of the Society;

  (ii) a Lloyd's broker;

  (iii) an underwriting agent;

  (iv) an annual subscriber;

  (v) an associate;

  (vi) a director or partner of a Lloyd's broker or an underwriting agent;

  (vii) a person who works for a Lloyd's broker or underwriting agent as a manager"

  I pause there because the phrase "as a manager" is important in the light of the description in the preamble of what constitutes a manager. The description is not what might spring to the mind of anyone hearing that word. It appears that
  "'manager' in relation to a Lloyd's broker or underwriting agent, means a persons who exercises managerial functions under the immediate authority of the board of directors, or any member thereof, or of the partners, or any one of them, as the case requires, of the Lloyd's broker or underwriting agent".
  That is an extremely wide description which could cover any one of a number of employees who at any time was acting directly under an order of a partner or director of a broking firm.
  9.45 pm
  As 72, 000 people are employed in the community of Lloyd's, under that definition it must follow that the clause affects as many of them as of members of Lloyds itself. Yet not one of them was consulted about the Bill. The argument advanced by those who favour the clause—that it has been considered by those whom it affects most—does not stand examination.
  Mr. Southwell also argues that Lloyd's is a unique institution which stands alone and it is therefore right that it should be accorded privileges afforded to no other similar body because no other body can properly be equated with it. I submit that most of the bodies that I mentioned earlier can properly be equated with it in terms both of their quasi-judicial functions and of their regulatory powers.

  683
  One body stands out above most others as being more directly on all fours with Lloyd's—the Council of the Stock Exchange. My hon. and learned Friend the Member for Hemel Hempstead (Mr. Lyell), in an excellent speech in the previous debates on this matter, said that in his view the Stock Exchange and Lloyd's were entirely different and that attempts to equate them were mistaken.
  Sir Peter Vanneck, who has been Lord Mayor of London and is now a member of the European Parliament, and who has also been a member of the Stock Exchange, did not agree. Speaking as an ex-member of the Stock Exchange Council, he wrote to The Times pointing out that, although the Stock Exchange Council did not have those powers, that was not to say that it would not like to have them. In his view, it would like to have the powers and probably should have them.
  If we consider giving these powers of immunity to Lloyd's, it will not be long before other bodies claim exactly the same powers for exactly the same reasons, giving precisely the same definition of their need as has been given by Lloyd's.
  The similarity between the Stock Exchange and Lloyd's is very great. For example, there are 270 Lloyd's broking firms and 234 Stock Exchange broking firms. The Stock Exchange has 4, 099 members, which roughly equates with the number of working members of Lloyd's. The Stock Exchange has about 18, 000 employees and a turnover in buying and selling in the United Kingdom alone of £5, 288 million in 1981. That is an enormous amount of money and the Stock Exchange, both in this country and abroad through its agents and branches, is a huge financial institution.
  It is suggested that there is the distinction that in Lloyd's there is unlimited liability whereas the Stock Exchange is not a risk business. Yet a member of the Stock Exchange is not allowed to be a member of Lloyd's precisely because both involve risk and every member of the Stock Exchange has unlimited liability on all his possessions covering his partnership in his firm. Therefore, in my view, there are close connections between the Stock Exchange and Lloyd's and there is no excuse for giving one of them powers which have so long been denied to the other.
  Mr. Jonathan Aitken: My hon. Friend referred to Sir Peter Vanneck's letter. Lest the House be left with the impression that that rather jejune contribution to the columns of The Times represented the views of the Stock Exchange, I should point out that Sir Nicholas Goodison effectively corrected that view by making it clear that the Stock Exchange has only ever sought or needed a very limited degree of qualified privilege.
  Sir Nicholas Bonsor: I am grateful to my hon. Friend for his assistance. I agree that this is the case. There is no question of the present Stock Exchange Council seeking the powers that Lloyd's sees fit to seek. That is not to say that, were we to grant it to Lloyd's, there might not be a future Council of the Stock Exchange that would seek similar powers.
  Messrs. Southwell and Philips allege that to give the Council and Committee of Lloyd's the same degree of duty under the law and the same degree of responsibility under the law as everyone else enjoys would be injurious to the interests of Lloyd's as a community in three ways.
  684
  First, they say, it would waste the time and energy of the officers. Secondly, they say, it may inhibit the willingness of fit people to serve on the Committee of Lloyd's. Thirdly, they say, it might damage the reputation of Lloyd's. I believe the first two arguments to be so spurious that I shall not waste the time of the House upon them. It cannot seriously be argued that one of the most fundamental principles of English law should be abrogated in this fashion because the time and energy of officers of the Lloyd's community would be wasted in following up claims against the Council of Lloyd's.
  The question whether it would inhibit the willingness of proper people to serve can be easily solved by looking at similar bodies. The Committee and Council of Lloyd's, like those I have mentioned, will be in an extremely prestigious office, carrying responsibilities and giving power and prestige within that community. Without question, people will be willing to serve on it despite the fact that they, like everyone else in this community, will be under the ordinary rules of law that subject them to the need to take reasonable care in the exercise of their duties.
  I ask the House to consider what would be more injurious to the reputation of Lloyd's—if someone, feeling grievously wronged by the actions of the Committee and the Council, were to say so vocally in the community of Lloyd's, which is itself something of a hotbed of rumour, as most City and similar institutions are and if he were to grouse and complain in the international community that he has been wronged but has had no remedy, or if someone alleges that he has been wronged, takes Lloyd's to court and it is found that Lloyd's has committed no wrong?
  Mr. Fairbairn: I think that the House should consider this point. If he is prevented from any action of defamation against the Council, it would not be prevented from any action of defamation against him.
  Sir Nicholas Bonsor: I am extremely grateful to my hon. and learned Friend. That is so. It would certainly be an imbalance of law that he was prevented from speaking about what he considers a genuine grievance and yet the Council of Lloyd's, which has committed that grievance, is fully protected in so doing.
  There is no doubt that the reputation of Lloyd's, built up over the centuries on the word of the members being as good as their bond, will not be enhanced should the Committee and Council of Lloyd's be seeking to hide behind an artificial and unique defence if someone alleges that they have been wronged by them.
  The logic of the argument of the proponents of the Bill is full of flaws. It is particularly so in this instance because they claim, in the same breath, that a suit in damages will harm the reputation of Lloyd's but that the remedies of injunction and breach of natural justice remain. Therefore, they argue, remedies are accessible even though the negligence and tort and libel suits are protected. That is not true. Whereas the actions for injunction or for breach of natural justice would be equally damaging to the reputation of Lloyd's, they do not give and never could give the same remedies as those available under the ordinary common law that this statute seeks to get round.
  As a positive claim, the two eminent counsel who gave this opinion for the Lloyd's Committee claim that there are seven precedents for the unique treatment that they wish to have given to the Lloyd's Council and Committee. The seven precedents are that section 2 of the Unfair Contracts

  685
  Terms Act 1977 is similar, that trade unions have similar immunities, that there are judicial exemptions that stand in the same light, that the Armed Forces also have special exemptions, as do some elements of the National Health Service, the Post Office in the carriage of mail, and ship owners.
  I do not believe that any of those parallels have a remote connection with that which the House is being asked to examine today. I shall deal briefly with only two. Section 2 of the Unfair Contract Terms Act 1977 does not allow negligence with impunity. It expressly excludes negligence in contractual clauses, and allows them only in the event of the court finding that in exceptional circumstances it is reasonable for them to be imposed. That is very different from asking for an immunity to be given in all actions to cover the authority of Lloyd's.
  I have already said something about the trade unions. I remind the House that when dealing with this question in March 1906, F. E. Smith pointed out that the immunities given to the trade union movement at that time—and immunities in section 2 of the Trade Disputes Act 1906 include immunities from libel and torts—were powers that the people of England had fought for 1, 000 years to remove from the feudal barons. That sets one tier of people under a separate law from all the others. It gives powers to people already in positions of power whereby they can abuse their existing power with impunity at the expense of those who serve under them.
  Sir Charles Fletcher-Cooke: It was not the feudal barons, it was the medieval Church.
  Sir Nicholas Bonsor: I am quite sure that my hon. and learned Friend is correct. The medieval Church was equally at fault, and could invoke powers that not even the Committee of Lloyd's would seek.
  Viscount Cranborne: I hesitate to add to the intervention of my hon. and learned Friend the Member for Darwen (Sir C. Fletcher-Cooke), but my hon. Friend will perhaps recall that in many cases the medieval Church was a feudal baron in its own right.
  Sir Nicholas Bonsor: I am also grateful to my hon. Friend. I cannot help feeling that it is possible that the Committee of Lloyd's may be the nearest thing to a feudal barony that we have left, but I do not want to pursue that point too far.
  Having put forward these positive cases in an attempt to justify the giving of a particular power to the Committee of Lloyd's, Messrs Southwell and Philips in effect admit that they have failed to make a positive case by relying on the claim that even if the immunities are granted, no harm will be done by them because other adequate remedies will be available. They are the remedies of injunction and breach of natural justice.
  I am sure that all my hon. and learned Friends, with their deep knowledge of the law, will hesitate before putting any such argument before the House. As they well know, an injunction is not an adequate remedy for three reasons. First, it may well be too late to avert the damage that has already been done before an injunction can be sought. If someone has been libelled, and his reputation tarnished, no amount of injunction will undo the harm that has already been done. If he has lost his job in a business, such as the underwriting of Lloyd's—which relies upon personal contact and prestige—because he has been
  686
  libelled, no amount of injunction will compensate for the wrong that has been done to him, if he has lost his job wrongly through the negligence of the Committee of Lloyd's or the way in which it has talked about him. In those circumstances, an injunction is not an adequate remedy.
  It is not an adequate remedy in circumstances similar to the Sasse case, whatever the merits of that case may have been. If the Committee of Lloyd's is negligent in the pursuit of its powers and the duties placed upon it, it is quite wrong to deprive those whom it has harmed of damages resulting from that harm. No compensation can be awarded in an action for an injunction. An injunction will be precious little use if a man has already been ruined by the actions of which he complains.
  Thirdly, it is very difficult to obtain an injunction. The ruling by Lord Justice Denning, as he then was, in the case of Lee v the Showman's Guild of Britain laid down the criteria on which the court will consider the way a tribunal exercises its powers.
  Lord Denning said that the court would ask whether a tribunal
  "has observed the law, has interpreted the rules correctly and applied them to the facts."
  If the tribunal has done that, the court will not interfere with the decision it has reached, consider the conduct in which the hearing was carried out or consider whether all the available evidence was sought or produced and the way in which the—
  It being Ten o'clock, further consideration of the Bill stood adjourned.

  BUSINESS OF THE HOUSE
  Motion made, and Question put,
  That, at this day's sitting, the Lloyd's Bill may be proceeded with, though opposed, until any hour.—[Mr. David Hunt.]
  The House divided: Ayes 151, Noes 5.

  Division No. 73]

  [10 pm

  AYES

  Alexander, Richard

  Dixon, Donald

  Atkins, Robert(Preston N)

  Dorrell, Stephen

  Baker, Nicholas (N Dorset)

  Douglas-Hamilton, Lord J.

  Beaumont-Dark, Anthony

  Dover, Denshore

  Beith, A. J.

  duCann, Rt Hon Edward

  Benyon, W. (Buckingham)

  Dunn, Robert(Dartford)

  Berry, Hon Anthony

  Dunwoody, Hon Mrs G.

  Best, Keith

  Durant, Tony

  Biffen, Rt Hon John

  Dykes, Hugh

  Biggs-Davison, Sir John

  Eastham, Ken

  Blackburn, John

  Eggar, Tim

  Bottomley, Peter (W' wich W)

  Elliott, Sir William

  Boyson, Dr Rhodes

  Evans, John (Newton)

  Bright, Graham

  Eyre, Reginald

  Brocklebank-Fowler, C.

  Fairgrieve, Sir Russell

  Brooke, Hon Peter

  Faith, Mrs Sheila

  Bryan, Sir Paul

  Farr, John

  Buck, Antony

  Fenner, Mrs Peggy

  Callaghan, Jim(Midd't'n &P)

  Fisher, Sir Nigel

  Campbell-Savours, Dale

  Fookes, Miss Janet

  Carlisle, Rt Hon M. (R'c'n)

  Forrester, John

  Channon, Rt. Hon. Paul

  Fraser, J. (Lamb 'th, N'w'd)

  Chapman, Sydney

  Fraser, Peter (South Angus)

  Clarke, Kenneth (Rushcliffe)

  Gardiner, George(Reigate)

  Clegg, Sir Walter

  Garel-Jones, Tristan

  Crouch, David

  Goodhart, Sir Philip

  Cunliffe, Lawrence

  Goodlad, Alastair

  Cunningham, G.(lslington S)

  Grant, Anthony (Harrow C)

  Dalyell, Tam

  Grieve, Percy

  Davidson, Arthur

  Gummer, John Selwyn

  Davis, Terry (B 'ham, Stechf'd)

  Hamilton, Hon A.

  Dean, Joseph (Leeds West)

  Hamilton, Michael (Salisbury)

  Dean, Paul (North Somerset)

  Hamilton, W. W. (C'tral Fife)

  687

  Hardy, Peter

  Nelson, Anthony

  Harrison, Rt Hon Walter

  Neubert, Michael

  Hawkins, Paul

  Normanton, Tom

  Heddle, John

  Osborn, John

  Henderson, Barry

  Page, John (Harrow, West)

  Howell, Rt Hon D. (G' ldf' d)

  Page, Richard (SW Herts)

  Howell, Ralph (NNorfolk)

  Pattie, Geoffrey

  Howells, Geraint

  Penhaligon, David

  Hunt, David (Wirral)

  Percival, Sir Ian

  Hunt John(Ravensbourne)

  Pitt, William Henry

  Jenkin, Rt Hon Patrick

  Pollock, Alexander

  Jessel, Toby

  Prentice, Rt Hon Reg

  Johnson Smith, Geoffrey

  Proctor, K. Harvey

  Johnston, Russell (Inverness)

  Renton, Tim

  Jones, Barry (East Flint)

  Rhodes James, Robert

  Jones, Dan (Burnley)

  Rhys Williams, Sir Brandon

  Jopling, Rt Hon Michael

  Sainsbury, Hon Timothy

  Kerr, Russell

  Shepherd, Colin (Hereford;

  Kimball, Sir Marcus

  Silvester, Fred

  Langford-Holt, Sir John

  Speed, Keith

  Lawrence, Ivan

  Sproat, Iain

  Lee, John

  Squire, Robin

  Le Marchant, Spencer

  Steel, Rt Hon David

  Lewis, Kenneth (Rutland)

  Stevens, Martin

  Lloyd, Peter (Fareham)

  Stewart, A. (E Renfrewshire)

  Lyell, Nicholas

  Thompson, Donald

  McKay, Allen (Penistone)

  Thorne, Neil (Ilford South)

  MacKay, John (Argyll)

  Thornton, Malcolm

  McNair-Wilson, M.(N' bury)

  Tinn, James

  McNally, Thomas

  Townend, John (Bridlington)

  Madel, David

  van Straubenzee, Sir W.

  Major, John

  Viggers, Peter

  Mather, Carol

  Walker, B. (Perth)

  Mayhew, Patrick

  Wall, Sir Patrick

  Meacher, Michael

  Waller, Gary

  Meyer, Sir Anthony

  Watson, John

  Mills, Peter (West Devon)

  Wells, Bowen

  Monro, Sir Hector

  Wells, John (Maidstone)

  Morgan, Geraint

  Wolfson, Mark

  Morrison, Hon C. (Devizes)

  You nger, Rt Hon George

  Morrison, Hon P. (Chester)

  Murphy, Christopher

  Tellers for the Ayes:

  Myles, David

  Mr. Tony Newton and

  Neale, Gerrard

  Mr. John Stradling Thomas.

  Needham, Richard

  NOES

  Cryer, Bob

  Hoyle, Douglas

  Tellers for the Noes:

  Maxwell-Hyslop, Robin

  Sir Charles Fletcher-Cooke and

  Moate, Roger

  Mr. Richard Body.

  Thomas, Mike (Newcastle E)

  Question accordingly agreed to.
  As amended, again considered.
  Sir Nicholas Bonsor: Before the vote, I was discussing the merits of an injunction as a remedy against the harm that might be done by the misbehaviour of a future Committee of Lloyd's. I was suggesting that an injunction was not the proper remedy and that it falls short for three reasons. First, it would probably be too late to reverse the damage that might be done. Secondly, no compensation can be awarded under an injunction case. Thirdly, it would be difficult to obtain against a properly constituted regulatory body.
  I was halfway through what Lord Justice Denning had to say in the case of Lee v The Showman's Guild of Great Britain, in which he lay down the criteria on which a tribunal would be judged by a court as to whether such a body had behaved effectively and properly. He said that it would see whether a tribunal observed the law, interpreted the rules correctly and applied them to the
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  facts. I went on to say that the Committee of Lloyd's suggests that an injunction is one of the effective remedies and a breach of natural justice is another.
  But if a breach of natural justice is another, as any of my hon. and learned Friends will know, it is even more difficult to obtain than an injunction. In the Sunday newspapers this weekend there was reported a case of a teacher who claimed that he had been wrongly dismissed. I do not know whether he had been, but Mr. Justice Comyn, in his summing up, also applied the criteria under which the case of natural justice would be examined by the courts. He said that the same strictness is not expected of regulatory bodies as of a court of law. The court will ask what was a fair hearing from a properly constituted body acting in good faith. If it was such a hearing it would look no further to examine the way in which the hearing had been conducted, or the evidence had been given to it, or the way in which it had seen fit to examine the facts. I do not believe, nor, I am sure, do my hon. and learned Friends backing the amendment, that the remedy that the Committee of Lloyd's says will be adequate will meet the justice of the case. Clearly, it does not.
  The Lloyd's case seems to rest on three facts. The Committee claims that the disciplinary powers must be acted upon quickly if they are to be effective. That does not stand a moment's examination. Is the Committee really suggesting that it must be entitled to act negligently or wrongfully, or to libel the person whom it is investigating so as to act quickly and effectively? If so, why should that be? It is saying in effect that the disciplinary hearing should be permitted to be conducted in a manner that will lead to injustice, or may lead to injustice, and that the ordinary law of the land must stand back and allow this to happen, and that no remedy must be allowed to those who have been grievously wronged under it.
  Secondly, it says that the only reason why the members who are looking to throw out the immunity clause or who may sue Lloyd's in due course are doing so because they want to spread the risk across the other members of Lloyd's or to spread risk across the wider membership of Lloyd's. They say that Lloyd's is a risk-taking business and because of that members should not have the right to sue the Committee of Lloyd's or to spread risk across the wider membership of Lloyd's.
  10.15 pm
  That is a superficially attractive argument until one remembers that the only circumstances in which risks could be covered and the burden shared would be those in which in the High Court it had been established that the Committee of Lloyd's had been negligent or acted wrongly. It cannot be correct that that is a risk that members of Lloyd's undertake when they agree to be an underwriter or a name. The risks that they take are the ordinary risks of the market place. Those are the risks to which one can properly refer when talking about Lloyd's as a risk-taking business. It is no part of the exercise of the Committee of Lloyd's Committee or Council to increase the risks by behaving in such a fashion that their negligence, their libel or their wrong adds to the damage done to the members of Lloyd's. That again is a spurious argument against the taking out of clause 14.

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  Thirdly, it was argued that the damage to Lloyd's would be great. I hope that I have dealt with that point. It will be far greater if Lloyd's fails to give the remedy when it is clearly in the wrong.
  My new clause would create a filter which would prevent the bringing of blackmailing or vexatious litigation with no merit involved. The Lloyd's Committee and Council have said properly that they are worried about the possibility that such litigation would be commenced against them and that they might be forced into settlements by the expense and dishonour involved for them in the process.
  Anyone who has practised at the Bar, who is a solicitor or who has knowledge of the law will be aware that under order 53 of the rules of the Supreme Court the filtering process is already well established in the principal way in which the courts go through their business. The order applies to leave to appeal in many cases whereby preliminary hearings to see whether there is merit in a claim for an appeal are held. It is absurd to suggest that such hearings prejudice the right of either party.
  My new clause would safeguard Lloyd's perfectly adequately against blackmailing and vexatious litigation but would not go against the fundamental principles of English law which are so badly broken by clause 14 in its present form.
  I close by repeating the words of the Royal Commission in 1909, which I referred to earlier:
  "There is no rule of law so elementary, so universal and so indispensable as the rule that a wrongdoer should be made to redress his wrong."
  I ask the House to make sure that that principle of law is upheld in this instance.
  10.17 pm
  Sir Charles Fletcher-Cooke: I shall be brief. My hon. Friend the Member for Nantwich (Sir N. Bonsor) has made a very impressive speech, and it would be folly on my part to repeat it.
  Having given the House the benefit of my thinking on a previous occasion, I make only three short points. My hon. Friend is right to say that if the immunity—which is a large but not total immunity—is given, no doubt for the best of reasons, to the regulatory body of Lloyd's there will be a rush of applications for a similar immunity from other regulatory bodies of other trades, professions and callings. One can instance them. There are not only the obvious ones—the Law Society, the Bar Council, the General Medical Council and the Council of the Stock Exchange—but the minor ones—the quantity surveyors, the average adjusters, and so on. There are hundreds of trade and professional associations which no doubt are not exactly in the same case as Lloyd's but which can give similarities to the position of Lloyd's which would be difficult to reject.
  In those circumstances, as I said in my recent intervention, we shall be getting back to the state of immunity that was successfully dealt with and removed by the Tudors and the Stuarts, and again in the nineteenth century. We do not want to get back to a position in which great bodies and organisations are immune from the law, even to the extent which is proposed now, which is not, of course a total immunity.
  Secondly, I take issue with the remarks made by my hon. and learned Friend the Member for Hemel Hempstead (Mr. Lyell), for whom I have the greatest
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  regard. When we last debated the matter, he envisaged a situation in which the regulatory body would be obliged to act very speedily on inadequate information. He argued that the dangers of loss of confidence in the whole organisation were such that a ruling would have to be made on totally inadequate evidence. I fully agree that that situation might well arise, but if the wrong decision were made in those circumstances, that would not be negligence. If someone does his best when he is obliged to work speedily on inadequate evidence, and gets it wrong, then he gets it wrong, and he is not negligent in so doing. He has fulfilled his duty of care. Therefore, I do not think that that example is a good one.
  I am not particularly enamoured of a filter which equates somebody who wishes to sue the regulatory body of Lloyd's—for negligence, defamation, or whatever it may be—with the vexatious litigant. For some reason, in a case against this body—but not in the case against any other body that we know of—it is suggested that the procedure of the vexatious litigant should be followed.
  I believe that the suggestion was put forward as of an olive branch to the promoters of the Bill, to see whether somehow a compromise could be reached that would ensure the passage of the Bill—a Bill which, apart from clause 14, I am as anxious to see passed as is anybody else. But that olive branch has been rejected with contumely by the promoters. They say that the filter would make it easier rather than harder to sue for damages in an action for negligence, for defamation, or whatever it might be. They say that it would put the imprimatur of the court on the action and give it somehow a special quality and strength that it would not otherwise have.
  I have never heard such a spurious argument in my life. The idea that, when a vexatious litigant comes before the court and at last gets permission from the court to proceed, it somehow influences the judge in the trial of the action is rubbish. If the proposers do not want it, let us not press it. Let us rather accept amendment No. 7, which does the right thing about the clause by seeking to reject it altogether.
  Mr. John Fraser: Does the hon. and learned Gentleman agree that the damage done by the alternative proposed in the amendment would not be damage to the final hearing of the action but damage outside? A court will have decided that there is a prima facie case against a member of Lloyd's and therefore more damage might be done to his reputation overseas than would be the case when a vexatious litigant is given leave to issue proceedings.
  Sir Charles Fletcher-Cooke: It is an exact parallel. No one says that because a vexatious litigant produces a prima facie case on first appearance he must win or he has a stronger case than the ordinary litigant. If we carried to its logical conclusion the theory that we must protect ourselves against the uninstructed foreigner we would never allow an action against any of our institutions.
  If the proposers do not want the olive branch, let iis withdraw the offer and carry amendment No. 7, which cancels the immunity altogether.
  Mr. Fairbairn: I speak as one who has nothing to do with Lloyd's and little to do with the law of England, but I am immensely disturbed by clause 14, not for any reason connected with Lloyd's, but because of its principle. It

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  seems to grant immunity to an institution for no good reason and an immunity such as has not been granted since the Trade Disputes Act 1906.
  The bad reason for the immunity of 1906 was that the then fledgling Labour Party made it the price of its support for the then Liberal minority Government. Whatever loyalties one may have to the institutions of trade unionism, and I am not hostile to them, immense harm has been caused by immunities being given because people are loyal to a Government or institution whose purposes they do not necessarily comprehend.
  We are discussing the fundamental right of an individual not to be deprived of his rights under the law. Clause 14 proposes that there are individuals who should be exempted—I had not appreciated that it went as far as defamation, but I see that it does—from their rights if they are wronged, albeit wronged in good faith.
  If the community of Lloyd's has, by the misapplication of its rules, its failure to apply those rules or whatever other action, in good faith, wronged a man or many men or bankrupted their families by so doing, there is no remedy. If that community refuses to allow a person to be an active underwriter or costs him his job as such, albeit in what is described as good faith, he has no remedy.
  In other words, we are establishing a principle that is contrary to the natural law. It is that negligence in good faith is immune from action. Let no one in the House or outside misunderstand that principle. The clause means that negligence in good faith is immune from penalty and remedy.
  10.30 pm
  Mr. Needham: Does my hon. and learned Friend accept that those who join the community of Lloyd's know full well that they are giving up that right and that the vast majority of the community has, on three occasions, voted that Lloyd's should do that? Does it not have some bearing on their rights if they voluntarily give them up?
  Mr. Fairbairn: That is a most astonishing doctrine. Until we pass or do not pass this new clause, the concept has not been a part of Lloyd's. It is extraordinary to say that someone who emigrates to Russia does not believe that he is giving up his rights. Until now, there has been no immunity from the effects of negligence in Lloyd's. Why, in 1982, should it be necessary to extend that concept? My hon. Friend's point is meaningless.
  We are told that it is only in good faith. If we take the case of the vexatious litigant, all that he must plead is bad faith. The advice that I give to every client is "If you wish to litigate, do not". I know very few people rich enough to take on someone else vexatiously, far less anyone rich enough to take on the community of Lloyd's vexatiously. There is no possibility of doing so. However, the possibility to plead bad faith in order to be allowed to take on Lloyd's vexatiously, and thus to harm its name, is an infinitely greater risk.
  What does that do for the name of Lloyd's, which is pled in the opinion that has been circulated, if not signed, by Messrs. Southwell and Philips as the principal reason to object? But there are other reasons. The first is that litigation consumes time and energy. I am surprised that the Bar Council and the Law Society are not represented to plead their case if that is so. Any wise lawyer will tell
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  people not to litigate because the outcome is never certain. Of course it consumes time and energy, but that is no reason to say that no one should be allowed to litigate. I cannot believe that anyone who litigates, such as the National Coal Board or the National Union of Mineworkers, is not equally conscious of time and energy.
  Then we are told that people may fear to serve on the council. What of other people? Will a doctor refuse to operate on his patient for fear that he might be said to have been negligent? He must say "I am sorry. I will not have you on my roll, because if I diagnose appendicitis and it turns out to be earache, I am not immune". What of football referees or directors of companies? Are they to be put in a position whereby their shareholders would have no remedy for their bona fide negligence, because it might consume their time and energy? These are fundamental concepts that are dangerous.
  We are told in the opinion of contractual cases. My hon. Friend the Member for Nantwich (Sir N. Bonsor) dealt with section 2 of the Unfair Contracts Act. In the opinion, a number of statutes are pled in aid. It is said that they demonstrate an equivalent immunity or an echoed immunity. For instance, members and officers of local authorities and National Health Service authorities are protected against suit in respect of acts done bona fide for the purpose of giving effect to various statutes.
  We are told about section 251 of the Highways Act. What does that Act say? It states:
  "No act or thing done by any member of a local authority or by any officer or other person shall, if the actual thing done was bona fide for the purpose of carrying out the provision, be subject to any claim, liability or demand whatsoever."
  But subsection (3) states:
  "nothing in this subsection shall be construed to exempt any member of a local authority from liability to be surcharged with the amount of any payment which may be disallowed by the auditor."
  That is not an analogy.
  Let us examine the Food and Drugs Act. Section 128 states:
  "An officer of a council shall not be personally liable in respect of any act done … Where an action has been brought against an officer … in respect of an act done … he is not legally entitled to require the council to indemnify him, the council may, nevertheless, indemnify him."
  The section states earlier:
  "nothing in this subsection shall be construed as relieving a council from any liability".
  All the legislation quoted has the same effect. It removes from the individual officer the absolute liability, as in the Crown Proceedings Act 1947, and does not exempt the council from that responsibility. That has been the trend and basis of all law for a long time.
  I was even more amazed that the Post Office Act was pled in aid, as exempting a person from any duty "in the carriage of mail" and
  "immune from liability for anything done or ommitted to be done in relation to anything in the post."
  I found that even more extraordinary, because under the Post Office Act 1953 not only is a person not immune from any civil suit under section 59, but
  "any person employed to convey or deliver a mail bag, or a postal package … is guilty of carelessness, negligence or other misconduct whereby the safety of the mailbag or postal bag is endangered"
  is guilty of a criminal offence.
  The opinion, which appears to be the basis upon which the matter was accepted, is based on a complete misinterpretation of the statute law quoted. There is no

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  exemption from liability for the communities concerned. There is in some cases a transfer of that liability to the general body that employs a person. In some cases there is an increase in the liability of those who employ.
  It is important to understand that tonight we are not arguing about the rules of a club to which some people belong fervently, and believe that they should support fervently, without thought of the principles involved. This is one of the great principles that has been fought over in the House of Commons for centuries. It is the question whether some powerful men should take unto themselves a right to be immune from the law when other men are not.
  I am a lawyer and all advice given in the course of litigation is exempt. Perhaps, therefore, it will be said by other lawyers who may speak that I should be the last to speak about immunity. First, it is only advice in foro that is exempt. Advice that is negligent but bona fide and that is given in the course of litigation but not in foro is not exempt. That is subject to any further decision that the House of Lords may make.
  The reason why a lawyer in foro is exempted from defamation and negligence is that were he not so every litigant could pursue his case for ever on legal aid, prevent his sentence from being effective or pursue his appeal by saying "If only Fairbairn had asked that other question, or if only he had refrained from asking that other question, which admittedly in bona fide he asked but which was negligent, I would have had a different result."
  It is that singular effect which is the reason for the exemption in foro to all counsel. For all others there is no community which regulates the affairs of men that is ultimately immune to the extent that the individual whom they wrong, albeit wronged bona fide, has no remedy. That is something that I should like to see in the House in the name of whomever it was passed.
  Mr. Aitken: I rise with some diffidence, following as I do three such distinguished speeches made in support of the amendment by my hon. Friend the Member for Nantwich (Sir N. Bonsor), who spoke with his customary robustness, and by my hon. and learned Friends the Members for Darwen (Sir C. Fletcher-Cooke) and for Kinross and West Perthshire (Mr. Fairbairn). They are learned in the law and their erudition, expressed as it has been sometimes in Latin, has risen rather above my head. I am a simpler man and I shall take a broad brush approach.
  A broad approach is required at this juncture because we are discussing an issue of fundamental importance to Lloyd's and to the public interest in the widest possible sense. For Parliament to be asked to grant immunity from the law to any group of citizens is a momentous issue. Not since the Trade Disputes Act 1906, when Parliament gave immunity from the law to trade unions, have we had a request for a privileged group of citizens to be above the law. It is right that we should be deliberating on this matter with the utmost seriousness.
  I deplore certain reports in the press to the effect that the opposition to the clause has been motivated by gangs of old school chums and other mysterious groups. We are discussing a clause that gravely affects the rights of individuals to the fundamental principle of equality before the law. Before we grant it, we must ask ourselves as a House some serious questions. I shall put four such questions to the House.
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  10.45 pm
  My questions are in the order of descending importance. First, is the granting of immunity in the best interests of Lloyd's? Secondly, does Lloyd's need the immunity that it is seeking? Thirdly, even if Lloyd's needs that immunity, does it deserve to be granted immunity, bearing in mind the committee's track record in dealing with recent controversies and scandals? Finally, is it in the public interest for Lloyd's to be given the immunity that it is seeking?
  First I shall consider whether the granting of immunity is in the best interests of Lloyd's. Obviously, Lloyd's thinks so. It may seem an impertinence to question its judgment on the matter, which is so important to its self-interest, as an outsider who is not a member of Lloyd's. I shall take the risk, not for the first time, of sounding somewhat impertinent about the affairs of Lloyd's. I shall say why I believe that immunity is against even Lloyd's best interests, giving short-term, medium-term and long-term reasons.
  I refer to the short-term reasons. It can be fairly said that the big risk that Lloyd's is taking in pressing for the clause is that, if it did not do so, it could have the Bill without further criticism and controversy. I do not wish to deprecate the admirable speeches that have been made on other issues, particularly the tour de force by my hon. Friend the Member for Faversham (Mr. Moate), but I think that we would all agree that immunity is the issue that goes to the heart of the Bill. If Lloyd's had not taken a firm stand and had not rejected all olive branches of compromise over the issue, the Bill would be passed without any serious doubt.
  Mr. Peter Green, the chairman of Lloyd's, is something of a gambler, who would stake all on the clause. It would look good if he won all. Not only are there questions about whether he will win all in the Division Lobbies tonight, but there are more fundamental questions to be raised in another place, when the Law Lords sink their teeth into some of the mistakes and errors of thought that lie behind the clause.
  Mr. Green and his committee must take the responsibility for the fact that they have, as it were, put all their chips on immunity. Because of the controversy attaching to it, if they lose the Bill, they will look exceedingly foolish in having staked all on the immunity issue. Henri IV said in a different context.
  "Paris is well worth a mass."
  If I were a member of the committee of Lloyd's, I would have said that the Bill was well worth giving up immunity for, because there are much more important issues.
  In the medium term, too, the clause is against the best interests of Lloyd's. If the Bill becomes the law of the land, almost immediately after it is an Act of Parliament, Lloyd's will be embroiled in worse controversies than at present because the immunity exists. For every malefactor and dissident in Lloyd's who is disciplined by the committee, the power of immunity will be used to prevent him from suing in the courts. What will be his reaction? He will immediately and noisily complain in words to the effect of: "I am the victim of an injustice. I would have got justice if only Lloyd's had not used against me the controversial power of immunity. I have been prevented from getting the justice that is the birthright of practically every other Englishman."
  Those complaints will be published by the press. Those grievances will be ventilated in the House of Commons.

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  There will be questions in Parliament asking "Is it not about time that the Secretary of State for Trade removed the immunity?" There will be Adjournment debates. There will be one long-running sore of controversy because of the immunity requested by Lloyd's. In demanding the clause, Lloyd's is creating a rod for its own back. It is creating for the future controversy that it has sought to avoid.
  In the long term, the prospects are perhaps even gloomier. History shows that immunity is a poisoned chalice. Across the centuries, every institution that has held it seems to have been doomed to destruction. Mention has been made of the Norman barons who had immunity until Henry VII removed it and of the medieval Church which enjoyed benefit of clergy. King Charles I proclaimed the immunity of the Monarch, and had his head chopped off while doing so. More recently, since 1906 the trade unions have enjoyed an immunity which has contributed enormously to their unpopularity today.
  Mr. Lyell: I hesitate to stop my hon. Friend in his flight of fancy, but the law courts also enjoy complete immunity. Do they also suffer the terrible problems that he has enumerated for all the other bodies?
  Mr. Aitken: I am surprised that my hon. and learned Friend cannot differentiate between a blanket immunity and immunity for a specific time and place and a specific officer carrying out his duty. A Member of Parliament, for the brief time when he is speaking in the Chamber, has immunity. A judge delivering a judgment from the bench has immunity. But to give an institution a blanket right which would prevent a citizen from going to court to seek the justice that any other citizen may obtain involves a far wider and deeper immunity.
  History shows that the institutions which benefit from immunity sow the seeds of their own destruction in the process. This perhaps explains the bizarre paradox of the Opposition's support for the Bill. Why do a number of well-known Left-wing Members support the provision of immunity for Lloyd's? If I were a member of Lloyd's, the support of the Bennite Left for this clause would make me distinctly uneasy.
  I believe that the Left support the clause not because they are convinced by the mellifluous arguments of Mr. Peter Green but because they look ahead to the future and see that a Lloyd's privileged by immunity will be a more vulnerable target to hit and perhaps to destroy when the time comes for the Marxist Left to challenge the citadels of capitalism in this country.
  Mr. John Fraser: That really is rather silly and superficial. In discussions within the Labour Party, many of its members, particularly those on the Left, strongly opposed immunity in the form originally proposed. The suggestion that there is some ideological advantage to be gained from the Bill is rubbish. The clause was viewed with the greatest scepticism, but we now take the view—in so far as we take a view at all, as it is private legislation—that the present proposals represent the bare necessity which will enable the Committee of Lloyd's to carry out its task. The hon. Gentleman's analogy is therefore silly and superficial.
  Mr. Aitken: I am entranced by the thought of the hon. Member for Norwood (Mr. Fraser) leaping to the defence
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  of the Bennite Left. I must have touched a nerve. I am sure that the hon. Gentleman speaks for himself and for many members of his party. Nevertheless, if I were a member of Lloyd's, I should be distinctly uneasy about the fact that some Labour Members both above and below the Gangway who are not noted for their sympathy towards capitalist institutions have in a most mysterious and bizarre fashion come out strongly in support of immunity for a group of rich and privileged people to increase their power. It is a strange paradox of the political situation surrounding the Bill.
  I turn to the question of whether Lloyd's needs the immunity. Clearly, the hon. Gentleman has studied the arguments and is convinced that it genuinely does. This fundamental question must be dealt with. I noticed that this morning's Financial Times carried what must be almost a definitive article—based, I suspect, on a very authorised briefing—setting out the basic reasons why Lloyd's is so certain that it needs the immunities. The Financial Times states:
  "Lloyd's says it needs the immunity clause for two basic reasons. The first is that the council must be able to act quickly and decisively when initiating disciplinary action against any member of the Lloyd's community, and that the council should not be inhibited from a particular course of action by fear of suit for damages."
  I pause after that first reason because the implications of that explanation are profoundly disquieting; it is only fear of legal action which now stops Lloyd's from acting swiftly—some of its critics would say rashly—to initiate disciplinary action. It follows that immunity could well result in positively encouraging Lloyd's to act more quickly, perhaps rashly and impetuously, on such matters which may destroy individual livelihoods. I shall give chapter and verse of the examples I have in mind.
  Let us consider for a moment some of the after-effects of the troubled Sasse syndicate. When the Committee of Lloyd's suspended Sasse Turnball & Company Limited as an underwriting agent at the end of 1977, the effect was that that company was prevented from carrying on any underwriting activities at Lloyd's. Some months later, Mr. Sasse, one of the directors of Sasse Turnball, managed to find himself a position as an employee of a Lloyd's broker, underwriting on a delegated authority basis for a Lloyd's syndicate.
  However, as soon as that news was announced and known to the Committee of Lloyd's, the deputy chairman of Lloyd's instructed the managing agent of that syndicate that it was intolerable and unacceptable that the syndicate should be enabling Mr. Sasse to continue working at Lloyd's. It instructed the syndicate that it should cease forthwith to extend any underwriting authority to Mr. Sasse. Mr. Sasse was, by that means, deprived of his livelihood. I hold no brief for Mr. Sasse; I do not know whether the deputy chairman of Lloyd's was right to intervene in that way. That is a question to be decided by Mr. Sasse's litigation which is now pending against the Committee of Lloyd's.
  Looking ahead to what the effect would be if this immunity clause was in operation, one finds a very disturbing story. If Mr. Sasse is right and the deputy chairman of Lloyd's is wrong in intervening in that way, Mr. Sasse will recover damages from Lloyd's to redress his financial loss as a result of his livelihood being destroyed and his being unable to work as an underwriter.

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  However, if Lloyd's is right it and can be shown that the deputy chairman was justified in intervening in that way, of course Mr. Sasse will not recover any damages.
  However, it would be absolutely wrong if the issue were never able to be considered by the courts because Lloyd's had immunity. It is useless to say that judicial review takes care of the situation, because Mr. Sasse's only redress would be a declaration, after losing his livelihood through being prevented from working, that Lloyd's was wrong in intervening in that way. This is a clear case where a small man—an individual livelihood—is being destroyed. Whether the small man's name is Smith, Brown, Jones or Sasse, it is Parliament's duty to ensure that individual livelihoods, whether in closed shop situations with trade unions or in a Lloyd's situation, is preserved. We are taking a risk with individual livelihoods if we give immunity to Lloyd's in that way.
  The Financial Times gives the second reason why Lloyd's wants immunity and states:
  "The second and fundamental reason for the clause, Lloyd's says, is that, if a member sues Lloyd's in respect of underwriting losses, the other members of Lloyd's have to foot the bill in the end."
  That sounds very persuasive, but it never happened in that way. Lloyd's have been sued only in respect of underwriting losses because it was alleged that it acted negligently on its own powers and duties. For example, in the Sasse affair, it was Lloyd's allegedly negligent failure to advise Sasse Turnball to repudiate contracts after Lloyd's had refused to tribunalise Den Har that led to the law suits. It was not underwriting losses per se that led to that but a suit of negligence. If the British Medical Association is sued for negligence, it is the individual doctors, members of the BMA, who have to pay the cost of the suit for negligence. There is nothing special about the position of Lloyd's that needs a special grant of immunity.
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  Lloyd's has been deeply worried, I believe, by the argument that it is the equal of the Stock Exchange in all identifiable respects to the outside world and that it therefore needs no more and no less protection than the Stock Exchange. I do not think that people on either side will be convinced by the other's argument. I have listened to the debates with care. I have yet to hear a persuasive case to convince me that the Stock Exchange is in some totally different category and therefore does not need immunity whereas Lloyd's does need immunity.
  My third question is whether Lloyd's, even if it needs immunity, deserves to get it. I move to more contentious ground. I assert that the recent track record of the chairman and Committee of Lloyd's in handling disputes and controversies of a disciplinary nature has been deplorable. I go further. I believe that the leadership of Lloyd's in these disciplinary matters has shown itself to be judicially, intellectually and perhaps even morally inferior to any other regulatory body in Britain and certainly inferior to the Council of the Stock Exchange, the most analogous authority it can be compared to.
  Those are strong words. In order to justify them, I need to take the House with me through some of the basic facts of the two major scandals that rocked Lloyd's in the late 1970s—the scandal of Sasse and the scandal of Savonita. At the end of these two episodes, I ask the basic question: would Lloyd's have handled itself and the sagas better or
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  worse if it had been in possession of immunity? Savonita is a subject all too well known to me. I raised it in Adjournment debate in the House in 1978. There is no need for me to go into the rights and wrongs in any detail. I wish, however, to touch upon some of the basic facts particularly as they affect the regulatory powers of Lloyd' s.
  The facts were that a cargo of cars on the good ship "Savonita" left a port in Italy but was allegedly burnt and totally destroyed by fire. In fact, it was established beyond doubt that the cars were never burnt at all in any material way. They were brought back to land in Italy and sold off in a perfectly excellent state to dealers who re-sold them throughout Italy. Indeed, loss adjusters from Lloyd's managed to skip round and actually acquire large numbers of the cars said to have been destroyed.
  There was very little doubt that a serious fraud had been committed. I say that there was "very little doubt" I shall come in a moment to what one of the leading legal authorities in the country said on the matter. As soon as doubts arose about whether the claim, which was insured in London, was genuine, the smaller broker involved in the story, Pearson Webb Springbett headed by Mr. Malcolm Pearson, who has played such an admirable part throughout this saga of the Lloyd's Bill, starting with Savonita, refused to press the claim with British underwriters. Somewhat to everyone's surprise, the claim was taken up? by a larger broker, Willis Faber and Dumas, that pressed the claim in highly controversial circumstances.
  There was a situation on the London market in which a probably fraudulent claim had taken place. One broker had refused to press the claim in the belief that it was fraudulent. Another broker was pressing for the claim. The underwriters and the smaller broker who were worried turned to the chairman of the Committee of Lloyd's for guidance and protection as the regulatory body. Before the small broker, Mr. Malcolm Pearson, turned to the chairman of the Committee of Lloyd's, he had the good sense to secure an opinion from the Senior Treasury Counsel, Mr. John Mathew QC. Mr. Mathew wrote a masterly opinion summarising all the facts and all the evidence in the case. His opinion concluded with these words:
  "We have no doubt that such enquiries as have been made to date disclose such positive indications of fraud that a full professional enquiry by any prosecution authority such as the Fraud Squad would very probably produce the evidence necessary to sustain a probable charge of fraud. We would therefore suggest that the right course for Mr. Pearson to take would be to again approach the chairman of Lloyd's and, we think, the Chairman of the Institute of London Underwriters, finally to inform them of the complete picture to date, so that they can take any steps which they may feel compelled to take to protect the good name of Lloyd's and the Institute and any of their members who are involved."
  In other words, one could not have had a dearer demonstration from the senior Treasury counsel that here was a provable case of criminal fraud. The chairman of the Committee of Lloyd's should have intervened to put matters right, and have stopped British underwriters and small British investors in the syndicate paying a fraudulent claim.
  What did the chairman and Committee of Lloyd's do? They did nothing. The then chairman of Lloyd's, Sir Havelock Hudson, wrote a letter back to Mr. Pearson saying that he noted the position, and did nothing else. As

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  a result, the underwriter, unprotected by the regulatory authority had, albeit under protest, to pay the fraudulent claim.
  At this point it seemed to me that the public interest was involved, with the theoretically self-regulating body not performing its duty, so I went to see the then chairman of Lloyd's, Mr. Ian Findlay. I said that I was sufficiently disturbed about the matter to think of raising it either at Question Time or in an Adjournment debate. I began by asking what powers, as chairman of Lloyd's, he had in dealing with the market and abuses of power of the market. He replied, somewhat ironically in view of the Bill, that he had all the powers that he wanted. He had power to withdraw licences and to suspend malefactors, and full regulatory authority over the market.
  I then asked Mr. Findlay why he had not used such powers in this case and why he had ignored the senior Treasury counsel's opinion. At that point Mr. Findlay said that he would like to call in the former chairman of the committee, Sir Havelock Hudson, who had dealt with the matter. Sir Havelock came to the meeting and said that he had not felt like intervening because in his judgment it was a purely commercial matter and there was nothing that the chairman of the committee should be doing. This was supported by Mr. Findlay and his committee.
  I was astonished by this. Had I been an underwriter of or a small name in Lloyd's, I would at this point have gone to law and sued for negligence. For the chairman and Committee of Lloyd's to turn their backs on opinion from the senior Treasury counsel saying that serious criminal fraud had been committed and something ought to be done about it, and nothing was, is a shameful disgrace.
  Mr. Fairbairn: In mala fide no less than in bona fide.
  Mr. Aitken: I cannot compete with the Latin wisdom, but I am sure that my hon. and learned Friend is right.
  The question was not tested, because nobody sued. Had they done so under the Bill, there would have been no question of getting any damages or any redress in the courts, which is another nail in the coffin of the theory that the Bill is a valid piece of legislation.
  I raised the matter in the House; a decision which was criticised, but which I am pleased to see is now being praised by such people as by my hon. Friend the Member for Richmond, Surrey (Sir A. Royle). It ended with a call for an approved self-regulation of Lloyd's. After I had raised the matter, all hell broke loose in the columns of the financial press, which strongly critised the chairman and Committee of Lloyd's for not doing their basic duty. When I had done that, Lloyd's announced that it would have its own internal enquiry into the Savoneta affair and, at last started to do some proper self-regulation.
  I can only say that that attempt to have an internal inquiry was a farce and a fiasco, and one which did more to harm the good name of Lloyd's than anything that could be said in criticism of it, or anything that was subsequently raised over the Savonita or the Sasse affairs. It is not my opinion saying that. The financial and national press was almost unanimous in its savage criticism of the way in which the regulatory authority of Lloyd's had gone about its business.
  On 16 December 1978, The Economist said of the report of the inquiry of Lloyd's into the Savonita affair:
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  "The Report is a shoddy document that smacks heavily of kangaroo justice … It is selective, contains inaccuracies, fails to examine substantive issues (like whether there really was evidence of fraud) and omits examination of key witnesses."
  In The Daily Telegraph of 9 December 1978, the distinguished columnist Mr. Andreas Whittam Smith wrote on the subject of the Savonita board of inquiry's report:
  "The…point to make about the report on the Savonita claim is that it is a sloppy, unconvincing, ill-written piece of work. It carries neither the persuasiveness nor the sense of fairness that informs a report prepared by Department of Trade Inspectors or by the City Panel on Takeovers. It is as if the five gentlemen were trying to play Shakespeare having previously acted in nothing more demanding than the school pantomime."
  That reference to five gentlemen was to the judges appointed by Lloyd's to sit on the inquiry.
  Perhaps the most swingeing criticism of all came from the late and great city editor of the Sunday Telegraph, Mr. Patrick Hutber, who wrote in his column on 10 December:
  "The way in which Lloyd's of London has mishandled the Savonita affair has dealt its reputation the worst blow in living memory, and gravely weakened the position of those of us who believe in the princple of self-regulation. Not to put too fine a point on it, Lloyd's has succeeded in making itself appear both incompetent and somewhat cowardly. Having produced a report which, as we shall see, was, to say the least of it, inadequate, it fell into a blue funk at the idea of publishing it. Before it would release the report it demanded an undertaking from newspapers that they would indemnify the board and committee of Lloyd's in respect of all legal liabilities which might be incurred as a result of publication."
  All this was decisively rejected by the robust gentlemen of Fleet Street, who published the report and proceeded to tear it to shreds. It was out of the ashes of the Lloyd's own board of inquiry into Savonita that the Fisher report arose, and finally these gentleman moved towards trying to regulate their own affairs in the more thorough way that they should have done.
  Mr. David Crouch: My hon. Friend has been illuminating us with the story of his meeting in the city with the chairman and the previous chairman of Lloyd's. He has told us what the press thought and what a bad name Lloyd's got by what was not done. What did he think the chairman and the previous chairman thought they were achieving by not intervening? Does my hon. Friend think that those two chairmen thought that they were preserving the good name of Lloyd's because it was a commercial transaction and Lloyd's always paid? Does my hon. Friend think that that is what they were seeking to do?
  Mr. Aitken: It is very difficult for me to put myself into the mind of the then chairman of Lloyd's. But there is a spirit in Lloyd's—it is shown up in the Sasse claim as well—which is "We are here to pay claims, even sometimes claims that we are pretty sure are fraudulent. If we can shove the whole thing under the carpet and keep quiet about it, so be it." This philosophy was evidently borne out by the Savonita affair and to a considerable extent by the Sasse affair as well. I have no doubt that these are isolated examples and that the vast mass of business in Lloyd's is transacted fairly and honourably. But so long as there are these momentous disasters, why should we as a House of Commons be granting immunity to the chairman and the committee against those who are wounded in those disasters?
  One person who was gravely wounded in the Savonita disaster, although he seems to have survived it remarkably well, was Mr. Malcolm Pearson, who as a result of this

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  extraordinary committee's inquiry was gravely libelled all round the world. I do not think that it worried him too much in England, because both sides of the case were put fairly once the national press commented on the quality of the report. But in Lloyd's List itself it was a different story. Lloyd's List circulates all over the world, and the savage and unfair criticisms—unfair in that they were based on this extraordinary misapprehension, misquotation and travesty of justice in the formation of the evidence—went round the world and might have harmed an international broker severely.
  11.15 pm
  Viscount Cranborne: My hon. Friend the Member for Canterbury (Mr. Crouch) asked my hon. Friend the Member for Thanet, East (Mr. Aitken) what he thought the motives of Lloyd's might be for not prosecuting the Savonita case a little more thoroughly. Does my hon. Friend the Member for Thanet, East agree with me that all organisations that are a little frightened that their position is beginning to decline a little in the world in which they operate tend to pay fraudulent claims of this kind for fear of losing business? Does my hon. Friend agree that perhaps that rather short-sighted view prompted Lloyd's not to take the long-sighted view that would have gained it more business in the long run, if it had shown itself to be a little more fearsome in prosecuting fraudulent claims?
  Mr. Aitken: I agree with my hon. Friend that that may well have been at the back of the minds of those who were entrusted at that time with the regulation of Lloyd's. I remember now that in the Adjournment debate I quoted the words of Edmund Burke, who said that the only thing necessary for the triumph of evil was that good men should do nothing. What happened here was that good men failed to carry out their regulatory duties and failed to do what they should have done and were entrusted to do.
  With regard to the immunity question, I was saying that one effect of the publication of the report of the board of inquiry into Savonita was that Mr. Malcolm Pearson, the small broker, was effectively libelled, or allegedly libelled, all round the world by Lloyd's List, and he felt that his commercial interests were gravely damaged by it. He did not feel it in England because there was already an adequate right of reply, as on the whole every city editor had commented favourably on his behaviour and commented unfavourably on the quality of the report. When Lloyd's List was published all round the world, Mr. Pearson said "I wish to have a right of reply. I feel that I have been libelled. I wish to have my point of view published in Lloyd's List circulating throughout the corners of the globe and to influential people in the insurance world."
  The Chairman of the Committee of Lloyd's and the Lloyd's List editor said "Certainly not" at first. Mr. Malcolm Pearson then threatened to go to law and to sue for libel. At that point the walls of Jericho fell and he was allowed his right of reply. I ask myself whether the Savonita affair would have been worse handled or better handled if Lloyd's had had immunity at that time. If Lloyd's had the immunity, it would have given the two-finger sign to Mr. Pearson and not published what undoubtedly was a fair right of reply redressing the balance. The history of the Savonita affair shows clearly that if at that time Lloyd's had had immunity, its dismal
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  handling of the saga would have been considerably worse and resulted in considerably greater injustice for the individuals concerned.
  Mr. Fairbairn: While my hon. Friend is on that point, I think it is important that we should emphasise why that would have come about. As Lloyd's would have had no risk from any threat of litigation, since it would have been immune from it, it could have said "No" to the publication of the truth.
  Mr. Aitken: Absolutely. My hon. and learned Friend emphasises only too eloquently the point that I was trying to make.
  The Sasse affair has many disturbing similarities with the Savonita affair. In November 1976, the members of syndicate 762 knew that a contract for insurance had gone wrong in America, although they thought that they were reasonably well protected because a valid reinsurance contract existed. However, the chairman and Committee of Lloyd's at that time knew that a horror story existed in America. They knew it because they had refused to tribunalise Den Har, and they had a good opportunity at that moment to advise the Sasse Turnball and Company Limited underwriting team to repudiate the contract. They did not do so. They said, in effect "We will ignore the rights of the names on syndicate 762 and will force them to accept their responsibility in the interests of Lloyd's and the community as a whole."
  There was a substantial settlement. Lloyd's agreed to indemnify the names on the 1977 account to the tune of £6.1 million and the names on the 1976 account to the tune of £10 million—about £16 million in all. If I were a name in any of those syndicates, would I have got such justice for what was alleged to be an act of negligence if immunity had existed? Of course I would not.
  Immunity will give the regulatory body of Lloyd's an undesirable degree of protection. It will suspend the rights of individuals to get a settlement of negligence claims or the right of reply. To say that as a result of seeing how Lloyd's handled two dramatic scandals we should give it immunity, in the aspiration that it will handle future scandals better, is the triumph of hope over experience. We should not be sanguine about the regulatory body fulfilling its functions better with immunity.
  My final question is whether it is in the public interest for Lloyd's to be given such immunity. I take the view so robustly expressed by my hon. Friend the Member for Nantwich (Sir N. Bonsor) that no group in this country should have immunity granted on the scale requested by Lloyd's. If a degree of protection is needed, and I concede that it could be, I have not yet heard an adequate attack on the filter system suggested in the amendment.
  Conservative Members will be signing the political death warrant of ourselves and many other individuals if we give away the basic right of equality under the law for those whose livelihoods may be affected by the sort of scandals, clashes and crashes that I have described. We should stick by the right of an individual to have access to the courts and remember the words of Milton:
  "Whoever knew Truth put to the worse, in a free and open encounter?"
  That free and open encounter in our courts should not be denied to any citizen of our realm, be he a member of Lloyd's or anyone else.
  Viscount Cranborne: It is a privilege to follow my hon. Friend the Member for Thanet, East (Mr. Aitken),

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  who put a case against clause 14 which it will be difficult for any of my hon. Friends or even the hon. Member for Oldham, West (Mr. Meacher) to refute.
  Everyone who has spoken in debates on the Bill will allow that we have addressed ourselves to one of the most important Private Bills to come before the House for a long time. No one could deny that.
  I have been disturbed by some of the curious allegations flying about the financial press recently. Some were alluded to by my hon. Friend the Member for Thanet, East in his distinguished contribution. We have heard that some of my hon. Friends and I have been pursuing the corporation and chairman of Lloyd's for sport. Some of us have even been accused of pursuing them for the sake of money.
  Those rumours and allegations are not mere whispers in the Corridors of the House. They have been made openly, some in the financial press—though not in newspapers as distinguished as those that you, Mr. Deputy Speaker, and I read. Mr. Kenneth Fleet of the Sunday Express comes to mind—saving the presence of my hon. Friend the Member for Thanet, East, who had some connection with that newspaper group in the past. I am sure that if he were still connected with the group no such allegations would have been made. We can only regret the passing of control which my hon. Friend's family held in that newspaper.
  Those allegations are extraordinary. They are, perhaps, prompted by the natural association of ideas that arise from the sporting instincts of my hon. Friend the Member for Gainsborough (Sir M. Kimball) who, I am told, is whipping-in in this particular hunt for those who want the Bill passed. I am astonished that my hon. Friends and I should be considered a cross between Lord Scamperdale setting out for the best meet of the hunt and Al Capone of Chicago trying to extract money from the corporation of Lloyd's, who are presented as a feeble bunch of people subject to the ogres of my hon. Friends and I on the Government Benches.
  One only has to express that rather curious view to understand the absurdity of those allegations. They do no credit to the seriousness with which Members have addressed themselves during the debates. Everybody has said what a great organisation the Corporation of Lloyd's is and remarked on the astonishing contribution it has made to invisible earnings. That is one thing that makes us all feel that if Lloyd's is to survive and continue to produce the results it has it is incumbent on the House, when presented with a Bill of this importance, to address itself seriously to the matter in hand.
  The allegations that I have attempted to describe, which have been put about by I know not whom, do no credit to those who make them and only lower the tone of the debate.
  We have come a long way during the Bill's passage. We have addressed ourselves to many matters that seemed defective in the original Bill. The issue of fraud, about which my hon. and learned Friend the Member for Hemel Hempstead (Mr. Lyell) spoke with his usual distinction and clarity of mind, has been settled to everybody's satisfaction.
  Divestment was spoken about by many Members of the House, and the tour de force performed by my hon. Friend the Member for Faversham (Mr. Moate) is an exception
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  to the general feeling of the House that the subject was handled with great skill and seriousness in the Committee chaired with such distinction by the hon. Member for Oldham, West.
  Although those matters have been disposed of, the question of immunities remains. As my hon. Friend the Member for Thanet, East stated, that goes to the heart of the Bill. The hon. Member for Thanet, East gave his view why immunities would make no difference to the effectiveness with which the Committee of Lloyd's performed its self-regulatory task. I can add nothing to what he said.
  I should like to highlight briefly one or two things that emerged during the debate on 3 February. We must ask ourselves why Lloyd's wants the immunities. My hon. and learned Friend the Member for Hemel Hempstead gave clearly in the previous debate, and my hon. Friends who have spoken tonight against clause 14 and in support of the new clause of my hon. Friend the Member for Nantwich (Sir N. Bonsor) have again given clearly, the principal reasons why the Committee of Lloyd's wants those immunities. There are other reasons, which were mentioned notably by my hon. Friend the Member for Harrow, Central (Mr. Grant) on 3 February:
  "any litigation in Lloyd's is widely publicised. It is used overseas as a criticism of Lloyd's and as a reason for foreign competitors taking away the business."
  11.30 pm
  The same point was made in the speech, commendably brief, of the hon. Member for Norwood (Mr. Fraser). I intervened, as reported at column 395 of Hansard, to cross-question him a little further about what he said. It seemed to me that he was making the same point as my hon. Friend. The hon. Gentleman was arguing by implication that the integrity of Lloyd's, which we all know is one of its greatest assets, could be impugned only in a court of law. That is a remarkable argument. The one place where that integrity can be impugned with least damage and least mischievously is in a court of law, in the controlled atmosphere that does not thrive in the world of rumour and newspaper speculation, a world that certainly exits in the most litigious of all countries, the United States, where not only does Lloyd's do a great deal of its business but where nowadays many of its names hail from.
  Therefore, if we want to protect the good name of Lloyd's there are worse ways of doing it than going to a court of law and proving that a piece of litigation is vexatious or otherwise. It would be far worse if immunity were granted and therefore it was impossible for a name to take the Corporation of Lloyd's to court, so that immunity prevented an attempt to scotch the sort of allegations that might well have been flying about in newspapers or, worse, in the market where insurance is broked. How much better to do it in a court of law than to allow rumour to run rife! This argument, of all the arguments deployed in favour of immunities, is specious.
  Other arguments have been advanced in support of Lloyd's and the proposed clause 14. My hon. Friend the Member for Harrow, Central said on 3 February:
  "It would change the whole character of unlimited personal liability if a member through litigation, could pass on his losses to members as a whole."—[Official Report, 3 February 1982; Vol. 17, c. 370.]
  What my hon. Friend is saying is that because of the story of the Sasse syndicate anybody who loses a large sum of

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  money can sue the Corporation of Lloyd's and if he succeeds he will force the corporation and membership to carry his losses, no matter how he suffered them.
  That is a remarkable argument. The whole point of suing for negligence is that if the corporation has been negligent at least the members of Lloyd's have some form of redress. As my hon. Friend the Member for Thanet, East so cogently explained, if there is no redress in the courts the corporation can merely hide behind that immunity and, as he so eloquently put it, give two fingers to anybody who has the audacity to sue it. I find this a remarkable argument.
  Mr. Fairbairn: My understanding of the purpose of insurance is that one person who has a loss can pass it on to others, who do not have that loss. Perhaps it would be inappropriate if that was to be a defence for Lloyd's, of all people.
  Viscount Cranborne: My hon. and learned Friend makes a point which I find it difficult to quarrel with. The whole question whether Lloyd's should be able to insure itself against vexatious litigation was covered at length in the Second Reading debate. I am told by the corporation of Lloyd's that this is an interesting subject but that if it attempted to put such a course of action into practice the expense would be so colossal as to break Lloyd's altogether.
  My hon. and learned Friend tempts me down a path that I had not previously thought to follow, but I find it difficult to follow that argument. I understand that all underwriters at Lloyd's have to carry personal insurance of this kind. If it is not too expensive for them, why is it too expensive for the corporation of Lloyd's? The experts may be able to explain this more clearly to me; I will do my best to listen and to understand their arguments. None the less those are not arguments that I have found persuasive so far.
  Mr. Richard Shepherd: Does my hon. Friend recall from the Committee proceedings before the hon. Member for Oldham, West (Mr. Meacher) that the latest electee to the Committee of Lloyd's put forward a powerful argument that there could indeed be an errors and ommissions policy of up to £100 million? He was prepared to take up £10 million of that. If we have substantial affirmation by a significant figure in the market we can take it for granted, because so far as I know it was not repudiated by the Committee of Lloyd's, that it is a possibility. It is a route that the Committee should explore and it should explain to us, perhaps today, why it was not taken.
  Viscount Cranborne: I am much indebted, as so often, to my hon. Friend for that intervention. I had forgotten that passage in the reports on the proceedings of the Committee. My hon. Friend has powerfully reinforced the point that I was attempting to make in answer to my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn). As time goes on we might investigate this question further. Perhaps my hon. Friend the Member for Harrow, Central will be able to reply during the Third Reading debate when, or indeed if, we get there.
  My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) may not have considered what the cost of such a policy would be. I cannot recall whether the
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  Committee considering the question also considered the cost of the premiums. If I understand the argument put forward by the chairman and Corporation of Lloyd's, the premiums themselves were considered to be too expensive and this was more of a problem than placing the insurance. It might be better for this sort of speculation to take place outside the Chamber, if my hon. Friend will bear with me.
  There are one or two other points that need answering before we can proceed to vote on Clause 14. My hon. and learned Friend the Member for Hemel Hempstead, in a typically excellent speech in the debate on 3 February, made the most persuasive case for granting immunities. This in no way surprised me. Partly because of the respect that I bear him but also partly because of the force of his argument, I was momentarily persuaded by what he said, and I quote:
  "…if one is exposed to claims for damages in the wa) in which the public at large are exposed, …one's opportunity of acting swiftly, firmly and fairly is likely to be greatly inhibited."—[Official Report, 3 February 1982; Vol. 17, c. 396.]
  I see my hon. and learned Friend nodding. Therefore, he stills holds that view.
  At column 399, I asked my hon. and learned Friend whether he would speculate that the Committee of Lloyd's had been negligent or might become negligent. If it did become negligent, I asked him how the victims of that negligence could obtain redress if immunity were granted. My hon. and learned Friend said that he was delighted to give way, because it enabled him to hang the remainder of his argument on my Intervention. I listened with considerable care to what my hon. and learned Friend said, but I cannot see, from the remainder of his most distinguished speech, that he said anything that answered my intervention or answered the much more cogently argued point of my hon. Friend the Member for Thanet, East. I hope that my hon. and learned Friend the Member for Hemel Hempstead will catch your eye later in the debate, Mr. Deputy Speaker, because he owes it to us to elaborate a little on his assertions in columns 399 and 400 of Hansard.
  Mr. Lyell: I am grateful to my hon. Friend, who utterly disarmed me with his previous remarks. He and are anxious to see that people such as the underwriting names of the Sasse syndicate should not be left without redress. My hon. Friend the Member for Thanet, East (Mr. Aitken) overlooked the fact that it is clear in the Sasse case that the managers and the underwriters of the syndicate would have been liable had they been sued, and that such litigation was not pursued because they were known not to be worth the amount of money that was lost. Consequently, an alternative was sought in suing the Committee of Lloyd's. However, in future such managers and underwriters will be expected to carry the insurance, which will mean that their primary liability will yield the redress for which my hon. Friend is looking. I would have thought that everyone interested in the Bill would agree that the loss should fall where the primary liability lies rather than have to be carried off by a side wind to the Committee of Lloyd's.
  Viscount Cranborne: My hon. and learned Friend again makes his point with great cogency. The Bill grants all sorts of powers to Lloyd's for investigation and disciplinary procedures. As my hon. Friend the Member for Thanet, East said, that was proved to be much needed

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  by the distressing circumstances of the Savonita case. If, for the sake of argument, the Committee of Lloyd's was to repeat what seems to both my hon. Friend the Member for Thanet and myself the solecism that it committed during the Savonita investigation, where it was assuredly negligent, and if the sort of immunity for which my hon. and learned Friend asks and for which clause 14 asks is granted, is it not true that it could not be sued for negligence even if it was negligent?
  Mr. Lyell: I note that my hon. Friend immediately shifted his ground after I gave my answer. I mentioned the Sasse case, and he shifted to the Savonita case. The Savonita case, although very important, is not one in which individuals were looking for financial remedy, because the people who paid out did so willingly—[Hon. MEMBERS: "No."] Those who paid out were the names who paid out under pressure, as my hon. Friend the Member for Thanet, East put it, from a powerful underwriting account. The Savonita case raises a question of public policy in getting Lloyd's to press for the investigation of fraud internationally, which both my hon. Friend the Member for Thanet, East and I are keen that it should do. It also raises the question of the ability of the Committee of Lloyd's to act firmly and swiftly against the big boys. It is a matter of judgement, but, in my view, the ability to act against the big boys—
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Gentleman has made one or two points during the debate, and his intervention seems very long.
  Mr. Lyell: You are right, Mr. Deputy Speaker. It is a matter of judgment whether granting immunity is likely to make something more effective or less effective.
  11.45 pm
  Viscount Cranborne: My hon. Friend the Member for Thanet, East answered that point effectively. I accept that the Sasse and Savonita cases are not the same, but if Lloyd's is given immunity and is able to shelter behind it there is no reason to suppose, in view of the human nature of that organisation, that it will not use that power of immunity as a shelter rather than to exercise self-regulation, which is what we all want. Before my hon. Friend takes refuge in his abstruse legal mind and abstruse legal experience, he should consider the wider consequences of his proposal. I should like to pursue that further, but the hour is late and other hon. Members wish to speak. However, I shall allude to other arguments.
  The Minister, who has made many distinguished contributions, no doubt has felt increasingly frustrated at the antics of his Back-Bench colleagues. He has uttered dire warnings. In his intervention on 3 February he warned us that, unless the Bill were passed today, it was unlikely that the Government could find any more time for it. The warning was echoed throughout the House by hon. Members who urged us to pass the Bill. That is not a good argument.
  If one says "Pass the Bill, even if you do not like it, because otherwise you will not have a Bill at all" the antics of Opposition right hon. and hon. Members on the Standing Committee considering the Oil and Gas (Enterprise) Bill will be in vain. I have the privilege of serving on that Committee and I shall, no doubt, have the
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  privilege of serving all night on it tomorrow. I accept, of course, that it is unlikely that the Opposition could improve it with their antics, given their views.
  If everyone agrees that a Bill is needed, and if a number of people say that the Bill is imperfect but that it cannot be passed other than in its existing form, there is no point in going through the antics of the legislative steeplechase. That is absurd.
  Mr. Ivan Lawrence: Is my hon. Friend aware that, until I heard that argument, I was in favour of staying out of the Chamber and coming in and supporting those who wanted the Bill as it stood? After hearing that argument, I believe that there must be something wrong with the Bill, and now I support my hon. Friend the Member for Dorset, South (Viscount Cranborne).
  Mr. Deputy Speaker: I ask the noble Lord to return to discussing the new clause.
  Viscount Cranborne: Of course, Mr. Deputy Speaker. My hon. and learned Friend the Member for Burton (Mr. Lawrence) has been most flattering. It is rare in our debates for anyone to say that he has been persuaded or convinced by anything that he has heard in the Chamber. That must be a great parliamentary milestone which all hon. Members, no matter what their view of the clause, will welcome. I hope that it will be emulated as time goes on.
  You have urged me, Mr. Deputy Speaker, to return to discussing the new clause. The argument advanced by my hon. Friend the Under-Secretary of State and his colleagues that they must have the Bill is relevant directly to immunity. If the Bill must be enacted with clause 14, if we are to have the Bill at all, the Government are saying "Whatever we feel about immunity does not matter. The Bill is more important." That is a specious argument in the context of the new clause, especially because of the points made by my hon. and learned Friend the Member for Kinross and West Perthshire, who argued most cogently that what is at stake in clause 14 is the fundamental liberty of British citizens.
  This is the core of the Bill. This is the core of our objection to it. If my hon. Friend the Under-Secretary of State argues that the only way in which we can have the Bill is by incorporating clause 14 unamended by my hon. Friend the Member for Nantwich (Sir N. Bonsor), we must have grave reservations about passing it. I have listened to your reproof, Mr. Deputy Speaker, with all the respect that is justly your due, but the argument that has been advanced is germane to the issue on clause 14.
  Trade union immunities have been raised many times during the debate. They have been pooh-poohed by those who propose to support clause 14 in its present form. They say, among other things, that trade union immunities and the immunities that are proposed for Lloyd's are two different things. Who am I to argue with my hon. and learned Friends and others who advance that argument? However, there is a political issue that we ignore at our peril. No matter what my hon. and learned Friends may say—I regret to say that one of them is my most honourable and respected friend, my hon. and learned Friend the Member for Hemel Hempstead—there can be no doubt that Labour Members, especially those on the Left-wing of the Labour Party, will use the granting of

  709
  immunities to those who are supposed to be our friends in Lloyd's as the basis for attacking the admirable Bill that has been presented by my right hon. Friend the Secretary of State for Employment.
  If anyone doubts me, I need refer only to the debate on 3 February. The hon. Member for Keighley, who I have seen with pleasure taking part in the debates on the Bill, intervened to say:
  "The hon. Gentleman suggests that the immunities involved in the Bill are necessary to allow Lloyd's to work. Can he tell the House what he will be doing on Monday when the trade union movement will advance the argument that it requires immunities to allow it to work? If he is consistent, will he vote for or against the Employment Bill?"—[Official Report, 3 February 1982; Vol. 17, c. 402-3.]
  That was an interesting intervention in many ways. It was interesting partly because it was a most able contribution to the new political sport of baiting the Social Democratic Party, one of the distinguished members of which is sitting on the Front Bench below the Gangway—the hon. Member for Newcastle upon Tyne, East (Mr. Thomas).
  No doubt it was irresistible to the hon. Member for Keighley (Mr. Cryer) to draw attention yet again to the "will he, won't he, will she, won't she" process that we observed with such pleasure as some members of that party came into the Lobbies with us on the important vote the other night and as some did not.
  If anyone doubts the veracity of what has been suggested by so many of my hon. Friends, they need only refer to columns 402 and 403 in the Official Report of 3 February 1982, during the proceedings on the Bill. They will see not that what they forecast was just a possibility, but that, with his usual elan, the hon. Member for Keighley had already started doing what my hon. Friends and I so much fear.
  I would have considerable sympathy with the hon. Member for Keighley if we were to treat the corporation of Lloyd's in one way over immunities, however different the case, and treat the hon. Member's friends from the trade union movement in another way. That flies against all the principles of equity and law that my hon. Friends—all such distinguished lawyers—have been propounding this evening.
  Therefore, I beg my hon. Friends before they advance that argument, let alone the others to which I have alluded, to look carefully before they tread too heavily on that piece of bog.
  Sir John Biggs-Davison: In making that comparison, which I am not sure is a true comparison, will my hon. Friend consider against what and for whom the trade union immunities exist and then compare them with the proposed immunities for Lloyd's, which are internal, for the better control of Lloyd's?
  Viscount Cranborne: My hon. Friend tempts me to bore the House for longer than I intended. An immunity is an immunity. There is the question of whether it affects merely the members of Lloyd's or people outside the body that is declared immune. I am willing to accept that my hon. Friend and learned Friend the Member for Hemel Hempstead and my hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison) would not agree with me, but I do not find their argument convincing. I do not think that the electors would find it convincing, however hard my hon. Friends might try to defend it.
  710
  There are two other matters that should be alluded to. One is the great claim made by the corporation of Lloyd's to the effect that the market is behind the Bill. That has been the authority that the chairman of Lloyd's has claimed and that has enabled him to put forward the Bill to the House. At first sight the authority claimed by the chairman of Lloyd's is fairly convincing. The Wharncliffe meeting passed the Bill in its original form by an overwhelming majority.
  Some very curious cracks are beginning to appear in the unanimity of the working names of Lloyd's. I am surprised at the pusillanimity of some working members of Lloyds who have spoken to me on the telephone about whether they support the Bill and in particular the immunity provisions. A letter appeared in the financial press today, and was prominently displayed in the Financial Times. One of the signatories assured me on the telephone not long ago that, although he supported the Bill in public, he was increasingly against it in private. [HON. MEMBERS: "Name him."' He told me that in confidence. I promised not to reveal his name and I shall not do so.
  12 midnight
  Before accepting too easily the claims for unanimity, one should consider the curious way in which working members of Lloyd's put their convictions into practice. Having been assured of one thing on the telephone, I then see the same name appended to a letter in the financial press. As I understand it, that person's grounds for acting in that way were that he did not wish to start a quarrel among members of his association. That may be a perfectly respectable judgment. Nevertheless, if such an important man, supported by many others with whom some of us have spoken, makes such an assertion on such an important point, it is incumbent at least upon those who hold positions of authority in Lloyd's to sing the same song in public and in private.
  My hon. Friend the Member for Thanet, East went to the core of the question whether immunity would work and I can add nothing to the admirable way in which he expressed the argument. Nevertheless, one peripheral point worried me. We are told that one of the main reasons why Lloyd's needs the immunity so badly is that many of the names now on its books are inhabitants of the most litigious nation in the world, the United States of America, where people indulge in vexatious litigation at the drop of a hat—no doubt encouraged by the practice that I saw all too frequently when I worked there whereby lawyers take a percentage of the damages eventually settled.
  A further question requires to be answered. A report in The Economist of 21 November 1981 stated:
  "Lloyd's of London may yet be forced to drop the outrageous clause 11 from its private parliamentary bill, which comes up for its third reading in the house of commons after Christmas."
  That was, perhaps, not strictly true. However, it continues:
  "Will foreign names, especially the 1, 300 Americans at Lloyd's, be free to sue in their courts back home? Lloyd's has a $3 billion trust fund (a pool of premiums) managed b) Citibank in New York on which potential litigants might set their sights.
  As a general principle, courts in the United States do not uphold immunities—even when they are claimed by presidents. In 1974, Mr. Richard Nixon"—
  whom some hon. Members will remember as a particularly notorious president of the United States—
  "claimed executive privileges when asked to hand over the Watergate tapes but was overruled by the Supreme Court."
  As I understand it, from reading the article further,

  711
  Lloyd's asked its New York attorney—a partner in the distinguished firm of LeBoeuf, Lambi, Leiby and MacRae—for his opinion.
  Obviously, if the suspicions voiced by The Economist have any substance, there seems to be little point, quite apart from the reasons so admirably advanced by my hon. Friend the Member for Thanet, East, in Lloyd's seeking immunity since a principle object of it is to protect Lloyd's from the excessive litigiousness of United States citizens.
  I must pay tribute to the chairman of Lloyd's because, during what must have been a most difficult and anxious time, he was the most courteous of men. He sent me a letter dated 17 February in which he tried to answer my question. I hope he will forgive me if I quote from that letter. He said that the worry was that
  "if judgment was given against the Society, the plaintiff would recover against moneys held, inter alia, in the Lloyd's U. S. Trust Fund.
  We, too, were concerned about this. Although nothing under United States law ever seems to be as clear cut as one would like it to be"—
  this is no doubt true—
  "our understanding of this position is that it should be possible to ensure that in such a case the United States court would give jurisdiction to the English court, which, of course overcomes the problem."
  Although I am reassured by that letter, I am not reassured enough. If possible, I would like to know in a little more detail whether the advice tendered by the United States attorneys acting for the Corporation of Lloyd's was any more specific than that. If it was not, it casts further doubt, over and above doubts so ably cast by my hon. Friend the Member for Thanet, East on whether immunities are even needed.
  This has been a long and, in many ways, an interesting debate and I hope that my hon. Friends will raise the many points which need examination during the debate. However, the whole point of this Bill, which is so badly needed, is to ensure that the principle of self-regulation works. The burden of argument we have heard is clearly on the side of the doubters of clause 14 as presently drafted. It is incumbent on my hon. Friend the Member for Harrow, Central, before proceeding with the Bill and pushing it through in his usual able manner, to explain to us some of the answers to our questions. As my hon. and learned Friend the Member for Kinross and West Perthshire said, immunities are of fundamental importance, not only in terms of English and Scottish liberties, but in terms, of fundamental political importance, as I endeavoured to show.
  I beseech my hon. and learned Friend not to wreck this Bill or give cause to the people waiting to consider it again in another place to do so and to cast the sort of doubts we have heard this evening. At least give us a chance to hear a proper answer.
  Mr. Anthony Grant: I agree with my hon. Friend the Member for Dorset, South (Viscount Cranborne) on at least one aspect; it has certainly been a long debate. I also agree that it has been interesting and I congratulate my hon. Friend the Member for Nantwich (Sir N. Bonsor) on the way in which he introduced the debate, without necessarily agreeing with everything he said.
  712
  I share the hope expressed by my hon. Friend the Member for Dorset, South in that personalities will not enter the debate. That is the correct course. I never get involved in personalities or anything of that nature.
  My hon. Friend the Member for Nantwich sought to convince us that views had changed. He cited confidential remarks. That is a matter that only he knows about. In talking about the Wharncliffe decision, involving 13, 000 votes for and 57 against, and all the other votes that the Committee of Lloyd's has undertaken, I want to stress that, unless there is any evidence to the contrary, hon. Members should accept that the Committee has conducted its affairs completely honestly, with total propriety and within the rules. That must be understood. It would be deeply resented—
  Mr. Archie Hamilton: Will my hon. Friend explain how the clause on immunities, despite an undertaking given by the late Sir Graham Page that it should be placed in the schedule, has now found its way back into the body of the Bill? That undertaking was given to the House on Second Reading.
  Mr. Grant: I explained this matter in our previous debate. The limited immunity—it is limited despite what is sometimes suggested—that is sought by clause 14 is purely an internal one within Lloyd's itself. I accept that it also applies to those who are about to enter or who have left Lloyd's. No one is compelled to become a member of Lloyd's. This does not affect policyholders or the public at all. One might have gained the impression, listening to the eloquent and emotional speeches of my hon. Friends, that one was dealing with poor, downtrodden citizens who were being deprived ruthlessly of rights by large and rich corporations. That is not true.
  Mr. Fairbairn rose—
  Mr. Grant: I promise to give way in a moment. In the future, policyholders or members of the public can sue Lloyd's and can take Lloyd's to the courts as much as they please. The fact that Lloyd's, assuming that the Bill reaches the statute book, has obtained additional powers, may help policyholders whose interests will be better looked after. If anything, the Bill will enable the Council of Lloyd's to act more speeedily and more efficiently in protecting outside people. I give way to my hon. and learned Friend.
  Mr. Fairbairn: I am grateful to my hon. Friend. His point that no one is compelled to join Lloyd's is particularly inadequate. No one is compelled to become a doctor. No one is compelled to become a shareholder. No one is compelled to become an accountant. They do not require the councils that regulate them to have immunity. Why should it be necessary in this case?
  Mr. Grant: That will become apparent if my hon. and learned Friend will allow me to continue with my remarks. I take up the example that has been cited of a patient suing his surgeon for error. The relationship is absolutely different. The parellel is between the underwriters and the policy holder or member of the public.
  The whole basis of Lloyd's is individual responsibility. My hon. Friend the Member for Dorset, South (Viscount Cranborne) referred to an earlier remark in which I stated that it was contrary to that concept that members should be enabled to pass their losses on to the body of members which is the Society as a whole. I stand by those remarks.

  713
  Much of the debate has revolved around clause 14. The Society has been treated as if it was an entirely separate body from its members. The reality is that the members are the Society. Therefore, it is they, in the event of action being taken who will meet the damages of the member who brings the suit.
  Sir Nicholas Bonsor: Is it not a fact that the Society of Lloyd's are the people who will have elected the Council and Committee of Lloyd's and is it therefore not right that, in the event of negligence by those who have been elected, they should bear the brunt of the damages awarded?
  12.15 am
  Mr. Grant: That is not the case. The point I am trying to get over clearly to hon. Members is that the Society—that is, the whole body of members—would bear the damages from the suit taken.
  Lloyd's is unique. It is an international trading body that is in the risk business. It is different from the Law Society, the General Medical Council and the Stock Exchange. They are not similar bodies and, with respect for my hon. and learned Friend the Member for Darwen (Sir C. Fletcher-Cooke) I doubt whether there will be a flood of legislation by these other bodies because we have passed the Lloyd's Bill. They understand the differences. If there is to be legislation, then we shall treat each case on its merits.
  Every hon. Member will accept that the Fisher committee was a responsible body, headed by a High Court judge and consisting of underwriters and members of Lloyd's. In paragraph 602 the report says:
  "It is in the public interest that Lloyd's should be efficiently regulated …It would be contrary to the public interest, and inconsistent with the patterns of control established by the Insurance Companies Act, if the Corporation of Lloyd's was to be inhibited in the task of self-regulation by fear of legal proceedings against it. In particular, if the Council and Committee of Lloyd's were to decide that, for fear of possible legal liability, they could not undertake functions designed for the protection of Members, the whole body of Members would suffer."
  Let us consider what the likely course of legal proceedings would be. These were referred to in the opinion of counsel which has been widely circulated. It has been suggested that the opinion was unsigned and was somehow not authoritative. My copy is signed, but some copies were made available to hon. Members without being signed because it was thought that it would be quicker to copy them in that way. It has been signed, and the two learned gentlemen in question take full responsibility for it.
  They point out that:
  "inevitably on occasions Members of Lloyd's will suffer serious underwriting losses. Such losses may occur despite conservative underwriting as a result, for example, of some untoward national disaster. They may result from speculative, or unsound, underwriting. They may involve negligence or breach of duty on the part of underwriting agents or Lloyd's brokers. They may involve a breach of Lloyd's regulations by an underwriter or a broker.
  Where an individual sustains serious commercial loss there is an increasing tendency both in England and elsewhere, "
  as my hon. Friend the Member for Dorset, South recognised,
  "particularly in the United States, to look for someone to sue. Professional negligence litigation is a growth industry, fostered by a steady widening by the Courts of the categories of situation in which compensation is awarded for pecuniary loss.
  714
  When Members of Lloyd's suffer losses as a result of questionable underwriting, some will be tempted to litigate if even the vestige of a case can be made out. The most obvious defendant in such circumstance is likely to be an underwriting agent or a Lloyd's broker. But there may be scope for adding the Society as a defendent on the basis of an allegation of failure properly to have created or exercised regulatory powers or duties."
  That is the sort of situation which can arise and against which, if Lloyd's is to perform its task properly, it needs to be proteted. If it is not, the consequences thereof will be a heavy burden on officers and staff and a disproportionate amount of time and energy may be expended. My hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) said that the Bar or the Law Society would welcome such a relief from burden. But the big difference is that they are paid to do it, whereas the officers and staff of the corporation of Lloyd's are paid to write insurance rather than to engage in tiresome litigation.
  There would be undoubtedly a reluctance to act and possibly a reluctance to serve, and the adverse publicity of Lloyd's being engaged in internal litigious wrangles before the courts would be exploited to the full by overseas competitors.
  Mr. Tim Eggar: Can my hon. Friend say categorically that, in the event of immunity being given in the English courts, there would be no possibility of action being taken through the courts of the United States of America which might result in litigants in the United States succeeding where litigants in the United Kingdom could not succeed?
  Mr. Grant: This is a nice point of private international law, and it is a long time since I studied it. My advice is that the likelihood is that a claim that the jurisdiction should be that of the English courts would succeed and therefore the problem would not arise which worried my hon. Friend the Member for Dorset, South (Viscount Cranborne) and about which he wrote to the chairman of Lloyd' s.
  I accept that the new clause is a genuine attempt at compromise, and it is superficially attractive, but only superficially. I can tell the House that Lloyd's considered it at a much earlier stage as a possibility, but it rejected it for a number of practical reasons.
  I shall relate briefly the objections to what seems to be an attractive proposition. First, the proposal of seeking the leave of the High Court would be a sort of mini-trial, and there is no doubt that a plaintiff would have only to make out the vestige of a case to receive the benefit of the doubt in those circumstances. Therefore, the preliminary granting of leave would not have anything to do with making it easier, but it would undoubtedly attract adverse publicity, which we need to avoid.
  The other objection is that the system would encourage plaintiffs to go on what lawyers describe as fishing expeditions to obtain documents to which otherwise they would not have access. Although my hon. and learned Friend the Member for Darwen poured scorn on the imprimatur of a High Court judge, I must say that it would be a valuable weapon in the hands of a plaintiff who was seeking to force a settlement from Lloyd's. That possibility cannot be ignored. Litigation is not always carried through to the bitter end. Frequently it is used to extract a settlement, and a great deal of time, trouble and possibly expenditure results.
  Mr. Body: I should like to be a supporter of the Bill, but does my hon. Friend say that the two objections which he mentioned apply to an action for libel or slander? Does not he agree that qualified privilege already attaches to any disciplinary proceedings by the committee of Lloyd's and will apply also to the council of Lloyd's. Why is it necessary to go beyond qualified privilege in the clause?
  Mr. Grant: It probably does attach to that situation, but I do not think that the other points, concerning the adverse publicity, fishing expeditions and discovery, are overcome in that way. Those would still all occur. Therefore, I believe that Lloyd's is right in saying that the disadvantages of the proposal outweigh any advantages that it may have, and that it does not get over the problem with which Lloyd's seeks to deal.
  We are dealing here with a question of balance of judgment on the whole issue—probabilities and possibilities. Of course, there are possibilities that some person, some member of Lloyd's or of a syndicate, will have an action which would suffer as a result of immunity. I believe that it is a remote possibility. On the other hand, I believe that the probabilities are that without the clause Lloyd's would be inhibited in the work of self-regulation that it wants to do, and that it would find itself involved in litigation of a sort which would do great harm to Lloyd's and probably to the public and to policy holders at large.
  We have heard a great many quotations from the press. The Daily Telegraph is not always my most compulsive reading—it is on some occasions—but today I do not think I can do better than quote from the leader. At the end it says:
  "In essence this question of immunity"—
  speaking of reforming Lloyd's
  "is a conflict between two views of the public interest. The greater good, surely, is that Lloyd's, one of the country's most valuable commercial assets, should be well regulated. The Bill now before the House of Commons adequately sees to that."
  On that basis I hope that the Bill will make progress, and I advise my hon. Friends to reject the new clause.
  Mr. Eggar: With the possible exception of one of my hon. Friends, I think that everybody in the Chamber wants to see the Bill go to another place and to be passed, because we all recognise that the way in which Lloyd's is regulated needs to be tightened up. But when we are talking of an issue as important as whether a section of the community is to be given immunity from the common law of the country, there has to be an overwhelming case put forward by those who are asking for that immunity.
  I have no possible interest to declare. I did not even go to that school which is on the wrong side of the M4 opposite Slough. But I have listened very carefully to the arguments that have been put forward. First, there was the argument relating to libel, which my hon. Friend the Member for Harrow, Central (Mr. Grant) mentioned. The only way in which I think this can possibly be justified is when we are talking about using the disclosure of documents in a libel case as a way of getting and taking proceedings against the Council of Lloyd's, which would not otherwise be possible.
  In my judgment—and it is surely only a matter of judgment—that so-called fishing argument simply does not justify and cannot justify immunity from libel proceedings. It is too far-fetched. But the main argument tonight has focused around the question of negligence. I have heard two arguments put forward by the Council of
  716
  Lloyd's. The first is that the very existence of law suits calls into question the efficient operation and the standing of Lloyd's. I understand that in the historical context. Until the Sasse litigation there had been no serious attempt to interfere with the functioning of Lloyd's or to challenge the council's decisions through the courts. Just because the Sasse case was the first, it attracted enormous attention throughout the world.
  12.30 am
  When I was kindly given lunch by the chairman of Lloyd's recently, it was put to me that one of the effects of the litigation was that banks in the United States seriously wondered whether insurance policies at Lloyd's were valid as security. They were worried about the standing and financial propriety of Lloyd's. That was put as an argument for not permitting law suits to take place, but that argument must be answered by education. It is up to Lloyd's to explain to the world's banking and financial communities what a law suit in the United Kingdom involves and the implications of a law suit succeeding.
  Unfortunately, we have to get used to a growth of litigation. English courts are slowly following the American courts and we are having more litigation. We have to accept that, and Lloyd's should not be allowed to insulate itself against that development. As I said, it is a matter of judgment and, on balance, the commercial arguments put forward on behalf of Lloyd's do not seem to be overwhelming.
  The other argument is that a limited number of undesirable characters are operating in the market of Lloyd's, from whom the community of Lloyd's needs to be protected. I am surprised that the Lloyd's Committee takes that view, because it is an argument not in favour of granting immunity, but against self-regulation in the market. I am sure that we all wish Lloyd's to continue as a self-regulating market.
  Mr. Aitken: My hon. Friend is making an interesting point. There are individuals within Lloyd's who sometimes use undesirable tactics that lead to the sort of troubles that we have heard described. Indeed, the principal villain in the Sasse affair was nicknamed "the sewer rat" long before the affair blew up. But surely, instead of seeking to deal with such problems through immunity, Lloyd's ought to tighten up on the vetting procedures that take place before it allows someone to become a member of Lloyd's and a broker and, thereby, to have powers such as that to sign binding authorities. Is that not a weakness that needs to be corrected?
  Mr. Eggar: Absolutely. As usual, my hon. Friend has anticipated my next point. The argument is for Lloyd's to tighten up its self-regulation rather than that it should rush to the House for immunities.
  If there are undesirable characters operating in the market, is it not right that the names who may not be able to identify those characters have a right to try to force the Lloyd's Committee to take action against the individuals or syndicates involved? The fact that names can sue for negligence should be used to persuade the Lloyd's Committee to take action when it might not otherwise be willing to do so.
  It is a finely balanced argument and there are strong feelings throughout the Lloyd's community. I feel strongly that the case has not been made out. I say "so be it" to those members of Lloyd's who do not want the Bill at all if they

  717
  do not have immunity. If that is the stance they wish to take, very well, but they should realise that if they go down that road the chance is that sooner or later—and I suspect it will be sooner—Parliament will regulate and they will lose their powers of self-regulation.
  Mr. Richard Body: I have an interest in the Bill as a member of Lloyd's.
  I support the Bill and would wish to see it on the statute book. A year ago I should have said that it was high time that Lloyd's had legislation and could put its house in order. I regret the intransigent attitude of certain people in Lloyd's during the negotiations.
  I regret, above all, clause 14 in the way in which it is framed, although it is immeasurably better than that in last year's Bill. Some progress has been made, but it does one thing which I believe is appalling. It extends the law of privilege when for 30 years the House, assisted by the courts, has been seeking to curb that law.
  Some of us who practised at the Bar years ago remember stories of plaintiffs who sought to take proceedings against a Government Department when a civil servant had been negligent or done something wrong. We had to advise that there was no remedy because the law of privilege prevailed. That kind of privilege has not been curbed as other kinds of privilege have been curbed. The clause puts that process in reverse in an obnoxious way. It does not use the word "privilege"; it talks of "a restraint on suit", which is a euphemism.
  Several of my hon. and learned Friends are present. We never needed to use the phrase "restraint on suit" years ago. For hundreds of years lawyers were able to speak of privilege and then the word "immunity" crept in. I am sorry to see certain distinguished lawyers in the House using it. That word crept in, historically speaking, only recently in our courts. It is a rather good word which suggests a healthy state of affairs. It is a medical term, not a legal term.
  The correct word to use is "privilege". We are being invited to extend the law of privilege to Lloyd's. The House should think carefully before it agrees to that. As for clause 14, "privilege" is the appropriate word to use. It means being above the law, and that is what we will make the Council of Lloyd's in several important respects. We are giving it something which other institutions have to work without.
  The term is appropriate also because it is well understood in the law of libel and slander which, I believe, gives cause for concern.
  Mr. Moate: Before my hon. Friend turns to the question of libel and slander, I believe that earlier he stated that the proposition of immunity was reversing the trend of 30 years. Does that not suggest that one might be starting a new trend by encouraging other organisations with an equal need to regulate and discipline to seek a similar privilege? Does he not fear that that will lead to other propositions coming before the House?
  Mr. Body: I think that that will undoubtedly be so. Only a short time ago a letter was sent to the editor of The Times from the chairman of the Stock Exchange, or someone else speaking on behalf of the Stock Exchange, expressing the wish that the Council of the Stock Exchange should have the kind of powers that the Committee of
  718
  Lloyd's hopes to obtain from the House. I do not want to talk about trade union privileges or immunities, but they are another example.
  Any disciplinary body in any profession would like to have the powers. For a time I was associated with the Bar Council, and I think that the Bar Council might well like to have the privilege that the Committee of Lloyd's now seeks. Some of the other professions would also like to have it, but that would be objectionable.
  I realise that anyone feeling aggrieved will still be able to obtain an injunction, but that is no remedy for someone who has suffered an act of defamation. The only remedy in libel and slander is one of damages. I cannot think of any plaintiff believing that he has been defamed who has sought merely an injunction. The proper remedy is one of damages, because it provides some compensation for having lost one's good reputation. It also acts as an effective deterrent to those who may be rather loose-tongued.
  We in the House are familiar with absolute privilege. We are among the very few to have it. But what Lloyd's is seeking is something near to absolute privilege. It is certainly a degree of privilege greater than that of qualified privilege.
  It would be possible under the Bill still to bring proceedings for libel and slander, but only if the plaintiff could show "bad faith". With the inclusion of those words the Bill is an improvement upon its predecessor of last year, but so far as I know the term has never been judicially defined. However, "good faith" has been so defined. It was defined in 1892 in the Chancery Court by Mr. Justice Kekewich. He said:
  "What does 'good faith' mean? What is meant by those two English words which are the exact equivalent in every sense of the expression, which is perhaps more commonly used, though not more correctly or properly, 'bona fides'? I think the best way of defining the expression, so far as it is necessary or safe to define it, is by saying it is the absence of bad faith—mala fides."
  Therefore, we have no help from the courts as to what "bad faith" can mean.
  So far as I know, in a decision on a question of qualified privilege the issue of bad faith has never been considered. Goodness knows what the courts would make of that phrase. With all respect to those who drafted clause 14 in its present form and allowed the term "in bad faith" to be incorporated, they are inviting a great deal of litigation and therefore a great deal of unnecessary hardship. All we know is that it limits in some indefinable way the extent of the defence of absolute privilege. Clause 14 does not, therefore, erect a barrier to an action for libel or slander.
  The Council of Lloyd's will have a sufficient barrier without clause 14 in any action for libel or slander. It will have the defence of qualified privilege. The Stock Exchange Council, the Bar Council, the Law Society, the General Medical Council and, indeed, every disciplinary body presiding over any profession or occupation has that privilege. It extends to all the functions of any disciplinary body.
  The defence of qualified privilege is well established. It has been clearly defined over the years. Plaintiffs and defendants and those who advise them are well aware of what it means. The law in that respect is as certain as it can be.
  Sir Marcus Kimball rose in his place and claimed to move, That the Question be now put.
  Question put, That the Question be now put: —
  The House divided: Ayes 107, Noes 0.

  Division No. 74]

  [12.46 am

  AYES

  Alexander, Richard

  Lyell, Nicholas

  Baker, Nicholas (N Dorset)

  Lyons, Edward (Bradf'd W)

  Beaumont-Dark, Anthony

  MacKay, John (Argyll)

  Benyon. W. (Buckingham)

  Major, John

  Berry, Hon Anthony

  Marshall, Michael(Arundel)

  Best, Keith

  Mates, Michael

  Biffen, Rt Hon John

  Mather, Carol

  Biggs-Davison, Sir John

  Mayhew, Patrick

  Blackburn, John

  Meacher, Michael

  Boscawen, Hon Robert

  Mills, Peter (West Devon)

  Bottom ley, Peter (W'wich W)

  Monro, Sir Hector

  Bright, Graham

  Morrison, Hon C. (Devizes)

  Brooke, Hon Peter

  Murphy, Christopher

  Buck, Antony

  Myles, David

  Bulmer, Esmond

  Needham, Richard

  Campbell-Savours, Dale

  Nelson, Anthony

  Carlisle, Rt Hon M. (R'c'n)

  Neubert, Michael

  Chapman, Sydney

  Newton, Tony

  Cope, John

  Normanton, Tom

  Cryer, Bob

  Osborn, John

  Dorrell, Stephen

  Page, John (Harrow, West)

  Douglas-Hamilton, Lord J.

  Page, Richard (SW Herts)

  Dover, Denshore

  Pattie, Geoffrey

  Dunn, Robert (Dartford)

  Penhaligon, David

  Elliott, Sir William

  Percival, Sirlan

  Eyre, Reginald

  Renton, Tim

  Fairgrieve, Sir Russell

  Rhodes James, Robert

  Farr, John

  Rhys Williams, Sir Brandon

  Fenner, Mrs Peggy

  Sainsbury, Hon Timothy

  Fisher, Sir Nigel

  Shepherd, Colin (Hereford)

  Fraser, J, (Lamb'th, N'w'd)

  Silvester, Fred

  Gardiner, George (Reigate)

  Speed, Keith

  Garel-Jones, Tristan

  Spicer, Jim (West Dorset)

  Gilmour, Rt Hon Sir Ian

  Sproat, Iain

  Glyn, Dr Alan

  Squire, Robin

  Goodlad, Alastair

  Stevens, Martin

  Gow, Ian

  Stewart, A, (ERenfrewshire)

  Grant, Anthony (Harrow C)

  Stradling Thomas, J,

  Grieve, Percy

  Thomas, Mike (Newcastle E)

  Gummer, John Selwyn

  Thompson, Donald

  Harrison, Rt Hon Walter

  Thorne, Neil(Ilford South)

  Heddle, John

  Viggers, Peter

  Henderson, Barry

  Walker, B, (Perth)

  Howell, Ralph (NNorfolk)

  Wall, Sir Patrick

  Hunt, David (Wirral)

  Waller, Gary

  Hunt, John (Ravensbourne)

  Watson, John

  Jessel, Toby

  Wells, Bowen

  Johnson Smith, Geoffrey

  Wells, John(Maidstone)

  Jopling, Rt Hon Michael

  Wheeler, John

  Kellett-Bowman, Mrs Elaine

  Wolfson, Mark

  Kimball, Sir Marcus

  Younger, Rt Hon George

  Kitson, Sir Timothy

  Lang, Ian

  Tellers for the Ayes:

  LeMarchant, Spencer

  Mr, Michael Hamilton and

  Lester, Jim (Beeston)

  Mr, Paul Hawkins,

  Lewis, Kenneth (Rutland)

  NOES

  Mr, Roger Moate and

  Tellers for the Noes:

  Mr, Jonathan Aitken,

  Question accordingly agreed to.
  Question put accordingly, That the clause be read a
  Second time:—
  The House divided: Ayes 18, Noes 71.

  Division No, 75]

  [12, 58 am

  AYES

  Aitken, Jonathan

  Crouch, David

  Beaumont-Dark, Anthony

  Dover, Denshore

  Blackburn, John

  Dunn, Robert(Dartford)

  Body, Richard

  Eggar, Tim

  Bottomley, Peter (W' wich W)

  Fairbairn, Nicholas

  720

  Fletcher-Cooke, Sir Charles

  Moate, Roger

  Henderson, Barry

  Sainsbury, Hon Timothy

  Kellett-Bowman, Mrs Elaine

  Lawrence, Ivan

  Tellers for the Ayes

  Lennox-Boyd, Hon Mark

  Mr, Archie Hamilton and

  Mayhew, Patrick

  Viscount Cranborne,

  NOES

  Alexander, Richard

  Mills, Peter (West Devon)

  Baker, Nicholas (NDorset)

  Monro, Sir Hector

  Benyon, W, (Buckingham)

  Murphy, Christopher

  Biffen, Rt Hon John

  Myles, David

  Biggs-Davison, Sir John

  Nelson, Anthony

  Bright, Graham

  Neubert, Michael

  Buck, Antony

  Newton, Tony

  Bulmer, Esmond

  Normanton, Tom

  Campbell-Savours, Dale

  Osborn, John

  Carlisle, Rt Hon M, (R'c'n)

  Page, John (Harrow, West)

  Chapman, Sydney

  Page, Richard (SWHerts)

  Cope, John

  Pattie, Geoffrey

  Cryer, Bob

  Penhaligon, David

  Dorrell, Stephen

  Percival, Sir Ian

  Elliott, Sir William

  Rhodes James, Robert

  Eyre, Reginald

  Rhys Williams, Sir Brandon

  Fairgrieve, Sir Russell

  Shepherd, Colin(Hereford)

  Fenner, Mrs Peggy

  Silvester, Fred

  Fisher, Sir Nigel

  Speed, Keith

  Fraser, J, (Lamb 'th, N'w'd)

  Spicer, Jim (West Dorset)

  Gardiner George(Reigate)

  Sproat, Iain

  Garel-Jones, Tristan

  Squire, Robin

  Gilmour, Rt Hon Sir Ian

  Stevens, Martin

  Glyn, Dr Alan

  Stewart, A, (ERenfrewshire)

  Grant, Anthony (Harrow C)

  Stradling Thomas, J,

  Gummer, John Selwyn

  Thompson, Donald

  Harrison, Rt Hon Walter

  Walker, B, (Perth)

  Hunt, David (Wirral)

  Wall, Sir Patrick

  Hunt, John(Ravensbourne)

  Waller, Gary

  Jessel, Toby

  Wells, Bowen

  Johnson Smith, Geoffrey

  Wheeler, John

  Le Marchant, Spencer

  Wolfson, Mark

  Lester, Jim (Beeston)

  Younger, RtHonGeorge

  Lyons, Edward (Bradf'dW)

  MacKay, John (Argyll)

  Tellers for the Noes:

  Major, John

  Mr, Michael Hamilton and

  Mates, Michael

  Mr, Paul Hawkins,

  Meacher, Michael

  Question accordingly negatived.

Clause 14

  LIABILITY OF THE SOCIETY, ETC.
  Amendment proposed: No. 12, in page 19, leave out lines 11 and 12 and insert
  'unless the act or omission complained of:—

  (i) was done or omitted to be done in bad faith; or

  (ii) was that of an employee of the Society and occurred in the course of the employee carrying out routine or clerical duties, that is to say duties which do not involve the exercise of any discretion'.—[Mr. Anthony Grant.]

  Question, That the amendment be made, put and agreed to.
  Bill to be read the Third time.

  STATUTORY INSTRUMENTS, &c.
  Mr. Deputy Speaker(Mr. Ernest Armstrong): In
  order to save time, I shall put together the Questions on the two motions to approve statutory instruments.
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c).

  LEGAL AID AND ADVICE
  That the Legal Aid (Financial Conditions) Regulations 1982, a copy of which was laid before this House on 1st February, be approved.
  That the Legal Advice and Assistance (Financial Conditions) Regulations 1982, a copy of which was laid before this House on 1st February, be approved.—[Mr. Cope.]
  Question agreed to.

  Employment (Tyneside)
  Motion made and Question proposed, That this House do now adjourn.—[Mr. Cope.]
  1.10 am
  Mr. Mike Thomas: I wish first to set out the employment—or., rather, unemployment—background on Tyneside and in my constituency.
  Male unemployment in Newcastle is now 19 per cent. or about one in five, and female unemployment 9 per cent. or about 1 in 10. According to a study by Newcastle city council, in my part of the city—the east end —male unemployment is now 23 per cent. and female unemployment 12 per cent., compared with 14 per cent. and 7 per cent. in 1978. In other words, unemployment has nearly doubled since the Government came to office. In the Walker ward, which includes the two Swan Hunter shipyards, male unemployment is now 34 per cent.—one man in every three is out of work—and overall unemployment is 27 per cent. and rising. In Consett, a much talked about and much troubled area, male unemployment is 31 per cent. and overall unemployment just over 25 per cent. and falling. Walker has become the new Consett of Tyneside. The problem for young people is even more severe. About half—48 per cent.—of males under the age of 20 in Walker have no permanent job and find none within a year of leaving school.
  In 1964, the shipyards in my area employed 11, 700 people. They now employ fewer than 6, 000. The effect of that is amply illustrated by the statistics for skilled unemployment. In the United Kingdom as a whole, only 15 per cent. of the unemployed are skilled workers. In my constituency the figure is 49 per cent.
  I should also set out the defence background to employment on Tyneside.. Five years ago, Vickers employed 7, 000 or more. It now employs between. 400 and 500, all dependent upon overseas orders and most of them on short time for the past 18 months. At the Royal ordnance factory in Birtley there were 250 redundancies just last year. At Marconi, despite the Sea Wolf order, 290 out of the 650 workers are to go. Not a job has been saved by a £14 million order. At Swan Hunter, about 8, 000 are currently employed, about 60 per cent. of them—some 5, 500—on warships. We already know from the chairman of British Shipbuilders that even on present plans the 5, 500 will fall to 3, 500 by 1983–84. Support firms by the score which make ancillary equipment for tanks, fighting vehicles and so on, are equally affected and the employment implications of the cuts in defence spending are very serious.
  I wish to concentrate on the situation at Swan Hunter and I am grateful to the Minister for agreeing to answer the debate. The order book on the merchant side extends to about £550 million. On the military side, there are the through-deck cruisers and HMS "York", the stretched type 42, all moving towards completion. The order book extends to about 1985. It is one of the longest in the ship building industry, but it is also one of the most vulnerable. If the Trident programme pre-empts the surface ship budget in the way that the Government seem to plan, the tap will be turned off at Swan Hunters for 5, 500 men.
  Naval orders for British Shipbuilders as a whole in 1981 stood only at £270 million as against the expected £440 million. The chairman of British Shipbuilders said in

  723
  evidence to a Select Committee of this House that of the 33, 000 current warship work force, in British Shipbuilders as a whole, 45 per cent. or 16, 000 must go by 1986 on current plans. I am anxious that the Ministry of Defence recognises that problem now and seeks to deal with it. It cannot just wash its hands and play Pontius Pilate in all of this; it has responsibilities to my constituents, who served it so well for so long.
  It is no good the Government saying that British Shipbuilders should seek exports. Constant development and one-off re-specification make it almost impossible to develop an export business in warships. By refusing to release MoD ships in build to meet export orders when they do come, they compound the felony. The Dutch, German and Italian navies do not make these selfish mistakes and I would like the Minister to tell us why our Navy insists on behaving in this fashion.
  By demanding the attention they do for their existing orders, the Government inhibit Swan Hunter from developing expertise in non-naval work that it desperately needs to acquire. An example of that is the P amp; 0 order, that went to Finland at the end of last week. Will the Minister tell us how far his Department went in easing its pressure on the naval work at Swan Hunters to allow the yard to fit the P & O boat in? How far is it consciously planning to help the yard make the smooth transition to merchant work, if that is to materialise? How far will it programme the existing orders to avoid any sudden cut-off in naval work? In particular, can he give assurances that the hoped-for Fleet support tanker orders will come in 1983? Will there be more type 42 orders for Swan Hunter?
  It would be unfair to the Minister if I laid the whole problem at his door and I readily acknowledge that it is not entirely a problem for the Navy. However, I hope that the Minister will agree about the Navy's responsibilities in it.
  We must also ask British Shipbuilders on what grounds it decided not to compete for the P amp; 0 order when there are 600 outfitters on the dole in Newcastle and vacant berths in the yards in my constituency as well as elsewhere, and a dire need to gain experience in the type of work that the P amp; O ship represented. How did British Shipbuilders make its decision not to compete? Did it ask the Navy for adjustment of completion times? What is the Government's overall strategy in all of this? Was it simply the truth that the order was not profitable enough? Surely the Government should understand that that is not the first priority in these circumstances. I suspect that that order was sacrificed on the altar of the public sector borrowing requirement and on some false search for an artificial and short term profitability for British Shipbuilders.
  I hope that the Minister can answer these questions tonight. They were raised with me by my constituents and the Northern region of the TUC and are important questions. All in all, I do not want us to simply look back. I want some indication that the Government, in general, and the Ministry of Defence in particular, are considering my constituents' future. If steps are not taken now to secure that, shipbuilding north of the Tyne will be exposed and unprepared for the world market in two or three years. Thousands of jobs will be at risk, as will a major part of Britain's warship building capacity. It is not in my constituents' interests—whether they work or hope to work in the shipyards—or the interests of the Government, the Navy or British Shipbuilders.
  724
  The Government's approach so far has been woefully inadequate. Labour's commitment to the cuts in our defences were probably even worse, with even more jobs lost. However, we are talking about jobs in a constituency where half of the skilled men and youngsters do not have a job. On the present plans, by 1985, that position will be materially worse unless the Government take steps to deal with it. It is not good enough for the Navy to say "We want the yards to compete and tender. We want to work with them to get what we want out of them at the time we want our ships delivered. Whatever else happens to British Shipbuilders is none of our business." It is a vitally important component of the Navy's responsibilities, if Swan, Hunter is to make the transition that seems planned for it, that the Government should now start planning to help. I hope that they will start by giving an indication tonight, through some hard and positive replies to the questions that I have asked. It will be no good coming to the conclusion in 1985 that Swan, Hunter has a problem. What we do not do now will not be done in time.
  1.20 am
  The Under-Secretary of State for Defence Procurement (Mr. Geoffrey Pattie): The House will be grateful to the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) for giving us the opportunity of having this short debate. I congratulate the hon. Gentleman on his customary and cogent manner in presenting his argument.
  I think that, before I turn to the specific issues raised under the subject of the debate, it would be helpful to the House to recall that the prime function of defence procurement expenditure is for the research, development and production of equipment for the Armed Forces. The defence industrial base of the United Kingdom was created specifically in order that the equipment needs of the Services might be satisfied, and not vice versa, that is to say, it is not and can never be the prime function of defence expenditure to support United Kingdom industry regardless of cost. None the less, it remains our firm and often stated policy to buy British wherever it is sensible and practicable to do so, and to prefer a foreign product over that of our own industry only where the latter fails by a substantial margin of performance, time scale or cost. As a result over 90 per cent. of the defence equipment budget is spent directly with British industry or on collaborative projects.
  The industries on and around the Tyne, taken together, represent a combination of skills which is of great importance to defence and to the equipment needs of the Services. There are well over 60 firms with factories in the metropolitan county of Tyne and Wear which are quality assessed as being eligible to receive direct Ministry of Defence contracts. There will also be many which perform sub-contract work on Ministry of Defence contracts, although these cannot easily be identified separately. These factories employ between them about 40, 000 people. In 1980–81, the last year for which figures are available, they received between them well over £100 million in direct defence contracts. Contracts placed during 1980–81 amounted to over £60 million.
  I should like to single out for particular mention some of the major defence contractors on Tyne and Wear to which the hon. Gentleman referred. The hon. Gentleman has centred his remarks, understandably, on Swan Hunter. In response to one of his remarks, made in passing, I should like to say that there is no question, whatever

  725
  problems Swan Hunter may have—they are shared with the rest of the British shipbuilding industry—of Trident being responsible for turning off the tap for warship building. The assessments made by British Shipbuilders, in conjunction with the Ministry of Defence, about the likely capacity would have been made regardless of any decisions taken on the Trident project.
  As the hon. Gentleman knows, the Swan Hunter yard is an important component part of British Shipbuilders. It has done distinguished work for the Royal Navy. At present some 9, 000 of the work force are working on Royal Navy contracts. Two ASW carriers and a Type 42 destroyer, HMS "York", are on order from the firm. The Ministry of Defence's outstanding contract liabilities with the company amounted to some £240 million at the end of the last completed financial year. In addition, Swan Hunter has been awarded the preliminary design contract for a new class of afloat support vessel.
  In view of the contraction of the Royal Navy's surface ship programme, I cannot be optimistic about long-term prospects for Ministry of Defence orders with the firm continuing at their present historically high level. However, the current programme should provide the firm with work until the end of 1984, as the hon. Gentleman indicated. British Shipbuilders has stated its intention of using this period to obtain merchant shipbuilding work and progressively to devote more of its staff to such contracts as work for the Royal Navy nears completion. This, as the hon. Gentleman will appreciate, is necessary because Naval work requires a much higher proportion of outfitting and electrical trades than does merchant shipping. We welcome British Shipbuilders' constructive and farsighted attitude in adopting this strategy. The hon. Gentleman will probably not need to be reminded that Swan Hunter was, of course, predominantly a merchant shipping yard until 1977. I am sure that, given the time now available it will make a successful transition back to a predominance of merchant shipbuilding work which will redress the balance in favour of civil orders.
  The needs of the yard are being closely considered by British Shipbuilders in its discussions with the Ministry of Defence and the Department of Industry. Both Government Departments and British Shipbuilders are closely monitoring the situation and are fully aware of the points that the hon. Gentleman has made. One cannot expect yards to change their sphere of expertise overnight.
  One can see what the problems are likely to be over the next few years for Swan Hunter and what appropriate steps need to be taken. As hon. Members will be aware, Swan Hunter has won some important orders over the last year—the British Nuclear Fuels Limited irradiated nuclear fuel carrier worth around £13 million and the £14 million newsprint carrier for Thor Dahl. A further large order was announced last week for a sophisticated general cargo vessel able to carry a wide range of cargoes and containers. The order—for the Norwegian company Leif Hoegh—is worth around £25 million. Hon. Members will not need to be reminded that Swan Hunter is an excellent yard, with an excellent work force capable of pulling in the orders. We hope to be able to place an order for the afloat support vessels some time next year.
  It would be remiss if I did not mention in a debate of this importance the place in the metropolitan area of Tyne and Wear of Vickers, although the hon. Gentleman made no great mention of that company. The tank factory at Elswick in Newcastle has a long and distinguished history
  726
  of work, particularly in overseas sales. We welcome the plans that Vickers has to move the tank plant from Elswick to Scotswood and modernise it where necessary, and the continued employment in heavy engineering which this will bring. The confidence that Vickers places in the future and in its work force is demonstrated by its willingness to devote over £6 million of its own funds to this re-location. I am glad also that the Government, in the form of my right hon. Friend the Secretary of State for Industry, have been able to provide financial assistance to the firm in making this move.
  It has been the policy of successive Governments to look first to the Royal Ordnance Factories for heavy armoured fighting vehicles, and in lean times this means that tank production work must go to the Royal Ordnance Factory at Leeds. This is the most efficient procedure as far as defence votes are concerned, as it avoids the excessive overhead costs that would arise from maintaining two sources of supply.
  Over recent years, therefore, Vickers has developed its own range of main battle tanks, with a specification designed to meet the particular needs of the overseas market. The company's technical and commercial record over these last 10 years has encouraged it to invest in a new factory in Newcastle which will provide the base from which to exploit the developing export market for military vehicles.
  This new and modern factory concept will provide 380, 000 sq ft of space for production, and has been built at a total cost of £7.5 million. It will have a capacity for approximately 100 vehicles per year, together with resources and facilities to undertake the manufacture of a wide variety of general engineering products. Initially employment will be provided for 700 people. At the same time the company is, from its own resources, extending the range of vehicles to cover not only tanks and recovery vehicles, but bridge layers, self-propelled guns and personnel carriers.
  The company has confirmed that it would not have gone ahead with this project, code named "Dreadnought", had it not been for the substantial regional development grants provided by the Department of Industry, and the direct benefit the on-going business will derive from the advantages of the enterprise zone, in which the factory is located.
  I also understand that the transfer of the business into new premises is being used as an opportunity to rationalise the management and production systems with the intent of improving the company's competitiveness, and hence the prospect for further employment on Tyneside in due course. I know that the hon. Gentleman will welcome that.
  Vickers has enjoyed export success in the past with various armoured vehicles, as well as modification and retrofit packages for vehicles in service with a number of armies around the world. The company is highly oriented towards overseas sales and, quite apart from the Valiant tank, is pursuing a wide range of prospects which, for commercial reasons, I cannot comment on in detail. We have given the company help in the past with its sales promotion efforts, and the MoD defence sales organisation is lending its support to Vickers' export drive.
  I come back to one part of nautical work and discuss ship repairing. There is quite a bit of ship repair work done on the Tyne, some in British Shipbuilders and some in yards outside British Shipbuilders. It has always been the

  727
  policy to repair Naval and Naval auxiliary ships within the Royal dockyards to the maximum extent possible within the retained capacity of the dockyards.
  Prior to the White Paper, Cmnd. 8288, the Royal dockyards were severely overloaded and had been for some time as the report of the dockyard study in 1980 made clear. This overload resulted, in practice, in a substantial volume of repair work, in the years leading up to Cmnd. 8288, being placed with industry. Some of this, of course, was carried out on the Tyne. Although the contract work included some Naval vessels, of which the assault ship HMS "Fearless" and the frigate HMS "Torquay" were examples of work carried out on the Tyne, Royal Fleet auxiliaries constituted the major element of work which was placed to contract so as to relieve the dockyards.
  One of the major objectives of my right hon. Friend's review was to reduce the total requirement for refitting work both by eliminating major mid-life refits of surface warships and by reducing the number of naval surface ships and auxiliaries. The primary effect of this was on the dockyards themselves and, as the House is aware, three out of five Royal dockyards are due for closure by 1984. It also soon became clear, however, that there would be a substantial reduction in repair work for industry, and in December 1981 firms were informed that they could no longer expect a regular programme of work such as there had been in recent years.
  Cmnd. 8288 did not lead, however, to a sudden termination of all RFA contract work. A substantial volume has continued throughout 1981–82, including work on the Tyne. Moreover, it is expected that there will be a continuing need, although at a reduced level, for which Tyneside yards will be given every opportunity to compete. I am pleased to announce that I have today agreed that the RFA "Fort Grange" should be refitted at Smith's ship repairers on the Tyne, the company having been successful in a competitive tender exercise. I am glad to have the opportunity of making that news known. We also acknowledge and readily testify to the good work which has been and is being done in commercial repair yards, such as Smith's.
  I should need much more time to refer to some of the other companies in the region. The hon. Gentleman spoke about Marconi at Gateshead, and he said, rightly—and it was a comment in passing—that the Sea Wolf order had not affected the employment position there, which is correct. I remind him that the position at Gateshead may be affected by the air defence radar orders which we are considering at the moment, and we hope to make an announcement in the near future.
  There is also the workloading at the Royal Ordnance Factory at Birtley, which is mainly concentrated on various forms of ammunition. That is also carefully monitored and considered by the Ministry of Defence. The estimated value of orders for 1982–83 is, for example, running in Birtley at about £44 million. There is quite a significant amount of work still going on in that factory.
  The products that all these factories on Tyneside supply to the MoD are many and varied. They range from very important but unglamorous items such as brushes and mops, ships' steering gear and combat clothing to lead-based paints. It is important to make this point because it is very easy for any hon. Member—this is no criticism of
  728
  the hon. Member for Newcastle upon Tyne, East—and Ministers, too, to become hypnotised by some of the bigger, glamorous companies and to regard them as the key ones. Of course, they get the headlines and employ large numbers, but there are sizeable numbers of people employed in these much smaller companies working on the less glamorous aspects of MoD work. They are very important to us, and we have spent large sums of money with them.
  Mr. Mike Thomas: I appreciate what the Minister is saying. Earlier in his speech, he made the explicit point that orders which had been running at about £100 million a year in this general area are now down to about £60 million. Am I right in saying that his speech has confirmed that there has been a substantial cut—40 per cent.—in the amount being spent?
  Mr. Pattie: I said earlier that £100 million was the figure in 1980–81 that had been spent, and that further new contracts of £60 million had been placed. That represents a reduction of the order indicated by the hon. Gentleman.
  The term "cutback" is often bandied about in relation to current defence spending, and it is true that we have had to adjust our future programme to take account of the funds that we are likely to have available—as my right hon. Friend made clear in Cmnd. 8288—but I remind the House that we plan to continue to increase defence spending overall in real terms for the next four years in line with the NATO target of 3 per cent. That means that the equipment share of the budget will also continue to increase in real terms.
  I cannot make predictions or promises as to how much of this increased budget will come the way of Tyneside. As my right hon. Friend made clear, the adjustments to the defence programme that were necessary will mean reduced job opportunities in some areas, particularly in the older, more labour-intensive industries. Thus, I cannot rule out the possibility of reduced defence work for some of our contractors on Tyneside. However, the opportunities that exist—and are increasing—for work in the newer, more technological, industrial sectors will be available for firms on Tyneside as elsewhere. Furthermore, my ministerial colleagues and I lose no opportunity of emphasising to prime contractors the importance of sub-contract work to smaller United Kingdom firms, and I am optimistic that opportunities will remain plentiful in this area as well.
  Mr. Thomas: I am grateful to the Minister for giving way again. I was deliberately brief in the hope that I would be permitted to intervene once or twice. Returning to the question of the effect of the defence review in the general thrust of the Government's posture on defence, he suggested earlier that in some way or other, if the Government were to embark on the Trident programme, that would not have a profound effect on the surface ship ordering that would go on in a yard such as Swan Hunter. It seems to me that Swan Hunter is peculiarly vulnerable to the kind of imbalance that the Trident project will create in the whole business of naval procurement. Can the Minister deny that the kinds of ships that are being built at Swan Hunter and that may be built there in the future, are unlikely to be built in anything like the present quantities if Trident goes ahead?
  Mr. Pattie: It is a little difficult to respond in the time that I have left to me. The review that my right hon. Friend

  729
  made in the summer of last year changed the emphasis of Naval provision for the future from the surface fleet, as the hon. Gentleman knows, to the sub-surface fleet. The whole problem about the Trident procurement is that that is a separate issue which is used as a red herring. If the hon. Gentleman were prepared to take issue with me on whether that was the right decision to take—not the Trident decision but the balance that came out in the White Paper—I could argue that point with him. I do not think that we have any more time in which to deal with that.
  730
  All in all, there are many exciting possibilities open to British industry to benefit from increased defence expenditure, and I very much hope that firms on Tyneside will be successful in 'winning their share of the opportunities that exist.
  Question put and agreed to.
  Adjourned accordingly at twenty-one minutes to Two o'clock.